Global supply chains, decent work and social responsibility : an example from the toy industry

Decent work has become a frame of reference for many civil society and international organisations. It represents a key strategy in the fight against poverty and inequalities. Labour rights violations, however, remain prevalent, especially in global supply chains. The toy sector is emblematic : working conditions are particularly poor in this sector, despite the industry as a whole being governed by a code of conduct since 1995. Pressure from public opinion can, therefore, act as a tool to counterbalance flawed corporate social responsibility (CSR) and to force companies to act more responsibly when it comes to their sourcing operations. An example is the recent campaign waged by Solidar Switzerland against the toy industry and toy manufacturer Mattel.

By Lionel Frei, Solidar Switzerland - @LionelFrei

A sector that’s faring well – with appalling working conditions
After several years of mixed results, the toy sector is now faring very well and is growing again, with a return to the excellent results seen at the end of the 1990s. Turnover in the sector exceeded 85 billion dollars per year, fuelled by the sales of multinationals such Hasbro, Disney, Lego or Mattel, one of the sector’s leading companies, with a turnover of 6 billion dollars. Its production is primarily carried out in China, for the European and American markets.

The toy industry has serious problems in terms of working conditions, like many other globalised industries. The workers’ pay is very low, at approximately US$230/month, insufficient to meet their basic needs. According to 2010 estimates, it represented only 0.08% of the final sales price. Five years later, this amount has fallen to 0.05%. Workers often have to work an excessive amount of overtime, in breach of Chinese law, exceeding, in the most extreme cases, 100 hours a month. There are serious breaches of the occupational health and safety regulations, such as unprotected exposure to toxic substances like benzene. Finally, there is no freedom of association.

Defective CSR
Several scandals affecting the toy industry in the mid 1990s led to the introduction of "ICTI-Care", a corporate social responsibility (CSR) programme covering the whole sector. Set up under the aegis of the International Council of Toy Industries, it works in the following way : the big brands commit to only use suppliers that have been certified, for their compliance with labour standards, by independent auditors. This programme, however, is seriously flawed in terms of its independence. Firstly, ICTI-Care is controlled by toy companies : it is headed in the main by the top directors of the multinationals in the sector. Secondly, ICTI-Care is financed by the annual fees paid by toy companies. Furthermore, and more worryingly, independent surveys conducted in recent years show that working conditions have improved very little (if at all - more info here).

Why have conditions not improved ?
The commercial model used by toy multinationals consists in placing orders with tight deadlines whilst putting pressure on prices via invitations to tender. Competition between Chinese factories to secure the contracts puts downward pressure on the working conditions. The factories thus find themselves faced with two conflicting obligations : to respect the social standards established by ICTI-Care and to fulfil the orders of major brands on the most advantageous terms (for the buyer). If a labour law violation is reported, the big brands can free themselves of any responsibility by explaining that it outsources to certified factories. It should also be noted that even if the labour standards were respected, they are insufficient. ICTI-Care tolerates, for example, a 78-hour working week, even though the Chinese legal maximum is 44 hours.

A public plea for reforms
Alongside its development cooperation programmes in favour of decent work, Solidar Switzerland also conducts advocacy campaigns. Two years ago, we launched a campaign to denounce the working conditions in the toy industry. In partnership with China Labour Watch, Solidar Switzerland commissioned independent reports on the working conditions in several Chinese toy factories. The investigations were carried out anonymously : investigators had themselves hired as workers in order to assess the reality on the ground from the inside. Although the factories were certified by ICTI-Care, serious problems were observed. No less than 20 violations of Chinese labour law or core labour standards were reported.

The study was followed up by an online advocacy campaign and public actions in several Swiss cities. The prime objective was to inform consumers of the widespread reality in this industry and, secondly, to put pressure on the leading company in the sector, Mattel. The information was widely covered by the national and international press and 18,000 signatures were submitted to Mattel’s European head office in Amsterdam. Following the campaign, Mattel is in the process of re-auditing the two factories incriminated. The results will be made public at the beginning of 2017. Finally, Mattel expressed openness and interest in cooperating with our NGO and civil society organisations in the future.