Chapter Six
Options for Future Regulation
Types of Regulation
1.1 There are two broad ways to improve conditions under which outworkers
perform their work: government legislation and programs, and voluntary
action by industry, unions and community groups. Although different in
their formulation and application, these mechanisms should not be seen
to be mutually exclusive and a combination of both types may ultimately
be required to adequately protect outworkers from exploitation.
1.2 When considering methods of reducing outworker exploitation, two
major observations arise from the evidence: first, that a coercive approach
has generally not been successful; [1] and second,
any system devised must have a top down rather than a bottom-up approach.
That is, it must move from the 'visible' to the 'invisible' and incorporate
a greater level of accountability among retailers and manufacturers. [2]
For any system to work 'it must rely on the agreement and proper compliance
of the "visible" participants in the process … the retailers
and usually the designers/suppliers who own the labels'. [3]
1.3 Legislative Action
1.4 Sale of Clothing Legislation
1.5 With the exception of legally enforceable awards, there is currently
no federal or state legislation that regulates the manner in which outworkers
are employed. In its submission to the Committee the Union recommended
that to guarantee wage and social justice for outworkers, 'Sale of Clothing'
legislation be enacted. Such legislation would make it an offence to make
an agreement for outworkers to be employed under conditions less than
the relevant award, and would include substantial penalties for non-compliance.
The new legislation would become part of the Trade Practices Act.
The Union also recommended that complementary state legislation be enacted
and that all state legislation define outworkers as employees. [4]
1.6 In contrast to the views expressed by the Union, employer groups
did not support legislative regulation. The Victorian Chamber of Commerce
and Industry, for example, argued that in the light of the fact that current
award provisions were restrictive and were not providing the solution
to outworker exploitation, further legislation was unlikely to do so either.
[5]
1.7 While supporting the concept that all parties should be involved
in finding and implementing a solution to the problem of exploitation
of outworkers, the Retailers Council of Australia, argued that the retail
industry 'cannot, nor should not be expected to provide, or be, the solution'.
[6] The Council rejected the notion proposed
by the Union that all retailers could participate in a 'policing' role:
Given the nature of the retail clothing sector, characterised by thousands
of small retail shops, it is patently obvious that individual retailers
do not have the resources to carry out the role proposed by the TCFUA
nor should they be expected to carry out that policing role. This is
an impossible suggestion at the best of times but given the current
trading trends in the clothing sector when most retailers are battling
to stay in business, let alone concern themselves with issues extraneous
to their direct business activities, it is totally inappropriate and
inequitable to foist such an imposition on the retail industry. [7]
1.8 Increased Retail Prices and Loss of Jobs
1.9 The Victorian Employers' Chamber of Commerce and Industry expressed
concern that if increased regulation of home-based employment resulted
in increased labour costs for manufacturers, there would a consequent
but unsustainable increase in retail prices for clothing. The end result
would be a further move to off-shore manufacturing and, ironically, a
further decrease in employment options in TCF industries with the ultimate
loss of jobs for many outworkers. [8]
1.10 The TCF Union rejected this concept. It argued that the pressure
to have a quick response time for women's fashion, for example, would
ensure that such garments continued to be manufactured locally. What would
happen, the Union suggested, was that retailers would be forced to pay
higher prices to their suppliers who would then be required to pay higher
rates to outworkers. [9]
1.11 When questioned on the possibility of retail price increases resulting
from increased regulation, the CTFIA stated that initially it was assumed
that there would be significant increases but that on further examination
it was decided that, although some increase was anticipated, it would
not be prohibitively large. [10]
1.12 Labelling
1.13 Garment labelling is used in a number of ways to provide information
to potential consumers and purchasers of clothes. In the absence of legislation
requiring relevant labels, consumers remain unaware of the conditions
under which any garment bearing the "Made in Australia" label
is manufactured, be it in a factory by a worker paid under award conditions
or by an outworker employed under exploitative arrangements. Thus suggestions
were made to the Committee in several submissions that it was now time
for a 'fair trade label' to be introduced, either voluntarily through
peer pressure, or compulsorily through trade practices legislation. [11]
1.14 Mr Paul Stewart-Day, in particular, argued that all Australian made
garments should bear a label which would indicate that workers involved
in that garment's manufacture had been paid according to their legal entitlements.
He advocated a heading such as 'PAID RIGHT' followed by a brief explanation
that workers who had made the garment had been paid in accordance with
their legal entitlements. Such labelling would not need legislative backing
but could be introduced voluntarily by retailers through a code of practice
that would be administered by a secretariat. [12]
1.15 In supporting the concept of labelling, the Australian Catholic
Social Justice Council noted that 'such campaigns as the ozone free/green/ecological
labels have proved that consumers are prepared to pay more for an ethically
sound and good quality product'. [13] The Council
argued that it was now appropriate for garments to carry a label indicating
that their manufacture was free from outworker exploitation.
1.16 The success of such labels, however, appears to depend on the extent
to which consumers place importance on the information contained in the
label. According to the Council of Textile and Fashion Industries of Australia
this in turn depends to a large extent on publicity given to the message
contained on the label. [14]
1.17 However, the contrary view was put to the Committee by Mr Harold
Scruby, a consultant to TCF industries, that labelling would not be effective:
I am trying to get away from this idea of labelling. I think labelling
could be a catastrophe. It has all sorts of problems in terms of the
manufacturing side. I guess it could be open to a lot of fraud. In the
enforcement, labelling would be, I think, a disaster. [15]
1.18 The Retailers Council of Australia also questioned the efficacy
of using labelling as a way of addressing problems associated with the
exploitation of outworkers. In evidence Mr Phil Naylor, Chief Executive
Officer, stated that: 'In our experience, labels, especially promotional
labels like 'Australian Made' and so forth, do not have a lot of persuasive
power'. [16]
1.19 Other Government Action
1.20 National Outwork Committee
1.21 In its submission, the Union recommended that a National Outwork
Committee be established under the auspices of the Department of Industrial
Relations which would include representation from industry, unions and
appropriate departments and authorities and which would have responsibility
for the initiation and funding of projects relating to outwork. [17]
1.22 The Queensland Government noted in its submission that there was
reluctance among migrant communities to deal with both government agencies
and the Union, especially when initiatives were developed without their
involvement. The submission thus recommended that an independent, non-government
body be funded to assist outworkers address their needs. [18]
1.23 Statistics
1.24 Because information about the number of people involved in outworking
is not accurate, and because such information is essential for policy
development, the Union recommended that the Australian Bureau of Statistics
undertake a national survey of outworkers. Such a survey would ascertain
the prevalence of home-based work across all industries. [19]
1.25 Both the Australian Chamber of Manufactures [20]
and the Dale Street Women's Health Centre [21]
recommended data collection by the Australian Bureau of Statistics to
obtain information on homeworkers, more general research on the extent
of home-based work, the forms of work being undertaken, and the working
conditions experienced, including occupational health and safety issues.
1.26 Inspectorate Activities
1.27 In noting that government inspectorate activities had declined in
recent years, several submissions to the Committee recommended that more
resources be devoted to the surveillance of award compliance. These submissions
included the ACTU, which recommended 'the development of an effective
and appropriate system of inspections to regulate outwork'. [22]
1.28 In support of increasing compliance enforcement, Mr Paul Stewart-Day,
a former NSW Industrial Inspector, recommended that 'adequate numbers
of government investigators be appointed to exclusively police the clothing
industry' in conjunction with large increases in penalties for non-compliance
with award and other statutory obligations. [23]
1.29 However, as argued by TCF industries consultant Mr Harold Scruby:
It has been, is and will remain virtually impossible to solve the problem
through "sweatshop" raids and inspections. Close down one operation,
it will open the next day under a new name. [24]
1.30 English Language Programs
1.31 The Federal Government has committed finds to three projects targeting
English language and literacy skills among outworkers (two projects are
in Victoria and there is one in NSW). Two of these projects are managed
by the TCFUA.
1.32 However, in view of the widespread and chronic lack of English language
skills among migrant outworkers, a number of submissions to the Committee
called for increased efforts to be made to provide language proficiency
classes to enable outworkers to both negotiate contracts for outwork more
successfully, and to enable to move on to more satisfactory employment
(Paragraph 3.60). [25]
1.33 Government Involvement in Deeds of Cooperation
1.34 In its submission to the Committee, the NSW Government suggested
that the federal Government could reinforce the move to industry self-regulation
by requiring that, as a condition of eligibility for government funded
assistance programs, prospective recipients or suppliers be signatories
to deeds of cooperation or codes of practice which govern the use of outworkers
labour. [26]
1.35 Government Procurement Policy
1.36 The various federal and state governments in Australia, through
procurement of specialised clothing, are able to implement policies that
reflect a commitment to purchase clothing that is supplied by companies
which can provide a guarantee that only award-paid labour has been used
in the manufacturing process.
1.37 As noted in the submission from the NSW Government, the State Department
of Public Works and Services is currently undertaking a review of NSW
Government Procurement and Disposal Guidelines which will include criteria
to ensure that 'desirable conditions are fostered in the supplying firms
and the general industry'. [27]
1.38 Corporate Action
1.39 A number of the larger garment companies in Australia expressed
concern about the possible exploitation of outworkers and were generally
willing to address the present situation. [28]
A number of companies already have terms and conditions in their contracts
with sub-contractors and suppliers which forbid exploitation of outworkers.
However, because the structure of outwork involves many parties, such
contractual conditions are difficult if not impossible for retailers or
manufacturers to police, especially if there are several intermediaries.
1.40 The Retailers Council of Australia noted in its submission that
while retailers could not enforce laws they could, and many already do,
contractually require suppliers to comply with laws and regulations regarding
people involved in the manufacturing process. However, the RCA submission
also pointed out that most retailers were very much removed from the actions
of suppliers and were for the most part unable to have any influence over
the actions of suppliers, or their contractors or subcontractors: 'It
grossly oversimplifies and inaccurately sets the relationship between
retailers and the many parties in the manufacturing sector to suggest
otherwise'. [29]
1.41 Furthermore, the RCA argued that while the voluntary codes of conduct
being entered into by several of the large retailers with the Union may
influence the circumstances under which some outworkers were employed,
because there were thousands of small retailers (which carried out the
majority of clothing sales in Australia), it would be a 'self defeating
exercise' to expect that many outworkers, particularly those being exploited,
would be identifiable. [30]
1.42 Despite these statements, the RCA supported a strategy whereby Government
would properly enforce employment laws, coupled with an approach by the
fashion industry such that each element in the retailing and manufacturing
chain would obtain contractual undertakings from the previous level that
all employment laws and regulations were being followed. [31]
However, the RCA did not support the proposal to have an organisation
register accredited participants or any form of auditing by an outside
agency. Instead, each element in the chain would have the ability to impose
sanctions, primarily through cancelling contracts [32]
1.43 "Oz-Legit" Proposal
1.44 In a submission to the Committee Mr Harold Scruby, a consultant
to TCF industries, proposed a system of accreditation similar to that
of the Australian Quality Assurance System. [33]
The key components of the system, which Scruby nominally named 'Oz-legit',
were:
- agreement in principal by major purchasers of outworkers products
(retailers) that they will only purchase garments from accredited organisations;
- agreement by suppliers to have their manufacturing and supply systems
audited;
- agreements by retailers to have their purchasing systems audited;
- determination by the auditor as to whether garments were manufactured
under award conditions; and
- expulsion from the system of suppliers found to be not in compliance
(after fair warning).
1.45 Under this scheme, initial funding for the system would come from
state and federal governments, with follow-up funding coming from participants.
1.46 Role of the Union
1.47 Information and Advocacy Service
1.48 Through its Outwork Information Campaign the Union has made comprehensive
efforts towards educating outworkers of their employment rights, informing
employers of their responsibilities in using outworkers, and alerting
the general public to the possibility that exploitation of labour may
have occurred during the making of garments that they wear. However, as
outlined in its report The Hidden Cost of Fashion, these efforts
are just the beginning of a process which would finally see all outworkers
receiving rates and conditions equal or better than that stipulated in
the award.
1.49 As part of a set of future strategies, the Union recommended that
an information and advocacy service be established to enable outworkers
to be better placed to demand award or equal conditions. In addition,
the Union recommended that a specific allocation be made in the Department
of Industrial Relations budget to enable the Union to continue to inform
outworkers of their rights and responsibilities, and to advocate on their
behalf. [34]
1.50 In support of the need for better information, the Victorian organisation
Job Watch noted that there was general confusion among outworkers as to
whether they were employees or contractors and that, in general, the level
of knowledge of common law contract and industrial relations was extremely
poor. [35]
1.51 Other Action Suggested
1.52 Clothing Co-operatives
1.53 The Springvale Indo-Chinese Mutual Assistance Association (SICMAA)
has formulated a proposal, outlined in its submission to the Committee,
for the formation of a Community Based Clothing Co-operative. As proposed
by SICMAA, the cooperative would employ outworkers and deal directly with
major customers for contracted work. With assistance from government instrumentalities,
such as the Department of Employment, Education, Training and Youth Affairs,
the Department of Social Security, the Australian Tax Office and the Department
of Immigration, a factory would be set up by a local non-profit organisation
(such as SICMAA) and outworkers within the local community would become
members of the cooperative. Other elements of the scheme include access
to English language training, gender equity and best practice policies,
mutual support for workers, and the encouragement of individual and collective
responsibility. [36]
1.54 As argued by SICMAA, the project would have many advantages for
both outworkers and garment companies:
- set-up costs would be kept to a minimum as outworkers would bring
to the business their own machinery;
- elimination of the intermediary level would increase incomes to outworkers;
- working conditions would be improved through the use of factory premises;
- retailers would be certain that their products were ethically 'clean';
- the scheme would create employment;
- government instrumentalities would provide accurate information about
rights and responsibilities (such as tax and DSS information);
- legal working conditions would be adhered to thus providing workers
with correct entitlements with regard to matters such as compensation
cover and superannuation;
- workers would have more regular hours of work, thus allowing for time
for family needs. [37]
1.55 In a supplementary submission to the Committee, the Australian Catholic
Social Justice Council supported, as a 'good outcome', the formation of
cooperatives or small businesses owned and managed by the workers themselves.
[38]
1.56 Combined Approach
1.57 A number of submissions to the Committee suggested that because
the problems associated with the use of outworkers in the garment industry
involved a number of parties, a collaborative and coordinated approach
was required. [39] As suggested by ANESBWA,
the approach taken to resolving outworkers problems should be a joint
one because all groups involved had limited resources; because there were
so many aspects to the problem, finding solutions to it should also be
multifaceted. [40]
1.58 The Dale Street Women's Health Centre in South Australia also argued
that there was a need to coordinate the activities of the state Employee
Ombudsman and Department of Industrial Affairs, the federal Departments
of Industrial Relations and Social Security, the Australian Taxation Office,
and other key organisations. [41]
1.59 Childcare
1.60 The Union recommended in its submission to the Committee that 'further
action needs to be taken to improve accessibility of child care to outworkers'
and that 'this should include resources to improve the cultural relevance
of child care services'. [42]
1.61 Recognition of Qualifications
1.62 The Union recommended that 'strategies to streamline the recognition
of overseas qualifications need to continue to be refined'. [43]
1.63 Groundwork by Community Groups
1.64 Asian Women at Work argued that regardless of changes that were
made to legislation or to the structure of the industry, work by union
or community groups with individual outworkers was extremely important:
As long as you have a group of women who do not know what their rights
in Australia are and do not know what their entitlements are and what
access they should have to systems, that group will continue to work in
this industry. It does not matter how much legislation is in place to
protect them, if they do not know about it, they will not access it. So
I stress that education is very important: actually spending the resources
to get alongside these women and move them out of the industry. [44]
Education of the Industry
1.65 The Victorian Employers' Chamber of Industry and Commerce noted
in their submission that there was a need within the garment industry
for education about contractual obligations and in particular the distinction
between employees and independent contractors. The Chamber also saw a
need for cultural issues to be taken into account in educating employers.
[45]
1.66 In addition, the Chamber recommended that funding for TCF Industry
development should be targeted at improving management skills, especially
in small businesses, and encouraging the development of cooperative cultures,
partnerships and best practice models. [46]
1.67 The NSW Government pointed out in its submission to the Committee
that:
Industry regulation and self-regulation cannot be successful alone -
it must be coupled with an emphasis upon industry education, provided
in large part by government, in order to improve knowledge [of] the rights
and responsibilities of stakeholders, and to increase awareness of the
role that can be played by Government agencies. [47]
1.68 The submission stressed that the key issues which needed to be addressed
relative to industry education and training, were lack of literacy, often
to the extent of complete lack of basic English skills; outworkers fears
about government agency activities; and the sparsity of reliable employment
records in the garment industry. [48]
1.69 Clearing House
1.70 The Victorian Employers' Chamber of Commerce and Industry recommended
in their submission the concept of a 'clearing house' or cooperative which
would coordinate production for a number of retailers and manufacturers
to improve quality, efficiency and the organisation of labour, and possibly
as an outworker employment agency. Such a structure would eliminate the
need for intermediaries and would provide greater regulation of allocation
of work and delivery times. [49]
1.71 Conclusions and Recommendations
1.72 There are two basic ways in which actions can be taken to improve
conditions under which outworkers perform their work: legislative and
voluntary. The Union has proposed legislative action through the enactment
of 'Sale of Clothing' legislation. In contrast to this, both the Union
and the Council of Textile and Fashion Industries of Australia have promoted
voluntary deeds of co-operation or an industry 'Homeworkers Code of Practice'.
1.73 Mindful of the arguments put forward by both parties, the Committee
concludes that voluntary action should be supported in the first instance,
and in particular that the 'Homeworkers Code of Practice' proposed by
the Council of Textile and Fashion Industries of Australia should be fully
embraced by all parties involved. Should voluntary action fail to have
any effect, then legislative action may need to be considered. The
Committee recommends that an industry 'Homeworkers Code of Practice' should
be adopted by all participants in the garment retailing and manufacturing
process. The Committee regrets that further progress has not been
made towards establishing a voluntary Code and undertakes to review progress
towards voluntary regulation in a further 12 months.
1.74 In attempting to resolve the problems faced by outworkers, quite
a number of recommendations were made to the Committee by various government,
industry and community groups. It is clear from the number of suggestions
that a combined and coordinated approach is needed. Of those recommendations
made, the Committee endorses and recommends the following actions.
1.75 The Committee endorses the concept of labelling garments. While
there is the possibility that labelling may have no effect, there does
not appear to be any detrimental impacts associated with labelling, and
there is a good chance that it will have a positive impact in highlighting
the issue of outworkers exploitation, especially if it is made compulsory
through trade practices legislation. The Committee recommends to the
garment industry that it voluntarily adopt an agreed label declaring that
the employment conditions under which the garment was made complied with
legislative requirements.
1.76 Because the problem of outworker exploitation is multifaceted, the
Committee sees merit in having a National Outwork Committee, coordinated
at government level, which would include representatives from industry,
unions, community groups, and government agencies. The Committee recommends
that the government investigate the concept of a National Outwork Committee
which would have responsibility,
inter alia, for the initiation and allocation of funding for projects
relating to outwork.
1.77 There is insufficient information about the number of outworkers
involved in garment manufacture, and in other areas of home-based processing.
The Committee recommends that the Australian Bureau of Statistics conduct
a comprehensive survey of the number of home-based workers across all
industries. The ABS should carry out this survey in conjunction with the
ATO and information gained from the Reportable Payments System on the
number of outworkers.
1.78 The English language skills of many outworkers are frequently poor
or inadequate. This reduces their ability to negotiate contracts and to
understand the conditions under which they are employed. Notwithstanding
existing programs, the Committee believes that there would be merit in
all governments reviewing programs for English language education with
a view to increasing access for outworkers. The Committee recommends
that the Government review federally funded arrangements for English language
education with a view to increasing accessibility for migrants involved
in outwork.
1.79 A contributing factor in the shedding of responsibility along the
garment manufacturing chain appears to be ignorance among participants
as to their own rights and responsibilities, and those of other parties.
There is a need for increased levels of industry education in areas of
award compliance, industrial relations, taxation compliance, and management
skills. The Committee recommends that the government review educational
arrangements in TCF industries for industrial relations and small business
management.
1.80 The Committee believes that because a multifaceted approach is
needed to eliminate exploitation of outworkers in the garment industry,
the Government should move quickly to allocate funding identified in the
TCF 2000 Development Package specifically for projects relating to outworkers,
including those recommendations given above.
1.81 The Committee undertakes to review in 12 months time outworking
in the garment industry, with particular reference to the recommendations
contained in this report.
J A Collins
Chair
Footnotes
[1] Evidence, p. E 339.
[2] Evidence, pp. E 506, 676, 901.
[3] Evidence, p. E 693.
[4] Evidence, pp. E 25, 39, 45, 49, 859-60,
890; and supported by the ACTU in its submission, Evidence, p. E 275.
[5] Evidence, p. E 423.
[6] Evidence, p. E 698.
[7] Evidence, p. E 699.
[8] Evidence, p. E 429.
[9] Evidence, p. E 13.
[10] Evidence, p. E 838.
[11] Evidence, p. E 137, 171, 715-8, Submission
No. 38, p. 7.
[12] Evidence, pp. E 715-718.
[13] Evidence, p. E 137.
[14] Evidence, p. E 832.
[15] Evidence, p. E 675.
[16] Evidence, p. E 709.
[17] Evidence, p. E 27.
[18] Submission No. 39, p. 2.
[19] Evidence, p. E 27.
[20] Evidence, p. E 327.
[21] Evidence, p. E 507.
[22] Evidence, p. E 273.
[23] Evidence, p. E 713.
[24] Evidence, p. E 692.
[25] See for example Evidence, p. E 146, 171,
507.
[26] Submission No. 38, p. 6.
[27] Submission No. 38, p. 6.
[28] See for example, Evidence, p. E 133.
[29] Evidence, p. E 700.
[30] ibid.
[31] Evidence, p. E 704.
[32] Evidence, p. E 707.
[33] Evidence, pp. E 693-4
[34] Evidence, p. E 27.
[35] Evidence, p. E 489-491.
[36] Evidence, pp. E 806-819.
[37] Evidence, p. E 807.
[38] Evidence, p. E 146.
[39] See for example, Evidence, p. 304.
[40] Evidence, p. E 195-6.
[41] Evidence, p. E 507.
[42] Evidence, p. E 29.
[43] Evidence, p. E 28.
[44] Evidence, p. E 226.
[45] Evidence, pp. E 414, 423.
[46] Evidence, pp. E 415, 423.
[47] Submission No. 38, p. 1.
[48] Submission No. 38, p. 6.
[49] Evidence, pp. E 415, 423, 431-2.