TRIBUTE TO WORKPLACE ACCIDENT VICTIMS IN ASIA...........................................................

INTRODUCTION: FROM THE FLAMES.....................................................................................

i) ICFTU Activity Following the Kader Fire

IINDUSTRIAL FIRE BREAKS OUT KILLING 188 ...........................................................................

WORKING GROUP FOR THE SUPPORT OF KADER WORKERS...................................................

SETTLEMENTS OVER COMPENSATION: DEATHS AND INJURIES ..............................................

FIRES AND ACCIDENTS IN THAILAND: ON AN INCREASE.......................................................

KADER AND THAILAND TRADE UNIONS.................................................................................

ENFORCEMENT TANGO: THE THAI GOVERNMENT'S ROLE.....................................................

i )

Building Safety: The Kader Factory

ii) Health and Safety: The Kader Workers

iii) Minimum Wages and Work Schedules at Kader

KADER: THE ASIAN CONTEXT ................................................................................................

i )

Kader History in Thailand

ii) Kader and the CP Group in China

CHINA: DOMINANT PLAYER IN WORLD TOYS........................................................................

i ) Accidents and Injuries in China

THE INTERNATIONAL TOY INDUSTRY: A WEB OF CONTRACTS...............................................

i) Image Making: Setting the Scene

ii) Toy Making: Cheap Labour for Toys

iii) Toy Marketing, Sales and Safety

Come to the Fair!

iv) The Role of International Toy Contracts

I NTEGRATING THE COMMUNITY: TOY CONTRACTS WITH TENTACLES .................................

i) Personal Employment Contracts

ii) Individual Sub-contracting

iii) Sub-contracting to Other Firms

CONTRACTING THROUGH SWEATSHOPS: CHILD-FEMALE GHETTOS.....................................

CONCLUDING DISCUSSION: FROM THE ASHES.....................................................................

Appendix I: The Life Safety Code: Standards to Prevent Factory Fires ............................................

Appendix II: Triangle Shirtwaist Company: A 1911 New York Fire......... .........................................

Appendix III: Codes of Practice: The Levi Strauss Company Example.............................................

Appendix IV(a): ICFTU Resolution an Exploitation in the Toy Industry ...........................................

Appendix IV(b): ICFTU Resolution an Workers' Rights Abuses in China ..........................................

List of Boxes or Inserts

Illustration of Four Buildings at Kader............................................................................................

Ms. Lampan Taptim: Couldn't Get Out, No More Stairs!................................................................

Ms. Tumthong Podhirun: It's Happened Many Times Before..........................................................

Picture of Parents Driving Coffins Away.........................................................................................

Labour Leader Disappears: ILO - Standards in Thailand..................................................................

Toy Investors in Transition: A Hong Kong Case Study ....................................................................

Thailand Fires Mirror Joint Ventures in China ..................................................................................

I ndustrialized Countries Encourage China Toy Imports: U.S. Case Study........................................

Subcontracting Into the Community: A Philippine Case Study ......................................................

Minimum Wages in Thailand.........................................................................................................

Relevant ICFTU Policy....................................................................................................................

TRIBUTE TO THE WORKPLACE ACCIDENTVICTIMS IN ASIA

This report is dedicated to 188 workers who died and 469 others who were in-j ured in a 1993 fire at the Kader Industrial Toy Company situated near Bangkok,Thailand.

I NTRODUCTION: FROM THE FLAMES

On 10 May 1993 the worst-everfactory fire in the world occurred atthe Kader soft toy factory in NakhonPathom province near Bangkok,Thailand.

The first part of this report describesand analyses events leading up to theKader fire and for the few monthsthat followed, up to the time whencompensation issues for victims wereresolved. Sections C to E of the reportrefer to this period of time.

The fire is then reviewed in the lightof a several-fold increase in deathand accident rates for all Thai work-places since 1987. Workplace acci-dents in Thailand now approach200,000 per year. This is discussed insection F

The three sections that follow (fromG to I) look at issues of relevance toworkers, the government and theKader company itself in the outcomeof events.

Thai labour policies severely limit thecapacity of workers to implementchange an their own. Further, byrefusing to enforce safety standardsproperly, the Government is both aid-ing and abetting in the developmentof situations that give rise to catas-trophes such as the Kader Fire.

The Kader Company is examined inSection I as is its investment historystarting in Hong Kong, then movingto Thailand and ending up in China.Kader's investment history points toi mportant changes in the broader in-ternational toy industry, especiallywith respect to the production of toysin China.

Why toy investors are turning toChina is looked at in Section M of thereport. Cheap labour is the mainreason. There is little requirement forcompanies to worry much aboutunsafe factories or care about work-er's health and safety. Workplaceaccidents in China are currently re-

sponsible for the death of over 20,000workers per year.

The lower cost of production of toysin China changes the investment cli-mate for countries like Thailand.Thailand competes with China to at-tract investment capital for local toyproduction. With this developmentThailand has become sadly lax in en-forcing its own legislation. It turns ablind eye to health violations thus al-l owing factory owners to ignoresafety standards. Since China enteredthe picture, accidents in Thailandhave nearly tripled.

The structure of the international toyindustry is described in Section K.How toy "images" are controlled, pro-duced into toys, and then marketedand Sold internationally is discussed.The role of major companies in con-suming countries is also examined.

In Sections L and M, an intricate webof toy contracts becomes apparent.Major toy buyers from consumingcountries sign production contractswith factory owners throughout Asia.Factory owners, in turn, hire workersor sign more contracts for part of thework to other individuals, or tosmaller firms, including sweatshops.Depending an the country involved,contracts are also signed within com-munity, family or church pro-grammes.

In the concluding discussion ofSection N the web of contracts andsub-contracts in the toy industry ishighlighted. International productioncontracts are identified as central toi mplementing change in the toy in-dustry. Recommendations are di-rected at Thailand and China as pro-ducing countries. Others deal withthe need for international standards.The roles of companies in consumingcountries are discussed as are the im-portant roles for consumers inbringing about change.

I ) ICFTU ACTIVITY FOLLOWINGI)ICFTU ACTIVITY FOLLWINGTHE KADER FIRE

In November 1993 the ICFTU coor-dinated a Mission of inquiry toThailand with its Asian and PacificRegional Organization (ICFTU-APRO)in Singapore and with theI nternational Ladies' GarmentWorkers' Union (ILGWU) from NewYork. Mr. Lucien Royer (ICFTU), Ms.Becky Plattus (ILGWU) and Mr. K.S.Thomas (ICFTU-APRO) were involvedin the mission and were responsiblefor the production of the findingscontained in this report. In Thailand,the activities of the mission wereorganized with the Labour Congressof Thailand (LCT) and the ThailandTextile Garment Workers' Union. TheFriedrich Ebert Foundation was in-strumental in helping to plan impor-tant meetings, events or interviews aswas the Asian-American Free LabourI nstitute in Bangkok.

I n all, the mission met and inter-viewed 50 - 60 individuals inThailand. Trade union leaders andmembers of non-governmental orga-nizations involved in activities relatedto Kader's fire participated in meet-ings or were interviewed directly Ameeting with eight officials from dif-ferent departments of the Inter-national Labour Organization (ILO)was organized by the ILO. A tour ofthe Kader site and surroundings wasalso organized as were interviewswith survivors of the fire, followed byvisits to their homes. An official of

the personnel department of Kaderwas interviewed as were officials ofthe Ministry of Labour, including theDeputy Minister. Several represen-tatives of the academic communitywere visited and interviewed. Finally,a special visit was organized to meetProfessor Nikom who headed theThai inquiry into the fire. Of equal im-portance were the many casual walksin the back streets of Bangkok to ob-serve the numerous flourishing sweat-shops and their operations. Follow-upresearch was conducted in the ILO li-brary in Bangkok and at the offices ofToy Manufacturers of America, amajor industry organisation which islocated in New York City.

Following the trade union mission toThailand, the ICFTU Executive Boardat its 104th meeting in December,1993 passed two important resolu-tions an factory fires in Thailand andChina. The 15th World Congress ofthe ICFTU outlined the importance ofdeveloping with the ITS a frameworkfor the effective co-ordination ofi nternational action regardingtransnational corporations.

From 12-14 October, 1994 theI CFTU/ITS Working Party an Health,Safety and the Environment met inBrussels to discuss the findings of themission and to make proposals forinternational actions to bring aboutchange in the toy industry. The con-cluding discussion in section N in-corporates the results of those discus-sions.

Couldn't Get Out - No MoreStairs!

"There was the Sound of yellingabout a fire. I tried to leave the

section but the supervisor toldme to get back to work. My sis-

ter who worked an the fourth

floor with me pulled me awayand insisted we try to get out.

We tried to go down the stairs

and got to the second floor. Wefound that the stairs had already

caved in. There was a lot of

yelling and confusion. I couldn'tgo down further. In desperation Iwent back up to the windows and

went back and forth lookingdown below. The smoke was

thick and I picked the best placeto jump in a pile of boxes. My

sister jumped too. She died."

Ms. Lampan Toptim

I NDUSTRIAL FIRE BREAKS OUT KILLING 188

1 At 4.00 p.m. an 10 May, 1993a fire erupted at the Kader soft toyfactory in Nakhon Pathom provincenear Bangkok, Thailand. The com-pany employed over 3,000 workers.174 women and 14 men died in theincident. 469 workers were injuredand most of the remaining workersbecame jobless.

2 The fire occurred in a four-storey building an the ground floorpackaging and storage area near alarge electrical control panel. The firequickly spread upwards to other

floors and to two adjoining factorybuildings. A Government inquiry Setup by Mr. Nikom Chandravithun wassubsequently Set up to report an thei ncident. Six months later it con-cluded that improper building de-signs, inadequate fire exits andstairways as well as poor health andsafety practices at Kader were themajor contributing factors in victimsnot being able to escape in time.Survivors reported that locked doorsand barred windows prevented manyof the victims from escaping.

3 There were four factorybuildings in the compound, the firstthree of which were built with non-insulated steel structures. Only thefourth building did not catch fire. All

the victims who died worked inbuilding number one where the firestarted. Workers from other buildingsmanaged to escape in time with mi-nor injuries. Under the intense heat

the first three buildings lost theirstrength and quickly collapsed. Innumber one building the structurecollapsed onto the victims after thefire started, thus leaving no time toescape.

4 Two 1.5 metre stairways ser-viced the upper floors of eachbuilding. Since there were no separate fire exits these stairways were theonly means of access for people tothe outside from the upper floors.These were not intended for use asfire exits and, instead, acted as airflow conduit carrying heat, fumesand smoke to the upper floors. Thefreight elevators similarly becamechannels for fumes and smoke tospread. The burning of raw materialsin the fire gave off poisonous gas andmany workers passed out due to lackof oxygen.

5 Since Kader also used ad-j oining hallway space for temporaryoffices and for storage of materials,these stairways quickly becamedeath traps as victims searched for away out through thick smoke andfumes or over fallen and burning ma-terials. About 1,100 panic-strickenworkers attempted to escape from asingle stairway, clambering over thebodies of others which had piled upbehind the exit door at the bottom ofthe stairway. As escape routes be-came inaccessible and as the heatand smoke closed in behind them

the victims wandered, desperatelysearching for a way out and finallyj umped out from the top floors ontothe cement padding below. Someworkers survived because they fell antop of the bodies of co-workers whohad jumped out before them anddied. Of the total number of victimswho survived, 469 were injured,many of them permanently disabled.

6 Fire alarms in the firstbuilding were out of order and therewere no Sprinkler systems anywhere.Many workers an the top floors didnot notice the fire until they detectedsmoke. There had been no training ofpersonnel to deal with fire fightingnor had there been fire drills. TheGovernment inquiry explained:

" Despite having two firefighting water distributors an eachfloor, the lack of fire drills made everyone panic. The security guardsand workers' leaders underestimatedthe Situation and acted too late. Thematerials strewn an the paths caughtfire. So, the fire spread from the firstbuilding to the second. The Lift wellssucked the smoke and fire fromdownstairs to all the floors. So, thefire spread from the first building tothe second and the third buildingquickly.

Flammable materials werekept an the walkaways and the facto-ry's ground floor. The fire spread

About 1,100 panic-strickenworkers attempted to escapefrom a single stairway, clamber-i ng over the bodies of otherswhich had piled up behind theexit door at the bottom of thestairway.

around and across the buildings veryquickly. Inspection of the groundfloor of the fourth building showedthat materials were piled up to theceiling, and the electricity controlpanels were not separated from thepiles of goods."

7 Fire fighters described thescene as a "living hell". According toeyewitness accounts horror dominated the scene. Injured victims layan the ground screaming for help asrescue workers took others to one of22 nearby health facilities and hospi-tals. Friends and relatives waited in

despair as riot police and soldiers ar-rived to keep them at bay. The rescueoperation mostly served to locateand pull out the human remains andcharred bodies from the wreckage. Ittook over 20 days to clear the debrisand end the search for human re-mains.

8 Chaos and pandemoniumfollowed for two weeks after the fireas grief-stricken relatives braved thehorrid sight of decomposed bodies ata nearby morgue to identify theirloved ones.

I t's Happened Many TimesBefore!

"My job was to keep track of rawmaterials and supplies. I wasdrawing up a list an the third

floor and heard somebody yelling

'fire, fire'. Some people weremoving around at the windows

but I did not take it seriouslybecause it has happened before.

Soon I smelled smoke and veryquickly it billowed inside the

place. I headed for the back doorbut it was locked. I couldn't goout the front entrance because

there were too many people try-i ng to get out by that time.

There was a lot of commotionand confusion. When 1 saw peo-ple jumping out of the windows Ibecame very frightened. Soon I

couldn't see anything. The smokewas so thick and the lights had

gone out. I didn't know what todo. Finally 1 had no other choice

but to join others and jumpedout of the window. I saw many of

my friends lying dead an theground beside me. Injured my

l egs but I came out alive."

Ms. Tumthong Podhirun

WORKING GROUP FOR THE SUPPORT OFKADER WORKERS

9 A coalition of groups thatcame together after the fire, made atremendous difference to the outcome of final compensation.Academics, trade unions and non-governmental organizations repre-senting women, students and chil-dren or concerned about humanrights or civil liberty issues, joined ef-forts to create the "Working Group forthe Support of Kader Workers".

10 The Working Grouppushed the government into estab-lishing a special centre for the Support of workers near the factory andto coordinate information as well asto ensure proper communicationwith workers and their families. TheWorking Group made it possible topin down the responsibility for pro-viding compensation to the Kadervictims. A threat to organize an in-ternational boycott of Kader prod-ucts accompanied a series of very im-portant protests and sit-ins at the CPoffices in Bangkok, Thailand. Withthe help of the Thai DomesticHelper's Group, 1000 people at-tended a major rally in Hong Kong.Street theatre was staged in a touristdistrict. Leafleting and a sleep-inwere also organized in Hong Kong aswas a march through a Toys-R-Usretail Store.

11 These actions attractedmedia attention and served to mountsufficient pressure an the companyto properly recognize negotiationswith the Working Group. A memoran-dum of agreement was signed an 13July, 1993 and resulted in a several-fold increase of compensation cover-age by Kader. Up to US$ 12,000. wasadded to the total compensationpackage per individual by Kader in-stead of the original US$ 4,000 thatwas offered. This was subject to thevictims and families agreeing not tolater pursue legal action for compen-sation.

12 Kader agreed to pay foradditional medical costs not coveredby government compensation.Monthly education payments for thechildren of deceased parents andminimum payments to short-termworkers would not have been in-cluded as compensation either.Kader also agreed, eventually, to offersuitable jobs (in an eventual new op-eration) to injured workers, to therelatives of the victims and to theworkers previously employed therefor three or more years. Finally, Kaderagreed to pay all outstanding salaries,overtime payments, annual holidaypayments and all amounts for com-pensation to the government for dis-bursement.

SETTLEMENTS OVER COMPENSATION:DEATHS AND INJURIES

13 Based an documentationsupplied by the Thai Inquiry an theKader fire, estimates show what workers should have received by way ofcompensation. The figures shownbelow include compensation moneyfrom all sources, taken together, in-cluding from various Governmentagencies, Kader itself, other privateagencies, foundations as well as fromindividuals. To what extent, compen-sation payments to victims and fami-lies were properly paid out, was notassessed.

14 A qualifying injuredworker should have received up toUS$ 380.00 for initial injury costs,plus full 1993 salaries depending anstate of health. Medical costs up toUS$ 1,200.00 should have been pro-vided for by the government withKader paying whatever else wasneeded. In addition, up to US$ 720.00per month (for the first year) was tobe made possible and a further US$480.00 per month, after the first year(for up to ten years) as total compen-sation for damages and costs, in-cluding rehabilitation.

15 Families of the deceasedshould have received up to US$1,900.00 for funeral expenses. Tocompensate for the death of a familymember up to US$ 9,200.00 was allot-ted with an additional US$ 78.00 permonth for up to sixty months. US$120.00 was to be made available tothe families of deceased students.Educational costs and fees were tobe guaranteed for students of thedead parents (for periods coveringfrom the primary to the post sec-ondary years of education) and anaverage of US$ 60.00 per monthwould be paid out for additional edu-cational costs to cover the sameperiod.

16 Workers who were un-harmed should have been paid onemonth's salary to the end of themonth in which the fire occurred. Ahousing allowance up to US$ 40.00should have been provided for inadditional compensation under thelaw.

FIRES AND ACCIDENTS IN THAILAND:ON AN INCREASE

17 Other fires have been re-ported at Kader. The first was an 16August, 1989. One person died, 30were injured and three buildings andcontents were destroyed whenpolyester fabric used in the manufac-ture of dolls ignited in a spinning ma-chine. A second fire destroyed ma-terials and goods an 13 February,1993. The Welfare and LaborProtection Department issued in-structions to Kader ordering it tomake changes over safety measuresin the toy factory The instructionswent unheeded. The company wasasked to establish a workplace emer-gency plan in case of fire and to iden-tify safety officers within the plant.No subsequent inspection of theplant took place.

18 The third fire at Kader inMay 1993 is now well-known, world-wide. A flurry of news investigationscompared Kader to previous fires inThailand. Three years ago, a truckhad overturned in Bangkok and twolarge gas cylinders caught fire incin-erating scores of cars waiting at a traf-fic light, killing 91 people. Five

months later, another 171 peoplewere burnt from an overturned truckcarrying dynamite.

19 Fires happen frequently inThailand. Workplace fires help swellthe already high death rate due to increases in workplace accidents, gen-erally. For example, just three monthsafter the Kader fire, a six storey hotelcollapsed and killed another 133people and injured 351 more.

20 After the Kader fire andthe hotel collapse, the IndustryMinister Sanan Kachornprasart ordered a special task unit to inspectfactories in Bangkok and nearbyprovinces. 144 of the 244 factories in-spected had ignored the law by notproviding adequate fire escapes orfire alarms. This is 60% of all opera-tions. Only factories with more than100 workers and with buildingshigher than three storeys had beeni nspected.

21 The Government inquirypointed out that accidents in facto-ries increased at the rate of 20% to

30% per year while industry grew atthe rate of only 12% to 15% per year.According to the Thai Governmentfigures, there were some 37,000 occu-pational injuries and illnesses in1987, increasing to 50,000 in 1988.For 1991, the inquiry reported

125,000 accidents. The 1992 figure ex-ceeded 150,000. At this rate of in-crease, accidents have probably ex-ceeded 200,000 by now. Adding inunreported accidents, an estimated5,000 workers die in Thailand work-place accidents per year.

KADER AND THAILAND TRADE UNIONS

22 In 1990 in NakhonPrathom - the province where Kaderis situated - there were 7,583 largeand Small-scale firms, employingabout 52,736 workers. Trade unionsexisted in only seven factories, one ofthem at Kader. The Kader IndustrialTrade Union was registered with thegovernment in 1991. Before the fireonly 413 of the more than 3,000 or so,Kader workers had enrolled asmembers. This union formed part ofthe National Private EmployeesCongress, one of eight national tradeunion centres in Thailand.

23 Only ten workers areneeded to form an official tradeunion in Thailand. The governmenthas a system of "one-union, one-vote"to name delegates to the LabourCourt, the National Advisory anLabour Development and Wages andan the Enterprise Labour RelationsCommittee. Creating illegitimateunions to be elegible for nominationto these bodies is well known. Whenmixed in with legitimate unions, thetrade union scene in Thailand ismade up of small, fragmented, poorlyfinanced and often poorly managedunions. The Kader union was onesuch union.

24 The law does not protectworkers or union officers from em-ployer discrimination when organizing new unions. No official au-thorization is required for employersto lay-off or penalize workers orunion officers during an organizingperiod. Employers may imposepartial closing of a plant where unionmembers or officers are involved in agrievance dispute. Employers canpresent a list of counter grievances tocreate confusion and delay nego-tiations. They can, and often do, ha-rass union members and officers toleave the union, redering previousagreements void for lack of adequateunion membership.

25 There are severe restric-tions an the right to strike in the

country. Employers are free to lay offor dismiss workers who are an strikeand to hire new ones to replacethem. Non-union workers cannot jointhe union or participate in a unionafter a strike is called. It is also legalfor employers to dissolve, move, re-name or temporarily close a factoryand then selectively dismiss tradeunionists. There is wide scope in thelaw for the Labour Minister to preventor stop strikes if he deems themharmful to the economy, a danger tosocial peace, national security orpublic morale.

26 A strike is legal only if thenumber of positive votes for the strikemake up at least 50% of the totalregistered members of the union (asopposed to 50% of the members ac-tually voting. This makes industrialaction impossible in larger compa-nies with scattered branch opera-tions. Workers cannot strike to Sup-port colleagues in the same sector.Wide sweeping powers are given tothe police to arrest and detain per-sons who jointly stage a so-calledillegal strike.

27 Trade union organizationscannot employ full time elected offi-cers as these must be full time employees in their own sector, severelyrestricting their ability to participatei n the activities of the union. Tradeunion officers must also submit de-tailed personal particulars to the gov-ernment to keep their positions. Theycan be disqualified by the govern-ment for even minor irregularities.When convicted of legal violations,union officers cannot resume theirpositions until after one full year.They can be suspended or unfairlydismissed. Loopholes give manage-ment the prerogative to begin lengthycourt proceedings over many issuesincluding grievances.

28 Another major restrictionto association are the limits imposedby legislation an the use of outsideresource people (or advisors, as they

are called) in the functioning of theunion, including in the collective bar-gaining process. Such advisors mustmeet government qualifications toobtain a licence to work for tradeunions. Assistance from such advi-sors (e.g. a negotiator from a nationalunion or from a more experiencedState Enterprise Union) is severelyregulated and punishable by up to ayear's imprisonment for violations.The law also limits the number ofsuch advisors for a union to two.Outside union bodies, such as inter-national trade union organizations ar-ranging conferences, seminars oreducational activities in Thailandmust obtain permits and allow obser-vation of these events by the authori-ties. Finally, regulations make it im-possible for workers to communicatewith one another. Document distri-bution inside the workplace is forbid-den. Permission is needed to useworkplace bulletin boards. It is not al-lowed to organize meetings an com-

pany property and workers can be re-fused permission to enter the plantbefore or after work.

29 Until the 1991 militarycoup, union strength in Thailand wasconcentrated in the state enterprisesector, which accounted for half ofthe labour movement's membershipand the largest and strongest unions.37 trade unions were dissolveddenying membership to over 200,000workers. The military amended legis-lation and imposed new limitationsan unions.

30 The limits to trade unionsin public enterprises served to de-stroy solidarity action among stateand private sector workers. Sincethen the labour movement's bargain-i ng power and growth was sharplylimited paving the way for the rapidand smooth privatization of state en-terprises ensuring absolute manage-ment control.

LABOUR LEADER DISAPPEARS: ILO - STANDARDS IN THAILAND

I n June 1991, the then Presidentof the LCT, Mr. ThanongPhodhi-an, disappeared during aplanned trip to Geneva where hewas to raise the issue ofThailand's labour violations withthe ILO.

Thailand has been a member of the ILO Since 1919 but hasnot ratified the Convention an Freedom of Association(Convention No. 87) or the the Convention an the Right toOrganize (Convention No. 98). Thailand has ratified onlyeleven of about 175 Conventions adopted by theInternational Labour Organization.

In Thailand Tade unions had initially been dissolved in1958. Recognition of the freedom of association did not

come until 1972-76 following much worker unrest, forcingthe government to create minimum structures to handlegrievances. In 1972 so-called "worker associations" becamethe basis of the countries industrial relations. Three yearsl ater a new Labour Relations Act (LRA) created the provi-sion for trade unions, federations and congresses.

In the last week of February 1991 the military staged a couptoppling the democratically elected government of PrimeMinister Chatrichai Choonhavan. The LRA was subse-quently amended in 1991 to prohibit government workers,household workers and agricultural workers from formingunions.

Public sector workers belonged to the Labour Congress ofThailand (LCT), one of the most active opponents of themilitary's interference with the country's labour relations.I n June 1991, the then President of the LCT, Mr. Thanong

Phodhi-an, disappeared during a planned trip to Genevawhere he was to raise the issue of Thailand's labour viola-tions with the ILO. He is still missing, to this day.

I n May 1991, the ICFTU with a number of ITSs filed a corn-plaint wich the ILO citing Thailand's violation of freedom ofassociation. Six months later the ILO issued a strong criti -cism of Thailand urging that it rescind its legislation restrict-i ng workers' freedom of association and to organize.

In the United States, the AFL-CIO filed a petition with the USTrade Representative in October 1991 to remove Thailand'sGeneralized System of Preferences (GSP) for violation ofworkers' rights. See the U.S. case study in section K. of thisreport for more information an the GSP

I n June 1992 the GSP subcommittee decided to extend itsreview of workers' rights for 6 months to allow the govern-ment to review arid modify labour policies and bring thesei nto conformity with international standards. There was ahope that labour relations would take an about turn in 1992when a massive uprising followed a dramatic series ofevents in Thailand forcing the military regime to call elec-tions. In September 1992 a democratically elected coalitiongovernment came to power. However, promises by the newPrime Minister during the election campaign to reform in-dustrial relations have yet to materialize.

ENFORCEMENT TANGO:THE THAI GOVERNMENT'S ROLE

31 The Thai Government firei nquiry concluded that Kader hadviolated safety laws "... with the connivance of Government Officials".This helps understand why theGovernment so quickly laid chargesagainst a worker after the police beathim to confess that he had smoked acigarette just before the fire. Onlyafter one full year of national and in-ternational pressure did Thailand fi-nally lay charges against a factoryengineer and three board members.

To date, Kader Industrial (Thailand)Co. Ltd. has not been charged as acorporate entity for the fire.

32 Kader has built a newfactory since the fire. The new facilityis in the northeast province ofNakhom Raschasima under thename "Shougand Concord Grand(Group) Limited." Thailand officialsadmitted to having no prior knowl-edge of the company's plans to builda plant there and had not authorized

its construction. The ThailandGovernment has turned a blind eyeto this important violation. Manyother violations have been ignored.

33 Section F of this report re-viewed the rising accident rates inThailand and how 60% of large companies in Bankok are still in violationof safety standards for fire prevention.Improperly enforced standards allowfor violations to go unheaded inmany sectors of industrial activity, notjust in health and safety. Of 32,228plants reported in 1992, 23,065 werei n violation of employment standardscovering working hours, days off,over-time, and physical amenities.This is 71% of all operations in-spected that did not operate withinthe law. These figures include prop-erly licensed operations only. TheGovernment of Thailand is not en-forcing its own standards.

I ) BUILDING SAFETY: THE KADERFACTORY

34 Separate government de-partments approved conflictingbuilding plans submitted by Kader.Under the Building Control Act thecompany was given permission toconstruct three sets of stairs. Yet only

two Sets of stairs were built to con-form with plans approved under theFactories Act. Similarly, under theFactories Act, Kader built walkwaysbridging the floors of each building.No such walkways were shown inplans approved under the BuildingControl Act. The law also specifiesthat for the number of workers atKader, the stairways used as fire es-capes should have been from 5 to 10m. wide, not 1.5 m. as was the case.

35 Caged assembly freightelevators speeded up the verticalspreading of the fire. This and thelack of adequate horizontal and verti-cal fire separations were importantfactors in the Kader incident.Examination of the Plans submittedto the government under the FactoryAct also Shows that the Kaderbuildings should have been con-structed with reinforced concrete,not non-insulated steel. This wouldhave prevented the buildings fromcollapsing onto escaping victims.

36 A published report by theNational Fire Protection Associationpointed out eight major flaws (seeAppendix I) in the company'sbuilding construction or design thatcould have prevented the high level

A subcommittee of thegovernment inquiry an

the Kader incident found thatthe main problem rests with

the lack of enforcement ofestablished standards.

of fatalities. None of these had beenincorporated by the company in itsplans to construct its buildings. Thereport concluded:

"Among the fire protectionprinciples that have received at-tention because of the Kader fire arethe need for properly designed, in-stalled, and maintained automaticfire detection and fire suppressionsystems; proper exit design (in-cluding an adequate number of prop-erly sized and arranged exits); properconstruction of fire separations andstructural integrity; and the need foroccupant fire safety training"

37 Government documentsShow that the company also operateda factory without obtaining a localofficer's factory construction certifi-cate as was required by law. One gov-ernment inquiry subcommittee re-ported that the local authoritieswhich review company plans and is-sue permits are unable to scrutinizecompany proposals seriously be-cause they lack qualified engineersand staff. The Thai government wastherefore unable to properly regulatethis toy operator. Kader was allowedto build an unsafe factory.

II ) HEALTH AND SAFETY: THEKADER WORKERS

38 The unchecked factoryaccidents and the number of workerskilled or injured over the years atKader displays this company's disre-gard for the health and safety of itsworkers.

39 The government inquiryreported that "...working conditionsat the plant were severe and depressing". It was difficult to get permissionto leave the factory if workers gotsick. Workers often preferred a paycut to the shouting and harassmentthey got from management whenasking for things. Surviving workerstold of drinking tap water from bath-room sinks.

40 Lint, fabric, dust andanimal hair filled the air an the pro-

duction floor. Flammable materialswere ubiquitous in the plant. Noise,heat congestion and fumes from vari-ous sources were reported by manyDust control was nonexistent; pro-tective equipment inadequate.Inhaling the dust created respiratoryproblems and contact with it causedskin diseases. The factory's clinicwould provide drugs (eg. chlopheni-ramine, antihistamine or antipyretics)to alleviate symptoms. Serious caseswere referred to outside clinics orhospitals. Workers paid for medica-tion themselves and were reimbursedfor receipts in amounts up to 150 baht(US$ 6.00), and only if they had paid10 baht per month into a companyfund for this purpose.

41 Kader did not havequalified health and safety officers ansite and did not have proper trainingor education programmes for itsworkers in the plant. Kader did notperform regular fire drills for emer-gencies.

42 There is a faily developedbody of Health and Safety legislationand standards in Thailand. There areover 40 pieces of legislation or regula-tions an safety, occupational diseases,i njuries and illnesses. Hazardsand dangerous products, includingharmful chemicals are also regulated.Other regulations protect publichealth and safety. There is protectionfor children and women workers andfor workers in specific occupationswhile handling equipment in differentsituations or conditions.

43 A subcommittee of thegovernment inquiry an the Kaderincident found that the main problemrests with the lack of enforcement ofestablished standards. It concluded:

"There are not enough offi-cials for inspection of businesspremises. The Welfare and LabourProtection Department has only 36workers, the Industrial Works Depart-ment has only 20 workers but theyhave to do safety inspections of200,000 business premises in thecentral and provincial regions.

"Many inspection officers andtheir superiors lack knowledge ofscience, engineering and safety techniques. Many high-level officials areunskilled in safety inspection.Lacking understanding of safety in-spection, the whole team produces apoor performance.

"The existing procedures areout of date. They cannot solve prob-l ems.

," High-level officials in the

central and provincial regions usuallyrelent in law enforcement. As a result, the number of occupational in-j uries increase at the rate of 20-30%every year - especially in the provin-cial area. The delay in legal proceed-ings also makes the law ineffective."

44 Thailand's Health andSafety Association reported that only20 out of 100,000 infractions in oneyear actually reached the courts forreview. Kader was, therefore, al-lowed to run an unhealthy and un-safe factory.

III) MINIMUM WALES AND WORKSCHEDULES AT KADER

45 Currently, the minimumwage for the Bangkok area ofThailand is 135 baht (US$ 5.52) perday To not receive the minimumwage means that workers must workmore hours per day to earn enoughfor thier basic survival. Lower wagesobliges workers to take an moreovertime or extra outside work. In-creasing the workload means workefficiency decreases and accidentsbecome more frequent. Workers per-ceived as too accident-prone areoften let go and replaced by others -l ess tired, unemployed workers.Adherence to minimum wage stan-dards, therefore, is of direct rele-vence to factory accidents.

46 At the time of the fire thedaily minimum wage was 125 baht(US$ 5.00) per day for Bangkok andsurrounding areas.

47 Kader workers inter-viewed at the hospital after the fire

stated that there were only about 100workers hired as "employees" underThai legislation. These were the Of-fice and administrative personnel.Most of the remaining workers wereall contract workers. As contract em-ployees each had to sign an as pro-bationary workers for three monthsat a salary of between 60 to 70 baht(US$ 2.40 to 2.80). After the firstthree month contract these contractworkers would sign another employ-ment contract extending as long as ayear and usually paying from 80 to90 baht (US$ 3.20 to 3.60) per day.Eventually this wage might go up to100 baht (US$ 4.00) per day. Manyworkers had been there for as longas two years without receiving the le-gal minimum wage. Officials of theDepartment of Labour were asked ifthe practice to pay contract workersless than the minimum wage wouldbe allowed to continue. They con-firmed that after the military came topower, the government had adopteda policy not to interfere in employee-employer contracts as long as theworkers agreed in writing. Althoughprevious legislation set a limit of 120days for a temporary contract, thispractice was allowed to continue in-definitely without government in-terference. Only the workers whohad been with the company for sev-eral years actually received the mini-mum wage.

48 Similar restrictions applyto students engaged as part-timeworkers. Many of these were at ornear the minimum age of 13 years.Several injured workers told theBangkok Post that Kader had em-ployed about a hundred students aspart-time workers during summer va-cation. They were told part-timeworkers were not entitled to anysocial benefits or even the minimumwage. The firm usually employedstudents during the vacations.Further, the Labour Welfare andProtection Department said if theworkers are employed as part-timestudent workers for job training, itwas unable to take action againstthe company for injuries and com-pensation.

Currently, the minimum wage forthe Bangkok area of Thailand is135 baht (US$ 5.52) per day.

49 Kader also generated sav-i ngs by taking advantage of cheap anovertime work. Regular workinghours were from 08:00 - 17:00 hours.(i.e. 9 hours per day). When the com-pany was inundated with orders, theworkers would work overtime until22:00 hours to 23:00 or even until05:00 an the following day. Kaderwould pay 21 baht (US$ 0.84) perhour more than the regular pay. Oneof the government departments re-ported to the fire inquiry and pointedout that Kader's extensive use of shift

work created unsafe conditionswhich increased the likelihood ofworkplace accidents. In practice,workers at Kader had no alternativebut to work overtime because regularincome from normal work hours didnot cover the cost of living. Also,workers said the supervisors oftenfixed a target for daily work, and paywas deducted if quotas were not met.Therefore, Kader was responsible forworkplace conditions which in-creased the likelihood of fires andaccidents to happen in the first place.

KADER : THE ASIAN CONTEXT

I ) KADER HISTORY IN THAILAND

50 The Kader IndustrialCompany typifies the newly emergedindustrial production capital in Asia.The company was founded by TingXiong-zhao, a Chinese industrialistwho established himself in Shanghaiin the 1920's and 1930's with severalcompanies manufacturing batteries

and light bulbs. Ting fled to HongKong in 1949 after the ChineseCommunists seized power. In HongKong, Kader subsequently madelarge profits manufacturing plasticgoods and torch-lights for the US mili-tary. In 1954 Kader began to produceplastic toys for the US and Europeanmarkets.

Infrastructure improvements inChina coupled with low minimum

wages seem to be the maindetermining factors in staying in

Thailand or moving to China.

51 From the 1960's, the Tingfamily began to concentrate an toymanufacturing. Dennis Ting He-shaoand Kenneth Ting Wu-shao, the elderand younger sons of Ting Xiong-zhao,followed their father in building theKader 'toy empire'. Presently, DennisTing (otherwise known as the "Kingof Toys") is the chair of most Kader-controlled companies and KennethTing the managing director. Thefamily business has also diversifiedi nto areas including property de-velopment and trading. There arenow more than a dozen companiescontrolled by the Ting family, such asKader industrial Co. Ltd., KCP Toys,KCP Packaging, Kader Holding,Bachmann and Lyre TerraceDevelopment.

I ndustries makes toys in the Thaiplant for some of the biggest namesin the U.S. Toy industry: Arco, Kenner,Gund, J.C. Penney, Hasbro, Toys-R-Us,Fisher-Price and Tyco. The factoryalso produced stuffed dolls, clothslippers and Souvenirs for theEuropean Union as well. Kader, thebiggest contract toy maker in Asia,employs 10,000 people in eightcountries. Its shares are traded an theHong Kong stock exchange.

53 Kader I ndustrial(Thailand) Co, Ltd. began manufac-turing in 1988. and Set up the ThaiChui-fu Holding as a publicly listedcompany in 1990 with 20% sharestraded in Thailand's stock market.

52 U.S. Customs Service doc-uments show that Hong Kong Kader

54 In Thailand, Kader was Setup as a foreign joint venture with the

TOY INVESTORS IN TRANSITION

A Hong Kong Case Study

Kader's and the CP Group's investments in both Thailandand China reflect the changing patterns in toy investments.

A few years ago, a Thai business magazine featured an arti-cle about the increasing tendency of toy manufacturers tomove their operations from Thailand to China. The articlecited the Big Fair'Toys (Thailand) company as an example.This company produced battery-operated remote con-trolled toy Cars as well as Lego-like toy products calledTandem. It bad initially moved its operations to ThailandfromHong Kong. "We were earning about baht 60 millionper annum during the first year that we Set up here",General Manager Mr. Phakarat Vishudumark was quoted assaylng. He Said that setting up with the government's helpmade it a good initial investment compared to staying inHong Kong.

During dhe middle to late 1980's, Thailand's economicgrowth rate was at a steady 10% and it was considered idealfor investments into manufacturing, including toys. At thatti me the minimum wage was about 10 baht per day andtaxes and costs of primary materials were at an all time low.However, the toy investment situation was changing. With arise in labour costs coupled with stiff competition fromlarge companies, the first year profitability deteriorated andthe company moved its whole operation, lock stock andbarrel to China. Other operators followed similar patterns.

I n 1990 the Hong Kong Government's Industry Department

twice conducted a survey of 976 manufacturing industriesto study investment patterns in 14 sectors, including the toysector. 214 Hong Hong toy operators formed part of theoverall survey. 50.9% of them already had opened up someproduction facilities outside Hong Kong. Following photo-graphic goods, toy companies, more than any other sector,were in the process of expanding outside Hong Kong.21.5% of toy manufacturers anticipated phasing out theiroperations in Hong Kong and 99% of these anticipated mov-i ng to Guangdong in China. Eleven per Cent anticipatedstaying in Hong Kong as well as expanding operations inGuangdong. Of those surveyed, very few planned to ex-pand in Thailand.

Similar changes had occurred in other manufacturingsectors but changes in toys were highest along with elec-tronics. Among 532 respondents from all manufacturingsectors with established facilities outside Hong Kong, 92%had Set up in China and 84% in Guangdong Province.

Decisions to leave Thailand, however, are tempered by thepoor quality infrastructure in China. Despite the prospectfor cheap labour in China, other companies, like Kader,have also stayed in Thailand. Thailand has more reliableinfrastructure and more skilled labour. Of twenty possibleinvestment factors, 84% of 191 responding companies (inthe Hong Kong survey) chose infrastructure as the secondmost important (after labour costs). Therefore, infrastruc-ture improvements in China coupled with low minimumwages seem to be the main determining factors in stayingi n Thailand or moving to China.

CP (Charoen Pokphand) Group,owned by the well known Chiara-vanont family in Thailand. CP is oneof the largest southeast Asian con-glomerates, known for large-scaleagribusinesses and is currently ex-panding in many other fields of op-eration, including in China.

55 The Thailand based CPGroup, has in turn created a com-pany in Hong Kong known as HonboInvestment. Honbo Investment andKader industrial then formed anothercompany, KCP Toys, also in HongKong.

II ) KADER AND THE CP GROUPIN CHINA

56 In the early 1980's whenChina developed a special economiczone in Shekou an the Pearl Riverdelta, Kader was the first to establisha production plant there. Dennis Tingthus came to be known as 'the firstHong Kong businessman in Shekou'.The search for cheap labour tominimize production costs has beenthe main reason for the migration ofHong Kong industries to SouthernChina.

57 Kader has two factories inthe special economic zones of China.A few years ago, Business Week featured one of these plants and showedhow its employees (some of them un-der age) worked 14 hours a day,seven days a week, to meet contractdeadlines from US toy companies forspecial Christmas orders of MickeyMouse and other dolls. Its toy factory

in Shekou was the first Hong Kong In-vestment in that area. In Shekou, fa-cilities are old and run-down. In June1993, the workers went an strike withthe support of the ACFTU (All ChinaFederation of Trade Unions) branchof Shekou City over poor food andworking conditions.

58 Since 1990 two fires havebeen reported at Kader's second fac-tory in Dongguan. About 4,000workers earn close to Rmb 120 (US$20.) per month. Workers have re-ported crowded, dark, dirty and un-healthy living conditions.

59 In 1993 Asia Week maga-zine listed the Charoen Pokphangroup (CP) companies as the 12thlargest investor in Thailand. The com-pany is vertically and horizontally in-tegrated in numerous other opera-tions (feedmills, farms, motorcycles,real estate and food franchises) inseveral Asian countries. According tothe Far Eastern Economic Review it isaggressively expanding operations inChina where it already ranks near thetop of the foreign investors' league.The company is planning to expandi n department stores, automobiles,oil refineries and petrochemicals. Itsjoint venture with Kader in Thailandappears to reflect a way of operatingand it continues to sign new joint-venture agreements at a furious pace.World-wide the CP group comprisesmore than 200 companies with totalrevenues of US$ 4 billion in 1992alone. Some of CP's Chinese venturesare also listed an the New York StockExchange.

The search for cheap labour tominimize production costs hasbeen the main reason for themigration of Hong Kongi ndustries to Southern China.

U.S. toy imports from China

alone totalled US$ 3.3 billion

in 1992. 40% of all toys sold in

the European Union come from

China.

CHINA: DOMINANT PLAYER IN WORLD TOYS

60 Coupled with poor healthand safety, cheap labour is the maindriving forte that has generated thisfast development in China Since theearly 1980's. Minimum wages inChina are about US$ 0.80 per daycompared to US$ 5.52 per day inThailand.

61 According to the ToyManufacturers of America, U.S. toyimports from China alone totalledUS$ 3.3 billion in 1992. 40% of all toyssold in the European Union comefrom China.

I ) ACCIDENTS AND INJURIES INCHINA

63 The Kader fire mirrors yetworse conditions within the bordersof China. Since 1991 only a few firesand accidents have been publicly re-ported in China. Some of these havebeen summarized in the adjoiningbox an conditions among joint ven-tures in China. 376 workers died inthese fires and 501 more were in-j ured. Yet this is but a small Pro-portion of the national death toll.Beijing reported, through the ChinaDaily, that about 15,000 people died

THAILAND EIRES MIRROR OTHERS AMONG JOINT VENTURES IN CHINA

- In 1991 there was a very serious fire in a Hong Kongowned raincoat factory in Dongguan, where about 80people died and about 50 were injured. Kader also has afactoy in Dongguan. Since 1990 two factory fires havebeen reported there.

- In 1993 a massive nitric acid blast shook a dangerousgoods depot in Shenzhen. 15 people were killed and 200injured at the Anmao Dangerous Goods Shipping &Storage Company. In August of that year a State Councilinvestigation team reported to the municipal governmentthat the fire-prevention work of the Public SecurityBureau which owned 20% of the operation was not up tostandard. It warned that water supply facilities were toopoor to fackle fires and that fire-fighting equipment wasi nadequate.

- On 25 November 1993 a blaze killed 26 people working ina fireworks factory in the northern province of Hebei.

- The next day an 26 November 1993 an explosion at achemical plant in China's central province of Hunankilled 61 people.

- Again in November 1993, another fire company ownedby a Hong Kong joint venture operating in southern "China killed 84 workers (almost all women) and injured42 more. The Zhili Handicrafts factory in Shenzhen was adeath trap - no fire alarms, no sprinkler systems, no firehoses and no fire escapes- just a single stairway lockeddoors, and windows covered with heavy wire mesh.News accounts referred to the factory as a locked tage.More than 400 people working for Zhili spent most of

their days in the theee-storey factory, sitting at machinesan its first and second floors, sewing stuffed toys forbetween 200 and 300 yuan a month. Most of its,employees were women' from Sichuan and Hunanprovinces, some as young as 16 who slept and ate in an L-shaped hostel building outside the factory. Stuffed toyswere being manufactured for export to Italy and Canaria.

- In November of the following week poisonous gaseskilled two workers and injured 19 others in a plastics andelectronics factory in Guangdong. Ventilators hadbroken down two days before the incident and had notbeen repaired.

- On 13 December 1993 a fire-in the Gaofu Textile Co. ofChina in Fuhzou province killed 60 factory workers,mostly women. Deafened with the noise of spinningtextile machines, workers an the thed floor of the factorysoldiered on, unaware that 60 were dying in their beds asfire swept the floor above. The Taiwanese company wasrun with staff an sweatshop assembly lines.

- On 11 June 1994 a fire in a Chinese shoe factory nearJiangmen killed 10 persons and injured 30 more.

- On 17 June 1994 a fire at another joint venture operationkilled 38 people and injured 160 more when a buildingcollapsed alter being gutted by a fire. This was at the YueSun Textile Factory, located in the Chinese QianshanI ndustrial Zone about eight kilometers north of theMacau border. The factory was owned by a Hong Kongmerchant and Shuhai Qianshan Industrial Company

in industrial accidents in 1992. Over20,000 died in 1993. Industrial acci-dents in the Special Economic Zonesare increasing at a rapid rate. InGuangdong alone the death rate isrising by an astonishing 62% per year.

63 The lack of health andsafety requirements reaps tremen-dous savings for foreign investors inChina. Following the Shenzhen toyfactory fire, mainland officialsadmitted that joint venture com-panies were completely ignoringsafety standards. Shortly after theGuangdong fire (described in adjoin-ing box) an article in the "ChinaDaily" lashed out at foreign investorsfor neglecting workers' rights andcompromising their safety. It quotedthe results of a survey of 30 foreign-owned enterprises in the cities of thatregion. Workers in over 4/5 of thecompanies surveyed were denied ba-sic workers' rights. Some had noestablished security precautions orpractices whatsoever. Explicitwarnings about potential problemsseem to have no effect either. For ex-ample, the owners of the Zhili factoryhad been warned 8 months prior toits fire that improvements to its firesafety measures were necessary.Provincial fire officials in Fuhzou hadtwice warned the Gaofu owners toi mprove safety conditions prior to its

December 1993 fire. However, thefactory fires sill happened, killing 144workers.

64 The shocking rise in work-place fatalities mirrors the stunningrise in China's economic growth.Hastily constructed factories ownedby Hong Kong and Taiwan businessesand staffed by young migrants fromChina's economic poorer areas, havemushroomed along the Chinesecoast. China says over six millionworkers are employed in some167,000 companies partly or whollyfinanced by foreign companies.

65 There seems to be littleprovision in China for compensationcosts for victims and families. Afterthe fire in the Guangdong factory,(described in the following box), sur-vivors were kept under guard in abarely equipped community hall, notbeing allowed to see family orfriends. Employees said they weretreated like prisoners and kept under24-hour police surveillance. Securitywas also very tight at the Shenzhenhospitals where the injured werekept. Chinese authorities have re-mained silent an compensation is-sues related to the victims or theirfamilies.

Production contracts with factory

owners form the hub of the toy

sales industry.

THE INTERNATIONAL TOY INDUSTRY:A WEB OF CONTRACTSI ) IMAGE MAKING: SETTING THESCENE

66 Toys are purchased forpeople of all ages but mostly by or forchildren, and are bought to symbolize a caring relationship. They areused as symbols to express some as-pect of a relationship with others,usually a parent, a grandparent, or aclose friend. Toys are made from im-ages designed to solicit memories orconvey powerful feelings of friend-ship, belonging, caring, love, and inti-macy.

67 Central to the toy industryare the licences for "images" out ofwhich toys are fashioned. An estimated 45% of all toy industry sales inthe world are of licenced products.80% of Hong Kong toy exports arecurrently produced through con-tracting in which brand-name com-panies give sole production rights tocertain manufacturers. This followssimilar patterns in the manufacturingof sports shoes and electrical appli-ances.

68 Toy images are often cre-ated and promoted for people in-vesting in cinema, television programmes, book publishing and car-toon production. The images are con-trolled and owned as registeredbrand names or through copyrightsand patent licensing. Because toy im-ages are also used to create feelingsabout other consumer commodities,broadcasting and advertising firmsalso have investments in licenses andpatents, as do companies involved inraffles, sweepstakes, carnivals andfairs.

II) TOY MAKING: CHEAPLABOUR FOR TOYS

69 At the other end of the"image" industry are the factoriesthat make the toys. In the course ofthis inquiry the countries most oftenmentioned as having facilities for toyproduction are the following: Hong

Kong, China, Thailand, Malaysia, thePhilippines, Brazil, Mexico, Taiwan,South Korea, Macao and Indonesia.Toy producers from these countriescompete for production contracts byout-performing others wherever pos-sible an production costs, deliveryschedules or product quality Factoryowners hire the workers to make thetoys. They might in turn sub-contractpart of the work to other companies.Many firms are joint venture opera-tions based in Hong Kong or in theAsian region. Toy production is char-acterized by large numbers of rela-tively small factories and workshops,few of them as big as the Kader enter-prise.

70 Kader had several agree-ments with international toy designand distribution conglomerates. Oneof its most well-known products is the' Cabbage Patch' doll invented byHasbro in 1983. The dolls were atremendous international marketingsuccess.

III) TOY MARKETING, SALESAND SAFETY: COME TO THEFAIR!

71 Production contracts withfactory owners form the hub of thetoy sales industry. Large buyers fromconsuming countries sign productioncontracts with factory owners speci-fying the details for the toys ordered,production timelines, paymentschedules and supplyer obligations.Thousands of companies are in-volved in the buying of toys, worldwide. However, in the course of thisinquiry the most frequently citedcompanies involved in this aspect ofthe toy industry are the following:Toys-R-Us, Hasbro, Mattel, Fisher-Price, Tyco, J.C. Penney, Arco, Kenner,and Gund.

72 Toys that are bought be-come the property of large whole-salers and retailers. Some of themhave distribution facilities of thierown. Others are connected to inde-

pendent sales outlets, retailing agen-cies or separate consumer outlets.Such outlets might be small dedi-cated toyshops, large-scale depart-ment stores or educational andhealth care institutions.

73 In the course of the ICFTUinquiry, the countries most frequentlycited as consumers of Asian toys arethe following: the United States andCanada, Germany, the EuropeanUnion, the United Kingdom, Japan,France, Spain, Australia, NewZealand and Italy

74 The main point of contactfor buyers and producers is at majortoy fairs throughout the world.Production contracts are initiated ornegotiated at toy fairs where large or-ders are placed to feed the majormarkets within consuming countries.

75 About 50 toy fairs ineleven countries were held in 1994.The most recent fair in New York wasa stunning illustration of the scope ofthe toy industry In a 300,000 square

foot (84,000 square metre) exhibitionhall, 22,000 buyers and 20,000 toymerchants from 93 countries Show,buy and sell toys in what is tagged as"the ultimate buying environment".

IV) THE ROLF OF INTER-NATIONAL TOY CONTRACTS

76 To exert more influence over as-pects of toy marketing and sales, thetendency of toy companies is toinvest in more than one aspect of theindustry at a time. For example, in1982 kader bought Bachmann indus-tries inc., a us toy-train designer anddistributor established in 1833. Bach-mann dominates a quarter of totaltoy train sales in the us. In 1989,Bachmann europe was set up to dis-tribute toy trains to the europeanmarket. In 1992, Kader also boughtout Lilliput, an Austrian model trainmanufacturing company. This kind ofinter-buying, inter-weaving amongcompanies is common at all levels ofthe toy industry.

However, in the course of this

i nquiry the most frequently cited

companies involved in this aspect

of the toy industry are the

following: Toys-R-Us, Hasbro,Mattel, Fisher-Price, Tyco, J.C.

Penney, Arco, Kenner, and Gund.

INDUSTRIALIZED COUNTRIES ENCOURAGE CHINA TOY IMPORTS

Case Study: United States Toy Imports

Consuming countries have comparable programmes to fa-cilitate the purchase of toys from Asia, including fromChina or Thailand. Decisions made in consuming coun-tries have a tremendous impact an decisions made by pro-duction managers in Hong Kong, Thailand or China.

In the course of the ICFTU mission references to the UnitedStates as a world importer of' Chinese toys occurred morefrequently than any other country.

In the United States, toys are subject to tariffs when im-ported into the United States, ranging from 12% for dolls,6.8% for other toys and from 3.9% - 4.6% for games. Thereare three groups of programmes that deal with importationof toys into the United States.

Where it can be shown that directly competitive toyproducts cannot be produced in significant commercialquantities within the United States, tovs may be entitled tounconditional duty free entry. Until January 1993, stuffeddolls, toy figures as well as skins used in their productionwere accorded this status. This represented a US$ 75million saving per year for American toy buyers. Currently,

a coaliton of toy companies is seeking to have this statusreinstated.

The second group of programmes allow toys, dolls andgames (as well as other merchandise) to be imported freeof duty They are the Generalized Systern of Preference(GSP) and Caribbean Basin Economic Recovery Initiative(CBI). Both exempt products manufactured in newly indus-trial countries if local content requirements can be met.The GSP however, has been the primary means of free entryfor toys, games and dolls from Mexico, Macao, Thailand,Malaysia, Indonesia and the Philippines. These countrieshave subsequently increased their shipments. Exports fromTaiwan, South Korea and Hong Kong have declined be-cause they have lost their GSP status since 1989.

Finally, the most significant development in recent years hasbeen the continued increase in shipments from Chinabecause of its eligibility as a "Most Favoured Nation"(MIN). Notwithstanding the fact that Chinese products arenot entitled to GSP free-entry status it continues to importtoys into the North American market that would normallybe assessed duty charges at a rate of 70%.

Finally, and perhaps of greatest

importance, is that the

contracting process operates

outside national boundaries and

is beyond the scope of national

regulation.

77 For large buyers like con-sumer wholesalers and retailers,however, it is not often desirable tohave direct investment interests inproduction factories. An arms-lengthapproach to factory production ispreferred, and control over it is in-stead exercised through the use pro-duction contracts.

78 Advantages are, first, thattoy buyers do not need to spendvaluable capital for facilities, mate-rials, infrastructure and skills.

79 Secondly, buyers steerclear of direct decision-making, awayfrom the responsibility (and liability)for accidents or for bad health andsafety practices. After the kader fire,many multinationals with whomkader had production contracts, pub-licly disavowed any responsibility for

the catastrophe and played no role incompensation settlements.

80 Finally, and perhaps ofgreatest importance, is that the con-tracting process operates outside national boundaries and is beyond thescope of national regulation.Inherently, this has the effect ofprompting countries like Thailand, tocreate a favorable climate for its toybuyers to get these production con-tracts. Becoming lax an enforcementis one way of doing this. Competitionamong countries due to the emer-gence of production contracts has re-sulted in the setting asside of healthand safety. Competition betweenThailand and China over the securityof local toy production was a con-tributing factor in the Kader fire inci-dent.

INTEGRATING THE COMMUNITY : TOYCONTRACTS WITH TENTACLES

81 In response to the interna-tional trends in competition,Thailand has Set up an aggressiveagency called the Board of Invest-ment and has established severalexport processing zones. It is man-dated to stimulate export-oriented in-dustry by providing direct investmentsupport, tax incentives and waiversan import taxes for machinery andraw materials. The new Kader plant issituated in such a zone.

82 The Board of investmenthas also established a series of pro-grammes to help investors with government bureaucracy or help identifylocal subcontracting opportunities topromote a domestic parts industry asopposed to "end-product" facilities. Avery ambitious programme was an-nounced in 1992 to expand the useof sub-contracting in all fields of ac-tivity of the manufacturing sector.

83 Other countries haveadopted similar policies and compa-rable programmes. It is not yet possible to fully asses the impact thesepolicies have an the toy industry. Sub-contracting first became popular fortoys in the Tate 1960's and early 70's.It was a well developed phenomenonby the early 1980's. In the course ofthe ICFTU inquiry, three differentforms of sub-contracting was evident.

I) PERSONAL EMPLOYMENTCONTRACTS

84 In section H(iii) of this re-port there is a discussion about howKader was able to pay less than theminimum wage by signing individualcontracts with some of its employees.Personal contracts are widespread inthe industry and can serve many pur-poses. Different names are used torefer to them but all are alike in thatthey centre around an agreement be-tween the employer and an individ-ual worker. Not all employment con-tracts are used for sub-contracting.Employees who agree to bring work

home from a factory, for example,after a day's work are frequently cov-ered by personal contracts.

II) INDIVIDUAL SUB-CONTRACT-ING

85 In the adjoining box thereis a Philippine case study in which atoy company has sub-contractedwork to one of its own workers who,in turn, hired family and communitymembers to do piece work. In thePhilippine case, the worker even-tually became an independant sub-contractor and hired hundreds ofworkers in the community. So per-vasive has this practice been that asearly as 1982 the ILO and UNDP pub -lished a booklet entitled, "Soft Toys -a Small Scale Business". It waswritten to promote Small-scale de-velopment projects in the SouthPacific region.

86 The subject of the bookletreflects how important sub-con-tracting had already become for thetoy industry. It Shows how to Set up asmall business of hand and machine-made soft toys. It is highly visual, andmade to measure for a would-be sub-contractor, willing to service smallbuyers or large factories.

III ) SUB-CONTRACTING TOOTHER FIRMS:

87 As mentioned earlier,Kader is one of the largest toy facto-ries in Thailand. Toy production ismostly composed of many smallerfirms and workshops. A web of sub-contracting goes an among many ofthese small operations. However con-tracts from larger firms tend to createcompetition among smaller firms. Asub-contracted firm may, in turn, sub-contract part of its work to a yetsmaller firm which would competefor the work with many other firms itsown size. The tendency to competeover toy prices among factory own-ers, pushes toy production deeperinto the sub-contracting web and into

A very ambitious programme wasannounced in 1992 to expand theuse of sub-contracting in all fieldsof activity of the manufacturingsector.

The sub-contracting process has

the potential for wide-scale

abuses.

the realm of unregulated activity. Thesub-contracting process has the po-tential for wide-scale abuses. There islittle control over operators not au-thorized by the law Section M of this

report describes how sub-contractingin toys encourages the formation ofsweatshops which would primarilyuse children or women as the sourceof cheap labour.

SUB-CONTRACTING INTO THE FAMILY AND THE COMMUNITY

A Philippine Case Study

The signing of a production contract offered by a major toybuyer creates the potential for factory owners to engage invarious forms of sub-contracting as a means of circumvent-i ng a country's minimum employment standards. This case

study is an example of how sub-contracting can serve thispurpose. It is a description of a toy manufacturer in thePhilippines and was reported in a 1990 joint study by theILO and the Labour Employment Department in Manila.Over US$ 250 million of toys are produced in thePhilippines per year. In all, twelve toy exporters using sub-

contracting in the Philippines were studied. Most werePhilipino-owned and some were joint venture operations in-volving multinationals. The stuffed toys and novelty itemsthey produced were sold in the United States, Canada,Japan, Australia, New Zealand, Italy and Germany.

The toy companies being studied reported that sub-con-tracting had became necessary to meet quota demandswithin the time specified in their production contracts.They ranged in size from 25 to 250 employees and mostlyemployed women.

One toy company studied:

One company with 100 employees was picked for more de-tailed study in the Manila area. It produced stuffed toys

and dolls.

I n this company the first stage of the production processstarted with sample-making. Initial samples of toys weresent abroad to prospective client's or were prepared fortrade fairs and subsequently modified. They were thenproduced (i.e. handpainted, silk-printed, assembled or tut)according to client's specifications and were sent back to

them for approval. Orders were then confirmed and hun-dreds of pieces of each sample item were made andshipped for market testing. If a high demand was forecast,

hundreds of thousands of orders for each item were thenplaced. Counter samples were made according to thespecifications stipulated by the dient and the two parties

agreed an the terms and conditions of a productionschedule and payment details.

The periodic surge of large orders meant the company wasoften unable to tope due to sudden shortages of labour,machines, space and the resulting shortage of cash to meetshipment deadlines. At first, extra casual workers werehired and overtime work was necessary. However, eventu-ally factory workers were encouraged to bring home addi-

tional work. Some workers in turn farmed out the work tofamily members, relatives, friends and neighbours withinthe vicinity of the company

For large operations, the report described how the producermight, instead, seek to find a sub-contracting firm to help in

the production of the toys ordered. However, in this case,the factory sub-contracted its own workers for the sewing,finishing and packaging of the toys. Whereas regularworkers were paid the minimum wage, sub-contract workwas paid per piece. Some of the recruited workers were re-ferred to as "co-participants" and became involved in so-

called livelihood community-based programmes. Theseprogrammes were initially financed by the company andwere set up to hire housewives, out-of-school youths andunemployed workers. One of the sub-contracod workersdescribed, was a church volunteer who organized domesticoutworkers from local religious organizations, as well asparishioners and out-of-school youths.

The company did all the cutting and provided all thematerials and some of the machines. Although individualworkers continued to bring work home and farm it out,others became more adventurous. Management paid tworegular workers, turned sub-contractors, 80% of the con-tracted price per unit item plus 30%-40% over the directlabour costs. These employees eventually resigned fromtheir jobs and became full time sub-contractors employinghundreds of workers within the community,

The stated company advantages of operating in this waywere to yield savings an overhead costs, savings an benefitpayments to temporary workers (retirement pay and the

like) and savings an the tost of minimum wages and ben-efits by needing fewer regularworkers.

CONTRACTING TO SWEATSHOPS:CHILD-FEMALE GHETTOS

88 In the Kader fire 174women died, many of them around13 years of age. Most of the fires earlier reported in China were in sweat-shops where young female workersdied or were injured. The case studyin the Philippines, Shows that themain purpose of community sub-con-tracting in toys is to take advantage ofyoung female workers to do piecework.

89 In Thailand the conditionsfor sub-contracting are ripe for thetoy industry. It is no longer limited totraditional areas such as cleaning,j anitoring, security, driving vehicles,courier delivery, or in after-sale ser-vices. It has already fanned out to themanufacturing of products. Largenumbers of young girls are nowworking in sub-contracting activitiesi n the manufacture of ready madegarments, leather products, shoes,and jewellry. They are located inrented shophouses off or near themain roads in the sprawling suburbsas well as in deserted inner locationsof the cities. Sewing machines op-erate from 8.00 am to 10.00 p.m. andworkers are hired for 2 consecutiveshifts or for one shift plus cheap over-time. Shift workers sleep in crowdedl odgings an the top floor of shop-houses. Food is usually provided withno benefits. Wages are whatever theworker accepts. Unemployed peoplefrom the countryside or immigrantsfrom other countries become willingvictims to operations run by theslave-driving mentality of gangbosses.

90 Central to the devel-opment of sweatshops is their rela-tionship to the minimum wage in anygiven country. In Thailand the mini-mum wage is not applicable to about50% of Thai workers. Due to impor-tant changes going an in the agricul-tural sector, there are currentlymassive migrations of populationsfrom these communities into urbancentres. Thousands of people arrivein Bangkok each week from the im-

poverished rural north to meet theseemingly insatiable demand for un-skilled workers at any one of thethousands of labour-intensive fac-tories situated there.

91 Similar migration patternshave been reported in other Asiancountries, including China. Toy production in China is already a well-es-tablished activity in sweatshop firms.Much foreign investment in Chinesemanufacturing finds its way into amyriad of small make-shift plants, setup by the local authorities or privateowners in China through layers ofsub-contracting for the export mar-ket. An estimated 3 million migrantworkers are engaged by Hong Kongcapital along the Pearl River Delta inthe southern province of Guangdongto manufacture shoes, garments, toysand electronic goods for export tothe West and the world's market.

92 Nearly all of these migrantworkers, mostly young rural womenfrom the poorer provinces such asHunan and Sichuan, are employedunder short-term contracts. There arefew rights and little welfare offered tothe workers in these sweatshops.Knowing that most of the migrantworkers are ill-informed, compliantand unprotected, the "mingong" aretreated like slave labour. Workers livein overcrowded dormitories and eatmeagre meals. Seven days a weekand 14 hours of work per day is thenorm. The factory management oftenretains people's wages. Horror storiesabound, such as women workers notbeing allowed to go to the toilet andsubject to body searches.Disobedient workers are frequentlybeaten by managers, sometimes withelectric batons. Workers are oftenlocked in at night in crowded andbare dormitories. Health and safetyprotection is practically non-existent.

Toy production in China is al-ready a weil-established activityi n sweatshop firms.

Everyone involved in producingand marketing toys must take

responsibility.

CONCLUDING DISCUSSION: FROM THE ASHES

93 The Kader fire shouldnever have happened. Making toysfor children must not continue to depend an the burning, suffering anddying of young women workers.

94 Steps must be taken to pre-vent similar fires or accidents inThailand and elsewhere. Everyone involved in producing and marketingtoys must take responsibility.

95 The Kader company andits partners must assume the most di-rect responsibility and be held accountable for the outcome of the 10May events. The practice of this toymaker to set aside safety standardsfor the production of lower pricedtoys must be stopped as it must fortoy makers in all producing coun-tries.

96 The toy "image" makers,the giant toy companies and thel arge retailers within consumingcountries must be made to assumeequal responsibilities for factory firesand accidents. Toy buyers should beencouraged to adopt codes ofpractice, setting minimum standardsfor toy production and be imple-

mented through the production con-tracts with factory owners.

97 Thailand must also assumeits responsibilities as must theGovernments of all producingcountries. Proper standards and ef-fective monitoring of the toy industrymust be ensured as must the enforce-ment of regulations (with appropriatepenalties) through proper judicialprocesses.

98 Given the intensely com-petitive market for toys there is a dan-ger that progress in improvingworking conditions in one countrywill be undermined by a flight of pro-duction to others where workers'basic rights at the workplace areabused. The key to progress is uni-versal acceptance that workers musthave the right to organize and bar-gain collectively and also that dis-crimination in employment andforced labour are outlawed. Childlabour should also be progressivelyeliminated starting with the mostdangerous and exploitative indus-tries. Without these basic workers'rights safety legislation will remain

PUBLIC AWARENESS - WORKING CONDITIONS IN THE TOY INDUSTRY

The conclusions of the ICFTU mission to Thailand are rel-evant to the implementation of ICFTU policy. This would in-clude the two resolutions an the toy industry and an Chinathat were adopted by the ICFTU Executive Board at its 104thmeeting (see Appendix 1V).

The resolution an the toy industry, called "...upon the ICFTUto conduct educational campaigns designed to raise publicawareness about the working conditions associated withproducing toys, and to direct pressure, including selectiveboycotts, in the toy industry to change its productionmethods in order to end the exploitation that it has created,uses and profits from..." This resolution also urged"...[ICFTU] affiliates and ITSs to fully participate in and Sup-

port these campaigns".

Among other actions, the resolution an China called uponthe ICFTU and its affiliates to "raise public awareness aboutthe working conditions associated with foreign-owned

export-oriented industries in developing countries and todirect pressure an these industries to change their produc-tion methods to end the exploitation that they have created,Lise and profit from."

Moreover, the 15th World Congress in its resolution an ChildLabour requested the Executive Board to intensify theI CFTU campaign to eliminate child labour by, among othermeans, "supporting specific campaigns including boycottsand community action, directed against goods producedby child labour"

Finally, in its statement an "Trade Union Organization andt he Challenge of Internationalization" the 15th WorldCongress called upon the ICFTU (through the ICFTU/ITSWorking Party an Multinational companies) "to developwith the ITS a framework for the effective co-ordination ofinternational action regarding transnational corporations.."

inadequate and unenforced. It is vitalthat new methods of cooperation beworked out between the Interna-tional Labour Organization (ILO) andthe General Agreement an Trade andTariffs (GATT) to ensure that basic in-ternational standards are observedand that no country is able to steal acompetetive edge through repres-sion, discrimination and gross ex-ploitation of workers.

99 Workers must play a rolei n the monitoring of production andmarketing activities of the toy industry and in bringing about changewith the cooperation of employers.Forming joint employee-employerhealth and safety plans must be en-couraged within toy production andworkers must be allowed to formunions and participate in decisionmaking. Toy producing countries likeThailand and China must agree to

ILO Conventions recognizing work-ers' freedom of association and theirright to organize.

100 Finally, consumers mustbe given the opportunity to buysafely produced toys and know theconditions under which they are cur-rently produced.

101 The ICFTU calls upon allthose in the toy industry and othersto join with the international tradeunion movement to work out a com-prehensive international strategy toensure that toys given to children arenot purchased at the price of miseryto the workers who make them. Wehope that this report will serve tohighlight not only the scale of theproblems uncovered by the Kaderdisaster, but also the way forward tomaking sure that such tragediesnever happen again.

Workers must play a role in themonitoring of production andmarketing activities of the toyi ndustry and in bringing aboutchange with the cooperation of

employers.

The Life Safety Code wasdeveloped after the 1911

Shirtwaist Company firein New York.

LIFE SAFETY CODES THAT PERTAIN TO THEKADER FIRECHAPTER 2: NFPA 101, LIFE SAFETY CODE, 1991 EDITION*

1 Every building or structureshall be so constructed, arranged,equipped, maintained, and operatedas to avoid undue danger to the livesand safety of its occupants from fire,smoke, fumes, or resulting panicduring the period of time reasonablynecessary for escape from thebuilding or structure or for that pe-riod of time needed to defend inplace in case of fire or other emer-gency

2 Every building or structureshall be provided with exits andother safeguards of kinds, numbers,locations, and capacities appropriateto the individual building orstructure, with due regard to the char-acter of the occupancy, the capa-bilities of the occupants, the numberof persons exposed, the fire protec-tion available, the height and type ofconstruction of the building orstructure, and other factors necessaryto provide all occupants with a rea-sonable degree of safety.

3 In every building orstructure, exits shall be so arrangedand maintained as to provide freeand unobstructed egress from allparts of the building or structure atall times when it is occupied.

4 Every exit shall be clearlyvisible, or the route to reach everyexit shall be conspicuously indicatedin such a manner that every occu-pant of every building or structurewho is physically and mentally capa-ble will readily know the direction ofescape from any point.

5 In every building orstructure of such size, arrangement,

or occupancy that a fire itself maynot provide adequate occupantwarning, firm alarm facilities shall beprovided where necessary to warnoccupants of the existence of fire.

6 Two means of egress, as aminimum, shall be provided in everybuilding or structure, section, andarea where their size, occupancy, andarrangement endanger occupants at-tempting to use a single means ofegress that is blocked by fire orsmoke. The two means of egress shallbe arranged to minimize the possi-bility that both may be rendered im-passable by the same fire or emer-gency condition.

7 Every vertical exit and othervertical opening between floors of abuilding shall be suitably enclosed orprotected, as necessary, to afford rea-sonable safety to occupants while us-ing exits and to prevent spread of fire,smoke, or fumes through verticalopenings from floor to floor beforeoccupants have entered exits.

* The Life Safety code has been de-veloped by the National FireProtection Association (U.S.) and hasbecome the main industry standardfor factory fire prevention in many in-dustrialized countries. The Life SafetyCode was developed after the 1911Shirtwaist Company fire in New York(see Appendix II).

TRIANGLE SHIRTWAIST COMPANY: 1911 FIREI N NEW YORK

1 On Saturday, 25 March, 1911a textile factory fire broke out an theeighth floor of the Triangle ShirtwaistCompany in New York killing 146workers. Until the Kader fire inThailand, the 1911 fire had remainedthe largest ever factory fire. It spreadrapidly to the other floors and manyworkers were unable to leave thebuilding, trapped and trampled byothers in crowded, narrow aisles andi mpassable exits.

2 Ladders to save workers didnot reach beyond six floors. Asflames drew closer, workers hurledthemselves out of the windows andonto the streets below. The capturingnets from the fire department toreunder the strain of falling bodies.Over a third of those killed had leaptto their death from the factory win-dows. The remaining workers suffo-cated or were burnt beyond recog-nition.

3 At the turn of the century,there was intensive textile manufac-

turing in the New York area. It wasnot until alter the 1911 factory firethat more stringent health and safetystandards were introduced.

4 The fire resulted in im-provements to factory standards forthe manufacturing of goods and textiles in a number of industrializedcountries. The factory standards inAppendix 1 of this report, alsooriginate from standards Set alter the1911 fire. However, the effect ofhigher standards there has also in-creased the cost of producing goodscompared to those produced insouth east Asia. Over the years a lotof the manufacturing sector hasmoved from industrialized countriesto places like Hong Kong, Korea,Thailand and the Philippines.

5 The Kader Fire Shows thatrelocating production facilities wheresafety standards and wages are lower,is still in practice today. The sameprocess that resulted in the relocationof manufacturers from industrialized

The Kader Fire Shows that

relocating production facilities

where safety staodards and

wages are lower, is still in practice

today.

countries to south east Asia since1911 is now unfolding again in thecurrent relocation of toy productionto China.

6 The 1911 New York fire is areminder that unless basic factorystandards are extended by allcountries progressively, there can beno long-lasting protection for healthand safety, anywhere. It will be impor-tant to establish mechanisms bywhich health and safety at work im-proves in line with the growth of pro-ductivity and exports and that cut-throat competition does not un-

dermine such progress. Interna-tionally recognized standards shouldencourage positive national actionsin factory fire prevention.

7 Most of the workers involvedi n the 1911 fire were young immi-grant women working in crowed andcluttered environments with oildripping onto wooden floors. Highlyinflammable fabrics were ubiquitousthroughout the factory and the airwas thick with lint. There was no fireprevention equipment or wereworkers trained in fire-fighting pre-cautions or emergency procedures.

CODES OF PRACTICE:THE LEVI STRAUSS & CO. EXAMPLE

1 There is a growing trendamong some transnational corpora-tions to develop and adopt codes ofpractice as a way of establishingpublic credibility for their corporatebehavior. To date such codes havemainly been adopted by US-basedcompanies in the textile and foot-wear sectors (Levi-Strauss, PhillipsVan Heusen, Nike, Reebok) and byl arge US-based retailers (JC Penny,Sears Roebuck and Co.), although atleast two European companies haverecently joined this trend (Danoneand IKEA).

2 It would, therefore, appearfeasible to develop such a code ofpractice for the toy industry and toenforce it through the issuance oftheir production contracts. As an ex-ample, the Code of Practice adoptedby Levi Stauss & Company is pro-vided here.

BUSINESS PARTNER TERMS OFENGAGEMENT AND GUIDELINESFOR COUNTRY SELECTION (1992)

3 Levi Strauss & Co. has aheritage of conducting business in amanner that reflects its values. As weexpand our sourcing base to morediverse cultures and countries, wemust take special care in selectingbusiness partners and countrieswhose practices are not incompatiblewith our values. Otherwise, oursourcing decisions have the potentialof undermining this heritage, dam-aging the image of our brands andthreatening our commercial success.

BUSINESS PARTNER TERMS OFENGAGEMENT

4 Our concerns include thepractices of individual business part-ners as well as the political and social issues in those countries wherewe might consider sourcing.

5 This defines Terms ofEngagement which addresses issues

that are substantially controllable byour individual business partners.

6 We have defined "businesspartners" as contractors and suppli-ers who provide labour and/ormaterial (including fabric, sundries,chemicals and/or stones) utilized inthe manufacture and finishing of ourproducts.

ENVIRONMENTALREQUIREMENTS

7 We will only do businesswith partners who share our commit-ment to the environment. (Note: Wei ntend this standard to be consistentwith the approved language of LeviStrauss & Co.'s Environmental ActionGroup.)

ETHICAL STANDARDS

8 We will seek to identify andutilize business partners who aspireas individuals and in the conduct oftheir business to a set of ethicalstandards not incompatible with ourown.

HEALTH & SAFETY

9 We will only utilize businesspartners who provide workers with asafe and healthy work environment.Business partners who provide resi-dential facilities for their workersmust provide safe and healthy fa-cilities.

LEGAL REQUIREMENTS

10 We expect our businesspartners to be law abiding as individ-uals and to comply with legal requirements relevant to the conductof their business.

EMPLOYMENTPRACTICES:

11 We will only do businesswith partners whose workers are in

all cases present voluntarily, not putat risk of physical harm, fairlycompensated, allowed the right offree association and not exploited inany way. In addition, the followingspecific guidelines will be followed.

a) Wages and Benefits

12 We will only do businesswith partners who provide wages andbenefits that comply with anyapplicable law or match the prevail-ing local manufacturing or finishingi ndustry practices. We will alsofavour business partners who shareour commitment to contribute to thebetterment of community conditions.

b) Working Hours

13 While permitting flexibilityin scheduling, we will identify pre-vailing local work hours and seekbusiness partners who do not exceedthem except for appropriatelycompensated overtime. While wefavour partners who utilize less thansixty-hour work weeks, we will notuse contractors who, an a regularlyscheduled basis, require in excess ofa sixty-hour week. Employees shouldbe allowed one day off in seven days.

c) Child Labour

14 Use of child labour is notpermissible. "Child" is defined as lessthan 14 years of age or younger thanthe compulsory age to be in school.We will not utilize partners who usechild labour in any of their facilities.We support the development of legit-i mate workplace apprenticeshipprogrammes for the educationalbenefit of young people.

d) Prison Labour/Forced Labour

15 We will not knowinglyutilize prison or forced labour in con-tracting or subcontracting relationships in the manufacture of ourproducts. We will not knowinglyutilize or purchase materials from abusiness partner utilizing prison orforced labour.

e) Discrimination

16 While we recognize andrespect cultural differences, we be-lieve that workers should be employed an the basis of their ability todo the job, rather than an the basis ofpersonal characteristics or beliefs.We will favour business partners whoshare this value.

f) Disciplinary Practices

17 We will not utilize businesspartners who use corporal pun-ishment or other forms of mental orphysical coercion.

GUIDELINES FOR COUNTRYSELECTION

18 The following countryselection criteria address issueswhich we believe are beyond theability of the individual business part-ner to control.

BRANDIMAGE

19 We will not initiate orrenew contractual relationships incountries where sourcing would havean adverse effect an our global brandimage.

HEALTH AND SAFETY

20 We will not initiate orrenew contractual relationships inlocations where there is evidencethat Company employees or repre-sentatives would be exposed tounreasonable risk.

HUMAN RIGHTS

21 We should not initiate orrenew contractual relationships incountries where there are pervasiveviolations of basic human rights.

LEGAL REQUIREMENTS

22 We will not initiate orrenew contractual relationships incountries where the legal environment creates unreasonable risk toour trademarks or to other important

commercial interests or seriouslyimpedes our ability to implementthese guidelines.

POLITICAL OR SOCIALSTABILITY

23 We will not initiate or renew con-tractual relationships in countrieswhere political or social turmoil unreasonably threatens our commerciali nterest.

I NTERNATIONAL CONFEDERATION OF FREETRADE UNIONS

EXECUTIVE BOARDBrussels, 1 - 3 December 1993

RESOLUTION ON EXPLOITATIONIN THE TOY INDUSTRY

The ICFTU Executive Board, meetingi n Brussels from 1 to 3 December1993:

RECALLING

the tragic fires at theKader toy factory in Thailand an 10May 1993 and the Zhili handicraftfactory in China an 20 November1993 which together claimed 369lives, made 300 injured and left 2,600unemployed, and

FURTHER RECALLING

that over200,000 factory fires and accidents,claiming approximately 5,000 liveswere reported in one year inThailand alone, and

CONSIDERING

that such fires arethe consequence of the failure ofgovernments to protect the healthand safety, as well as the rights, oftheir citizens in their efforts to attractforeign investment and generate ex-ports, and

NOTING

that the toy industry, andother similar industries, have takenadvantage of this international com-petition to organize their productionan the basis of competitive bids fromsub-contracts, such as Kader, that donot provide adequate wages and

working conditions, and with the co-operation of governments, such asChina, which allows the use of childlabour and prison labour and bansfree trade unions, and

FURTHER NOTING

that the toyindustry has created a system of ex-ploitation claiming women as amongits most numerous victims, and

RECALLING

the expressed con-cern of numerous trade union organi-zations about working conditionsand workplace environment in thetoy industry;

DEMANDS

that governments andemployers fully respect and im-plement minimum international-agreed standards for occupationalhealth and safety and the right to es-tablish and join free and independenttrade unions, and

CALLS UPON

the ICFTU to conducteducational campaigns designed toraise public awareness about theworking conditions associated withproducing toys, and to direct pressure,including selective boycotts, an thetoy industry to change its productionmethods in order to end the exploita-tion that it has created, uses andprofits from, and

URGES

its affiliates and ITSs to fullyparticipate in and support these cam-paigns.

INTERNATIONAL CONFEDERATION OF FREETRADE UNIONS

EXECUTIVE BOARDBrussels, 1 - 3 December 1993

RESOLUTION ON WORKERS' RIGHTSABUSES IN CHINA

The ICFTU Executive Board, meetingin Brussels from 1 to 3 December 1993:

RECALLING

that the horrific fire atthe Zhili handicrafts factory inShenzhen, China, an 20 November1993, which claimed the lives of over80 young women, was the third majorfire in Shenzhen in four months andfollowed a year when industrial deathsin special economic zones in China'ssouthern province increased by 62 percent;

FURTHER RECALLING

that themagnitude of the disaster resultedfrom the practice of barring andlocking doors and windows to keepworkers from leaving until productiontargets had been met, a practice com-mon in China's new export-orientedmanufacturing units;

NOTING

that to prevent possiblenews leaks unfavourable to the govern-ment, the Chinese authorities, insteadof assisting and counselling the sur-vivors, instead detained them in acold, draughty community hall wherethey had to sleep an the floor;

CONCLUDING

that such fires andtheir aftermath are the consequenceof the failure of the ChineseGovernment to protect the health andsafety, as well as the rights, of theircitizens in their efforts to attractforeign investment and generate ex-ports;

NOTING that international in-vestors, as well as the retail sectortakes full advantage of China's work-ers' rights abuses which include inade-quate wages and working conditions,the use of child labour and prisonlabour and the banning of free tradeunions;

CONDEMNS

the continued denialof human and trade union rights inChina which give rise to tragediessuch as the Zhili handicrafts factoryfire;

CONCLUDES

that this totally un-necessary loss of life highlights theneed for the establishment of effectivemechanisms for the enforcement ofinternationally agreed standards anworkers' rights, including health andsafety;

CALLS UPON

the ICFTU and itsaffiliates to intensify their efforts, at na-tional and international level, to drawattention to the abuse of workers'rights in China and to conduct educa-tional campaigns designed to raisepublic awareness about the workingconditions associated with foreignowned export-oriented industries indeveloping countries and to directpressure an these industries to changetheir production methods to end theexploitation that they have created,use and profit from;

FURTHER CALLS UPON

the ICFTUto organize and coordinate an interna-tional boycott of all toys manu-factured in China;

DEMANDS

that the Chinese gov-ernment launch an immediate publicenquiry into the cause of the Zhilihandicrafts factory fire, with terms ofreference general enough to permit anin-deahh examination of health andsafety conditions in China; bring tojustice all those responsible for thefire, including government officialswho neglected to enforce local healthand safety legislation; and to enforcelocal health and safety legislation; andensure that early and adequate com-pensation, paid by the factory owners,is made to the families of the de-ceased as well as to those who wereinjured;

FURTHER DEMANDS

that theChinese authorities fully respect

workers' rights to join free and in-dependent trade unions of theirchoice and allow the immediate re-turn of the Chinese independentunion leader Han Dong-Fang to hishome country.