Strategic alliance starts to bear fruit

A new alliance between Zara's owners Inditex and the global garments union is helping the Spanish retailer develop a strategic approach to tackling workers' rights throughout its supply chain, and to respond swiftly and effectively to major breaches of workers' rights when they occur. Workers in one Cambodian garment factory have already benefited.

In early 2007, the Spanish retailer Inditex signed a historic Global Framework Agreement with the International Textile, Garment and Leather Workers' Federation (ITGWLF) to co-operate on tackling workers' rights throughout the company's supply chain. Soon after the agreement was signed, one of Inditex's Cambodian suppliers fired 30 short-term contact workers, some of them trade union members.

Productive negotiations

The agreement between Inditex and ITLGWLF provided a framework for a rapid, collective response to the situation. After months of negotiations between the supplier, River Rich, and the Coalition of Cambodian Apparel Workers' Democratic Union, assisted by ITLGWF and Inditex, River Rich finally agreed to all union demands, including to:

• reinstate the workers concerned and pay them for the time they had been off work;
• withdraw all criminal charges against the sacked workers;
• eliminate short term contracts; and
• allow the creation of a union council at factory level.

As River Rich's principal buyer, Inditex committed to encouraging all efforts to build a stable and secure relationship between management and workers and to provide support for education and training for both management and workers. It also committed to working with ITGLWF to jointly monitor industrial relations developments at Riverrich, and provide advice and assistance as necessary.

A memorable lesson for River Rich

There have been 'hard' business benefits too..

According to Albert Cheung, Executive Director of Addchance Holdings Ltd, River Rich's parent company, the events of October 2007 were "a memorable lesson for us.... Initially we were worried that the trade union leaders would be toxic if they returned to the factory, but in fact they have turned out to be some of the best workers!"

There have been ‘hard' business benefits too, in the shape of a 30 percent increase in productivity and an increase in orders from Inditex from 9 million to 11 million garments annually.

Inditex has also been rewarded for its efforts with more stable supply to cope with its fast global marketing development.

Wider co-operation on tackling workers' rights

As well as enabling Inditex to respond swiftly and effectively with specific incidents in supplier factories, the Global Framework Agreement has also provided the umbrella for a larger programme of work between Inditex and ITGLWF. Over the past two years Inditex and the ITGLWF have together revised the company's code of conduct and agreed a new procedure for agreeing the code, started to revamp Inditex's audit methodology and developed new training material for auditors.

Future plans include looking at the impact of Inditex' buying practices on the ability of its suppliers to comply with its code of conduct and increasing the transparency of the company's supply chain.

The Global Framework Agreement (GFA) between the ITGLWF and Inditex is the first of its kind to focus on the conditions of workers in a company's supply chain. Until now, the scope of GFAs between multinational companies and global trade union federations had been limited to a company's direct employees.