final report impact assessment of the public private

Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ)

Final Report

November 2010

FINAL REPORT

IMPACT ASSESSMENT OF THE

PUBLIC PRIVATE PARTNERSHIP OF

GTZ AND TCHIBO – WE PROJECT

FINAL REPORT

IMPACT ASSESSMENT OF THE PUBLIC PRIVATE

PARTNERSHIP OF GTZ AND TCHIBO – WE PROJECT

Ramboll

Saarbrücker Straße 20/21

10405 Berlin

Germany

T +49 30 30 20 20-0

F +49 30 30 20 20-299

www.ramboll-management.com

Contact Person: Tobias Stern Business Manager T 030 30 20 20-203 M 0151 580 15-203 F 030 30 20 20-299 [email protected]

IMPACT ASSESSMENT OF THE PUBLIC PRIVATE PARTNERSHIP OF GTZ AND TCHIBO – WE PROJECT

CONTENTS

1. Executive Summary 1 2. Introduction 9 3. History and Facts of the WE Project Approach 11 3.1 Project Background: Brief History of Labour Standard Implementation 11 3.2 Project Genesis and Conception 15 4. The WE Project and its Logic 18 4.1 Intervention Logic in Detail 18 4.1.1 Outputs of the WE Project Approach 20 4.1.2 Outcomes of the WE Project Approach 21 4.1.3 Impacts of the WE Project Approach 22 4.1.4 External Factors 23 5. The Research Design of the Impact Assessment 24 5.1 Methodological Challenges 24 5.2 Phase 1: Inception Phase 24 5.3 Phase 2: Case Studies 27 5.4 Phase 3: Reporting 28 6. Overview on Interviews and Case Studies Conducted 29 6.1 Interviews with German Stakeholders 29 6.2 Interviews with Stakeholders in the Project Countries 29 6.3 Case Studies: Number and Regions of Case Studies 29 7. Results of the Impact Assessment 30 7.1 Impacts on Dialogue 30 7.1.1 Assessment of the Impacts on Dialogue 35 7.2 Impacts on Social Standards 35 7.2.1 Assessment of the Impacts with regard to Social Standards 44 7.3 Impacts on Economic Performance 45 7.3.1 Assessment of the Impacts on Economic Performance 48 7.4 Dissemination of the WE Project Approach 49 7.4.1 Assessment of the WE Project Approach’s Dissemination 50 8. Overall Conclusions 51 9. Success Factors of the WE Project Approach 53 10. Approach to WE 2.0 – Recommendations 54


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1. EXECUTIVE SUMMARY

The project approach “WE – Worldwide Enhancement of Social Quality” was developed jointly by the GTZ and Tchibo in 2007. Prior to the project two dialogue projects were conducted in 2006 within the context of the Round Table Codes of Conduct supported by the BMZ. The projects “Enabling Dialogue between Management and Employees” were directed at supplier firms in Romania and Bulgaria. The project in Romania was jointly financed with adidas and puma as well as through in-kind contributions from oxfam and German unions (e.g. ver.di, IG Metall, DGB-Bildungswerk). The tools applied in the Romania/ Bulgaria project can be considered as the prototype of the methodology of the WE project approach. The WE project approach was developed with the aim of achieving sustainable improvement in working conditions in Asian manufacturing sites. Against this background, the project has been funded as a Public Private Partnership (PPP) by the BMZ for the period of September 2007 until August 2010. The total project budget amounted to €2.6 million and the BMZ covered around 45 % of project costs. Tchibo and the GTZ have carried out the pilot project with 40 of Tchibo’s supplier firms in three project countries, namely China, Bangladesh and Thailand. The project’s duration comprises three years, two of which are dedicated to the training of the participating supplier firms. The WE project approach pursued thereby the following objectives:

• On the factory level, the WE project approach aimed to achieve a significant and sustainable improvement of working conditions in supplier firms on three interdependent levels, namely dialogue structures, compliance with social standards and economic performance.

• On the trainer level, the WE project approach intended to establish the training approach on a permanent basis via the chosen training organisations and to disseminate and establish it on the local market. By this, in turn, demand for the service shall be generated among international trading companies and local manufacturers which shall lead to the establishment of the training as a permanent part of the local service offer on social standards.

In the framework of the WE project approach Rambøll Management Consulting was commissioned by Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) to conduct the impact assessment of the Public Private Partnership “WE-Worldwide Enhancement of Social Quality” by GTZ and Tchibo. The impact assessment included an analysis of all the essential documents and data, in-depth interviews, a survey among all participating factories as well as four case studies in four regions in Bangladesh, China (two regions) and Thailand. Within these four case studies 14 factories were visited. The objectives of the impact assessment were:

• To evaluate the WE project approach’s impact on the trainers’ ability to apply the training instruments, as well as their ability to successfully convey to the participating factories knowledge on social standards and their implementation by using a dialogue oriented methodology.


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• To analyse the trainers’ impact on the scale-up of the project in terms of generating training demand from local manufacturers and international trading companies

• To assess the project’s impact on working conditions for employees in the production facilities and inherent economic benefits such as improved product quality or productivity.

As a result of the impact assessment it can be concluded that the WE project approach shows achievements in a challenging context, albeit differences in degrees in these achievements exist related to individual factories and regions. Furthermore, it became obvious in the course of the impact assessment that no alternative approach exists which could replace the WE project approach. Consequently, it can be concluded that a dialogue-oriented approach in the field of social standards is needed, but should be accompanied by measures on the political (e.g. stronger labour law enforcement, government incentives for compliance) and systematic level (e.g. further guidance on process of utilizing communication channels and dialogue structures at factory level) in form of an enhanced inclusion of government and civil society organisations such as trade unions. In terms of the impacts with regard to the objectives and target dimensions of the WE project approach, the impact assessment draws the following conclusions: In the field of communication and dialogue1, the WE project approach could achieve improvements in most of the visited factories. In these factories, dialogue and communication structures were established or adapted through the project which led to a change in attitudes between the workers and the management in the respective factories. This ultimately led to improvements in working conditions (see below). However, distinct differences between the four regions were observed. While in North and particularly South China elaborate communication and dialogue structures as well as processes were implemented and actively used, in Bangladesh and Thailand these communication and dialogue structures mainly took the form of committees and were so far not always used actively and regularly in daily working processes. Furthermore, the WE project approach could also realise impacts concerning the improved compliance with social standards in the visited factories. In this regard, it can be concluded that the WE project approach can show most developments regarding the social standards of welfare, Organisational Health and Safety (OHS) and worker representation. Regarding compensation and overtime, some positive changes were observed in the participating factories which could be attributed to the WE project approach. However, also in the field of improved compliance with social standards tangible differences between the four regions exist. In North and especially South China, more numerous and complex changes in the described social standards could be observed than in Bangladesh and Thailand. These differences can be explained by regional and external conditions such as the fluctuation (of management and workforce), the educational level of the workforce and management as well as the traditions in

1 For the purpose of this report “communication and dialogue structures” are defines as the formal and informal flow of

information within a group (e.g. division, factory project group) (Rosenstiehl 2000).


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the respective regions towards worker involvement, participatory approaches and worker organisation/unionization in general. These factors defined different starting points for change in the different project countries thereby leading to different results at the end of the project. In addition to these impacts, the WE project approach further had a considerable impact on the economic performance of the participating factories. A tangible economic impact could be observed in most factories in Thailand, South and North China while in Bangladesh positive tendencies could be reported. The greatest impact of the WE project approach is seen in the decrease of accident and rejection rates in the factories while also major impacts regarding productivity, worker fluctuation and absenteeism could be detected. Regarding the dissemination of the WE project approach in the respective regions, the impact assessment comes to the conclusion that the dissemination so far took place only to a limited extent (see chapter 7.4). The main challenges identified by the local trainers in disseminating the WE project approach were the long duration of the programme, the at first sight for external stakeholders missing compliance orientation and open issues regarding the copyright status. Overall Conclusions

Against the background of these findings it can be concluded that the WE project approach is a successful instrument in enhancing the compliance of participating factories with regard to certain social standards. At the same time, it is not a stand-alone instrument. Specific social standards such as compensation or overtime have to be addressed in a wider framework involving the international buying community, governments, trade unions and other relevant stakeholders. It is here where GTZ can play a decisive role, involving these stakeholders more closely in a future project and disseminating the project’s approach more effectively. Furthermore, the WE project approach’s has to be more closely tailored towards local circumstances and traditions2 in order to better be able to deconstruct power structures and to create opportunities for voice in the respective factories. This in turn would lead to better impacts of the WE project approach in the respective regions. On the level of communication and dialogue within the factories, the WE project approach achieves tangible impacts which are reflected in the changed attitude between workers and the management as well as adapted or newly introduced communication processes in the factories. It became apparent that these changes are necessary to achieve impacts on the level of social standards and that a dialogue-oriented approach therefore is needed for change. The WE project approach is currently a pioneer in using dialogue training in this particular form. There are other initiatives which work on improving dialogue between managers and workers. What differentiates WE is a clear cut methodology and tools which make dialogue processes rational and help balances power imbalances between the dialogue partners. Finally, by building on the inclusion and motivation of the most relevant stakeholders at factory level the approach clearly leads to a win-win situation and brings about economic gains for the participating factories. Although factories 2 For the purpose of this report “tradition” is defined as the passing on of action patterns and belief systems.


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have realised the “business case” of social standards to a varying extent, all visited factories could observe economic advantages (e.g. increased product quality and productivity; decreased absenteeism, sickness rate and labour turnover) through their participation in the WE project approach.


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Recommendations

The presented conclusions lead to the following seven recommendations:

The impact assessment showed that factories in which a stable group of workers and managers participated in the WE project approach were in a better position to implement changes regarding their compliance with social standards. This was due to the fact that the participants in these factories gained a better and more encompassing understanding of social standards and also were in a better position to develop strategies of dissemination within their factories. In order to ensure a more broad-scale success of the WE project approach in the future, the evaluator recommends that each participating factory in the project should be obliged to provide a stable group of participants on the side of the workers and the management. It must be noted that this is a challenging requirement due to the general turnover rate of employees and managers as well as the trust level this requires from the beginning.

It was highlighted by various stakeholders that many factories need more guidance throughout the WE project approach to achieve more and better impacts. Against this background it is recommended to develop an overall roadmap with the participating factories at the beginning of the project in which the factories’ goals for the project are documented. Although a key principle of the WE project approach was that the factories developed their own Action Plans describing measures fit to improve certain working conditions, it is also important that overall, longer-term goals – going beyond single topics - are developed by the factory. Hereby it is crucial that these goals are not put forward by the brand in order to build trust and create ownership on the side of the participating factories. Furthermore, it should be clearly communicated that the goals can be changed or adapted in the face of external circumstances or new insights in the course of the project. When the goals are set by the factory, baseline information should be provided by the factory to measure its progress towards its goals during the WE project approach’s implementation. This would also strengthen the commitment of the participating factory, as ownership is created and progress becomes visible. However, this again requires a certain level of trust, a guarantee of anonymity of the company data as well as an understanding of the benefits of monitoring Key Performance Indicators. Besides, the established instrument of letting the factories develop their own Action Plans on key social standards topics and internal dialogue after each workshop and monitor progress through regular factory visits should be continued.

3. Recommendation: Further adapt the project approach to local

circumstances and traditions

2. Recommendation: Define overall project goals together with each

participating factory at project start

1. Recommendation: Assess whether factories can set-up a fixed group of

factory participants (management & workers) for the whole project

duration


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During the impact assessment it was highlighted by various stakeholders that the approach of the WE project approach is not yet fully adapted to local circumstances and traditions. Therefore, it is recommended to further adapt the existing training material to local circumstances and traditions by using an increased number of country specific examples for illustration purposes. More importantly, also the communication channels recommended by the WE project approach should be further adapted to local circumstances. As the case of Bangladesh demonstrated, some concepts could not be used adequately by the participants of the project (e.g. suggestion boxes) as workers would have needed more training on how to use them and to internalise the necessary processes of usage. As a consequence, further concepts for different local circumstances and traditions should be developed in order to adapt the WE project approach accordingly in order to better be able to deconstruct power structures and to create opportunities for voice in the respective factories.

Factories in which the approach of the WE project was dispersed widely throughout the factory experienced better results than other factories. As a consequence, the WE project approach should develop motivating strategies by which the project’s methods and concepts can be communicated throughout the entire factories. Possible approaches could be the presentation of project results during worker assemblies or strategies for a wider worker involvement in the WE project approach. These could for example take the form of trainings in which the worker participants pass on methods and knowledge of the WE project approach to other interested workers.

To increase the ownership of the factories in the WE project approach and thereby improve its impacts, it is recommended to introduce a financial contribution for the participating factories that goes beyond the current financing of travel costs, the undertaken investment in the improvement of labour standards and the time-input. This contribution can take different forms. On the one hand, it could be a symbolic financial contribution which has to be paid by the factories at the beginning of the project. On the other hand, it could take the form of a margin of the economic profits which the factory achieves through the project. These payments could be transferred into a fund which would make the project financially self-sustainable in the long-run. Furthermore, it is recommended that the future participating factories have to provide baseline data with regard to their economic key performance indicators before participating in a similar project. Since this data is sensitive business data, the factories could be convinced to start a self-monitoring of their key performance indicators at the beginning of the project in order to ensure them that this data will not be detrimental to their business relations. By possessing this baseline data, one will be able to demonstrate the economic case of the WE project approach more effectively to the factories already in the course of the project.

5. Recommendation: Increase ownership of the factories through a financial

contribution

4. Recommendation: Develop a strategy to disperse the project‘s methods

and concepts within each factory


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In order to strengthen the commitment of future participating factories, it is recommended to strongly highlight the positive impact on the economic performance of the factories in the future. This can be either achieved by means of communication when recruiting new factories for the WE project approach or by means of best practice examples which should be included into the training material. Furthermore, factories which have already participated in the WE project approach could be invited to inform new factories about the economic benefits which they could realize. This will increase the credibility of the business case related to taking part in the WE project approach and thus will enhance the commitment of the future participating factories

To disseminate the approach of the WE project in the future, a decision has to be taken regarding the means of its dissemination.

1. The WE project approach could be disseminated via a newly established organisation/ platform or provider structure which would disseminate the approach via training courses to further training organizations as well as NGOs, trade unions and employer organisations and other relevant stakeholders. This platform could finance itself at least partially for example via fees for trainings and/or the financial contributions of the factories.

2. The WE project approach including the corresponding training material is made available as open source material. Each organisation and individual who is interested, can use and adapt it according to his or her needs. The introduction of the WE project approach as open source would have to be accompanied by a marketing campaign which particularly also targets trade unions, employer organisations, etc.

In both options, the involvement of government, trade unions, employer organisations and other relevant stakeholders is crucial as the impacts and the dissemination of the WE project approach can be enormously increased through the involvement of these organisations. Especially regarding social standards such as compensation, the support and involvement of these key actors on the systematic level is needed in order to achieve progress. On this level, GTZ can play a crucial role, facilitating the dissemination of the WE project approach and increasing its impacts at a factory level. In the light of the two proposed options the evaluator recommends the adoption of option one as in this option the quality of the trainings and a more targeted dissemination can be more thoroughly guaranteed. Furthermore, only with a platform or at least a coordinated approach can the involvement of additional stakeholders (trade unions, employer organisation) be organised. Furthermore

7. Recommendation: Take a decision about the future dissemination process:

“Steered multiplication vs. individual dissemination / open source”

6. Recommendation: Highlight the business case for future participating

factories


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the platform can also be used for lobbying purposes to ensure acceptance on the side of the relevant government agencies.


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2. INTRODUCTION

Rambøll Management Consulting was commissioned by Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) to conduct the impact assessment of the Public Private Partnership “WE –Worldwide Enhancement of Social Quality - Project” by GTZ and Tchibo. The project was implemented in the time period from September 2007 until August 2010 and aimed at implementing social standards at production facilities in Asia through applying a dialogue oriented training methodology. The objectives of the impact assessment were:

• To evaluate the WE project approach’s impact on

o the trainers’ ability to apply the training instruments

o the trainer’s ability to successfully convey to the participating factories knowledge on social standards and the corresponding implementation methodology – the dialogue approach.

• To analyse the trainers’ impact on the scale-up of the project in terms of generating training demand from local manufacturers and international trading companies

• To assess the project’s impact on working conditions for employees in the production facilities and inherent economic benefits such as improved product quality or productivity.

The impact assessment was conducted within five months (April 2010 to August 2010). Within this time period, the evaluation team of Rambøll Management Consulting conducted a desk research of all relevant project documents and data, in-depth interviews as well as four case studies in each of the three countries, namely Bangladesh, Thailand and China. The results of the impact assessment were presented and discussed in a workshop with GTZ and Tchibo representatives as well as on the WE Stakeholder Conference in Berlin in June 2010. A detailed outline of the methodological approach can be found in chapter 5 and 6. The following report documents the results of the impact assessment. It is structured as follows

• Chapter 3 gives an overview of the WE project approach’s history and genesis.

• Chapter 4 explains the WE project approach’s intervention logic.

• In Chapter 5 the methodological approach of the impact assessment is presented.

• Chapter 6 gives an overview of the conducted interviews and case studies in the framework of the impact assessment.

• Chapter 7 presents the results of the impact assessment regarding its achieved objectives and impacts.

• Chapter 8 presents the conclusions.

• In Chapter 9 the success factors of the WE project approach are set out.


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• Chapter 10 displays the recommendations for a rollout of the WE project approach.


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3. HISTORY AND FACTS OF THE WE PROJECT

APPROACH

3.1 Project Background: Brief History of Labour Standard Implementation

In the course of globalization and the opportunity for border crossing flows of finance and goods, supply chains have increasingly been diffused to developing and newly industrialized countries – among them many on the Asian continent. These countries display comparative cost advantages, especially in terms of the production factor labour. Thus, most international trading companies today source the majority of their labour intensive consumer goods from Asia, particularly including items like garments, jewellery and electronics. Likewise, Tchibo as a multinational company purchases many of its consumer goods from companies in Asia. While this development has created advantages and opportunities, it has also brought about new challenges. Globalization has generated employment, but there are valid concerns whether the employment conditions adhere to human rights, and ensure representation and protection of employees. Excessive working hours, poor wages or other unacceptable working conditions remain serious problems despite an increasing global effort by both public and private stakeholders to safeguard international labour standards as defined by the International Labour Organization (ILO).3 Since its establishment in 1919, the ILO features a unique membership structure: each member state has four representatives; two representing government, one representing the employer’s side and one representing the workers’ side. The ILO defines international labour standards through conventions, recommendations and codes of practices. It seeks to advance the opportunities for women and men to obtain decent and productive work in conditions of freedom, equity, security and human dignity. The ILO has defined “Core Labour Standards”, which are included in various human rights instruments and count as international customary law. Core Labour Standards as defined by the ILO include the freedom of association and the effective recognition of the right to collective bargaining, the elimination of all forms of forced or compulsory labour, the effective abolition of child labour and the elimination of discrimination in respect of employment and occupation. The body of international labour standards focuses furthermore on a range of other issues, such as minimum wage levels, occupational health and safety standards or working hours. Most developing and emerging countries have ratified a majority of key ILO Conventions and have installed a comprehensive and sophisticated labour legislation. However, there is a clear gap in implementation, as many developing countries firstly face limited capacities to enforce such rules: This creates incentives to circumvent stipulated labour standards, especially in the face of highly competitive markets with strong price pressure and strict delivery deadlines. Secondly, the general discourse in these countries assumes that the

3 Locke, R. et al (2006): Does Monitoring Improve Labour Standards? Lessons from Nike. MIT Sloan Working Paper No.

4612-06, MIT Sloan School of Management


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introduction of social standards makes production processes more expensive and thus the factories less competitive.4 In recent years, the need to tackle the persisting problem of inadequate labour standards in emerging and developing countries has increasingly been recognized by the international community and national governments as well as the private sector. Public authorities and the international community see the enhancement of labour standards as an important factor of ensuring basic human rights and supporting international development. As a reaction to an increased political and public interest in corporate social responsibility towards working conditions of employees in developing countries private companies likewise increasingly attach importance to the adherence of their supplier firms to social standards. Corporate Social Responsibility and labour standards: Pertinent approaches and

barriers

Since the 1990s, multinational enterprises have increasingly engaged in the promotion of better working conditions and labour standards at the independent overseas production plants from which they source their products. Partly, this development was triggered by growing pressure from NGOs who publicly highlighted cases of human rights violations in global supply chains. At the same time, the enhanced engagement regarding labour standards was also perceived as a risk management strategy for enterprises. More customers are becoming aware of labour rights problems in developing countries. In the light of competing offers of products, it is easy for them to boycott companies that do not respect social standards. Since the beginning of the 1990s, therefore, internationally operating companies have sought to identify and develop mechanisms to establish their overseas suppliers’ compliance with international social standards. At the early stage of international labour standard implementation, the main instruments applied were corporate codes of conduct, developed individually by international trading companies. These codes listed sets of labour standards and workers’ rights. Suppliers were required to sign these codes which thereby became a binding part of the business relationship. Through the use of such private law mechanisms, the aim was to compensate the enforcement gap accompanying national legislation.5 It was soon realized, that codes alone do not trigger implementation. Leaning on experiences from quality standard implementation, the mid- to end 1990s marked the emergence of social audits as a main measure to ensure code compliance. Social auditing, on the one hand, aims at monitoring factories’ compliance with social standards, while at the same time, it symbolically demonstrates the importance of social standards towards supplying companies. Until today, most international brands and retailers rely on social audits to ensure adherence to their standards.6

4 International Labour Organisation (2010): About the ILO. Available at. http://www.ilo.org/global/About_the_ILO/lang--

en/index.htm (accessed on 2.11.10) 5 O’Rourke, D (2003): Outsourcing Regulation: Analyzing Nongovernmental Systems of Labor Standards and Monitoring.

In: The Policy Studies Journal 31(1), S.1-29 6 Ibid.


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Since the late 1990s, multinational companies have increasingly joined forces among each other or with other stakeholders and interest groups, in order to exchange best practices and to jointly develop solutions to improve the existing approaches to the implementation of labour standards. An exemplary case is the Fair Labour Association (FLA), a non-profit organization of companies, universities and civil society initiatives working to improve labour standards in factories around the world. Especially since 2004, broader-based / multi-sector approaches have also increasingly been worked out in joint business initiatives, e.g. the Business Social Compliance Initiative (BSCI) or the Global Social Compliance Programme (GSCP).7 Until today, social audits prevail as the major instrument to tackle inadequate labour standards. In the face of unsatisfying results and progress in overseas supplier firms, however, numerous stakeholders are questioning whether social auditing alone, will lead to sustainability and effective improvements. The goal of social auditing is to raise transparency over compliance gaps, as a prerequisite to change. However 15 years of implementation experience has shown that social auditing fails to create transparency over more complex topics, such as breaches of freedom of association and the right to collective bargaining or discriminatory practices. Furthermore, naming compliance gaps has created change in “easy-to-implement issues” (e.g. easy Health and Safety aspects), but results have been limited in the categories wages, working hours, discrimination and freedom of association and the right to collective bargaining. Against this background, there is an increasingly wide-spread agreement among pertinent stakeholders and multinational enterprises that the passive social auditing tool is not sufficient as a means of sustainably introducing social standards. As a response, many brands and retailers have included training measures for suppliers into their social programmes. Their aim is to provide their manufacturers with a deeper understanding of the nature and importance of labour standards and thereby to trigger motivation for implementation. The supplier firms’ management is generally the target of such training programmes. However, these programmes have been criticised by NGOs such as the Clean Cloth Campaign (CCC) as workers are rarely integrated. As a consequence they are not informed about their labour rights in these programmes and changes cannot be sustainably implemented as the workers are not capable of claiming their given rights.8 Labour standards and the international development agenda

In recent years, the international community has increasingly proclaimed that an effective implementation of labour standards can play an important role in reaching internationally agreed development goals. Wages securing a decent standard of living, for instance, can contribute to poverty reduction. A permanent reduction of overtime can contribute to better health of the population. The ILO,

7 Federal Ministry for Economic Cooperation and Development: Development policy with a profit – public-private

partnerships. http://www.bmz.de/en/issues/wirtschaft/privatwirtschaft/ppp/index.html (accessed on 2.11.10) 8 Burckhardt, G. (2010): Die Schönfärberei der Discounter: Klage gegen Lidl’s irreführende Werbung. Case study in

Bangladesh for the Clean Clothes Campaign (CCC). Available at:

http://doku.cac.at/studie_klagegegenlidl_kampagnefuersauberekleidung_april2009.pdf (accessed on 20.8.10)


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e.g., has developed a “Decent Work Agenda”, calling for a development strategy that acknowledges the central role of work in people's lives. The principle of “decent work” refers to issues like income, rights, voice, fairness and gender equality and has notably also been incorporated in the UN Millennium Development Goals (MDG). MDG1 (“Eradicate Extreme Poverty”) now includes the sub-target “achieve full and productive employment and decent work for all, including women and young people”. The UN General Assembly has also recently adopted a resolution declaring “full employment and decent work for all” the central theme of the “Second UN Decade for the Eradication of Poverty (2008-2017)”.9 In this light, the international community and national development programmes are increasingly recognizing multinational enterprises (MNE)’s responsibility and leverage regarding the implementation of labour standards due to their business relationships with companies from developing and emerging economies. On an international level, to this end, the UN Global Compact Initiative was launched in the year 2000, aiming to catalyze corporate action in support of the Millennium Development Goals. The initiative supplements prior instruments aiming at global corporate responsibility, such as the OECD Guidelines for Multinational Companies (1979), providing voluntary principles and standards for responsible business conduct and the ILO's corresponding Tripartite Declaration concerning multinational enterprises and social policy (1977).10 Labour standards and German development cooperation

In the framework of its development policy, Germany is committed to enforce fundamental labour laws in the framework of its development cooperation. It aims both at promoting economic growth and at establishing decent living and working conditions, as both areas serve the goal of poverty reduction. Germany’s commitment encompasses three pillars: The support of international organizations, dialogue with partner countries and cooperation with the private sector. Regarding the latter, German development cooperation with the private sector is built upon the government’s recognition that internationally active businesses have the opportunity to reduce social grievances in developing countries and newly emerging markets. In the government’s view, economic cooperation can at times constitute a more efficient means for eliminating social ills than political measures alone given multinational enterprises’ influence. From a business perspective, on the other hand, isolated business approaches have fallen short of creating substantial change on a broad scale, as certain labour issues (e.g. living wages) require a political and legislative approach. At this interface between the economic and the political lies a business case for cooperation.11

9 Federal Ministry for Economic Cooperation and Development: Development policy with a profit – public-private

partnerships. http://www.bmz.de/en/issues/wirtschaft/privatwirtschaft/ppp/index.html (accessed on 2.11.10) 10 Locke, R./Romis, M. (2006): Beyond Corporate Codes of Conduct: Work Organizazion and Labor Standards in Two

Mexican Garment Factories. MIT Working Paper No. 4617-06, MIT Sloan School of Management 11 Federal Ministry for Economic Cooperation and Development: Development policy with a profit – public-private

partnerships. http://www.bmz.de/en/issues/wirtschaft/privatwirtschaft/ppp/index.html (accessed on 2.11.10)


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Private sector development cooperation in the area of labour standards takes place on various levels:

• Voluntary codes of conduct and private sector initiatives: The German government promotes initiatives of multinational enterprises and the incorporation of codes of conduct in their supply chains. It has also initiated the “Round Table Codes of Conduct”, facilitated by GTZ. The Round Table is a multi-stakeholder forum in which representatives from companies and business associations, NGOs, trade unions and the government discuss voluntary initiatives promoting social standards in companies which source their products from developing countries. Germany also supports the UN's Global Compact Initiative, with the GTZ facilitating the secretariat.12

• Fair trade: The German government supports fair trade initiatives, one of the reasons being their adherence to social standards apart from ensuring fair payment to the smallholders. One focus of the government’s measures is the dissemination of information on fair trade among consumers.13

• Development partnerships with the private sector (PPP): Furthermore, the Federal Ministry for Economic Cooperation and Development (BMZ) supports development partnerships with the private sector (Public Private Partnerships - PPP). The program focuses on European companies holding business relations in developing countries which aim to carry out a project which is “in accord with the principles of German development policy, of obvious relevance to development policy, and acceptable in environmental and social terms”14. The implementation of projects is conducted by the enterprise in cooperation with GTZ (the German Agency for Technical Cooperation), DEG (the German Investment and Development Company) or the Foundation for Economic Development and Vocational Training (SEQUA). The PPP program was launched in 1999 along with a separate fund.15

The WE project approach is a Public Private Partnership which was supported through the GTZ both conceptually, financially and in terms of logistics in the project countries.

3.2 Project Genesis and Conception

The project “WE – Worldwide Enhancement of Social Quality” was developed jointly by the GTZ and Tchibo in 2007. Its aim was to achieve sustainable improvement in working conditions in Asian manufacturing sites. The project was funded as a PPP by the BMZ for the period of September 2007 until August 2010. The total project budget amounted to €2.6 million and the BMZ covered around 45% of project costs. Tchibo and the GTZ carried out the pilot project with 40 Tchibo suppliers in China, Bangladesh and Thailand. The project’s duration comprised three years, two of which were dedicated to the training of the participating supplier firms.16

12 Ibid. 13 Ibid. 14 Ibid. 15 Ibid. 16 WE: The project WE at a glance. www.we-socialquality.com/DownloadDocument.aspx?id=55 (accessed on 2.11.10)


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The training approach was built on an innovative dialogue-approach to improve labour standard implementation. It was designed to establish dialogue structures between all levels of factory staff in order to ensure more successful labour standards implementation. This implied dialogue between the management and workers of a factory, as well as between the suppliers and the Tchibo buyers. Besides, civil society organisations, government representatives and further brands and retailers participated in project activities in an observer´s role. According to the project partners, the inclusion of stakeholders beyond the factory level will be further strengthened in the next phase of the project.17 The focus on a dialogue-oriented training approach was based on the project partners’ assumption as well as insights from further stakeholders that existing instruments like corporate codes of conduct and social audits face shortcomings in ensuring a self-driven, permanent and comprehensive improvement process towards compliance with labour standards in supplier firms (see chapter 3.1). The reason for this is that social audits only set standards and pinpoint non-compliances but fail to profoundly anchor a thorough understanding of the importance and benefits of labour standards in supplier firms. Furthermore, they are not accompanied with a methodology on how to implement the standards. Therefore, social audits and other classic tools try to generate change in a simplified manner, as they ignore complex interdependencies of hierarchies, socio-economic aspects, gender, local and global power relations in a multiple-stakeholder context.18 The WE project approach instead builds on the integration of both managers and workers in order to achieve more effective and sustainable change processes within the factories. The underlying idea was that dialogue is one key factor to success in sustainable labour standards implementation in various ways: On the one hand, only by entering into a continuous and constructive dialogue can retailers, management staff and workers identify problems which hamper improvement of working conditions in the company, work out ways to overcome these problems and eventually identify mutual benefits and advantages of labour standards. On the other hand, only by embarking on a real dialogue with the suppliers can a company like Tchibo mediate the importance of social standards within its global supply chains. The crucial aspect here is to initiate an exchange between managers and employees from different hierarchical levels of a factory and to provide the tools and methods needed that enable participants to jointly improve working conditions and pressing problems related to their workplaces. A successful solution finding process brings about the benefit of building trust and further promoting dialogue between parties that are not used to speaking to each other and exchanging in a constructive manner.19 Against this background, the WE project approach aimed to achieve impacts on two levels, namely on the level of supplier firms and on the level of local training organizations. This is demonstrated in figure 1:

17 Ibid. 18 Ibid. 19 Ibid.


17

Figure 1: The Objectives of the WE Project Approach

Source: WE Project Website http://www.we-socialquality.com/WE-Specificity/Project-procedure/Effect-analysis.aspx?l=2

(accessed on 23.2.10)

On the one hand, as the figure shows, the WE project approach aimed to achieve a significant and sustainable improvement of working conditions in supplier firms in the pilot regions. The ultimate aim was to improve the factories’ conduct on three interdependent levels: Dialogue structures in the factories, compliance with

social standards and economic performance. In the initial project stage, change should take place at the level of the participating pilot firms as a direct impact of the WE project approach. With the improved access to local service providers - equally triggered by the WE project approach - an improvement of working conditions for employees in the wider manufacturing industry in the regions was envisaged as a further indirect impact. On the other hand, the WE project approach intended to achieve lasting impacts on the level of local training organizations. As a direct impact of the ‘training of local trainers’, it was envisaged that the respective training organizations establish the training approach as a permanent part of their training offer. In a next step it should be disseminated and established by the training organisations on the local market and become a permanent part of the local service offer on social standards in the three partner countries. As a consequence of these actions demand for this training approach was to be generated among international trading companies and local manufacturers. Against this background the WE project approach’s goal has been considered synergetic with the objectives of the German development cooperation and is therefore funded and supported as a Public Private Partnership project as detailed in chapter 3.1.


18

4. THE WE PROJECT AND ITS LOGIC

4.1 Intervention Logic in Detail

The following chapter depicts the conception of the WE project approach in further detail. Thus, the detailed intervention logic of the project as reconstructed by Rambøll Management Consulting, comprising the project’s different steps and the underlying impact hypotheses giving reasons to the selection and arrangement/positioning of those steps will be presented. Figure 2 gives an overview of the project’s intervention logic as reconstructed by Rambøll Management Consulting on the basis of the relevant project documents and its discussions with Tchibo and GTZ.


19

Figure 2: Reconstructed Intervention Logic of the WE project approach

Development of training instruments and materials suited for the local context

Workers are involved in the decision-

making process on

social standards

Implementation of workshops and factory

visits

Selection of local training organizations

and pilot companies

Assessment of social

standards in project countries

Training needs assessment

Trainers gain/ enhance capacity about in-house

dialogue and social

standards

Training organizations

gain the capacity to establish the training on

local markets

The training organizations offer their training

services on the local

market and generate

demand for a dialogue-based

qualification on social standards.

Training is sustainably established as part of the local training

offer

Trainers function as multipliers to disseminate the training approach in

their organizations and networks

Trainer s help to establish dialogue and cooperation structures at the production

facilities

Communication between

managers and workers improves

Communication between buyers and suppliers

improve

Managers understand

the importance of

social standards and are open for dialogue Workers are

informed about the situation at

the production facility and company decisions

Consultation on social standards ,

with workers take place

Implementation of Train-the-

Trainer workshops

Transparency on different parties’

interest with the view of designing win-win solutions

Solutions to problems are developed within the

factories and trust is built

Key performance indicators have been improved sustainably

Pilot companies

have significantly improved working

condition for employees

Access to local service providers has

been improved sustainably for suppliers in the pilot regions

Improvements in working

conditions for employees are

initiated beyond the

pilot companies into

the wider manufacturing

industry

A network between the

pilot companies is established

Exchange of best practices

and on relevant

topics takes place

Best practices function as

beacons in the pilot regions

External factors

External factors and national legislation

Social standards are implemented in the pilot companies

Output

Outcome

Impact

External factors

Source: Rambøll Management Consulting (2010)

20

As figure 2 shows, the WE project approach’s intervention logic consists of various intertwined and interdependent outputs, outcomes, impacts and external factors. Based on the evaluation criteria of the BMZ20 and the OECD’s Development Co-operation Directorate (DAC)21, these components underlying the organization of the WE project approach are defined as follows:

• Outputs: Outputs are to be understood as all different kinds of interventions (such as trainings, activities, institutions, rules, and standards) developed and implemented in the framework of the WE project approach in order to effectively address the target problem.

• Outcomes: Outcomes are the immediate impacts which are intended to be triggered by the Outputs of the project. An outcome or intended immediate impact is for instance the gaining of expert knowledge on social standards and on the dialogue-training methodology among the trainers in the WE project approach.

• Impacts: Impacts are the intended long-term changes the project achieves. Broadly put, the overall impact of the WE project approach shall be the alleviation of social standards in the production facilities and project countries.

• External Factors: External factors comprise all framework conditions and events which are situated outside of the project’s conception and its sphere of influence, but which may in turn themselves influence the outcomes and impacts of the project.

In the following, the outputs, outcomes, impacts and external factors constituting the intervention logic of the WE project approach will be described in detail.

4.1.1 Outputs of the WE Project Approach

The project’s conception foresees various outputs at different stages of the project. These stages can be divided into a preparation stage, the training-of-trainers stage prior to the supplier qualification as well as a supplier qualification itself.

Preparation phase

Four major outputs constitute the preparation phase of the WE project approach: As one of the first steps initiating the project, the selection of the local training organizations and pilot factories was conducted. Pilot companies were selected along the following criteria: factories of current or future strategic importance for Tchibo as well as the product ranges produced by the factories. The project partners intended to cover a broad range of product groups to create a broad base of expertise on the process of implementing social standards. In the WE pilot project, 41 factories were initially selected in the three project countries China, Thailand and Bangladesh, out of which 40 factories decided to participate. In a parallel process, local trainers and their training organizations were selected. While the local GTZ offices were responsible for reviewing potential local training institutions, the selection of training organisations was finalized by representatives of Tchibo, the GTZ and the international coaches based on a pre-set/ pre-defined trainer profile. This profile included criteria such as work experience in the field of Corporate Social Responsibility (not only academic, but also at a factory level), methodological know-how, competences in addressing workers and managers as well as being a staff member of an established training organization , the latter ensuring for a good basis for the dissemination of the training approach. In two further steps, an assessment of the social standards situation in the project

countries and an assessment of the suppliers’ main training needs took place in order to create a sound basis for an effective implementation of the project. The suppliers’ training needs were derived from the social audits conducted in the framework of Tchibo’s Social Programme, which document the gap between standards in the factories and Tchibo’s Social Code of Conduct. Here it should be noted, however, that as discussed earlier, social audits have certain limitations in assessing the full status quo of a factory. Against this background the broader scale analysis of

20 BMZ (2006) Evaluierungskriterien für die deutsche bilateral Entwicklungszusammenarbeit,

http://www.bmz.de/de/zentrales_downloadarchiv/erfolg_und_kontrolle/evaluierungskriterien.pdf 21 OECD-DAC Glossary of Key Terms in Evaluation and Results Based Management, http://www.oecd.org/dataoecd/29/21/2754804.pdf

21

labour standard situations in the project countries, conducted by GTZ, was important for a more comprehensive understanding. Based on both perspectives, adequate training materials for

both factories and trainers were developed, this process being led by the GTZ. Training-of-Trainers

Following the initial preparations, the next central output in the WE project approach was constituted by the train-the-trainer workshops. In the framework of the training-of-trainer workshops, the selected local trainers were provided with expert knowledge on social standards and trained in their ability to support production facilities in dialogue tools and in establishing in-house dialogue structures according to the conception of the WE project approach. The trainings were conducted by so called international coaches who accompanied the entire implementation process of the WE project approach. Supplier qualification

Following the first training-of-trainer workshops on the training methodology, the next output of the WE project approach were the supplier workshops and factory visits. Seven supplier workshops and six factory visits (in between the workshops) took place throughout the duration of the project. They were implemented by the local trainers with the support of the international coaches. All participating supplier firms of a project region participated in the supplier workshops, each factory sending a team comprising four to six people, ideally consisting of two senior managers, two middle managers and two production floor workers. Furthermore, Tchibo buyers took part in the workshops. The objective of the supplier workshops was to practice in-company dialogue processes. For this purpose, the participants were trained in two aspects: first of all in the six-step problem solving methodology which allows stakeholders with conflictual relations – as in this case between managers and workers – to come to a conclusion on a defined topic. The content for the problem solving derived from technical trainings on key social standards topics, specifically forced labour, child labour, discrimination, disciplinary practices, working contracts, compensation, working hours, welfare, occupational health and safety or the international social management standard SA8000. In each workshop, managers and workers practiced to apply the six-step problem solving methodology to a dialogue structure and/ or labour standard topic and created joint Action Plans as result. The factory visits took place in between the workshops. They aimed at supporting the firms in implementing the agreed measures. The implementation status of the action plans was jointly evaluated and solutions to overcome obstacles were developed if necessary. Also, further training on social standards was given to the workers and their representatives on specific social standard topics. Furthermore, existing dialogue processes in the factories, like round tables, quality circles or work councils were moderated by the trainers. Overall, the local trainers facilitated the factory visits with the international coaches accompany half of the visits.

4.1.2 Outcomes of the WE Project Approach

According to the WE project approach’s intervention logic, the above mentioned outputs were to trigger a range of sequential outcomes, the latter of which were then again central to the achievement of the project’s overall intended outcomes and impacts. The first central outcome foreseen in the project’s intervention logic was the successful capacity building of the local trainers in terms of their ability to facilitate in-house dialogue and

convey knowledge on social standards through the train-the trainer workshops. This outcome was in fact key to all further intended outcomes in the project, which were to occur on the level of the participating factories on the one hand and on the trainer level on the other hand.

22

Factory level

Regarding the further outcomes at factory level, the trainers were, after a successful training on in-house dialogue and social standards, able to successfully facilitate the establishment of

dialogue and cooperation structures among the production facilities through the factory visits and supplier workshops as a second outcome of the project. Against this background, several outcomes were foreseen to emerge among the participants during the workshops and factory visits. On the one hand, the management was expected to

understand the importance of social standards for their overall company performance

and future business relations and to be open for dialogue with the workers and regarding worker involvement. This was an important first step, as the support and openness of the factory managers towards the new input was deemed crucial to the success of the project. Parallel, the workers’ capacity to express themselves was developed. Furthermore, throughout the supplier workshops and factory visits and by means of the qualified training by the local trainers and international coaches, transparency on different parties’ interests with the view of

designing win-win solutions was expected to be generated as an outcome. This implied that both groups understood that they had to develop common goals (e.g. good performance of the factory, job security, reduced labour turnover, stable business relations, etc.) which could best be pursued if dialogue structures were in place. A third outcome of the factory visits and supplier workshops was that problems were identified through dialogue and that thus, solutions to these problems within the factories were jointly developed. This in turn generated trust between the management and the workers. As a more long-term outcome of the supplier trainings, the WE project approach foresaw that the triggered changes of attitude among both managers and workers led to increasing joint consultations between managers and workers on social standards and production

issues in the factories. Also, it was expected that workers were increasingly informed about

the situation at their production facility as well as about company decisions. This outcome encouraged the final expected outcome on the factory level: Following this chain of positive change and progress, it was foreseen that the workers were generally involved in

the decision-making processes on social standards. The achievement of this latter goal was supported by a second and parallel string of outputs on the factory level, equally triggered by the supplier trainings. As the supplier workshops were designed to be conducted together with representatives from all participating supplier companies, it was expected as a further outcome that a network between the participating companies

was established. This development was for instance supported by creating space during the workshops for an exchange of best practice examples and peer learning. Trainer level

On the trainer level, the qualification of the trainers in terms of in-house dialogue and social standards, as well as their experience in facilitating the supplier workshops and factory visits, made the trainers function as multipliers to disseminate the training approach in their

organizations and networks. As a direct outcome of this, the training organizations gained the capacity to establish the training on the local markets and thus beyond the time frame of the WE project approach.

4.1.3 Impacts of the WE Project Approach

On the basis of the project activities conducted and the outcomes achieved, a set of interdependent long term changes will be reached. Again, these changes were to occur on the trainer level on the one hand and on the factory level on the other, whereas both levels are intertwined and synergetic: Impacts on both levels eventually contributed to the ultimate improvement of working conditions in the factories and in the wider manufacturing industry. Factory level

As a consequence of the lessons learned by managers and workers during the project activities, as well as the subsequent increased involvement of workers in the factory’s decision-making processes, the project’s intervention logic envisaged a major improvement of communication and

23

dialogue structures22 as a long-term impact. According to the project’s conception, communication structures between managers and workers, as well as communication

structures between buyers and suppliers improved sustainably due to the successful implementation of dialogue structures. At the same time, as a consequence of a cooperation of managers and workers using the underlying problem-solving methods, the pilot companies

have also significantly improved their working conditions. Eventually, on the WE factory level, these positive changes led to the implementation of social

standards in the pilot companies and, linked to this, to an improvement of the key

performance indicators of the factories. Ultimately, due to the demonstrated evident link between increasing social standards and the improvement of key economic performance indicators in the project, factories in the wider

manufacturing industry likewise begin to improve the working conditions in their production plants. This latter development was again also reinforced by the networking activities of the factories regarding best practices with respect to dialogue structures and social standards, as, according to the WE project approach’s logic, best practices start to function as “beacons” in the pilot regions Trainer level

On the trainer level, the organizations started offering the dialogue-based training and thereby at the same time generated demand for this type of training. Demand was also further generated due to the successful performance of the WE-factories in the project regions: They served as examples on how dialogue can improve social standards and economic performance of the factories. As a consequence, the dialogue-based training was established as a part of the local training offer. The establishment of the training in the regions, finally, will reinforce the improvements of working conditions for employees in the wider manufacturing industry in the pilot regions.

4.1.4 External Factors A whole range of external factors could have an influence on the project’s outcomes and impacts and therefore needed to be included in the intervention logic. These include, for instance, economic pressures, as the receptiveness of a factory’s management could be restricted during times of delivery deadlines. Furthermore, the regions’ labour laws and the level of their enforcement could have an impact on the project’s success. Additionally, infrastructural aspects such as the factories’ access to energy and water can have an influence on the project’s success. Also the educational level of workers and managers in the factories needs to be taken into consideration: Factory staff and management with a comparatively higher educational level may be more able to deconstruct power structures and create opportunities for voice than other factories. As a consequence the concepts of the WE project approach can be mediated quicker in these kinds of factories, thereby influencing positively the effectiveness and impact of the WE project approach.

22 For the purpose of this report “communication and dialogue structures” are defined as the formal and informal flow of information within a

group (e.g. division, factory project group) (Rosenstiel 2000).

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5. THE RESEARCH DESIGN OF THE IMPACT ASSESSMENT

The following chapter describes the methodological approach of the impact assessment of the WE project approach. In a first step it outlines the methodological challenges which evaluators encounter when evaluating highly sensitive issues such as social standards. In a second step it illustrates which methodological steps were taken and which research instruments were employed. Also, it describes the sources the conclusions were based on and how the conclusions were reached. The impact assessment consisted of four research phases:

Figure 3: Phases of the Impact Assessment

Phase 1: Inception Phase

Phase 2: Case Studies

Phase 2a: China Phase 2b: Bangladesh Phase 2c: Thailand

Phase 3: Reporting

April/ May

May/ August

May/ August

June/ August


5.1 Methodological Challenges

In general evaluations and impact assessments face the challenge that people confronted with an interview tend to conceal negative facts and highlight positive achievements. This especially holds true when evaluations are conducted in the field of working conditions or the improved compliance with social standards. Furthermore, in these sensitive fields evaluators are often seen as an outsider and a potential threat to – in this case – the factory or the employers. As a consequence it is an enormous challenge to the evaluator to establish a level of trust between the interviewee and her- or himself. This is even more enhanced by the fact that the factory visits in this impact assessment were restricted to one day due to time constrains. Against this background the evaluators acknowledge that some data, especially related to sensitive and personal issues such as discrimination, could not be collected in the framework of this impact assessment. The reason for this is that against the described background impact assessments in general do not provide the ideal conditions in which workers and managers would talk openly about every issue. In those cases, where these limitations were felt by the evaluators, the report indicates these limitations. However, in order to minimise the aforementioned challenges the evaluators used research methods which were adapted to the cultural background of the interviewees (see below). Furthermore, in order to build trust, the evaluators started the interviews by talking e.g. about the family and the families of the interviewee. Additionally, post cards of the respective home towns of the evaluators were used to establish a personal bond between the interviewee and the evaluator. Only after the interviewee was comfortable with the situation and had asked self-motivated questions regarding the reason why the evaluator was actually interviewing him or her the actual interview started.

5.2 Phase 1: Inception Phase

At the beginning of the inception phase, a constitutive coordination meeting between Rambøll Management Consulting, the GTZ and Tchibo GmbH was held. In this kick-off meeting, the details of the assignment were jointly determined and the planning for the impact assessment was adjusted. In conclusion, a finalized work plan with milestones of the impact assessment was drawn up.

25

As a starting point of the impact assessment, a desk research was conducted. The objective of the desk research was to gain a thorough understanding of the WE project approach as well as its context, and to thus build up a thorough foundation for the subsequent steps of the analysis. To this end, the desk research was divided into two parts, which were conducted simultaneously. On the one hand, an in-depth analysis of the existing WE project approach data was carried out in order to gain a deeper understanding of the WE project approach ’s organization, goals, concepts and procedures. The documents analysed relevant project documents and social audit reports as well as monitoring and evaluation documents of the project’s implementation, impacts and progress. The analysed documents comprised:

• Social audit reports from prior to the WE project approach (2007) and Re-Audit reports (2010)

• Stakeholder conference materials • Factory visit reports • Supplier workshop reports • Interim reviews of the WE project approach • Assessments of the local trainers by international coaches • Feedback questionnaires for local trainers

Simultaneously to the analysis of the project data, a literature review was conducted in order to gain a deeper understanding of the broader context of the WE project approach. The objective of the literature review was to gather and analyse relevant information about working conditions and social standards in China, Thailand and Bangladesh. Documents reviewed included the labour law in the field of labour standards in the three project countries, international labour standards as defined by the ILO Conventions, ILO documentation on the three project countries, social accountability standards (mainly SA8000) as well as broader publications on the implementation of social standards in emerging and developing countries. In order to validate the findings of the desk research and for the purpose of clarifying open questions, Rambøll Management Consulting conducted, simultaneously to the desk research, semi-structured in-depth interviews with relevant stakeholders about the WE project approach and its context. In total, seven interviews were conducted, out of which three were held with the international coaches appointed for the WE project approach. Other stakeholders included representatives of pertinent NGOs in the field, retail trade representatives, the German Federal Ministry for Economic Cooperation and Development (BMZ) and academics specialized on the issue of social standards in developing countries. The respective questionnaires can be found in the appendix. An overview of all the external stakeholders interviewed during the inception phase is provided in chapter 6.1. On the basis of the desk research and the in-depth stakeholder interviews, Rambøll Management Consulting subsequently reconstructed the intervention logic of the WE project approach in order to have a clear understanding of the projects’ rationale. Thus, all single steps of the project and the impact hypotheses were identified. Therefore, a theory of change approach as defined by Weiss23 was employed to identify all the single components of the project by which change is envisaged to be achieved. The intervention logic is depicted in detail in chapter 4.2. In parallel to the reconstruction of the intervention logic, the baseline of the WE project

approach was established. We thus reconstructed, based on existing project documents, the situation in the supplier firms prior to the WE project approach’s intervention. This was essential in order to have a baseline against which progress could be assessed and impacts of the WE project approach could be measured. To establish the baseline, it was chosen to systematically analyse the social audit reports produced by auditing companies prior to the intervention of the WE project approach in 2007 despite their apparent shortcomings. Information provided by social audit reports is in general not viewed as reliable in the academic discourse, and scepticism was also voiced by the interviewed external stakeholders and project initiators, as factories have learnt to manipulate social audits. Also, audit findings face severe limits since many non-

23 Weiss, C., Evaluation 2nd edition (1997)

26

compliances are not easily detectable. Against this background, it was decided to use the provided audit reports as an indication for the baseline situation prior to the WE project approach, but also to verify this baseline situation during the conducted case studies (see below). On the basis of the information collected during the desk research and by drawing on the reconstructed intervention logic of the project, Rambøll Management Consulting subsequently developed an overall assessment grid for the impact assessment. To this end, the collected information from the previous analysis steps was synthesized and systemized in the form of relevant aspects and central questions. Subsequently, a set of indicators and/or descriptors was developed for every single aspect and question. The final assessment grid can be found in the appendix of this report. Having established the assessment grid and thus the central questions to be answered during the impact assessment, in a next step, adequate data collection instruments were developed

to retrieve all the relevant information needed. Both quantitative and qualitative tools were developed. The complete set of data collection instruments can be found in the appendix. On the one hand, a self-monitoring tool for the supplier firms in the respective language of the country was developed. It aimed to retrieve information on the development of the factories’ economic performance throughout the duration of the WE project approach as well as the WE project approach’s impact on these developments. The tool asked the suppliers to indicate data on their key economic performance indicators for the years 2008, 2009 and 2010 and to state whether the WE project approach had an influence on any changes or consistencies. The tool was sent to all of the 35 supplier firms participating in the WE project approach.24 It had a response rate of 20%. In the light of this relatively low rate, it needs to be considered that the information requested in the survey constituted sensitive company-internal information. Despite the assured anonymous design and handling of the survey, restraints to pass on the information required are likely to have impacted the return rate of the self-monitoring tool. Qualitative and quantitative research instruments were developed for the on-site case studies in China, Thailand and Bangladesh. In order to gain all the relevant data needed for the impact assessment, information was to be retrieved from the local trainers of the WE project approach, factory staff (including the upper and middle management, worker participants of the WE project approach and other workers who have not participated in the project) as well as external stakeholders, including representatives of the local GTZ-offices, NGO and trade union representatives and regional ILO staff. The following instruments were developed to this end. They can be found in appendix one.

• Semi-structured interview guidelines for local trainers • Semi-structured interviews guidelines for the upper and middle management of the

factories • Semi-structured interview guidelines for workers who have not participated in the WE

project approach • A methodological note for focus-groups for worker participants in the WE project

approach • Semi-structured interview guidelines for the external stakeholders • A methodological note for a wishing tree for workers in China and Thailand • A methodological note for a wishing box for workers in Bangladesh

The wishing tree method was designed as a quantitative research tool for the factory visits in China and Thailand in order to gain a representative picture of the workers’ satisfaction with the working conditions in their factories and their wishes for improvement. For this purpose, the wishing tree was put up in a central point of the factories and workers were invited to put up wishes for the future developments in the respective factory for half a day. Unlike classical, standardized surveys, which are often met with reservation in Confucian and Buddhist societies, wishing trees are rooted in both countries’ cultures. Hence, the use of wishing trees lowers the

24 In course of the project 5 factories dropped out of the project to various reasons such as bankruptcy.

27

threshold for workers to participate and also to express opinions and voice criticism as they are conform to the workers’ cultural background. For Bangladesh, the wishing tree method was not applicable, as it is uncommon there. In order to however retain the participatory approach of the wishing tree method, and encourage participation in the survey, it was decided to place a “Wishing Box” in the factories instead. However, this approach was altered by the responsible evaluator on-site in Bangladesh as the low literacy level of the workers in the selected factories made this method unsuitable. The international consultant therefore conducted participatory brainstorming sessions using meta-plan cards with the workers to obtain the necessary information.

5.3 Phase 2: Case Studies

In a first step in this phase the selection of the case studies was conducted. For each case study region a representative sample of three to four factories was selected. In order to ensure that the wide range of factory profiles was represented in the sample, Rambøll Management Consulting selected the sample along the following representative criteria:

• Production portfolio: In order to analyse the impact of the WE project approach on factories in different production branches, factories with different production portfolios were selected. These reflected the diverse production portfolio of the participating factories.

• Size (number of employees): As it was assumed that the size of the factories might play an important role regarding the WE project approach’s impact, factories of different sizes were selected for the sample.

• Social standard performance prior to the WE project approach: To evaluate the impact of the WE project approach, it was deemed important to select factories which had a different level of compliance with social standards prior to the WE project approach. The social audit results prior to the project were crucial here.

• Certification in the field of social standards: In order to assess the WE project approach’s impact on factories which already possessed a SA8000 certification during the project, factories with this certification were selected for the sample.

• Regional distribution: From each region (Bangladesh, North China, South China and Thailand) three to four factories were selected for the sample.

On the basis of these criteria fifteen factories were eventually selected. A detailed overview can be found in chapter 6.3. The organization of the case studies was conducted in close cooperation with Tchibo and GTZ. For each of the four project regions, a seven days stay was organized. Out of the seven days, four were designated for factory visits, one for the interviews with external stakeholders and two for preparation, organisation, documentation and debriefing activities. Local experts were appointed for each of the project countries. Their role was to support with translation, communication and organization. Furthermore, the local expert helped the evaluators to interpret the findings in the light of the cultural and regional circumstances in the respective region. Case study portfolios were compiled for the local expert and the respective evaluator to guarantee a high quality in the research throughout the different case studies. The case study portfolio contained the assessment grid, a note on methodology, a detailed work plan, the interview guidelines and methodological notes for the focus groups and the wishing tree/ box. Furthermore, a legislative comparison of the region’s labour law and international labour standards which was developed during the literature analysis and a “Guidebook for gathering information from workers” were included in the portfolio. The portfolio as well as the social audit reports and the factory visit reports was send to the local experts before the case studies in order to include their feedback and prepare them thoroughly for the case studies. The case studies in Southern China, Northern China and Bangladesh were conducted in May 2010, whereas the case study in Thailand took place in August 2010. The political circumstances

28

in Thailand and a respective travel warning from the German Foreign Ministry prevented travel in the region in May. For the case studies fourteen factory visits were conducted. In Thailand, one factory visit could not be conducted as the evaluators were prohibited to enter the factory by the general manager. The reason given was that a previously conducted Tchibo social audit did not meet the expectations of the general manager in terms of its way of implementation. As a consequence the general manager was not open for a visit by the evaluators in the framework of this impact assessment. In the fourteen conducted factory visits the following stakeholders were interviewed:

• 14 individual and group interviews with the management of the factories including 34 managers

• 10 focus group interviews with 73 project participants (North and South China as well as Thailand) and alternatively

• 4 brainstorming sessions using meta-plan cards with 66 project participants (Bangladesh) • 50 individual interviews with workers that did not participate in the WE project approach • 10 wishing-trees set up in factories in China and Thailand25 (the cards placed on the

wishing tree depended on the visited factory; average 44 cards; range 11 to 152 cards) • 4 group interviews with local trainers • 6 interviews with local stakeholders

Furthermore, one telephone interview with a local trainer and two telephone interviews with external stakeholders were carried out for Thailand. A detailed overview of all case studies and interviews conducted can be found in chapter 6. During the case studies, the interviews and focus groups were documented and first results identified. The latter were then synthesized in the subsequent reporting phase.

5.4 Phase 3: Reporting

In this phase an internal synthesis workshop was conducted to synthesize and triangulate the findings obtained in the case studies and the survey. In addition, the findings of the case studies were triangulated with the results from the post social audits, which were conducted for Tchibo by external auditors in April and May 2010 within the context of the Tchibo Social Programme. Furthermore, the workshop was used to identify success factors of the WE project approach in order to come up with recommendations for a future scaling-up of the project approach. On the basis of the results of the workshop recommendations were developed jointly by the evaluators. Based on the outcome of the internal synthesis workshop, Rambøll Management Consulting presented the findings of the impact assessment to GTZ and Tchibo. Afterwards the final report of the impact assessment was compiled by Rambøll Management Consulting.

25 The wishing tree is a participatory data collection toll rooted in Buddhist tradition. In the framework of this evaluation the wishing tree was used

to collect data regarding certain analytical aspects. For this purpose the whole workforce of each visited factory in these countries was asked to

put forward anonymously their wishes concerning future working conditions in their factory. Further explanations regarding the methodology can

be found in annex one.

The cards placed on the wishing tree depended on the visit factory (average 44 cards; range 11 to 152 cards).

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6. OVERVIEW ON INTERVIEWS AND CASE STUDIES

CONDUCTED

The following chapter provides an overview of all stakeholders interviewed during the impact assessment as well as the number of factories visited according to the selection criteria.

6.1 Interviews with German Stakeholders

During the inception phase, the following interviews with relevant stakeholders were conducted. The selection of the interview partners was conducted in close cooperation with GTZ and Tchibo.

• International consultants, resp. Coaches

o Two coaches from “Sustainability Agents” (based in Germany, group interview) o Two coaches from “Neosys AG“ (based in Switzerland, two individual interviews)

• External stakeholders:

o Clean Clothes Campaign (CCC) (critical non-governmental organisation) o Außenhandelsvereinigung des Deutschen Einzelhandels e.V. (AVE) (economic sector) o Endowed Chair of sustainable knowledge, sustainable education and sustainable

management, University of Ulm, Economics faculty (academia) o Federal Ministry of Economic Cooperation and Development (BMZ), Division 315 – Trade,

Globalization, Investment (political sector)

6.2 Interviews with Stakeholders in the Project Countries

In the conducted case studies the following interviews were held:

Figure 4: Interviews with external Stakeholders during the Case Studies

Trainer Relevant Stakeholder

China

• Two trainers from TAOS Group

• One trainer from TÜV Rheinland and one trainer from SAI

• Representative of the local ILO office

• Representative of the local GTZ office

Bangladesh

• Five trainers from all contracted organizations


• Sammilito Garments Sramik Federation (workers federation affiliated with ITGWFL)

• BGMEA (exporter organisations)

• AWAJ Foundation (NGO)

Thailand

• One trainer from Thailand Environment Institute

• One trainer from PREMAnet

• One trainer from Kenan Institute Asia


• Representative of the local ILO office


6.3 Case Studies: Number and Regions of Case Studies

The following figure shows the distribution of the 14 visited factories in the 4 case studies along the selection criteria:

Figure 5: Distribution of the visited Factories along the Selection Criteria

Regional Distribution Product GroupCompliance with Social Standards

prior to the WE-ProjectSA 8000 Certification Size of factory

• 4 in South China• 4 in North China• 4 in Bangladesh • 3 in Thailand

• 9 Textile• 2 Steel• 1 Leather• 1 Woodworks• 1 Jewellery• 1 Others

• 3 minor or no concerns• 12 major concerns

• 2 factories with certification• 7 factories without certification• 6 n/a

• 6 small (< 500)• 5 middle (501 - 1500) • 4 large (1500 <)


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7. RESULTS OF THE IMPACT ASSESSMENT

Chapter 7 presents the results of the impact assessment. It describes the impacts of the WE project approach on dialogue structures in the visited factories in Bangladesh, Thailand, North and South China. Furthermore, it lays down the achieved results with regard to improved social standards, its impact on the economic performance of the factories as well as its achieved results with regard to the dissemination of the project’s approach on the trainer level. Finally, all observed impacts are assessed against their contextual framework conditions in the three different regions. The selection of the factories was based upon representative criteria (see chapter 5). As a consequence it is possible to deduce results for the whole WE project approach from the findings presented below.

7.1 Impacts on Dialogue

As it has been described in chapter 4, the WE project approach attempted in a first step to build and, where already existent, strengthen dialogue structures between workers and the management within the pilot companies. In general, it can be observed that in all fourteen visited factories, dialogue structures could be established or strengthened through the project. According to the interviewed workers26, managers and project participants27, dialogue structures such as suggestion boxes or committees were established or strengthened in all visited factories. However, important differences could be observed within the three regions regarding the nature and usage of the implemented structures. In Bangladesh, the interviewed managers, workers, project participants and local trainers stated that the dialogue structures established were mainly worker participation committees (WPC). In addition, all factories also founded OHS committees. Referring to interviews with workers, managers and local trainers, these committees were not in place before the WE project approach, even though the WPC is specifically required by Bangladeshi law. Other communication and dialogue structures28 such as suggestion boxes were also set up in all four visited factories. The interviewed workers, local trainers and project participants however stated that communication and dialogue structures have not so much been used actively in any of the visited factories. So far, workers have for example not used suggestion boxes to express opinions and the founded committees are not extensively involved into decision-making procedures within their respective factories. Although the established committees meet regularly sometimes without and sometimes with the management, they do not discuss e.g. topics such as excessive working hours or safety regulation for machines but rather topics such as broken light bulbs, broken fans, etc. These shortcomings are usually corrected immediately by the management in the visited factories. Other means of communication and for dialogue, which were introduced due to the WE Project’s approach, were not mentioned by interviewed managers, workers and project participants, although the evaluator asked explicitly for these (e.g. PA systems, information collection sessions, etc.). The infrequent/ irregular use of established communication and dialogue structures can be attributed according to the interviewed external stakeholders and local trainers to the Bangladeshi tradition. According to them newly set up structures usually lie dormant if no clear processes of – in this case – usage are established and practiced with the users. For example, a WPC will be established in a factory but its integration into daily or monthly decision-making processes is not guaranteed if clear and stringent processes regarding its involvement into decision-making processes are not regulated and implemented.

26 For the purpose of this report “workers” are defined as the Workers of the factory who did not participate in the project’s workshops, meetings,

etc. 27 For the purpose of this report “project participants” are defined as workers of the factory who participated in the project workshops, meetings,

etc. 28 For the purpose of this report “communication and dialogue structures” are defines as the formal and informal flow of information within a

group (e.g. division, factory project group) (Rosenstiehl 2000).

31

Furthermore, another factor which influences the usage of communication and dialogue structures in Bangladesh is the high worker turnover in the factories. In the opinion of the interviewed external stakeholders, management and local trainers, worker turnover in Bangladeshi factories is very high and higher than in Chinese factories. Workers frequently change their employer so that most workers on average only stay for a year in one factory in Bangladesh while in China workers on average stay for two to three years in one factory according to the interviewed management, workers and external stakeholders in the respective countries. This could also be observed in the visited factories. Against this background, it is difficult for the pilot factories to familiarise their workforce with established dialogue and communication structures and to motivate them to use them actively. This is furthermore reinforced by the fact the turnover is not only limited to workers as also the management of the factories often changes. As a consequence new managers have to get acquainted with the introduced communication and dialogue structures and more importantly have to “buy in” into the concepts and methods of the WE project approach without having participated in the project itself. Finally, the general educational background of workers in Bangladesh plays a role in the usage of the communication and dialogue structures. In Bangladesh, the average worker does not have any formal education and literacy skills. This makes it harder to deconstruct power relations and to create opportunities for voice in Bangladeshi factories in the context of the WE project approach. As a consequence the workers’ educational background raises the participation threshold with regard to communication and dialogue structures in the opinion of the interviewed external stakeholders and local trainers. In this respect, the working climate in Bangladeshi factories, which is marked by a top-down and authoritative atmosphere, in combination with the existing educational level, makes the empowerment of workers via communication and dialogue structures harder. This makes it challenging for project participants as well as workers to voice opinions and suggestions and to thus gain ownership and empowerment. The established communication and dialogue structures have given workers the opportunity to voice opinions and suggestions in the course of the project, but this still takes place in a limited way due to the traditionally top-down and authoritative atmosphere. As a consequence, solutions to challenges could only be developed in some fields of social standards by the workers and managers of the visited factories (see chapter 7.2). This was also confirmed in the interviews which were conducted with the workers and project participants in the visited factories. In the visited factories in Thailand communication and dialogue structures (welfare and safety committees) as well as by the workforce elected worker representatives were already in place before the project as this is prescribed by Thai law. Furthermore, both visited factories had suggestion boxes in place before the start of the project. In both factories these communication and dialogue structures were however not used actively by the workers and the management before the WE project approach according to the interviewed workers, project participants and management. For example, the worker representatives were known by the workers but were not used to convey suggestions and remarks to the management. This changed in the course of the project in one of the visited factories which now actively uses the established committees, worker representatives and suggestion box. The interviewed management, workers and project participants stated that before the project they did not know how to use these structures effectively for their daily working life. They also stated that because of the project, workers are now however capable of voicing their opinions and suggestions via the established communication and dialogue structures to improve the workflow and working conditions in their factory. In addition since the project, the management tours the factory in order to give workers the opportunity to directly voice opinions and suggestions to the management. This is actively used by the workers according to their statements made in the interviews. Additionally, the factory introduced group meetings in each workshop to discuss challenges and issues regarding working conditions. These group discussions are held every day between the workshop leader/ supervisor and the workers and make use of the WE project approach’s methods (e.g. meta-plan or fishbone diagram) according to the interviewed management, project participants and workers. These implemented changes in turn led to an improvement in the working climate of the factory, which was described as more open and trustworthy now, by both the workers and the management.

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In the second visited factory the observed changes were in general more limited as the existing worker representatives, committees and suggestion box were still not used actively after the project. The reason for the limited changes can be found in the economic problems which the factory experienced over the last years. Against this background the interviewed workers and project participants did not see the value in the introduced communication and dialogue structures as they were more concerned about their job security. However, the management now tours the factory to give the workers the opportunity to voice opinions and suggestions directly to the management according to the interviewed stakeholders. Furthermore, the interviewed workers, project participants and the management described the working climate in the factory as positively changed as the workers now voice opinions and suggestions and the management implements these suggestions accordingly. The reason given by the management for the limited usage and limited introduction of new communication and dialogue structures in the factory was the difficult economic situation of the factory. The factory currently experiences fierce competition and a drop in orders according to the management. Thus, the attention of the management has focused on economic issues rather than on the improvement of communication and dialogue structures in their factory. Therefore, the management could not commit itself as much as the management of other visited factory to the project. In the opinion of the interviewed local trainers and the external stakeholders the differences in the general usage and establishment of communication and dialogue structures in Thailand vis-à-vis the other project regions can be explained by the fact that many factories already possess communication and dialogue structures such as worker representatives and committees due to government enforcement and the Thai labour law. As a consequence most factories do not introduce as many new communication and dialogue structures as for example in China (see below). According to the local trainers the main challenge for factories in Thailand is to learn how to use the established communication and dialogue structures to facilitate communication between workers and management. In contrast to Bangladesh and Thailand, in North China as well as South China, communication and dialogue structures were newly introduced and actively used by the project participants and workers according to the interviewed workers, project participants and managers. However, differences exist in the quality and usage of the introduced communication and dialogue structures between on the one hand Bangladesh, Thailand and China in general and on the other hand in particular between North and South China. In comparison to Bangladesh and Thailand, the introduced communication and dialogue structures in the visited factories are more numerous and of different quality. In six of the eight visited factories in North and South China, worker representatives had been elected by the general workforce according to the interviewed workers, project participants and the management. In these factories all interviewed workers stated that they had participated in the election for their worker representative and thus knew their responsible worker representative. In one of the remaining two factories, the management appointed its worker representatives according to work performance and seniority. In the other factory, the management and project participants stated that worker representatives were elected, but the interviewed workers neither knew their worker representative nor participated in any elections. In addition, the eight visited factories in China introduced various forms of communication and dialogue structures reaching from wishing trees and suggestion boxes via open door policies and internal radio announcements to committees. With regard to the latter, founded committees covered areas such as OHS, quality management, fire fighting and worker representation. They are regularly informed and consult with the management in order to find solutions for existing challenges.

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In six of the eight factories, the interviewed management, project participants and workers described the relationship between the management and workers as changed since the WE project approach. In general, the atmosphere between the management and workers was viewed as more open and trustworthy. The interviewed management especially emphasised that workers voice and express opinions since the implementation of the WE project approach. The interviewed workers and project participants in turn stated that since the WE project approach has been implemented the management is listening to their concerns and suggestions and is implementing changes accordingly. In the other two factories, the working climate was described as not changed since the WE project approach by all interviewed workers and project participants. The management in these two factories however said that the atmosphere had changed as the atmosphere between workers and management was viewed from the management side as more open and trustworthy. In this regard, it is noteworthy that the changes in the relationship between the management and the workers were observed by all interview partners in South China while in North China, the relationship was still marked by a more “top-down”-oriented and hierarchical approach according to the statements made in the conducted interviews. An illustration for the latter is that in South China, all interviewed workers knew their worker representatives and in two visited factories the interviewed workers knew the project methods and used them actively in their daily working life. In comparison in North China, the majority of interviewed workers did not use the communication channel of voicing opinions via their worker representatives but instead used their workshop chiefs as their preferred communication channel. Furthermore, WE project approach’s methods were not known by any of the interviewed workers who had not participated in the WE project approach. Finally, the variety of newly introduced communication channels in the course of the WE project approach was higher in South China than in North China. Factors explaining the differences between North and South China can be found in the different levels of commitment to the WE project approach by the top-management, the traditions and history of the two regions and, as in the case of Bangladesh, in the different rates of fluctuation in worker turnover. Concerning the first factor, in factories where the management expressed a strong commitment to the WE project approach, also more communication and dialogue structures were implemented and also used more actively by the workers. Furthermore, the commitment of the management led to a wide-spread communication of the WE project approach’s contents within the visited factories, which led in two visited factories to wide

Best Practice Examples from the Case Studies

• In South China a factory introduced a wishing tree as a letter box which was actively

used by the workforce for suggestions. The wishing tree is locked and the only key is kept

by a worker who is the member of the newly founded welfare committee. The worker

checks the wishing tree every week for suggestions, analyses them together with the

welfare committee and discusses the suggestions with the respective manager on a

regular basis. Together with the management, it is decided which suggestions can be

implemented in which timeframe.

• Another factory in South China introduced among others a radio broadcast system to

inform workers about relevant information regarding the company.

• A factory in South China founded a worker representation committee in the course of the

WE project approach in which all worker representatives come together monthly or if the

need arises. All worker representatives were elected freely by the workers for a 1 year

term. After the WE project approach ended, the committee was transformed into an

SA8000 committee which works together with the management to achieve the SA8000

certification. The factory plans to apply for a SA8000 certification in July 2010.

• In Thailand a factory introduced group meetings in each workshop in which challenges

and issues regarding the workflow and working conditions are discussed using the

project’s methods such as meta-plan or fishbone diagrams. The group meetings are held

jointly by the workers of the workshop and their supervisor each morning before the start

of their working day.

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knowledge about and dispersion of the WE project approach’s methods among the workforce. Differences between North and South China can be explained according to the interviewed local trainers and external stakeholders with the second factor, as the South Chinese region has been exposed longer to western economic influences and is thus more accustomed to the demands of western brands than the North Chinese region. Additionally, the North Chinese region is traditionally more reserved concerning newly introduced changes according to the interviewed trainers and external stakeholders. As a consequence, changes on average take more time than in South China. Finally, as in Bangladesh, also in North China the relatively high labour fluctuation among workers poses a challenge to the usage of established communication and dialogue structures. Although not as high as in Bangladesh, the visited North Chinese factories have to deal with high worker turnover and have to accustom newly recruited workers to the implemented communication and dialogue structures. This requires a renewed investment and, at the same time, a new “buy-in” of the workers who have not experienced the implementation of the WE project approach. In South China in comparison, the worker turnover does not play a crucial role as all visited factories could reduce their turnover rate or did not experience in general problems with high turnover rates (see chapter 7.3). The turnover in management in both Chinese regions in contrast to Bangladesh is negligible as only one case of management change could be observed in the visited factories. Against this background, the workers and the management in the visited factories in South China could implement more solutions to challenges regarding various social standards than the visited factories in North China. Furthermore, the quality of the changes also differs with regard to the usage and quality of the above described communication and dialogue structures in the two regions (see chapter 7.2).

Figure 6: Introduced Communication Channels and Degree of Usage¹

25%

50%

25%

50%

75%

50% 25%

0% 20% 40% 60% 80% 100%

Worker Representatives

Committees (e.g. OHS)

Other communication structures such suggestion boxes,

electronic feedback channels (e.g. radio systems, PDA), etc.

North China

50%

50%

50%

25%

25%

25%

25%

25%

25%

0% 20% 40% 60% 80% 100%





South China

100%

100%

100%

0% 20% 40% 60% 80% 100%

WPCs




Established and active use Established and partly active use Established but not used Not established

Bangladesh

50%

50%

50%

50%

50%

50%

0% 20% 40% 60% 80% 100%



Other communication structures such suggestion boxes, …

Established and active use Established and partly active use Established but not used Not established

Thailand

¹ The results from Bangladesh, North China and South China rely on four factory visits. The results for Thailand rely on two factory visits. In total the visited factories represent 40% of the basic population (n=35).


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7.1.1 Assessment of the Impacts on Dialogue

On the basis of these findings, the evaluator comes to the conclusion that the WE project approach has a positive impact on building up and using existing dialogue and communication structures in the participating factories. Especially, in South China and to a certain extent in North China and Thailand, introduced dialogue and communication structures by the WE project approach are actively used by the management, workers and the project participants. In South China, methods of the WE project approach are even used in two factories by the general workforce while in Thailand the general workforce of one factory uses the project’s methods. Also in Bangladesh, impacts of the WE project approach on dialogue structures could be observed, albeit to a much lower extent than in the other two regions. Explanatory factors for the lower impacts can be found in the external conditions in Bangladesh such as the high worker turnover, prevailing traditions and the educational level of the average worker. The Bangladeshi example highlights that the approach of the WE project approach has to be further adapted to local conditions and traditions in order to achieve broad-scale impacts. This means that the project has to find solutions to the challenge that in Bangladeshi factories power structures are harder to deconstruct and opportunities for voice cannot easily be created. As a consequence some introduced communication and dialogue structures are not used by the workers in the factories because on the one hand they are not familiar with the processes of usage (see chapter 7.1) and on the other hand sustainable opportunities for voice have not yet been created. Consequently, the WE project approach has to ensure that workers from different cultural backgrounds incorporate the newly introduced communication and dialogue structures as a regular feature into their daily working routine. Furthermore, it has to be ensured that sustainable opportunities for voices are created in the participating factories. This demands cultural-sensitive modes of practice for the workers in the participating factories. Furthermore, it illustrates that more guidance in some project countries is needed to successfully establish dialogue and communication structures to ensure their usage after the WE project approach has ended. Then again, the examples of Thailand as well as South and North China demonstrate that the commitment of the management to the WE project approach is crucial to implement dialogue and communication structures which are actively used by the workforce. Against this background it can be concluded that the WE project approach achieved very positive impacts with regard to dialogue in the visited factories in South China and moderate impacts in the visited factories in North China and Thailand. In Bangladesh the WE project approach laid foundations for a more open and active communication within the factories. It remains to be seen however whether and how these foundations are built upon by the participating factories.

7.2 Impacts on Social Standards

With regard to its main objective – the strengthening of the participating factories’ compliance with social standards – impacts in the visited factories in the four regions could be observed. In general, in the majority of the visited factories, improvements regarding welfare, OHS and worker participation were found. With regard to compensation, discrimination, forced labour, child labour, disciplinary measures, working contracts and excessive overtime, changes could be identified in a couple of factories. However, it has to be noted that not all visited factories experienced challenges in every social standard. Accordingly, the following analysis, depicting changes in the four regions along each social standard, differentiates between factories which faced challenges according to the conducted social audit reports, factories which could improve their compliance and factories which did not experience any changes in the respective social standard. Furthermore, a differentiation between the four regions is important as the quantity and quality of the implemented changes through the WE project approach was different in the four analysed regions. According to the available audit reports, which were compiled before and after the WE project approach, none of the visited factories faced challenges in the field of forced labour. However, during the factory visits in two factories in North China and two factories in Thailand, all interviewed workers stated that overtime is compulsory for them, which constitutes a case of forced labour. In the other ten visited factories, no information with regard to forced labour could be obtained. This does not mean however that forced labour does not exist in these factories, as the setting of an impact assessment might not – despite all taken precautions – be the most favourable setting in which workers talk openly and thus disclose their concerns. Nevertheless,

36

the findings suggest that forced labour in the visited factories constitutes an exception rather than the rule. In the field of child labour, concerns had been detected in the social audit conducted prior to the project in one of the visited factories. In this factory young workers had to work excessive overtime. This factory in North China acquired a SA8000 certificate during the course of the WE project approach and thus no audit report was conducted at the end of the project. During the factory visit, the worker register was reviewed and no worker under the age of 18 was spotted. The interviewed management, project participants and workers confirmed that only workers above the age of 18 are nowadays recruited. In another factory in North China, child labour in the form of overtime conducted by young workers (age 16 to 18 year-olds) was detected, as workers reported on this in the conducted interviews. The existence of this problem was confirmed in the social audit conducted after the WE project approach. Although concerns with child labour were not mentioned in the audit report conducted before the WE project approach, in a factory in South China, the factory changed its recruitment procedure due to the WE project approach. According to the interviewed local trainers, management and workers, the factory only recruits workers who are 18 years and older since the WE project approach. In all remaining factories in the four regions, the worker registers were reviewed during the factory visit and no workers under the age of 18 or 16 (in China) were found. As however, birth certificates and birth dates can easily be manipulated in the respective countries, it cannot be excluded that child labour takes place in these factories. It can be however concluded that some improvements in the field of child labour could be achieved due to the WE project approach and that the factories meet their due diligence responsibilities. Practices of Discrimination were not reported in any of the audit reports compiled before the WE project approach. In the re-audit reports practices of discrimination were only noted for one factory in Thailand. In this factory the age for retirement was said to differ for male and female employees. Female employees had to retire at the age of 55 while male employees had to retire at the age of 60. However, during the factory visit it became apparent that this retirement policy is not actively practiced by the factory as female as well as male workers, who were above the retirement age were recruited and/ or still worked at the factory. According to the interviewed management the retirement policy dates back to the founding of the factory and had not been revised yet. With regard to the other factories it has to be remarked that identifying practices of discrimination is very difficult, as they touch upon personal issues of the workers which are usually not voiced during an interview with external and unfamiliar persons. Against this background, practices of discrimination (also with regard to minorities) could not be detected in any of the visited factories. However, this does not necessarily mean that discriminatory practices generally do not occur in these factories: An impact assessment does not provide the best possible setting for workers to talk comfortably and speak openly, and furthermore, it is known that, especially in Bangladesh, discriminatory practices take place in factories, as reports by non-governmental organisations demonstrate.29 With regard to improvements in this field, one change could be observed in a factory in South China. According to the interviewed management and workers, the factory reformed its recruitment procedure due to the WE project approach. The factory’s recruitment system was originally based on the hukou system. During the project this basis for recruitment was eliminated. As a consequence of the WE project approach, workers are nowadays recruited irrespective of their place of dwelling. The observed picture regarding disciplinary practices in the visited factories is complex. The audit reports prior to the implementation of the WE project approach showed concerns regarding disciplinary measures in two of the visited factories (e.g. deduction of housing and medical allowance by absence or deposits for swipe cards). One of these factories is a factory in Bangladesh, in which during the factory visit, no disciplinary measures could be observed. The other is a factory in South China where a deposit for swipe cards was levied. This practice was

29 Burckhardt, G. (2010): Die Schönfärberei der Discounter: Klage gegen Lidl’s irreführende Werbung. Case study in Bangladesh for the Clean

Clothes Campaign (CCC). Available at:

http://doku.cac.at/studie_klagegegenlidl_kampagnefuersauberekleidung_april2009.pdf

37

however abolished during the course of the WE project approach as all interviewed workers and project participants stated that they do not have to pay a deposit for their swipe cards anymore. Furthermore, one audit conducted after the WE project approach stated concerns with respect to disciplinary measures in one Thai factory. In this factory a fine of 20 Baht was said to be levied if the workers do not wear their proper working shoes. The interviewed workers, project participants and the management confirmed this rule during the factory visit, but stated that it only serves as deterrence and has never been implemented so far. Additionally, during the visits in three factories in North China it was found that workers were paid on piece-rate basis in some departments. Although no official production quotas existed according to the interviewed management, the majority of interviewed workers stated that deductions from their overtime bonus occur in case a fixed amount of products (the production target) is not produced within a given timeframe. Consequently, it can be concluded that disciplinary practices occur in these factories. These findings were furthermore reaffirmed by the audit reports which were conducted after the implementation of the WE project approach in the respective factories. In the other nine visited factories, no disciplinary practices were observed during the factory visits. The social audits prior to the WE project approach showed irregularities concerning working

contracts in all almost all visited factories; the only exception being one factory in Thailand. However, this factory did experience irregularities after the WE project approach according to the conducted audit report as employment contracts were missing and a copy of the employment contract was not provided to the employees. Thus, in all visited factories irregularities regarding working contracts still took place after the WE project approach according to the reports of the re-audits. Within the framework of the conducted factory visits, it was not possible for the evaluator to review current working contracts on the basis of a sample due to time constraints. As a consequence, the issue of irregularities in working contracts was investigated in the interviews with the management, the project participants and the workers in all fourteen factories. On the basis of these interviews, irregularities could be detected in all fourteen factories, reaching from incomplete worker registers (e.g. missing place of dwelling) to different forms of worker payments (e.g. cash and transfer to accounts). In the case of the above mentioned factory in Thailand the irregularities were confirmed by the interviewed management and workers. The reason given by the management was time constraints on the side of the Human Resource Department. However it also has to be noted that some irregularities occur for understandable reasons. In a visited North Chinese factory, for example, wages were paid either in cash or via bank transfer according to the preference of the worker. Although this constitutes an official breach with the norms of the respective social standard, it serves the needs of the workers as their preferences are taken into account. On an overall level however, no changes in degree in the irregularities in the visited factories could be observed which could be attributed to the WE Project approach. With regard to compensation, a differentiated picture across the analysed regions emerges. Referring to the audit reports from before the implementation of the WE project approach, eight of the visited factories experienced challenges in the field of compensation, and six still face these challenges according to the audit reports issued after the WE project approach. One has to note that this however does not constitute a positive trend as two audit reports were not yet available. In the audit reports only one visited factory could improve its conditions with regard to compensation. The main challenges reported on in the audit reports comprise for example delayed payment for resigned employees, compensation of annual leave to all employees or piece rate payments which do not adhere to the regulated payment norms according to national law. The existence of the latter problem could be confirmed in three of the visited factories in North China and in one visited factory in Thailand. In the factory in Thailand overtime was not compensated according to the compensation of 1.5 of the hourly basic wage as prescribed by Thai law. Instead the factory compensated the workers with a flat overtime compensation of 10 Baht per hour which resulted in less overtime compensation than foreseen by national law. In the Chinese factories, wages were paid in some departments on a piece rate basis and deductions occurred if given amounts of produced products were not reached by the workers in a given timeframe. Furthermore, piece rate overtime was not compensated according to national law as the piece rates were not adjusted to overtime payment as stipulated by law (in China: 1,5 times the base salary on weekdays, 2 times on weekends and 3 times on holidays). However, two of these factories were able to pay average wages which are two to three times higher than the

38

national minimum wage according to the interviewed workers, management and project participants. In both factories, the workers experienced a wage increase which was partially attributed to the WE project approach by the interviewed management as it increased the efficiency of their factories (see chapter 7.3). The national minimum wage was paid in all fourteen visited factories according to the conducted interviews and the audit reports before and after the WE project approach. In all factories except one, the interviewed management, workers and project participants stated that national minimum wage was also paid before the WE project approach. The other factory, located in North China, did not pay the national minimum wage before the WE project approach according to the interviewed management but is now paying it as an effect of the WE project approach. This was confirmed by the interviewed workers and project participants. Moreover, two of the visited factories in Bangladesh, two factories in South China and one factory in North China introduced bonus systems which are either connected to seniority or performance in the course of the WE project approach.

A major concern all fourteen visited factories is overtime (hours of work). In all visited factories, excessive overtime represents a major concern, with working hours reaching from 300 hours per month without one day off in a factory in North China to excessive overtime of more than twelve hours a week in a factory in South China according to the interviewed management, workers and project participants. The interviewed local trainers in all regions stated that excessive overtime is a huge problem in most of the production sites in their countries. According to all interviewed managements, the factories face a twofold challenge regarding excessive overtime. On the one hand, they have to adhere to the deadlines of the buyers which are sometimes very short. On the other hand, the workers, especially in China, have an incentive to work overtime as the payment is better; very often being migrant labourers, they also prefer to make the most of their time. Furthermore, eight of fourteen visited factories were affected by the financial crises as orders dropped initially and then shortly afterwards picked up enormously, although the capacities of the factories remained the same. However, one factory in North China and three factories in South China managed to reduce overtime during the course of the WE project approach by introducing new processes or by recruiting new workers. This was confirmed by all interviewed workers, project participants and the management in the respective factories. Despite these successes, these factories were still

Best Practice Examples – Compensation

• Two factories in Bangladesh introduced bonus systems which are connected to the

length of stay of the employee in the factory. In one factory, employees receive a bonus

payment on top of their wage if they stay longer than 6 months in the company. In the

other factory the employees receive a salary increase of 2000 taka if they stay longer

than 6 months. As a consequence worker turnover could be reduced significantly,

although the management could not state exact numbers.

• In a factory in South China wages were connected to the seniority of the workers in

order to reduce worker turnover in the factory. Hence, the wage system was reformed

and wages are now paid according to the number of years an employee is working in the

factory. As a consequence, workers receive an automatic increase in wages if they work in

the factory for a certain number of years. This measure was developed jointly by the

workers and the management and communicated widely within the factory. As the

measure was only introduced recently no impacts regarding worker turnover could be

observed.

• A factory in North China is paying average wages of 2000 to 3000 RBM per month which

is two to three times higher than the national minimum wage of 1190 RBM. Furthermore,

the workers experienced a wage increase of approximately 30% in the last year which

was partially attributed to the WE project approach as it improved the economic

performance of the factory.

39

not able to adhere to national laws30 with regard to overtime due to the above mentioned external circumstances and internal setting. In addition, the interviewed management in these factories argued that the WE project approach could have offered more solutions with regard to the challenge of excessive overtime. Although some solutions were offered (e.g. capacity planning tools, productivity enhancing measures, etc.), they were not deemed as sufficient by the management to counter excessive overtime effectively. A further external factor causing overtime is that the management takes too many offers while at the same time it is not possible for them to recruit more workers and expand their production accordingly.

All visited factories introduced changes in the field of Occupational Health and Safety (OHS)

during the course of the WE project approach. In Bangladesh, the four visited factories introduced trainings regarding safety issues at work such as Personal Protective Equipment (PPE) trainings for their employees according to the interviewed workers, project participants and the management. In addition more doctors and nurses were employed as well as more medicine was bought in all four visited factories. Moreover, OHS committees were founded in each factory. Two visited factories also introduced fire drill trainings and regular daily and monthly inspections of technical equipment by the management. However, it has to be stated that in all four garment producing factories the introduced measures face a low acceptance among the employees as the employees still do not use for example mouth protection devices or shoes because they consider them unnecessary. The OHS concerns are also reflected in the audit reports issued before and after the WE project approach. In Thailand in comparison the two visited factories introduced the following changes in the field of OHS over the course of the project. As a consequence of the WE project approach both factories keep their work floor more tidy and keep emergency exists free from blocking material. Other OHS concerns such as inadequate washing station, some missing signs or safety licenses were not remedied during the WE project approach as the audit reports, conducted before and after the project, as well as the interviews with the local trainers confirmed. The reasons given by the

30 In China, only 36 hours per week are allowed as regular working time marking everything beyond as overtime. The ILO in comparison

stipulates that 48 hours per week constitute regular working time and up to 12 hours per week are allowed for overtime as long as they do not

occur frequently.

Best Practice Examples – Hours of Work

• A factory in South China introduced a shift system due to the WE project approach to

reduce overtime for the individual workers. By adhering to a strict shift plan the number

of overtime hours could be significantly reduced for individual workers (on average by

approximately 40%), although it still does not conform to national legislation.

• A factory in North China introduced a one-piece-flow-system in order to make its

processes more efficient. Before the WE project approach the different processes for the

production of a product were dispersed in the whole factory. After the WE project

approach the production process for each product was concentrated on one floor making it

easier for the workers to communicate among each other if problems arise. As a

consequence the factory gained in productivity and overtime could be reduced

significantly. However, it still does not conform to national legislation. The reduction of

overtime could not be quantified by the management, but the workers and the

management unanimously stated that overtime has been reduced significantly.

• Two factories in South China and one factory in North China introduced rules on which

days and in which time period workers are not allowed to work. The factories introduced

either Sundays as a day off and/or Wednesdays evening off. On those days and in these

time periods overtime it is not allowed as workers should rest to recuperate. The

reasoning behind this regulation according to the interviewed management is that

workers are more productive and effective if they rest one day a week or in the middle of

the week. This leads in their opinion to productivity gains for the factory (see chapter

7.3).

40

interviewed managements were that they faced time constrains and constrain on human resources to implement the necessary changes. In North and South China, changes in the field of OHS, as in the case of Bangladesh and Thailand, could be observed in both regions. Improvements are still necessary, however, as the social audits conducted before and after the WE project approach in the visited factories still revealed challenges (four minor concerns and three major concerns) in seven of eight factories (one factory in South China does not display any concerns). In the North China cases, two factories, according to interviews with workers and the management, introduced health and safety trainings at the workplace as well as risk inspection checks by the management in the course of the WE project approach. Furthermore, one of the visited factories founded an OHS committee consisting out of workers and the management which is actively involved in improving the working conditions in the respective factory. Another factory introduced safety equipment for its machines and informs its workers weekly about safety issues at work via an assembly held by the management. In South China, interviewed workers, project participants and the management in three visited factories stated that health and safety trainings for workers were introduced in the course of the WE project approach. Two factories also founded an OHS committee consisting solely out of workers which is involved in the improvement of the working conditions in the respective factories. Another factory introduced fire drills while another one improved the sanitary conditions according to the interviewed workers and the management. In addition, two factories introduced health and safety trainings for newcomers in the course of the WE project approach in order to minimise the risk of accidents among them. This was confirmed by the interviewed workers, project participants and the management. Risk checks were also implemented in two factories due to the WE project approach to improve the safety at the workplace. Finally, two factories put up safety signs while another one installed safety equipment for machines during the WE project approach (for economic impacts see chapter 7.3).

Another field in which the visited factories in North and South China implemented changes is welfare. In Bangladesh and Thailand, no concrete improvements could be observed in this field during the factory visits, but ideas about improvements were discussed by the management in the respective factories. In North China, the interviewed workers and the management stated that the canteen food has improved due to recommendations by the workers which were given during the WE project approach. Another factory introduced monthly excursions for its workers while another improved the dorms of the workers by providing curtains for their beds. These changes were requested by the workers and implemented accordingly by the management of the respective factory. Furthermore, the management of one factory introduced an article writing contest in which workers can participate and win a financial reward. This information was confirmed in interviews with workers, project participants and the management in the respective factories.

Best Practice Examples – OHS

• Two factories in North China established monthly safety or risk checks in which the

management monitors and rates the workshops. In the first factory, each of the workers

of the workshop which is rated best receives 100 RBM extra payment on their monthly

salary. The workers of the second best rated workshop receive 50 RMB on top of their

monthly salary. In the second factory, the financial incentive for the workers is structured

along three ratings. The best workshop receives 60 RBM, the second 50 RBM and the third

30 RBM. These measures were developed by the management and widely communicated

to the workers.

• A factory in South China installed a ventilation system in the polishing department to

provide workers with clean air. This improved the working conditions and health of the

workers according to the interviewed workers and the management. This measure was

jointly developed by the management and the workers of the factory.

41

In South China, three visited factories improved their canteen food while three introduced entertainment rooms such as a library or a TV room during the course of the WE project approach. Additionally, two factories improved the sanitary conditions in their dormitories and one provided rooms for couples as a reaction to recommendations by the workers. Finally, one factory introduced an article writing contest with financial rewards while another factory introduced monthly birthday parties for those employees who celebrated their birthday in the respective month. This information was confirmed in interviews which were conducted with the workers, project participants and the management in the respective factories.

With regard to the last analysed social standard, freedom of association and collective bargaining, established dialogue and communication structures have been already described in chapter 7.1. However, regarding this social standard, qualifications have to be made. In the pilot phase of the project, the project’s partner’s objective was only to create an enabling environment for workers to exercise their right to freedom of association and collective bargaining. The aim of the pilot phase was to build trust between workers and the management as a first step towards exercising the right of freedom of association and collective bargaining. Against this background it was stated in chapter 7.1 that in Bangladesh, during the course of the WE project approach, structures of worker representation were mainly established in form of worker participation committees (WPC) and OHS committees to which workers were either elected or nominated by the management. It has to be emphasised in this regard that the WPC were not in place before the WE project approach although they are required by Bangladeshi law. The established structures of worker representation are however not actively used in the visited factories according to the interviewed workers, project participants and the management. Explanatory factors for this status quo comprise the external conditions in Bangladesh such as the high worker turnover, cultural factors and the educational level of the average worker (see also chapter 7.1). In contrast to this, in North and South China, the introduced structures of worker representation are actively used according to the interviewed workers, project participants and the management. In six of the eight visited factories in North and South China, worker representatives had been freely elected by the general workforce according to the interviewed workers, project participants and the management. In these factories, all interviewed workers stated that they had participated in the election for their worker representative and thus knew their responsible worker representative. In one of the remaining factories the management appointed its worker representatives according to work performance and seniority. In the other factory, the management and project participants stated that worker representatives were elected; however, the interviewed workers neither knew their worker representative nor did they participate in any elections. Similar developments could be observed in Thailand. Here structures of worker representation such as safety committees or worker representatives were already in place before the WE project

Best Practice Examples – Welfare

• A factory in South China introduced in the course of the WE project approach a library, a

TV room, a karaoke room and a computer room for leisure activities of the employees to

attract more and highly skilled workers. Furthermore, these leisure activities keep the

workers motivated according to the interviewed management.

• The management of a factory in North China developed and implemented an own project

called “on the spot” which organises different contests for the workers such as an article

writing contest. The first place of each contest includes prize money of 100 RBM for the

workers. The management stated that it developed and implemented this project because

such contests motivate the workers and thus increase their productivity (for economic

impacts see chapter 7.3).

• The management of another factory in North China organises excursions for all its

workers to regional sights and nature reserves in the vicinity of its factory every two

months.

42

approach. However, these structures were not used actively by the management and the workers as they did not know how to use them in their daily working life. As a result of the participation in the project one of the two interviewed factory now actively uses the existing structures of worker representation to improve working conditions and to include the workers in the decision-making of the factory (see also chapter 7.1). Further information regarding freedom of association and collective bargaining could not be collected in this impact assessment in Thailand. The reason for this lack of information can be found in the existing precarious situation regarding trade unions in Thailand as well as the setting of the impact assessment. As explained above impact assessments in general do not provide – despite all taken precautions – the ideal setting to gather sensitive information as workers are hesitant to disclose concerns and sensitive information to an outside evaluator.

Figure 7: Overview of the WE project approach’s Impacts on Social Standards

Social standards per case study region in which the WE-Project triggered improvements

North China South China Bangladesh Thailand

Forced Labour

Child Labour

Discrimination

Disciplinary

practice

Working

contracts

Compensation

Working Hours

OHS

Welfare

= Improvements detected Source: Rambøll Management Consulting (2010)

In comparison, the four analysed regions demonstrate tangible differences. The above described changes occur in Bangladesh regardless of the specific social standard on a lower scale than in North and South China. For example, changes concerning OHS took place in Bangladesh mainly in the form of founding committees and introducing risk inspections by the management, while in North China, for example, these inspections were combined with a competition among the different workshops for a financial reward for the workers of the respective winning workshop. In Thailand again changes in social standards with the exception of the field of OHS occurred rarely

Best Practice Examples – “Freedom of Association and Collective Bargaining”/

Worker Participation

• In all four visited factories in South China, the workers freely elected worker

representatives participated in the election, knew their worker representative and used

them as the main communication channel.

• In Bangladesh, Worker Participatory Committees (WPC) and OHS committees were

established in the course of the WE project approach to which workers were elected by

the workers or nominated by the management depending on the factory.

• Since the WE project approach, one factory in Thailand now actively uses the existing

welfare and safety committees as well as installed worker representatives which are

prescribed by Thai law. These structures of worker representation are used to include

workers in the decision-making process and to improve working conditions in the factory.

43

in comparison to the other three regions. These differences can be explained by the following internal and external factors which are specific to each region. The first explanatory factor regarding differences between Bangladesh and China is the general development level of these two countries. As China is more developed than Bangladesh in terms of infrastructure, energy supply, per capita income, etc.31 , the implementation of the WE project approach was able to start from a different level in the visited factories in China than in Bangladesh. As a consequence, it became obvious in the conducted interviews that the perception of problems between the two countries differs. Thus, challenges regarding social standards could be more easily tackled in the Chinese context compared to the Bangladeshi context, as basic commodities such as energy, water supply were given in the Chinese context. A second factor is the general level of education in both countries which is generally higher in China than in Bangladesh.32 This has implications with regard to the capacities of the management and the workers to find their own innovative solutions for challenges regarding social standards. In Thailand both factors, the level of education and the development level, did not have an observable influence on the observed changes initiated by the WE project approach. The third factor is the enforcement of government policies with regard to social standards in the three different countries. In China, the central government is currently enforcing more strictly the minimum national wage law as well as other laws regarding social standards. Hence, factories in China are in general more sensitive to such issues than factories in Bangladesh and Thailand, where no comparable strong /public movement on the side of the government currently exists. A fourth factor explaining the differences between the regions is the commitment of the

management. While in North China, according to the interviewed stakeholders and local trainers people seem in general more reserved, people in South China seem more accustomed to the expectations and standards of western companies. This is mainly due to the fact that South China was the first region in China to become exposed to international trade. However, also other aspects have to be considered: Firstly, Tchibo produces in South China in comparison with North China, more products which require a certain quality and management structure. This in turn makes it easier for the factories in South China to implement social standards. Secondly, people in South China have had a higher exposure to external people and hence are more prone to impart information to outsiders. As a consequence, the management in South China endorsed the WE project approach more fully than their counterparts in North China. In Bangladesh, a different picture emerges as many different western brands implement projects regarding social standards. Consequently, factories according to the interviewed managements can more or less choose in which project they participate and if they do not, another project will be offered in the near future. This makes it harder for the WE project approach to encourage a strong commitment of the factories’ management. In Thailand, in turn another picture emerges. As many factories in Thailand are still family-run businesses, the majority of them are not equipped with a professional management system. As a consequence the management of these factories face a variety of challenges in which the implementation of social standards is one. Thus the attention paid to find solutions for the implementation of social standards has to be divided between numerous issues (such organising the production workflow, acquiring new orders, etc.). Therefore, time constrains emerge and the management is more inclined to invest their time resources in other issues than the compliance with social standards. A final explanatory factor is the fact that the managements of the different visited factories have to a different degree understood the possible economic benefits of the compliance with social standards (see chapter 7.3). Thus, the visited factories in South China have implemented most changes, followed by the factories of North China, Thailand and Bangladesh.

31 World Bank (2010) http://data.worldbank.org/data-catalog (accessedn on 02.11.10) 32 In China the literacy rate of the population amounted to 94% (2008) while in Bangladesh it amounted to 55% (2008). The enrolment rate for

primary school was in China at 97% (1997) while in Bangladesh it was at 87,2% (2005). Currently, no data for both countries exist from the

same year regarding enrolment rates. As a consequence the data can only be seen as an indication regarding the existing difference in the

general level of education. Data for secondary school enrolment does not exist for China. Hence no comparison can be made between the two

countries regarding this aspect (World Bank 2010: http://data.worldbank.org/data-catalog (accessed on 02.11.10)).

44

7.2.1 Assessment of the Impacts with regard to Social Standards

Against the background of these findings, the evaluator assesses the WE project approach’s impact on social standards such as OHS, welfare, and worker participation as positive. As it has been shown, the WE project approach was successful in implementing solutions to challenges in the field of OHS by introducing, for example, risk inspections. Also in the field of welfare, important changes such as the establishment of libraries and TV rooms were accomplished through the WE project approach. Regarding worker participation and representation, the project was successful especially in South China to develop structures of worker representation which are actively used by the factories. It has however to be pointed out that the implemented changes differ in quality and quantity between the three regions. While in South China, most changes and especially changes of a significant impact have been implemented, fewer changes have taken place in North China, Thailand and Bangladesh. These differences can be explained by existing external conditions which are particular to each region. For instance, external conditions such as tradition and the general educational level as well as the commitment of the management are more favourable in South China than in North China, Thailand and Bangladesh. As a consequence, the WE project approach’s impacts were more significant in South China than in North China, Thailand and Bangladesh. Regarding compulsory overtime (part of forced labour), the impact assessment could not demonstrate any change through the WE project approach in four out of fourteen visited factories according to the conducted interviews with the management, project participants and workers. Nevertheless, overtime could be reduced in two out of the four factories (see below). Child labour was not an issue in the visited factories. Only one case of child labour in the form of excessive overtime for young workers (age 16 to 18 years) could be found in the visited factories; no case of actual child labour due to the age of employed workers was found. Furthermore, one factory changed its recruiting procedure in the course of the project in order to avoid any risk of child labour in the future. Additionally, concerning the social standards of discrimination and

disciplinary practices, no concerns could be detected by the evaluator. The lacking findings of discriminatory practices and disciplinary measures however have to be seen in the light that an impact assessment conducted by external evaluators in the timeframe of one day per factory does not provide an optimal setting to collect information on these issues as workers in general do not talk openly about personal topics to unfamiliar persons. Finally, the social audits revealed irregularities in working contracts in almost every visited factory. During the factory visits it was not possible for the evaluator to review samples of working contracts due to time constraints. Thus, the irregularities found were based on statements made during interviews by the interviewed management and the social audits. In the light of these findings, the evaluator can only identify minor impacts of the WE project approach with regard to the social standards of forced labour, child labour, disciplinary practices as well as discriminatory practices. Impacts of the WE project approach with regard to irregularities in working contracts could not be found. As in the case of OHS, welfare and worker representation, external conditions also influenced the WE project approach’s impacts regarding working hours and compensation. These social standards also depend strongly on the general enforcement of policies on the side of the respective national government. In this light, it has been easier for the WE project approach to reach successes in China than in Bangladesh and Thailand as the Chinese government is currently promoting and enforcing laws regarding social standards quite strictly. As a consequence, the WE project approach could reduce for example overtime in factories in South China, although the reduction still is not enough to meet the criteria of the national legislation. The same holds true for compensation: one factory in North China could accomplish a wage increase which is partially attributed to the WE project approach, but also to an increase of legal minimum wages. Furthermore, in all other factories the national minimum wage is paid and some factories introduced performance or seniority related bonus systems. In comparison to this, in Bangladesh only bonus systems could be introduced through the WE project approach while in Thailand no changes could be observed. In the light of these findings, the evaluator concludes that the WE project approach could realise some impacts regarding the social standards of compensation and working hours. As the project partners are aware and have stated themselves, certain issues cannot be fully resolved on an individual factory basis. Overall, there is a necessity to address certain issues with the support of governments, international buyers, NGOs, and trade unions.

45

7.3 Impacts on Economic Performance

Factories and buyers generally believe that achieving compliance with social standards is always connected with increased costs which then translate into higher product prices and deteriorating competitiveness. At the same time, literature on change management and HR management imply that a healthy, skilled and content workforce is more productive thereby leading to an amortisation of an investment into social standards. Showing that participation of workers creates a business case for factories was one of the “hopes” of the WE project approach. The project partner’s goals were to motivate future suppliers to ascribe to such a training programme, but also to use a possible business case to strengthen interest in investing into enhanced social standards, especially when it comes to working towards living wage levels. The impact assessment, thus, was also used to collect information with regard to changes on the economic performance of the participating factories. This was executed by the following measures: On the one hand, an anonymous survey was conducted among all 35 factories which had run through the entire programme, to collect data on any changes in their economic performance33 throughout the WE project approach; secondly, information was collected during the fourteen factory visits in the four regions. The response rate of the anonymous survey was 20% which can be explained by the nature of the collected data. As economic data is very sensitive for companies, it can be assumed that despite the ensured anonymity, not many factories were willing to answer (see chapter 5). Furthermore the survey was voluntary for the participating factories in order to reduce the likelihood of fake data. Finally, the timeframe for the impact assessment was tight and it had to be conducted during peak production season (April). Given the high amount of activities involved in the impact assessment for a majority of the suppliers, Tchibo stalled sending out the invitation to the survey to reduce the demands on the suppliers. Therefore the timeframe for the answers was only two weeks. During the factory visits the interviewed management was very willing to provide oral information as well as information in writing regarding their changes in economic performance. Exceptions hereto were the visited factories in Bangladesh which could not provide written information as they do not collect them systematically according to the interviewed management and the reviewed records by the evaluator. However, the interviewed managements were able to give approximations regarding the changes of the factories’ economic performance. On the basis of the collected information through the survey, it can be observed that the participating factories experienced a positive tendency in all economic key performance

indicators such as accident rate, rejection rate, days of sick leave etc. (see figure 8).

33 The survey was send to all 35 participating factories in the respective language of their country. The response rate of the survey was 20%

which can be explained by the nature of the collected data. As the data is very sensitive for most factories, not many factories were willing to

answer although the process of collecting the data was done under strict rules for anonymity (see chapter 5). Furthermore the survey was

voluntary for the participating factories.

46

Figure 8: The WE Project Approach’s Impact on Economic Performance

57,2%

71,4%

71,4%

85,7%

85,7%

85,7%

85,7%

85,7%

42,8%

28,6%

28,6%

14,3%

14,3%

14,3%

14,3%

14,3%

0% 50% 100%

1

2

3

4

5

6

7

8

Yes No N/A

42,8%

71,4%

71,4%

100,0%

85,7%

85,7%

85,7%

100,0%

14,3%

28,6%

14,3%

14,3%

14,3%

14,3%

14,3%

14,3%

28,6%

0% 20% 40% 60% 80% 100%

Profit in factory

Average monthly turnover

Average amount of goods produced per month

Average rejection rate per month

Average rate of worker turnover

Average rate of workers being absent without permission per month

Average number of sick days per month

Average rate of accidents per month

Improvement Deterioration No change N/A

Economic Key Performance Indicators Assessment of the WE-Project's

Contribution

Source: Rambøll Management Consulting; Survey (n=7)

Figure 8 illustrates that in the majority of questioned factories in the survey, the profit and company turn-over improved over the duration of the WE project approach, while the company turn-over increased in more factories than the profit did. More importantly, the majority of factories which experienced changes in this regard stated in the survey that they attribute these changes to a large extent to the WE project approach (see right part of the figure 8). The same holds true for the average amount of goods produced per month (i.e. production output) in which a majority of questioned factories could likewise witness an increase. Also with regard to absenteeism, worker turnover and sick days per month, the questioned factories could experience a substantial decrease and attribute these changes partially to the WE project approach. The highest influence however could be exerted by the WE project approach on the accident and rejection rates, as all questioned factories witnessed a substantial decrease regarding these rates. Furthermore, all factories attribute these changes to a large extent to the WE project approach (see figure 8). These general results could also be confirmed in the fourteen factory visits in the case studies, although regional discrepancies could be found. While in North China, Thailand and especially South China, the visited factories experienced and monitored tangible economic results triggered by their compliance with social standards and their participation in the WE project approach, in Bangladesh, only positive tendencies could be experienced. This can be explained by the fact that the interviewed group of factories in Bangladesh do not monitor their economic performance as rigorously as factories in China. Consequently, the visited Chinese factories were more able to document and acknowledge changes in their economic performance than factories in Bangladesh. Against this background, three of the four visited factories in Bangladesh could not judge whether or not the WE project approach had an impact on their economic performance. They however reported a slight positive trend with regard to their worker turnover, absenteeism and the rejection rates in the conducted interviews. The fourth factory could also identify these trends but also experienced an increase in their productivity and could win new customers due to their participation in the WE project approach. The factory however did not provide data. All interview partners in the factories in Bangladesh attributed the changes to the WE project approach, but could not pinpoint the exact reasons for these improvements. In Thailand the two visited factories could increase their productivity by 5% and 15% as they could coordinate work processes more efficiently and more effectively. According to the interviewed management, project participants and workers these increases were possible due to

47

the better communication between the workers and the management which were a result of the WE project approach. Further impacts of the WE project approach on other economic indicators could not be observed in the visited factories as other indicators such as the accident rate, worker turnover, etc. did not change according to the interviewed management, project participants and workers. In North and South China, seven out of the eight visited factories were also able to increase their productivity in a range of 5% to 15% due to better coordinated work processes and an increased belonging of the workers to the factories. The interviewed management in the factories explained that the productivity gains were realised through discussions with workers via the established dialogue and communication structures of the WE project approach. Within these discussions, workers made recommendation on how production processes could be improved and developed through the WE project approach. As a consequence, the quality of the products improved and processes could be shaped more efficiently. In addition, the interviewed management and project participants in all factories stated that the exchange of information about improvements in the production process in the framework of the group workshops helped them to develop ideas on how to improve processes in their own factory. Next to increases in productivity, half of the visited factories in North China reported in the interviews that they were able to decrease their accident and rejection rates drastically. This was attributed to the implemented health and safety measures in the framework of the WE project approach as well as to the increased belonging of the workers to their factory. One manager explained in an interview: “When the workers understand that product quality is connected to the performance of the factory and ultimately to their wages, they pay more attention to product quality.” Furthermore, one factory could recruit more clients due to its enhanced compliance with social standards according to the interviewed management. Finally, one visited factory was able to decrease its worker turnover by 70%.34 The same trends could be observed in South China where all visited factories were able to decrease their rejection rate and one could decrease its accident rate referring to the interviews conducted with the management, project participants and workers. Moreover, three visited factories were able to decrease their worker turnover by 12%, 5% and 38% and one factory was able to recruit higher-skilled workers due to the welfare facilities established through the WE project approach. Additionally, the management of two visited factories explained that by decreasing their worker turnover, they were able to save money as they do not have to train newcomers as often anymore. Like in North China, the observed impacts on economic performance were attributed to their participation in the WE project approach. By discussing challenges together with workers and the management, solutions could be found by which e.g. the rejection rate or the labour turnover decreased and productivity of the factory could be increased.

34 For further information regarding the improvement in the working environment in these factories see also chapter 7.2.

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7.3.1 Assessment of the Impacts on Economic Performance

On the basis of these findings, the evaluator assesses the WE project approach’s impact on the economic performance of the participating factories as high. As it could be demonstrated, the visited factories as well as in general the participating factories were able to increase their efficiency by reducing rejection rates, absenteeism, worker turnover, accident rate etc. Moreover, these changes were attributed partially, strongly and sometimes exclusively to the WE project approach by the surveyed and interviewed factories. Furthermore, the majority of the visited factories were able to optimize their production processes by incorporating suggestions and recommendations of the workers via the established dialogue and communication structures of the WE project approach. However, differences exist between the four examined regions. While in North China, Thailand and especially South China, the impact on the economic performance is tangible and substantial, in Bangladesh, the impact of the WE project approach could not be shown due to missing data. Here, only tendencies could be identified via the interviews during the case studies. In the light of these findings, it was suggested by several interview partners (management and local trainers) to develop a baseline with regard to economic indicators for the future participating factories in the WE project approach against which the project’s impact on the economic performance can be highlighted for the participating factories already during the course of the project. This would in their opinion increase the motivation and commitment of the respective factories to the WE project approach.

Best Practice Examples – Economic Performance

• A factory in South China increased its productivity due to the WE project approach and

thus suffered less than the other factories of its company group from the financial crisis.

While the overall loss in profit was approximately 20% for the other factories of the

company group, the visited factory only experienced a loss of 11% in profit. The

difference was attributed by the interviewed management to the WE project approach as

the factory could reduce its worker turnover by 38% through the WE project approach.

Furthermore, the product quality increased and the rejection rate decreased by 7% as a

consequence. In addition, the factory was able to save money as it had to train fewer

newcomers as worker turnover decreased.

• In North China, a factory could increase its productivity by 10 to 15% by introducing

new production processes. On the basis of recommendations offered by the workers

during the WE project approach, the management of the factory introduced a one-piece-

production-flow, enabling workers to discuss problems arising in production and to find

solutions in the production process immediately. Furthermore, by introducing a

performance related bonus system and by the increased sense of belonging created

through the WE project approach among the workers, the quality of products increased

and the rejection rate decreased by 4%. Finally, worker turnover could be reduced by

70%, making it easier for the factory to run uninterrupted production.

• Another factory in South China could increase its productivity by 6% by optimising their

processes according to the recommendations made by the workers in the course of the

WE project approach. Furthermore, it could decrease its worker turnover by 12, 5% and

its rejection rate by 2% leading in the opinion of the management to an increase of

annual profits of 1 million RBM.

• A factory in Thailand could increase its productivity by 15% as a result of a better

communication between the workers and the management. As a consequence of the

better communication work processes could be optimised more efficiently and more

effectively. These changes were attributed to the factory’s participation in the WE project

approach.

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7.4 Dissemination of the WE Project Approach

The dissemination of the WE project approach by the training organisations in the four regions faced the following three challenges according to the interviewed trainers:

• The length and thus the costs of the WE project approach make a roll-out of the project difficult for the training organisations as other customers cannot or are reluctant to make such a large investment.

• The WE project approach’s aim to achieve a better working conditions in factories with social standards relies on triggering ownership of the participating factories and works with behavioural approaches to trigger mind changes on all levels in the factory. This is believed to create more sustainable changes at a labour standard level. This approach – while generally accepted in training and pedagogy, is a contrast to the programme approaches taken by most brands and retailers, which is compliance oriented and based on control. The freedom implied by the WE project approach, though accompanied by a rigorous methodology, makes potential customers feel uneasy as they fear a loss of control. The WE project approach has a challenge to communicate the connections between freedom, generating ownership and thereby initiating more sustainable improvements processes.

• The local trainers and trainer organisations did not clearly know if and how they were allowed to market the WE project approach. The question of copyright was not clear to all of them during the impact assessment, although a section in their contracts stated that they were allowed to use the training material after the project end and market the approach. One of the reasons for this uncertainty is the fact that the project partners decided during the course of the project that the WE Project approach required a more steered dissemination to ensure that quality standards are kept up and training demands can be met.

Despite these uncertainties, however, each training organisation in North and South China was able to sell components of the WE project approach to other factories and brands. In total, each training organisation made approximately 30 sales according to the interviewed local trainers. Moreover, the training organisations in North and South China integrated components of the WE project approach into their regular service offer. The means by which the training organisations disseminated the approach of the WE project approach was different in the regions. In North China, dissemination was triggered via mouth-to-mouth propaganda while in South China, one training organisation marketed the approach via its sales department and its webpage. The other training organisation organised a conference with over 100 participants to inform and disperse information about their service offer, including the WE-training. In Bangladesh, the training organisations stated that they have not yet started to disseminate the project’s approach. They explained that they still need more guidance from Tchibo and GTZ with regard to the process of disseminating the project’s approach to third parties as well as with regard to the copyright status. So far in Thailand training organisations have not sold the training to other organisations. The main challenge is the comparably long training period and the associated costs of the project which is seen as a hurdle for a roll-out to other organisations in Thailand. Nevertheless, one training organisation has approached Hewlett Packard (HP) which is genuinely interested, but has not taken a decision yet. Another training organisation has handed in a tender to the Thai government’s Department of Labour and Industrial Affairs in which they propose a project for the introduction of social standards in 36 factories based on the WE project approach’s approach. The value of the tender encompasses three million Baht. The training organisation is currently waiting for the department’s reply. Furthermore, in the interviews with the external stakeholders, it became obvious that the stakeholders were informed about the WE project approach because of the conducted stakeholder conferences in the framework of the WE project approach. Furthermore, they knew about the WE project approach’s website and the local trainer database. However, they so far have not yet used these media and information to disseminate the project’s approach in the

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respective regions as they do not see it as their role to disseminate and use the project’s approach; especially as it has been a pilot project so far.

7.4.1 Assessment of the WE Project Approach’s Dissemination

In the light of these findings, the evaluator identifies potentials for improvements with regard to the dissemination of the WE project approach. Although components of the project’s approach could be sold by the training organisations in North and South China to a limited extent, it remains questionable in how far an approach of dissemination which focuses solely on individual trainers and their training organisations can be successful in the future. In this aspect, the evaluator sees opportunities to extend the role of GTZ in a future project towards developing a strategy for informing and involving trade unions, non-governmental organisations and employer organisations on a systemic level. These organisations could spread the WE project approach widely as each one of them has specific access routes to different parts of society. In this respect non-governmental organisations could create for example more awareness in the respective society for the advantages regarding the compliance with social standards. Furthermore, GTZ could make an attempt to involve counterparts of the government to strengthen the impacts of the WE project approach with regard to specific social standards, e.g. working hours and compensation (see also chapter 7.2). Other challenges for a dissemination of the WE project approach are the length and the costs of the training and the approach of the project which relies on self-responsibility of the participating factories. Furthermore, it is recommendable to reach a more in-depth agreement with the involved local training organisations with regard to the copyright of the training material and the foreseen dissemination strategy. With regard to the goal orientation, the length and cost of the project, it should be reflected if a future WE project approach could be modularised and could include some form of overall goal orientation for the participating factories which still stays true to the open and empowering character of the WE project approach. An overall goal orientation could for example take the form of agreed goals between the factory and the local trainers at the start of the project. These goals could reflect what the factory wants to have achieved at the end of the project (however, goals should be able to change during the course of the project if deemed necessary by the factory and the local trainers). This kind of goal orientation and the fulfilment of these goals cold be better marketed to other brand and would thus facilitate the dissemination of the WE project approach. Against this background, it has however to be noted that the current status quo of dissemination by the local trainers also reflects a decision by the project partners taken in mid 2008 to postpone a complete roll-out of the project in order to ensure a coordinated and organised approach instead of an individual marketing of the training by each of the participating training organisations.

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8. OVERALL CONCLUSIONS

The WE project approach with its emphasis on communication and dialogue, its focus on an extensive inclusion of workers and its two year duration is a unique approach to enhance improvement of work places in factories. In the framework of the impact assessment no alternative approach could be found which could replace the dialogue approach of the WE project approach. Other projects with similar objectives in the field do not include the worker perspective to such an extent as the WE project approach and do not follow a similar participatory methodology (the dialogue-oriented approach). In this context it became obvious that a dialogue-oriented approach in the field of social standards is necessary, but should be accompanied by measures on the political and systemic level in form of an enhanced inclusion of governments and civil society organisations such as trade unions (see chapter 7.2 and 7.4). With regard to the WE project approach’s impacts it can be concluded that the WE project approach in general shows achievements in a challenging context, albeit differences in degrees and regions exist. Against this background the WE project approach was able to accomplish improvements in the field of communication and dialogue in most of the visited factories. In these factories, communication and dialogue structures were established or adapted, attitudes between workers and the management changed and new processes were either modified or newly introduced. However, distinct differences between the four regions were observed. While in North and particularly South China elaborate communication and dialogue structures as well as processes were implemented and actively used, in Bangladesh and Thailand these communication and dialogue structures mainly took the form of committees and were not always used actively and regularly in daily working processes. Next to the impacts in communication and dialogue the WE project approach also realised impacts regarding improving social standards in the visited factories. Here, it can be concluded that the WE project approach achieved most of its impacts in the areas of welfare, OHS and worker representation. With regard to compensation and overtime some observed changes in the participating factories can be attributed to the WE project approach. One of the successes in the visited factories was the initiated efforts to reduce overtime via e.g. a shift system. Concerning compensation some factories were able to pay higher wages due to efficiency gains which were attributed to the WE project approach. However, also in this field tangible differences between the four regions exist. In North and especially South China more numerous and complex changes in the described social standards could be observed than in Bangladesh and Thailand. These regional differences can be explained on the one hand by the fact that the existing management structures in the factories in China (especially South China) made good use of the WE project approach ’s approach and partially were able to realise the business case of their compliance to social standards. In Bangladesh on the other hand the empowerment of the workforce is much more difficult as external factors such as the education system or the existing infrastructure hinder the achievement of objectives of the WE project approach. Furthermore, the fluctuation of the workforce and the management is much higher in Bangladesh than in China which makes a commitment to the WE project approach more difficult. Additionally, the management of the visited Bangladeshi and Thai factories have not yet realised the “business case” inherent in a dialogue oriented path towards social standards which also weakens their commitment to the project’s approach. In Thailand furthermore, many factories are still family-run businesses and the majority of them are not equipped with a professional management system. As a consequence the management of these factories face a variety of challenges in which the implementation of social standards is one. Thus the attention paid to find solutions for the implementation of social standards has to be divided between numerous issues. In this light it became obvious that the WE project approach is not yet fully adjusted to local circumstances and traditions as the project has to take more into account the particular circumstances in which it operates. Additionally, it became clear that the commitment of the management to the project is a key factor for success. A modular approach might be a solution not only to adjust the project’s approach to local circumstances and traditions but also to enhance the commitment of the management.

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Concerning the dissemination of the WE project approach in the respective regions, it can be concluded that the dissemination to further companies took place only to a limited extent during the project duration. Due to the length of the project, an approach relying on the ownership and responsibility of the participating factories and the need for further guidance for the future dissemination, only the trainings companies in China have started to sell elements of the WE project approach to other brands and factories. For an effective roll-out the local trainers and training organisations now need guidance and further support from GTZ and Tchibo. In this roll-out GTZ could play an important role in the dissemination on political and systemic level in order to enhance the sustainability and effectiveness of the project’s approach for the future.

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9. SUCCESS FACTORS OF THE WE PROJECT APPROACH

Against the background of these findings, it was possible to identify four success factors of the WE project approach which enhance its implementation and its achievements of objectives and impacts. It has however to be noted, that these factors have been deducted on the basis of four case studies in three countries. Whether they are valid for other regions and countries has to be verified by further research. The four identified success factors are the following:

• Commitment of the Management: The commitment of the management to the WE project approach is crucial for the implementation and success of the project. Only if the management is committed, is it possible to implement far reaching changes in the factories regarding communication and dialogue structures as well as improvements concerning compliance to social standards. More importantly, the communication and dialogue structures, which build the foundation for further change in the field of social standards according to the intervention logic of the project (see chapter 4), are only actively used in the aftermath of the project if the management is committed to the project aims, content and methods. Furthermore, only with the strong commitment of the management will the WE project approach be communicated and dispersed widely in the whole factory.

• Space and voice to design creative solutions: In order to find solutions to challenges in the field of social standards the educational level of the workers as well as the cultural setting plays an important role. If the workers and the management in the project countries possess a relatively high level of education, the implementation of the project will be enhanced as problem-solving and learning skills will be well developed among the workers and the management. As a consequence the workers and the management are able to deconstruct power structures within the course of the project more easily and are able to develop solutions to challenges in the field of social standards together based on their own creativity and intellectual capacity. Thus the opportunity for voice and an environment which allows creativity of the workers is essential as they have to participate in designing solutions that are acceptable to all parties in the factories and fit to the respective cultural context. This in turn creates the business case for suppliers to engage and foster dialogue. The approach of creating this space and deconstructing barriers to voice should be further strengthened in a follow up project in order to strengthen the achievement of objectives and impacts of the WE project approach.

• Favourable External Conditions: The successful implementation of the WE project approach and hence also the achievement of objectives and impacts is highly influenced by favourable external conditions. Political factors such as the enforcement of labour standards by the country’s government have a positive impact on the success of the WE project approach. Also economic factors such as to bundle orders in order to give suppliers continuous business from the side of the trading companies enhance the success of the WE project approach.

• Low Fluctuation of the Management and the Workers: In order to guarantee continuity and a constant transfer of knowledge in the implementation of the WE project approach, a low fluctuation of the management and the workers is a key condition for the WE project approach’s success. If the same persons participate in the supplier workshops and the factory visits on the side of the factory, knowledge can be transferred constantly and solutions to challenges in the field of social standards can be found more easily. In addition under this prerequisite the participating persons gain a deeper and all-encompassing picture regarding the topic of social standards and are thus more able to develop realistic and practicable solutions. Furthermore, strategies how to disperse the WE project approach’s approach and knowledge within the factory can be developed to guarantee the sustainability of the project.

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10. APPROACH TO WE 2.0 – RECOMMENDATIONS

In the framework of this impact assessment the following fields of action and recommendations could be identified. They can be summarized as follows:

The impact assessment showed that factories in which a stable group of workers and managers participated in the WE project approach were in a better position to implement changes regarding their compliance with social standards. This was due to the fact that the participants in these factories gained a better and more encompassing understanding of social standards and also were in a better position to develop strategies of dissemination within their factories. In order to ensure a more broad-scale success of the WE project approach in the future, the evaluator recommends that each participating factory in the project should be obliged to provide a stable group of participants on the side of the workers and the management. It must be noted that this is a challenging requirement due to the general turnover rate of employees and managers as well as the trust level this requires from the beginning.

It was highlighted by various stakeholders that many factories need more guidance throughout the WE project approach to achieve more and better impacts. Against this background it is recommended to develop an overall roadmap with the participating factories at the beginning of the project in which the factories’ goals for the project are documented. Although a key principle of the WE project approach was that the factories developed their own Action Plans describing measures fit to improve certain working conditions, it is also important that overall, longer-term goals – going beyond single topics - are developed by the factory. Hereby it is crucial that these goals are not put forward by the brand in order to build trust and create ownership on the side of the participating factories. Furthermore, it should be clearly communicated that the goals can be changed or adapted in the face of external circumstances or new insights in the course of the project. When the goals are set by the factory, baseline information should be provided by the factory to measure its progress towards its goals during the WE project approach’s implementation. This would also strengthen the commitment of the participating factory, as ownership is created and progress becomes visible. However, this again requires a certain level of trust, a guarantee of anonymity of the company data as well as an understanding of the benefits of monitoring Key Performance Indicators. Besides, the established instrument of letting the factories develop their own Action Plans on key social standards topics and internal dialogue after each workshop and monitor progress through regular factory visits should be continued.

During the impact assessment it was highlighted by various stakeholders that the approach of the WE project approach is not yet fully adapted to local circumstances and traditions. Therefore, it is recommended to further adapt the existing training material to local circumstances and traditions by using an increased number of country specific examples for illustration purposes. More importantly, also the communication channels recommended by the WE project approach should be further adapted to local circumstances. As the case of Bangladesh demonstrated, some concepts could not be used adequately by the participants of the project (e.g. suggestion boxes) as workers would have needed more training on how to use them and to internalise the necessary processes of usage. As a consequence, further concepts for different local circumstances and traditions should be developed in order to adapt the WE project approach

3. Recommendation: Further adapt the project approach to local circumstances and

traditions

2. Recommendation: Define overall project goals together with each participating factory at

project start

1. Recommendation: Assess whether factories can set-up a fixed group of factory

participants (management & workers) for the whole project duration

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accordingly in order to better be able to deconstruct power structures and to create opportunities for voice in the respective factories.

Factories in which the approach of the WE project was dispersed widely throughout the factory experienced better results than other factories. As a consequence, the WE project approach should develop motivating strategies by which the project’s methods and concepts can be communicated throughout the entire factories. Possible approaches could be the presentation of project results during worker assemblies or strategies for a wider worker involvement in the WE project approach. These could for example take the form of trainings in which the worker participants pass on methods and knowledge of the WE project approach to other interested workers.

To increase the ownership of the factories in the WE project approach and thereby improve its impacts, it is recommended to introduce a financial contribution for the participating factories that goes beyond the current financing of travel costs, the undertaken investment in the improvement of labour standards and the time-input. This contribution can take different forms. On the one hand, it could be a symbolic financial contribution which has to be paid by the factories at the beginning of the project. On the other hand, it could take the form of a margin of the economic profits which the factory achieves through the project. These payments could be transferred into a fund which would make the project financially self-sustainable in the long-run. Furthermore, it is recommended that the future participating factories have to provide baseline data with regard to their economic key performance indicators before participating in a similar project. Since this data is sensitive business data, the factories could be convinced to start a self-monitoring of their key performance indicators at the beginning of the project in order to ensure them that this data will not be detrimental to their business relations. By possessing this baseline data, one will be able to demonstrate the economic case of the WE project approach more effectively to the factories already in the course of the project.

In order to strengthen the commitment of future participating factories, it is recommended to strongly highlight the positive impact on the economic performance of the factories in the future. This can be either achieved by means of communication when recruiting new factories for the WE project approach or by means of best practice examples which should be included into the training material. Furthermore, factories which have already participated in the WE project approach could be invited to inform new factories about the economic benefits which they could realize. This will increase the credibility of the business case related to taking part in the WE project approach and thus will enhance the commitment of the future participating factories

To disseminate the approach of the WE project in the future, a decision has to be taken regarding the means of its dissemination.

1. The WE project approach could be disseminated via a newly established organisation/ platform or provider structure which would disseminate the approach via training courses to further training organizations as well as NGOs, trade unions and employer organisations and other relevant stakeholders. This platform could finance itself at least

7. Recommendation: Take a decision about the future dissemination process: “Steered

multiplication vs. individual dissemination / open source”

6. Recommendation: Highlight the business case for future participating factories

5. Recommendation: Increase ownership of the factories through a financial contribution

4. Recommendation: Develop a strategy to disperse the project‘s methods and concepts

within each factory

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partially for example via fees for trainings and/or the financial contributions of the factories.

2. The WE project approach including the corresponding training material is made available as open source material. Each organisation and individual who is interested, can use and adapt it according to his or her needs. The introduction of the WE project approach as open source would have to be accompanied by a marketing campaign which particularly also targets trade unions, employer organisations, etc.

In both options, the involvement of government, trade unions, employer organisations and other relevant stakeholders is crucial as the impacts and the dissemination of the WE project approach can be enormously increased through the involvement of these organisations. Especially regarding social standards such as compensation, the support and involvement of these key actors on the systematic level is needed in order to achieve progress. On this level, GTZ can play a crucial role, facilitating the dissemination of the WE project approach and increasing its impacts at a factory level. In the light of the two proposed options the evaluator recommends the adoption of option one as in this option the quality of the trainings and a more targeted dissemination can be more thoroughly guaranteed. Furthermore, only with a platform or at least a coordinated approach can the involvement of additional stakeholders (trade unions, employer organisation) be organised. Furthermore the platform can also be used for lobbying purposes to ensure acceptance on the side of the relevant government agencies.