Strategic Vision 2019-2022 Partnerships to shape a future of compliance Since 2001, Better Factories Cambodia (BFC) has joined with workers, employers and government to improve working conditions and to boost the competitiveness of the garment industry. Originally, the project was linked to an innovative trade agreement between the Royal Government of Cambodia (RGC) and the United States (US) that provided market access in return for improving working conditions in the garment sector. After the expiration of the trade agreement in 2004, the Cambodian Government, together with trade unions and employers, requested the International Labour Organization (ILO) to continue with the implementation of the programme. Overview (MoC), the Ministry of Economy and Finance (MoEF), 1 the Garment Manufacturing Association in As its longest running country programme, Better Cambodia (GMAC), Cambodian trade unions, Factories Cambodia (BFC) is in many ways the driving manufacturing groups, factory managers, international force behind ILO and International Finance buyer partners, the United Nations (UN) in Cambodia, Corporation’s (IFC) Better Work Programme and has representatives of the ILO and IFC, and other inspired the establishment of the programme in eight stakeholders from the international development other countries including Bangladesh, Egypt (pilot), community in Cambodia. Ethiopia, Haiti, Indonesia, Jordan, Nicaragua, Vietnam. Central elements of the programme’s approach began BFC’s Impact and Achievements in Cambodia: from cultivating social dialogue through During the consultation process, partners reaffirmed worker-management committees, to offering factories the positive impact that the programme has had on tailored advisory services to help them solve their own the Cambodian garment industry and its workers, labour rights challenges, or using public reporting to including: spur improvements in factory working conditions and workplaces across the industry. With a current � The increased confidence and commitment of coverage of over 550 factories and 630,000 workers, major international buyers and brands in the BFC will continue to build on its success at the factory programme and thus in the Cambodian garment level, but also deepen its engagement with partners, sector; and embark on a process that will define the necessary � The significant improvement of working steps to create a culture of compliance in the sector. conditions in the industry over the past decade, By working with national and international partners with BFC as a key player and contributing factor, to define and realize the sector’s new vision, BFC will and the associated positive impact on continue to promote decent and safe jobs for Cambodia’s international reputation as a sourcing hundreds of thousands of workers, especially women. location; The programme will work with its key partners and � BFC as a neutral, independent, well-managed, industry stakeholders to help workers to develop new and responsive long-term player working with skills, businesses to bring in greater profits, and industry and other stakeholders as a positive families up and down the country to escape poverty. agent of change; The vision of partners and constituents for the � BFC’s effective partnerships for cooperation with industry is to build on progress and collaborate on a the RGC and Cambodian employers and trade transformative approach to sustain safe, healthy and unions; productive factories supported by strong processes of social dialogue at factory and industry levels, good � The improvement in industrial relations with a labour market governance and committed brands. The more responsible and constructive engagement programme is ready for its next strategic phase, by trade unions at the factory level on workplace covering the years 2019 – 2022. A phase that will issues and in tripartite consultation mechanisms; emphasise that a culture of compliance needs close � BFC’s role in working in partnership with the collaboration between national partners as well as with MoLVT and its inspectorate to help build its international industry players and stakeholders. capacity, skills, commitment and integrity in This document presents a long term strategic direction workplace inspection and compliance; towards an industry where good and stable working � The collaboration between BFC and MoC which conditions are standard and supported by industry has resulted in a recognition of partners of the stakeholders and institutions. It presents the priorities importance of labour standards in the RGC’s trade for BFC’s next strategic phase, including a process that policy; helps to define the long term strategic direction for the industry into clear and measurable actions, outcomes � BFC’s significant contribution to the and indicators. forthcoming MoEF garment sector strategy and a possible future role to monitor aspects of the This document is the product of an in-depth strategy. consultation process with BFC’s key stakeholders and partners, including independent consultations with representatives of the Ministry of Labour and Vocational Training (MoLVT), the Ministry of Commerce 2 Stakeholders also recognize that BFC’s work remains transparent and accountable ways, use unfinished. Building on steps already taken in the evidence-based research to inform policy making and previous strategy, partners need to look ahead to provide transparent and verifiable data about the state long-term options which sustain the outcomes, of the industry. impact and development of capacity that have so far Translating this into reality in Cambodia needs further been supported by BFC. This will need joint efforts and should be seen as a long-term collaboration to focus on embedding a culture of good objective. Stakeholders have asked BFC to performance and sustained compliance to transform accelerate this process over the next strategic phase the industry into one where factories are not so that partners more clearly define what they will dependent on external audits, inspections or need to do to transform the sector into a fair industry assessments. Instead, the sector will consist of with sustained compliance; what success looks like; factories where good working conditions and the and what partnerships are necessary to transform the upholding of standards are internalized as the norm industry. This includes a strategy on how BFC would in business planning and industry competitiveness; evolve to support the vision for the sector. where workers do not have to worry that their rights may not be respected; where union leaders need not to fear that they might be fired for their union Towards a stable and fair sector activities; where factory managers do not have to When BFC was set up in 2001, Cambodia was in the be afraid that wildcat strikes might happen; where midst of rebuilding its country after a long period of brands do not have to be concerned about potential conflict. The country had just developed its labour risks, abuses and work stoppages; and where national law, and the trade agreement between Cambodia actors do not need to be anxious about the possible and the US was an important step for the start of the next incident. country’s industrialisation process. It led to a rapid increase in factories, jobs, export earnings and thus Although much needs to happen, a transformed important social and economic development of the sector is possible when factory managers, workers and country. At the same time, workers and employers their representatives understand the labour law, and had little knowledge of the labour law, inspections when there are effective mechanisms of social were insufficient, social dialogue lacking and the sector dialogue at the factory level allowing workers and was characterised by violations of the labour law, wild managers to meet regularly to discuss progress and cat strikes, and unpredictability. However, much has find solutions for workplace issues. changed since. A transformed sector is possible if there is a strategic While it is recognised that there is not yet a culture of vision from the government supported by industry sustained compliance in the sector, important players for a competitive, productive and fair garment progress has been made. For instance, with its 17 years industry in which good working conditions and social of existence in the country, stakeholders agree that dialogue are a core component. BFC (i) played a major role in sustaining overall growth A transformed sector is possible if there is strong of Cambodia’s garment industry; (ii) contributed to labour market governance, with labour laws in place improvements in the lives of approximately 2.4 million that are well understood, comply with international Cambodians dependent on garment sector earnings; labour standards and are supported by mature (iii) created a level playing field for labour across all systems of social dialogue, oversight, inspection and Cambodian garment exporting factories; (iv) enforcement. influenced business practices through leveraging factory data to drive improvement and becoming a A transformed sector is possible if factories have core element in the risk management strategies of strong occupational safety and health (OSH) and international buyers; (v) made Cambodia’s garment human resources (HR) systems in place that support factories safer overall; (vi) contributed to the rigorous application of international labour standards virtual elimination of child labour in the sector; and and good practices, and where buyers and vendors (vii) ensured that workers are receiving the correct support factories in making positive changes and levels of wages and social protection benefits. reward good performing factories with more and stable orders and fair prices. In addition, other important accomplishments and initiatives in support of a stable, competitive and fair A transformed sector is possible when all sector have taken place and include: stakeholders - the government, the unions, manufacturers, employers and brands - take full � A minimum wage setting process in which the responsibility. They need to collaborate in open, National Council of Minimum Wage annually recommends a revised minimum wage to the government. Consultations on the changes to � Important national strategies include priorities 3 the minimum wage are based on a set of agreed related to stronger labour market governance, social and economic indicators; particularly for the garment sector. Examples are the Industrial Development Policy as well as the � The MoLVT’s commitment to increase the Rectangular Strategy which both include several effectiveness of its inspections, which has so far priorities related to stable and mature industrial resulted in, amongst others, a revised checklist, an relations and stronger inspection and enforcement ethics protocol as well as a strategic compliance mechanisms; approach to its annual inspection plans; � A draft sector strategy of which good working � The MoC’s commitment to have good working conditions are a cornerstone. conditions as a key component in its trade policies for the garment and other important An important conclusion of the consultation process export sectors; for BFC’s next strategic phase is that industry stakeholders and the tripartite constituents realise that � The Arbitration Council, which is seen by important progress has been made towards building a employers as well as workers and unions as a strong and fair sector with safe, healthy and productive neutral and fair arbiter for labour related conflicts workplaces. Industry stakeholders and tripartite and the rulings of which are often respected by constituents also realise that more needs to be done the parties. The Council and Foundation are also a to ensure that progress continues and eventually cornerstone to buyers’ risk management strategies leads to a garment sector that has transformed into and as a result are important for the confidence of a competitive industry where workers rights are being business in Cambodia as a sourcing destination; respected, employers and worker representatives can � An increased number of factories that have solve problems through mature social dialogue, where bi-partite (worker-management) committees in institutions can intervene, advise and enforce where their factories that are responsible for improving required and where brands support continuous workplace issues. While not all these bi-partite improvement through stable orders and fair prices. committees function effectively, often they are The consultations focussed on soliciting feedback on the first mechanism of structured forms of social the priorities for BFC’s next four-year strategy and dialogue that helps to improve working conditions these more operational priorities will be discussed in in the factory as well as communication between the next section of this document. However, it also worker representatives and factory managers; became clear from the consultation that constituents � The public presentation of individual factory level and partners expect BFC to embark with them on a performance on critical legal labour issues as well process to define what needs to be done to realise as an annual report on the state of the industry’s this long-term vision for the industry, including a set compliance levels all based on BFC assessment of outcome roles and responsibilities for each of the data; stakeholders, including for BFC, as well as strong indicators that measure progress. � Collaboration between MoC, MoLVT and BFC to address zero tolerance issues in factories as well Stakeholders’ vision and priorities as work with low compliance factories to improve their performance; Under this overall long-term strategic direction, partners also recognize the immediate role that BFC � A collaborative initiative of more than 20 large, should continue to play at factory level, with an mostly European brands in support of fair wages emphasis on factories that perform below average, as and collective bargaining called Action, well as creating role models of leaders amongst Collaboration, Transformation (ACT). Cambodia factories that can inspire the rest of the industry. These is one of the four countries where ACT is working models to communicate publicly about what is working. with manufacturers, unions and employers to use In addition, and linked to creating a renewed vision the CBA to include language around fair wages, for the industry as described in the previous section, which, once agreed, will be supported by a volume partners also highlighted the following priorities for the and price commitment of brands to the next four years: Cambodian garment sector. While negotiations are still ongoing, the deal would positively impact � Strengthen and deepen the relationship and better purchasing practices of brands as well as partnership with MoLVT to build its capacity, skills more predictability on volumes and prices for and credibility, and ensure consistency of factories; 4 interpretation of the Labour Law, regulations and conventions; � Develop with partners a stronger model to monitor working conditions in the industry sub-contractors and second-tier producers; � Identify and promote best practice case studies to demonstrate the cost/productivity benefits of high quality compliance, and take a more entrepreneurial approach to ‘marketing’ its benefits and resource mobilisation; � Expand and establish new partnerships of expertise in occupational health and safety, environmental and waste management, innovation, new technology and other areas that are essential for sustainable and productive factories; � Continue and deepen initiatives and partnerships on the elimination of child labour, women’s reproductive health, workplace sexual harassment and discrimination; � Continue and deepen awareness-raising and training of trade unions and their workplace representatives on the Labour Law and associated regulations and conventions, with more specific locally designed workplace training and associated materials that better reflect the education and literacy levels of garment workers; � Expand existing work with manufacturing groups to increase and influence good practices within manufacturing groups. � Utilise engagement with the MoEF and Supreme National Economic Council (SNEC) on the garment sector strategy to influence the coherency of government policy, and stakeholder partnerships, to ‘reinvent the industry; � Further enhance synergies with Better Work globally and with the totality of ILO engagement in Cambodia under the Decent Work Country Programme (DWCP) for 2019-2023, to ensure integrated approaches to creating quality jobs, especially for women, with a more positive industrial relations environment and associated working conditions. These priorities are presented in more detailed outcomes and actions in the next section. 1. Accelerate sustained 5 improvements in working conditions in factories � Continue to monitor and report publicly on factory level compliance in all garment exporting factories and build factories’ and workers’ capacity to improve working conditions through a systems-based approach and factory level mechanisms of social dialogue; � Facilitate the creation of an industry-owned strategic compliance approach for the subcontracting sector and low performing factories; � Identify and support factories in becoming leaders on compliance in the industry and encourage these leaders to inspire other factories to do the same; � Expand partnerships with other organisations to support factories on priorities related to, amongst others OSH, gender issues and new technologies; � Further improve BFC’s quality and consistency throughout its factory level core services to ensure that BFC consistently meet the highest quality standards. 2. Facilitate the creation of a vision for sustained compliance in the industry � Embark on a facilitated process where tripartite constituents and industry partners formulate a change process with measureable outcomes and indicators to create a culture of compliance in the industry; � Deepen collaboration with the MoLVT to increase their capacity, skills and credibility based on an approach towards strategic compliance in support of the vision; � Work with the Cambodian trade union movement on a process that strengthens the skills of factory level women and men union leaders and worker representatives on understanding the labour law and bargaining effectively in support of the vision; � Identify areas of joint collaboration and training with GMAC that support factories in strengthening their management systems in support of good compliance in support of the vision. 6 3. Create and expand partnerships 5. Lead and govern the programme with stakeholders that support the towards continued improvements transformation of the industry � Ensure active engagement of tripartite � Support the garment sector strategy through constituents in the governance of the programme convening partners to contribute to the through the Project Advisory Committee. implementation of the strategy. � Facilitate dialogues on sector level issues and � Forge close collaboration with investment and priorities between tripartite constituents and other manufacturing groups to support factories stakeholders. becoming leaders in the industry. � Expand managerial capacity of BFC through � Strengthen and leverage partnerships with buyers supporting and developing local team leaders to further engage them in factory and sector level within the programme. challenges and initiatives as well as the role they � Further a learning culture within the programme should play in the creation of sustained for continuous improvement. compliance in a competitive and fair industry. � Ensure healthy and effective financial � Implement existing and where feasible create new management in support of strong financial initiatives that address gender equality issues in sustainability. the sector and strengthen the role that women workers and representatives play in improvement processes and social dialogue. The key strategies for the next four years are deliberately ambitious for BFC and partners to deliver on the views of constituents and embark on the vision 4. Measure and use data, experience for a transformed industry. Essential conditions for the key strategies to be implemented successfully are and knowledge to communicate for the availability of (i) sufficient financial resources and improved practices in support of the (ii) strong commitment from all partners, which will vision for the industry enable BFC to deliver on its work both within as well as beyond the factory walls. � Analyse BFC data to help inform sector and factory level policies and practices in support of sustained compliance in a competitive and fair industry. � Use the results of the BFC impact assessment data to demonstrate how improved working conditions have an impact on worker wellbeing, business outcomes and communities. � Develop and implement a public communications campaign to showcase sector and factory level successes with the aim of spreading these successes more widely. � Assess and create partnerships with the private sector to support the use of new communication methodologies to broaden outreach, particularly to workers.