(Plounsbury, Flickr, Creative Commons)

Originally posted at In These Times

Despite the occasional factory fire or sweatshop media expose, American consumers have largely inured themselves to the status quo of exploiting the Global South as our overseas workshop for cheap clothes, toys and gadgets. With the holiday shopping season in full swing, consumers have affixed even more tightly the corporate blinders, rendering the workers in Santa’s Workshop comfortably invisible.

But some of the factories churning out hot toys have recently been exposed as bastions of labor abuse. According to an investigation by the New York-based watchdog group China Labor Watch,several toy-industry supplier factories in China (which have collectively produced for famous clients like Mattel, Disney and Hasbro) have flouted both international ethical standards and Chinese law. The extensive investigation, based in part on worker interviews, uncovered troubling conditions:

CLW’s investigation revealed at least 15 sets of violations in four factories together employing about 10,000 workers: illegal overtime pay, excessive overtime, forced labor, myriad safety concerns, a lack of safety training, a lack of physical exams, inability to resign from work, blank labor contracts, unpaid work, a lack of social insurance, use of dispatch workers, a lack of a living wage, poor living conditions, unreasonable rules, and a lack of effective grievance channels.

CLW found that “All four factories maintained monthly overtime hours two to six times in excess of the 36-hour legal limit.” At one factory in Dongguan, workers were reportedly threatened with dismissal “if they report to anyone that they have been working after 9:30 PM in the production facility.” At the Nanhai Mattel Diecast factory, CLW reported, “According to interviews, workers’ requests to get off work after their normal eight-hour shift are never permitted.”

Some workers are hired through “dispatch” agencies, rather than direct employment, which could deny them the same benefits as regular employees and leave them without a formal contract. In addition, workers were sometimes not equipped with protective gear, like face masks, nor given supposedly mandatory safety training.

While China’s labor regulatory regime is still extremely weak, CLW suggests that employers could be brought to book for violating wage laws, since systematic underpayment for workers “could have implications for millions of dollars in wage arrears.”

But CLW stresses that these workers have little ability to seek redress, while Mattel’s oft-touted efforts to police its labor standards are falling flat on the factory floor.

The reported maltreatment should be prevented by Mattel’s flagship Global Manufacturing Principles (GMP) program. But CLW says that since the late 1990s, the program has been eroded, its power to investigate and expose abuses increasingly diluted.

CLW’s research into Mattel’s “corporate social responsibility” programs indicates that in 2009, Mattel ended a partnership with SICCA, a group that had issued fairly robust audit reports, and switched to a new, weaker program called the ICTI CARE Process (ICP):

ICP audit reports are short, lack in detail, and only examine the conditions at Mattel’s seven directly controlled factories. Since 2008, Mattel has published no information on the labor conditions at its supplier factories despite the company promising in its 2012 Global Citizenship report to share information [about] “the overall performance of our major vendors”

Li Qiang, head of CLW, tells Working In These Times via email that despite Mattel’s claims that it uses outside monitors to help enforce compliance among its suppliers, “we know from our investigations that ICP gives a ‘seal of compliance’ to many factories with labor violations. The four factories investigated in our report all had these seals from ICP, including a factory directly controlled by Mattel. So we know that ICP audits don’t really represent a lack of labor violations.”

Mattel, for its part, said via e-mail that it is investigating CLW’s findings and takes workers’ welfare “very seriously.” It noted that “vendor factories are also contractually bound to comply with either GMP and/or the ICTI Code,” with violators potentially facing “corrective action” or termination. In addition, Mattel also said it has not used one of the suppliers cited in the report, Winty Industries, since 2009–a claim that CLW disputes based on field observations.

The report recommends that Mattel reduce its reliance on corruption-prone auditing protocols and instead undertake major reforms to its labor practices, including “increasing pay to factories and increasing time given for delivery,” as well as expanding transparency in the production chain. The report also urges Mattel to institute worker committees and NGO hotlines that can aid with labor disputes, so workers have more power to challenge employers.

This is not the first time corporate-sponsored auditors have looked like foxes guarding the corporate henhouse. Apple’s partnership with the Fair Labor Association (FLA) yielded a detailed report of conditions at the notorious Foxconn factories, but also drew skepticism about the electronics giant’s slick PR maneuvers. As Josh Eidelson reported earlier this year, FLA’s auditing has been panned by some activists as an Apple-sponsored “fig leaf” aimed at tamping down public scrutiny over labor scandals.

More recently, the reports of Wal-Mart’s “Ethical Sourcing” monitoring program have surfaced in the aftermath of the recent Bangladesh factory inferno, underscoring the futility of such audits when they failed to intervene on critical safety issues that factored into the disaster. Meanwhile, Wal-Mart has insisted the factory is no longer authorized to produce its clothing, further revealing, at best, utterly incompetent oversight or, according to some advocates, willful ignorance.

Yet conflict of interest is in many cases built into corporate monitoring schemes. The Pakistan factory fire that killed nearly 300 people in September took place at a facility that had recently received an international stamp of approval from Social Accountability International (SAI), a group that, according to the New York Times, “obtains much of its financing from corporations and relies on 21 affiliates around the world to do most of its inspections.” In the case of the Karachi factory, SAI had contracted its auditing services out to an Italian firm called RINA Group, and realized only too late that the death-trap factory had somehow earned a gold-star SA8000 certification on various criteria like wages and safety standards.

The fundamental problem with outside auditing systems mirrors the problem with global manufacturing in general. In poor, export-dependent regions of the Global South, it may be all but impossible to have international oversight that can effectively monitor everyday conditions, cut through local corruption, or avoid the inevitable pressure to protect brand names and their profit margins, even at the expense of workers’ rights.

Those intrinsic obstacles are precisely the key motivation for companies to outsource and subcontract labor to factories far outside the reach of oversight and regulation: Exporting labor is cost effective not only because it uses cheaper labor, but because it minimizes corporate responsibility for conditions in the supply chain. From the perspective of global brands like Mattel, of all the factors in the cost of doing business, the ethical obligation to treat workers with dignity is the easiest to shed.