The Promise and Perils of Private Voluntary Regulation: Labor Standards and Work Organization in Two Mexican Garment Factories
As supply chains stretch around the globe, scrutiny of working conditions in distant factories has increased. But international labor standards often depend on corporations engaging in “private voluntary regulation,” and even when such standards are adhered to, factory floor dynamics may determine their actual effectiveness.
A 2012 study by researchers at the MIT Sloan School of Management and the Inter-American Development Bank (IADB), “The Promise and Perils of Private Voluntary Regulation: Labor Standards and Work Organization in Two Mexican Garment Factories,” evaluates conditions at two Nike facilities in Mexico (referred to as Plant A and Plant B). Published in the Review of International Political Economy, the study involved field research and more than 90 interviews with factory owners, managers, workers and NGO representatives.
The findings include:
- Both facilities respected minimum wage laws, but workers in Plant A were paid more than those in Plant B; in addition, they received productivity bonuses based on team work, while Plant B based bonuses on individual work.
- Both plants adhered to Nike’s policy on working hours and overtime pay, but workers in Plant A were more likely to receive overtime than those in Plant B because they were made more aware of the policy.
- Workers at Plant A enjoyed more job satisfaction, had a higher degree of input in decision-making and had a greater degree of flexibility between team and individual work than those at Plant B.
- Plant A demonstrated better labor standards and was more productive than Plant B, despite its smaller size and less complex product mix. This contradicts earlier studies that suggested that larger, more bureaucratic factories and a more complex product mix would lead to better respect for labor standards.
- Plant A was closer to Nike’s regional office in Mexico City than Plant B, and this had a positive impact on labor standards. Plant A was also in an industrialized area near other factories, creating more competition for labor than Plant B.
- “More frequent visits and more open communication between Nike’s regional staff and management at Plant A led to the development of greater trust and a better working relationship between these two actors. This, in turn, contributed to the upgrading of Plant A’s production system and its consequent positive impact on working conditions at the plant.”
- Plant A was owned and operated by local firm in Mexico, whereas Plant B was operated by a Taiwanese company, significantly changing management-labor dynamics. Workers in Plant A tended to be treated better and viewed as valuable assets; those at Plant B were viewed as expendable by the management, which often favored hiring Asians workers because they were considered more productive.
- International ownership could negatively impact work standards because workers have greater difficulty voicing their concerns. In addition, there can be more willingness by management to move to another country or hire other nonresidents if labor issues arise.
Overall, the study demonstrates that two very similar factories – each evaluated by corporate management as being roughly equal in terms of labor standards compliance — can have different ground-level outcomes. The researchers suggest that “a more systemic approach, one that combines external (countervailing) pressure, comprehensive and transparent monitoring systems, and a variety of ‘management systems’ interventions aimed at eliminating the root causes of poor working conditions, is required to promote improved labor standards for the millions of workers employed in global supply chain factories.”
Tags: human rights, economy, employment, labor unions
Note to instructor: The suggested lessons are designed for flexibility. The goal is to have students understand how to convey the study’s findings accurately and to consider techniques for making the subject matter broadly accessible. In addition, it is well worth discussing how the study was put together and the intellectual context from which it comes. There is also a related news article in the study analysis section.
Newswriting and digital reporting assignments
- Write a lead, headline or nut graph based on the study.
- Spend 60 minutes exploring the issue by accessing sources of information other than the study. Write a lead (or headline or nut graph) based on the study but informed by the new information. Does the new information significantly change what one would write based on the study alone?
- Compose two Twitter messages of 140 characters or fewer accurately conveying the study’s findings to a general audience. Make sure to use appropriate hashtags.
- Choose several key quotations from the study and show how they would be set up and used in a brief blog post.
- Map out the structure for a 60-second video segment about the study. What combination of study findings and visual aids could be used?
- Find pictures and graphics that might run with a story about the study. If appropriate, also find two related videos to embed in an online posting. Be sure to evaluate the credibility and appropriateness of any materials you would aggregate and repurpose.
Class discussion questions
- What is the study’s most important finding?
- Would members of the public intuitively understand the study’s findings? If not, what would be the most effective way to relate them?
- What kinds of knowledgeable sources you would interview to report the study in context?
- How could the study be “localized” and shown to have community implications?
- How might the study be explained through the stories of representative individuals? What kinds of people might a reporter feature to make such a story about the study come alive?
- What sorts of stories might be generated out of secondary information or ideas discussed in the study?
- What are the study's key technical term(s)? Which ones need to be put into language a lay audience can understand?
- Do the study’s authors put the research into context and show how they are advancing the state of knowledge about the subject? If so, what did the previous research indicate?
- What is the study’s research method? If there are statistical results, how did the scholars arrive at them?
- Evaluate the study's limitations. (For example, are there weaknesses in the study's data or research design?)
- How could the findings be misreported or misinterpreted by a reporter? In other words, what are the difficulties in conveying the data accurately? Give an example of a faulty headline or story lead.
Read the issue-related New York Times article titled "Pressure, Chinese and Foreign, Drives Changes at Foxconn."
- What key points arise from the study and article relating to the issue of international labor standards and global supply chains? What issues should reporters be aware of as they cover related stories?