Events for ETI Members

ETI Members' Roundtable 4
Homeworkers

TGWU, London
16th July 2002

• Background and Purpose of roundtable
• Who participated?
• Key points from Presentations
  1. Introduction
  2. Profile of Homeworkers and Homeworking
  3. Case Study of Homeworkers in the UK
• Recommendations from Workshops
• Recommendations: what ETI can do
• For further information…
   
• Advance Flyer
   

 

Background and purpose of roundtable

ETI members expressed an interest in relation to workers who are part of the informal sector and are incorporated within supply chains. In addition ETI members discovered they had a collective problem with sub-minimum wages being paid to homeworkers producing Christmas crackers in Wales and have been working together to address this problem. Following this a greater awareness about the application of codes of labour practice in relation to homeworkers was required.

The purpose of this seminar was to improve members' understanding of homeworkers, and to discuss practical options for implementing codes in supply chains involving homeworkers. This was achieved through sharing lessons from the Smallholders and Homeworkers Working Group (SHWG) and from the collective action taken by a number of ETI members in reaction to the crackers situation in Wales.

Specific issues covered in the seminar include:

• Who are homeworkers and why do they work from home?
• Problems faced by homeworkers
• Company experiences of applying codes in the homeworking sector
• Case study on crackers to highlight specific issues that arise in dealing with homeworkers in relation to the ETI Base Code.

 

Who participated?

This roundtable was particularly well attended. Amongst members there were 34 participants representing 11 companies, 4 NGOs and 2 trade union organisations. Also in attendance were consultants including the National Group on Homeworking, Acona and homeworkers.

 

Key points from presentations

1. Introduction

Introduction by Dan Rees, Director of ETI

Homeworkers are an important part of the informal sector in many industries and are common in many countries.

Homeworkers are exposed to exploitation due to a lack of regulation in the informal sector. By definition homeworkers are small, dispersed units which consequently makes homeworking a problematic area to monitor or ensure effective implementation of labour standards. Furthermore, there is a risk that some suppliers will withdraw from employing homeworkers as a consequence of not being able to implement codes.

A central concern of ETI members is how to apply codes of conduct to homeworkers in a responsible way along with the challenge companies face in identifying homeworkers in their supply chain. This shift for companies to look at other parts of their supply chain and not just the first tier led to the setting up of the Smallholders & Homeworkers ETI Working Group and the commissioning of research to provide further information.

2. Profile of Homeworkers and Homeworking

Presentation by Dena Freeman, Acona.
Research commissioned by ETI Smallholders & Homeworkers working group.

In which countries and sectors is homeworking prevalent?

Homeworking is very widespread across many countries and many sectors. Homeworkers account for over 5% of the labour force in northern countries and approximately 25% of the non-agricultural labour force in industrialised Southern countries. The clothing and footwear sector employs by far the most homeworkers.

Who are homeworkers and why do they work from home?

80-90% of homeworkers are women. A 'typical' homeworker is a married woman in her thirties with children. Most homeworkers choose to work at home because of domestic and childcare responsibilities.

What are homeworkers' concerns?

Despite variations in country, culture and socio-economic context, most of the issues surrounding homework are very similar in all contexts. The primary concerns of most homeworkers are lack of work, irregularity and unpredictability of work, and low rates of pay. Other serious issues for homeworkers are their unofficial and unclear employment status and lack of social security and other employee benefits. In the metalware and accessories sectors health and safety can also be a key concern.

How are homeworkers organised and represented?

Very few homeworkers belong to Trade Unions. A small but growing minority of homeworkers belong to informal Homeworkers Associations. Homeworkers Associations focus on improving conditions for workers through information provision, network building and training. They also campaign for change. Some Southern groups also set up co-operatives, and run social insurance and micro-credit schemes.

What are the key factors which determine the visibility, and hence manageability, of homeworkers in global supply chains?

• Whether homeworkers interact directly with a factory, or whether this relation is mediated by one or more middle men or by a village association or co-operative.
• Whether homeworkers are subcontracted to produce completed items ('industrial manufacturing') or to carry out only particular operations ('industrial subcontracting).
• Whether the retailer sources directly from a factory or through agents' showrooms.

For full presentation notes, contact Adil (adil@eti.org.uk)

3. Case Study of Homeworkers in the UK

Presentation by ETI Members and National Group on Homeworking (NGH)

Background

In 2001, ETI members discovered that they had a collective problem with sub-minimum wages being paid to homeworkers that are sub-contracted by a common supplier to assemble Christmas crackers in South Wales. ETI members buying from this supplier have been working together to address this problem. One retailer member company and an NGO member who is also a buyer have taken a lead in dealing with the issues arising in conjunction with NGH. 

About NGH

National Group on Homeworking (NGH) is the only national NGO working solely on homeworking issues and is based in Leeds. It is a membership organisation which provides research and information in addition to establishing networks and support on homeworking.

4/5 Rule

The 4/5 rule: Despite the introduction of the National Minimum Wage (NMW) legislation, some employers use the 4/5 rule to establish a rate of pay which avoids paying NMW levels. This regulation allows employers to pay homeworkers four fifths of the rate of the NMW or less by mis-interpreting what an average worker should produce. (see FEA below)

Fair Estimate Agreement (FEA)

The fair estimate agreement is a written agreement between the employer and worker, which must be agreed before the start of the pay reference period which it covers. The "fair estimate" agreement must: set out the number of hours that the worker is likely to spend doing the output work in the pay reference period. To count as fair, the estimated hours must be at least four fifths of the number of hours that an average worker would take to do the same task in the same conditions.

Piece rates

For the fair estimate agreement to be valid, the worker must also have a contract which states the output rate (for example by setting a rate for each type of item produced or by setting a commission rate for sales)

Time and motion study

Study to determine the time taken to produce each type of item.

Crackers case study: Sequence of events

Mar 2001	NGH contacted by supplier
May 2001	NGH contacted by a homeworker regarding 'Fair' Estimate Agreement, a further 3 homeworkers contacted NGH that month.
Aug 2001	Investigation by NMW Compliance Unit led to a few homeworkers receiving back pay, but work then stops.
Nov 2001	NGH met with homeworkers and discovered ETI members were buyers
Nov 2001	NGH wrote to NGO member buyer without giving details of the supplier involved. After receiving assurances that work would not be moved full details of allegation were supplied. Company member initiates investigation through independent audit
Dec 2001	NGH met with NGO member. NGH were persuaded other ETI members can be trusted not to move the work and that this would be put into writing. NGO member revise questionnaire to consult homeworkers. NGO member invokes ETI code violation guidelines
Jan 2002	NGO member met & consulted homeworkers Joint letter to supplier from ETI buyers in relation to sub minimum wages being paid. A Memorandum of Understanding was agreed between the members and NGH in relation to what action would take place.

The investigation

In response to the alleged code violation received in Nov 2001 the NGO and company member decided that an independent audit of the Fair Estimate Agreement (FEA) would be carried out. The findings by the audit company chosen by the supplier found that the FEA was basically fair. However it was recognised that the company could have used more workers to determine the average time taken to carry out the work. Furthermore they concluded that the DTI guidelines on National Minimum Wage are flawed. The guidelines state that provided the worker is paid no less than 4/5 of the time taken to do the work, then it is fair.

Response to Audit

NGO and company member met with the supplier to discuss the findings. The supplier agreed that the current guidance from the DTI is unfair and accordingly they agreed to write to the DTI, asking them to change the guidance & abolish the 4/5 rule. Nevertheless, the supplier believes that there must be a level playing field and that until the law changes, the 4/5 rule will still be used as they would be uncompetitive if they abolished the 4/5 rule and their competitors did not.

Other issues

Currently, the supplier does not monitor the time taken for each item. This is because the workers are not recording the time taken to complete a cracker 'kit'. This information should be gathered and then be monitored against the time that the supplier believes it should take. Meanwhile the supplier believes that labour-intensive business is unsustainable in the UK due to rising costs.

Follow up to investigation

Mar 2002	NGO member consulted NGH and placed order. Company member placed order.
Apr 2002	NGO and company member meets with supplier and the issue of the 4/5 rule was raised
May 2002	NGO member sends a letter to the Department of Trade & Industry (DTI) raising concerns on 4/5 rule

NGH concerns in relation to investigation

• NGH provided contact details for independent investigation, on the understanding NGH would be able to brief company in advance.
• Investigation went ahead without NGH's knowledge. NGH and homeworkers alleging violation were excluded from the investigation, against ETI guidelines.
• Interviews with 1/3 of 'current' homeworking workforce not adequate
• Investigation failed to establish pay rates of homeworkers, or investigate other code violations.

Key lessons learned

NGO member

• There is a need for a UK homeworker strategy to provide a collective response in conjunction with companies and NGH.
• The gap between standards and the ETI code needs to be looked at whilst ensuring that homeworkers livelihoods do not suffer as a result of any action taken.
• A plan of joint action needs to be agreed between retailers, suppliers and homeworkers which take into account their priorities and further research to include a joint time and motion study to determine the average time taken to carry out the work.

NGH

• Huge issue in terms of time and resources for NGH
• Written confirmation from ETI members of commitment to workers is not enough
• Homeworkers not being identified and prioritised through ethical monitoring
• In all stages of the investigation the person and / or organisation originating the allegation must be involved

For copy of presentation slides contact Adil (adil@eti.org.uk),

 

Recommendations from Workshops

The basic purpose of these workshops was to determine what companies, NGO's, trade unions should do or not do when addressing homeworker issues. In addition the workshops encouraged dialogue between NGO's, TU's, companies and homeworkers aswell as identifying some of the key problem areas and what effective solutions there are to these.

What should companies do/not do when they find that homeworkers are working in their supply chains?

• Take a proactive approach and contact unions/worker representatives/NGH to understand the reasons why these people work from home and are vulnerable.
• Ask about homeworking during audits as a matter of course, checking with NGH to ensure robustness and correctness of questions asked. Accordingly companies need to audit further down through the supply chain and where homeworkers are identified ensure follow up investigations take place whilst not moving work away.
• Take on the responsibility of ensuring minimum legal benefits for homeworkers, including payment of national minimum wage, health and safety, sick pay, holiday are provided.
• Engage in a transparent dialogue with others sourcing in the same area and support a collaborative approach in order to ensure a 'level playing field'. With this in mind, there is a need for credible organisations to carry out time and motion studies to establish fair piece rates and monitor homeworker pay. Companies need to engage with suppliers to find out who is doing the work and whether it is being sub-contracted further. Similarly companies need to request costings breakdown from suppliers to help identification of homeworkers in the supply chain.
• Take a collective approach to help promote homeworking in a positive light, recognising their importance in supply chains. Companies should write to all homeworkers to let them know of networks, support groups and other representation available. Strategies to raise awareness of homeworkers rights should be done in conjunction with NGOs and trade unions.
• Ensure homeworkers get to see the ETI Base Code through their suppliers.
• ETI companies should lead the way and be proactive in dealing with homeworker issues.
• ETI members should campaign to get rid of the 4/5 rule.
• Companies need to adhere to an ethical policy throughout their organisation specifically when competitive forces may force production abroad.

How to minimise risks for homeworkers?

• Raise awareness within suppliers
• Show homeworkers in positive light and are part of process of production
• Be clear that commitment from retailer is there to stay with homeworkers

What should Unions and NGOs do?

• Help companies 'find' homeworkers and understand their issues
• Help ensure no loss of work due to asserting rights.
• Provide local information to retailers
• Facilitate meetings between companies and homeworkers
• Help companies understand what are appropriate conditions for homeworkers and devise a framework
• Trade unions to ensure homeworkers are represented and organised.
• Trade unions / NGOs in other countries can provide local information on labour costs etc.
• Trade unions / NGOs provide homeworkers with information on their rights
• Lobby government to create a level playing field
• Organise meetings to bring together key trade unions / NGOs to see what they are doing to represent homeworkers
• Work with homeworkers on Fair Estimate Agreements
• Trade unions to help with collective agreement on site to ensure that homeworkers are covered

 

Recommendations: what ETI can do

• Homeworkers to be identified and prioritised through ethical monitoring
• Lobby DTI/Government to change the guidelines on minimum wage & abolish the 4/5 rule
• ETI union members to work with homeworkers in relation to representation
• Strengthen investigation process to ensure involvement of person and / or organisation originating the allegation is involved in all stages
• ETI Alleged Code Violation Guidelines to be renamed Procedures to ensure compliance.
• Promote homeworking as a positive choice to assist with the formalisation of homeworking.
• More research and discussion on homeworking in general, with the possibility of a code being developed specifically for homeworkers

NGH recommendations for ETI

• ETI companies agree to stay with current cracker supplier and current UK workforce for next round of orders to carry out work measurement study and research across the sector in consultation with UK homeworkers
• ETI companies providing information on where they currently source crackers from
• Mechanism to penalise ETI members for not following alleged code violation guidelines.
• Representation for person and organisation originating the allegation to be built in to procedure, and resources made available for this.
• Commitment to staying with workforce for duration of investigation.
• Where it is unavoidable to move work abroad, notice should be given and resources made available to help workers adjust
• Where ETI suppliers relocate production, either in the UK or abroad, ethical audits to be done in advance

 

For further information…

NGH, The National group on Homeworking, Office 26, 30-38 Dock Street, Leeds, LS10 1JF.
Tel: 0113 2454273
See: about NGH. (Section 3, Case Study of Homeworkers in the UK)

Homenet, Office 20, 30-38 Dock Street, Leeds, LS10 1JF.
Web : www.homenetww.org.uk
Homenet has been set up to co-ordinate work with homebased workers in different parts of the world.

National Minimum Wage Enquiries: 0845 6500 207

London Low Pay Unit: 020 7713 7616

ETI Smallholders and Homeworkers working group
ETI, Fiona Mabbot : fiona.m@eti.org.uk
Tel: 020 7404 1463