The following is a conversation between Sharon Waxman, President & CEO of the Fair Labor Association, and Denver Frederick, the Host of The Business of Giving.
Denver: The Fair Labor Association is a nonprofit collaborative effort of universities, civil society organizations, and businesses. Its mission is promoting adherence to international and national labor laws. They believe that the products we buy should not come at the cost of workers’ rights. And here to tell us more about what they do and how they do it is Sharon Waxman, the president and CEO of the Fair Labor Association.
Welcome to The Business of Giving, Sharon.
Sharon Waxman, President & CEO of the Fair Labor Association
Sharon: Thanks so much, Denver. Good morning. Happy to be here.
Denver: Glad to have you. The FLA was established in 1999. Share with us how it got started and a little bit of its history.
Sharon: So our roots are in the ’90s, at a time when sweatshop labor was a little bit unknown, and the press started to focus on it more, and companies came to realize that they had a really big problem, that in their contract facilities– which a lot of them have or most of them have overseas– labor standards were not really up to snuff. They were not at a level that… and these all should be government regulations… at a level that really protects workers.
So we emerged out of that with what we call a governance gap, global standards that were really just lacking. The realization that governments wouldn’t, couldn’t, didn’t enact and enforce labor laws. So we emerged actually out of the Clinton administration. It started with the meeting with President Clinton, Secretary Raj, where they said to industry and civil society, “Can you all get together and figure this out?”
I think those who were at that first meeting were somewhat surprised that there was a second meeting, and the conversation started. And from that conversation in the White House, the Fair Labor Association emerged, and the goal was to create a safe space for business and unions, civil society workers’ rights organizations, and later universities to come together and try to address these problems in the absence of global law.
What we did was set, took the international labor organization standards and we operationalized them. And we help companies and require companies to work with us to meet those standards, everywhere from headquarter-level policy down to the factory floor. And the goal is really to raise the standards overall, to give everyone the same standards so everyone is aiming for the same goal… again, recognizing that governments just haven’t done this.
Denver: Yeah. Before we dig into the actual work, let’s say a little bit more about this multi-stakeholder approach because you said it glibly. I kind of looked back, I know how difficult it is, but when you’re talking about businesses and unions and civil society and universities, that is really very, very complex. How do you bring everyone in some sort of alignment kind of pointed in the same direction? We can’t take that for granted. That’s really a Herculean task.
Sharon: Yeah. It’s actually I think the greatest magic of the Fair Labor Association. It really is our secret sauce that over time, we have created an environment where there’s a lot of trust. It didn’t start out that way, and it’s not always that way. I mean, I don’t want to oversimplify it. The issues that we deal with are really, really tough.
And the businesses that we work with, they’re the socially responsible businesses that really want to have the input from civil society and hear what the unions have to say. Oxfam is one of the organizations that’s represented on our board. They want to hear what they have to say, and they want to have those conversations as part of a structure where there’s a goal that’s very clear. And we can have honest conversations, so it really is our secret sauce.
Denver: Yeah. That’s a great secret sauce to have. We all could use a little bit of it. If you have any extra, let me know. Where do you find the most egregious violations of workers’ rights? What parts of the world, Sharon, and maybe what industries?
Sharon: Well, our roots are in the fashion industry, and now we’re moving more into agriculture. We don’t necessarily find the most egregious in the fashion industry, but that’s where we work. So I would say that among the hardest issues that we work on is that of living wages, which is connected to overtime and how industry calculates wages. And globally, there’s a $674 billion wage gap, largely in the apparel and agriculture sector.
So this is an area and an issue, living wages, that was very much at the forefront at the founding of the organization. And it’s an issue that continues to really demand our attention. So we have really as an organization spent a lot of time focusing on how we can work with industry, work with civil society to address these, well, what really are poverty wages.
Denver: Yeah. Well, you truly are a 360-degree organization because you covered the waterfront on so many different things, but let’s pick up on your Living Wages For All program. And I know you were named the 2021 Classy Award Winner… one of them, for Social Innovation. Tell us about that program and how your organization thinks about using data in an innovative way because that’s exactly what you’ve done.
Sharon: Yeah. We were really quite honored to be recognized by the Classy system. What the award was for was the work we were doing or that we continue to do to really help the fashion industry, calculate what their workers are earning, illustrate the gap between what workers are earning, and measure progress over time. So we developed a very practical, efficient, and scalable tool to drive that conversation.
One of the things that has been so interesting in this work is that you say, okay, what is a living wage? And we all know that workers deserve a living wage. And I think people in the sector know that minimum wages are not enough. Some countries like Ethiopia, for example, they don’t even have a minimum wage. Other countries, the minimum wage can often or has fallen below the UN poverty line.
So, you ask the question, it seems like, oh, it should be pretty simple to figure out what a living wage is, but it’s really not. And that’s been the problem, is that no one has cracked the nut and figured out what is a living wage. So a few businesses, if they throw up their hands and they say, we can’t do this because we don’t know what the wage is.
So what we’ve done, working with an organization called the Global Living Wage Coalition, Richard and Martha Anker, if you’re listening, big shout out to you and your brilliant minds… we’ve worked with them to come up with wage ladders and to really break out a system that all businesses can use to actually determine what workers are earning. Seems like it should be pretty simple, but it’s really not because everyone in the fashion industry calculates the wages differently.
And the real thorn in all of this is overtime. It gets very well known that in the fashion industry, workers earn a lot of overtime to make up for really low wages, and that shouldn’t be. So a big part of the goal is to enable workers to earn to meet their basic needs in a regular workweek. No one should be working 60, 70 hours anywhere a week.
Denver: But you do it voluntarily.
Sharon: Yeah, so that’s a big piece of the work, is to develop the tools that enable all companies in the fashion industry to really measure what their workers are being paid. So everyone is using the same methodology. We’re all singing from the same songbook.
And once we can start to collect data using the same metrics, we can start to see: Okay, these people are earning… I’ll make this up… $5, the living wage according to various organizations, unions… The Asia Floor Wage is $10, and that’s the gap that we need to fill.
And the tool that we have developed enables companies to collect data over time, plug it into the system… our database that has all of these different wages, and measure over time where you’re making progress, how you can move toward that higher wage.
Denver: Let me ask you one other thing about wages as long as we’re on the issue, and that is what has the impact of COVID been on average worker wages? I can’t imagine it’s been good.
Sharon: That’s a really, really important question, and I think about this a lot. The COVID in America, we saw the devastation here when people lost their jobs; people were laid off, or they were furloughed. What happened in the fashion industry is that factories ran out of money. Multinationals had a cash squeeze. They weren’t paying… many were not able to pay the factories. The factories closed really suddenly, and workers were sent packing.
A lot of these countries, I’m thinking of India or Bangladesh, there’s a lot of migrant or internal migrant workers. So they came from hundreds of miles away for these factory jobs, and overnight the factories closed, and they were sent packing. They weren’t paid, so the impact on wages was devastating. I mean, they had none. And in a lot of these countries, the social structures are non-existent or just people weren’t paid. They just had no social safety net. So it was very, very, very devastating.
So that, to me, is the context for a lot of this, is hopefully coming out of a pandemic, how do we get wages back to where they were because they definitely did go down. I mean, if you had a job, your wages were down… And to really continue to drive forward toward meeting that goal of getting these workers out of the poverty wages.
Denver: Mm-hmm. Just greater urgency than even before. No question about it.
Sharon: A lot of this, the tools that we’ve developed, we can help the company set up a system to collect the data, but the companies have to take action. This is not just these tools that collect the data using this innovative dashboard that we’ve developed. That’s not enough to drive the change. That can help you measure the change; that can help companies see where they should be, but the company has to change its internal practices. And as part of the conversation and work with their manufacturers, work with the actual workers in their factory, to figure out a system that doesn’t require people to work endlessly just to make ends meet.
“Our methodology, again, is rooted in international laws, standards, and norms. We have a process for evaluating company performance on international labor standards. At the highest level, our companies will make a commitment to maintain all of the ILO standards in the way that we’ve operationalized them, starting at the headquarters with the policy, and then cascading it down to the factory floor or the farm, in the case of our agriculture companies, where that’s really where the rubber meets the road, right?… where you have to have a corporate policy; otherwise no one really knows what the goal is.”
Denver: Yeah. Like the old expression, you can lead a horse to water, but that’s about all you can do with this data. They’ve got to take it from there, the companies. Talk a little bit about your methodology, your sustainable compliance methodology. How does that work?
Sharon: Our methodology, again, is rooted in international laws, standards, and norms. We have a process for evaluating company performance on international labor standards. At the highest level, our companies will make a commitment to maintain all of the ILO standards in the way that we’ve operationalized them, starting at the headquarters with the policy, and then cascading it down to the factory floor or the farm, in the case of our agriculture companies, where that’s really where the rubber meets the road, right?…where you have to have a corporate policy; otherwise no one really knows what the goal is.
And if the goal is clear, and if there are people across the organization that are making sure that it’s implemented at the ground level, then that’s better for workers. So we work with companies over many years to reach an accreditation. And the accreditation is a symbol that they have met the standards, that they’ve committed to them, that they have the systems in place, that we’ve done some ground truthing.
And we see where there are problems, and there are always problems. We’re very solutions-focused. We’re not a gotcha organization. Our expectation is not that there will never be an issue. Our expectation is that when there’s an issue affecting workers, that there’s a system and a commitment to fix it. So our accreditation, our social compliance accreditation, takes the standards that we’ve set, and then we do a very comprehensive performance evaluation. And at the end of that, when a company has met our standards, the board of directors will review the information and accredit them.
Denver: What’s the benefit of accreditation? I’m taking somebody such as myself, let’s say, I probably wouldn’t know what companies are FLA-accredited, although I probably should. But I mean, where are the benefits to a company in real terms, in terms of people knowing about this and thinking differently and more highly of the company because they operate in that fashion?
Sharon: Yeah, well, a lot of the companies that we work with, like Nike, Adidas, Patagonia, many of the…
Denver: You got a great list.
Sharon: …biggest companies, UNIQLO, they are leaders in this sector. They want to be leaders and they know that it’s hard to be a leader. They also know, and I think this is one of the great benefits, is that no company, no factory can do this alone. So the idea of making collective progress, it’s very appealing to the forward-looking, forward-leaning companies. Again, the benefit is that it’s really a mark of leadership. It’s rigorous. There are a lot of…
Denver: You do unannounced audits, right?
Sharon: We don’t do unannounced audits.
Denver: Oh, you don’t. Okay.
Sharon: No. I mean, the audits that we do, what we’ve found is that when we announce an audit, we find still so many things like if the factory has time to prepare the information, for us it’s actually a much more meaningful conversation because we can dig deeper. They’re ready for it. They know what we’re going to be looking for.
And if you have a problem in a factory, we’ll see it. If you have double books, we’ll find it. If your workers are not being paid, it’s going to be apparent when we talk to people. We don’t catch everything, but our belief is that we can accomplish far more and move closer to our goal by having scheduled audits.
“…we at the Fair Labor Association are really pushing to show the world what good looks like. And that’s what our accreditation program is all about. This is what good corporate governance looks like. These are the high standards that you should be aiming for if you really want to make a difference. This is how you implement it across the globe, and here is how it can make a difference for workers.”
Denver: How has your work changed since the time you started? And I think about things like technology and the internet of things and blockchain. I also think about a younger generation that seems to be more focused and concerned about these issues. Are you seeing the way you go about your work and the response to it changing as the years have passed?
Sharon: It’s a really great question. Yeah. I think one of the biggest trends is… I mean, consumers expect this. I think there’s absolutely no doubt about that. Consumers expect companies and the brands to act responsibly. Workers deserve it. Again, no one should work at poverty wages.
Some of this is very personal for me. I should just mention that I come from a family, like so many Americans, of immigrants. My grandparents were immigrants from Eastern Europe, I mean, what’s now Poland, Russia. And when they came to this country, they found work in the textile industry. My grandfather on one side was sewing appliqués onto clothing. Grandfather on another side was making children’s clothing. For me, there’s a personal connection to the people on the other end of my sneakers or of my sweatpants.
So I think probably the biggest change is that there’s just an explosion of interest in these issues. I mean, absolute explosion. And investors are demanding and expecting more information from companies. Again, we were founded, as I said earlier in the conversation, to fill a governance gap, and governments now across the world are stepping in and starting to really pay attention and enact laws that have real consequences for business. So there’s just a lot more interest. There’s a lot more information demand. And I think that’s all good…
Denver: Yeah. Oh, there’s been a sea change. No doubt about it.
Sharon: …investors and there’s a whole class of investments called ESG, the environment, social, and governance. We’re the S, the social, that’s the labor, that’s the people. And yeah, it’s very hard to measure.
Environment has always been a little bit easier to measure, not to tackle because you can measure emissions, it’s very measurable. Labor rights on the other hand are about people, and people have rights; chemicals don’t. And people have a voice and chemicals don’t, so it’s always been very challenging.
And I think to go back to your question, what’s so exciting is that people are really starting to ask, “What is that?” Ask, “What is that requirement? What is that obligation to the people?” We, as the global community, don’t have the answer yet, but we at the Fair Labor Association are really pushing to show the world what good looks like. And that’s what our accreditation program is all about. This is what good corporate governance looks like. These are the high standards that you should be aiming for if you really want to make a difference. This is how you implement it across the globe, and here is how it can make a difference for workers.
There’s a lot of stuff out there that doesn’t require companies to do a whole lot. We’re very rigorous. We’re not for everyone. We’re really for the very committed. And it’s working, we’re growing. There’s a growing interest. There’s a growing recognition that this is something that a business has to do and, in many cases, wants to do. They just are not always sure how to do it.
Denver: Yeah. Right. We’ve talked a little bit about textiles here. Let me just move on for a moment to agriculture and one of your initiatives, which would be called Harvest the Future project, and you’re doing that in Turkey. Tell us about that.
Sharon: This is a program that started actually from some funding that we received from the US Department of Labor to address some of the chronic issues of child labor, migrant labor. And what we’re doing, again, is drawing on our strength of creating a safe space, bringing a lot of companies together in Turkey, some of the big multinational companies: Nestlé, Olam, Unilever, Pepsi… and working with them to address the forced labor, the migrant labor in the agriculture sector across Turkey.
So what you have are migrant workers who move from crop to crop. So they’ll at one point be harvesting pistachios, another week, two weeks later, they’ll be harvesting apricots or cotton. So the workers move, and there are labor agents that help to find them jobs. And often, there is exploitation of those workers with the folks who are placing them in jobs.
So what we’re doing is working with the government, with the companies, and with the labor contractors to educate everyone and set up a system where the workers are better protected; they know their rights, and the companies have a greater understanding about how they should be treating them.
“I think our work on fair compensation has really been quite innovative. I’m excited that we have a solution to help move the fashion industry forward together. Again, there’s a lot of interest in this issue, and I really am a big believer in not duplicating efforts. We have developed the tools to help companies use technology, use innovation to measure progress. And we would like everyone to use them so that we can focus on the solution…”
Denver: Finally, Sharon, with all that you have going on… and you have quite a suite of activities occurring simultaneously… what would you say is your major focus or at least what are you most excited about at this moment when it comes to your work?
Sharon: Boy, look, I’m excited about all of it. I think given, just to go back to the point, that there’s just an explosion of interest in this. I think what I am most energized by is the challenge of working with the companies, working with our partners in the organization and civil society to help the companies do better, so that the workers are treated better and are paid the wages they deserve, are working reasonable hours, are able to organize into a union if they want to, where there’s no forced labor; where children are in school and not working in a factory, and where unions and civil society are engaged and where there’s a conversation between the multinational corporates, the manufacturers in the various countries across the globe, and the workers.
When people… I used to work at the State Department so I’m a big believer in conversation. When those conversations happen, the outcomes can be much better for workers. And that’s what drives me. That’s why I get up in the morning, and I’m excited about that. And I’m excited where we’re making a difference.
I think our work on fair compensation has really been quite innovative. I’m excited that we have a solution to help move the fashion industry forward together. Again, there’s a lot of interest in this issue, and I really am a big believer in not duplicating efforts. We have developed the tools to help companies use technology, use innovation to measure progress. And we would like everyone to use them so that we can focus on the solution and not throw our hands up and say, “Oh, we don’t know what the workers are earning or we just don’t have the data.” So that’s what I find most exciting.
Denver: Yeah. I would always say that with all the challenges in front of you, every once in a while, you can turn around and look back and say, “Look at all we’ve done.” You know what I mean? “And how far we’ve come.”
Sharon: Yeah. Well, look, the problems are huge, right? I mean, this is a big, hairy problem. And I think the pandemic really showed how vulnerable so many workers in the fashion industry and in the agriculture sector are, and no one should have to live on the edge with such desperation.
Denver: For sure. For listeners who want to learn more about the Fair Labor Association, tell us about your website and what the visitors can expect to find on it.
Sharon: Yeah. Thanks for asking. Our website, you can find us at www.fairlabor.org. Once again, www.fairlabor.org. And what you’ll find on our website are our standards, what we do, how you can join our journey. You can find out more about our cutting-edge work on fair compensation and all of the programs that we implement across the globe.
Denver: Fantastic. Thanks, Sharon, for being here today. It was a real pleasure to have you on the program.
Sharon: Good. Thank you.
Denver Frederick, Host of The Business of Giving serves as a Strategic Advisor and Executive Coach to NGO and Nonprofit CEOs and Board Chairs. His Book, The Business of Giving: The Non-Profit Leaders Guide to Transform Leadership, Philanthropy, and Organizational Success in a Changed World, will be released in the spring of 2022.
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