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Disney in Haiti: Are Human Rights Campaigns Necessary?

July, 28 1997 Share

On their own, will the multinationals respect human rights?
The concrete case of Haiti demonstrates the need to hold corporations accountable.

 

1. U.S. Apparel companies flock to Haiti under Duvalier Dictatorship;  assembly workers' wages slashed by 56 percent!

Between 1983 and 1989, apparel exports from Haiti to the U.S. more than doubled, leaping from $81 million to $177.9 million.  By 1989, Haiti was the third largest exporter of apparel to the U.S. in the entire Central American and Caribbean region.

The only thing that wasn't growing during this boom period was the wages of the workers assembling goods for U.S. companies.  Real wages were down 56 percent, including the fact that companies also stopped paying legally mandated benefits.  Between 1983 and 1991, the dollar value of the wages the U.S. companies paid fell by 39 percent.

The mere presence of U.S. companies and their contractors does not guarantee respect for worker rights, nor even development of democratic institutions.

 

2. U.S. companies, even the U.S. Government, and the coup leaders opposed higher wages in Haiti.

One reason for the coup of September 1991, was to block President Aristide's wage reforms.  The coup came one day before wage rates were to be raised from the existing 21 cents an hour to approximately 50 cents an hour.

The U.S. companies and their contractors opposed this increase.  The Bush Administration allocated millions of dollars to oppose President Aristide's reforms.  USAID objected that "wage systems should not be the forum for welfare and social programs."  U.S. officials warned that if the 50 cent-an-hour wage were enacted, it would cause "high distortions in labor costs."

Following the violent military coup, the U.S. companies--including H.H. Cutler which is now threatening to pull out of Haiti--lobbied the Bush Administration to provide a loophole so that they could go on producing in Haiti despite the OAS embargo.  Eighty-seven U.S. companies continued to contract production in Haiti.  In fact, the U.S. was going in the opposite direction from the rest of the world--we were increasing trade during the military dictatorship.  In 1992, the U.S. imported $107 million of assembled goods from Haiti.  By 1993, this leapt 44 percent to $154 million--75 percent of which entered the U.S. duty free!

The U.S. companies and their contractors used the bloody repression--the military had killed over 4,000 people--to slash wages and destroy all popular, democratic grassroots movements, especially the nascent labor unions.

During the coup period wages were slashed to 14 cents an hour in the assembly plants producing for export to the U.S.

 

3. Haitian Factory owners and U.S. companies are making substantial profits in Haiti, and could easily afford to pay higher wages.  One assembly plant producing T-shirts pays its workers two to three times what workers sewing Disney garments earn at the H.H. Cutler contractors.

A stone's throw from the Gilanex factories owned by George Sassine, which are producing exclusively for H.H. Cutler and Disney, is another assembly plant, Multi-Industries, which sews T-shirts under contract with a Canadian company.   Workers at Multi-Industries earn between 63 cents and 83 cents an hour, which is two to three times what workers sewing Disney garments at Gilanex make.  The highest paid workers at Gilanex earn 38 cents an hour, while the majority earn closer to the 28 cent minimum wage.

 How is this possible?

Multi-Industries owner, Richard Coles, spoke with us last year.  He was very frank.  "Haitian businessmen" he told us, "are used to making enormous profits--$100,000 or $200,000 a month, and this has been going on for more than a decade.  You figure it out."  When we asked him about George Sassine, who even a year ago was complaining that he was barely able to make a living off his three factories sewing Disney clothing for H.H. Cutler, Mr. Coles responded: "There must be a mistake; it's impossible. Perhaps he's pretending."

Mr. Sassine was insisting that, as much as he would like to, he could not even think of raising wages in his factories.  If he did so, he would have to go out of business.

Richard Coles explained how the assembly business operates.  Yes, the giant retailers and the U.S. apparel companies do absolutely exploit Haiti's poverty, its dilapidated infrastructure, its political instability in order to drive contract prices down in Haiti.  For example, under contract with a Canadian company, he is paid $2.60 for every dozen shirts sewn in his factory, while the exact same work would contract for $3.20 a dozen in Honduras--22 cents per shirt in Haiti, 27 cents in Honduras.  Haiti does get squeezed.

But even at the low contract price of $2.60 a dozen, you make money.  His total labor cost (direct and indirect) to sew each shirt was 8 cents, while factory overhead added 5 cents more to the production cost.  Overhead included $2,500 a month rent, and $83 a day for gas to run his generators.  Total production cost amounted to 13 cents per shirt.  Given he was paid 22 cents, he made 9 cents, or, a 40 percent profit on each garment. It adds up.  With 200 workers, Multi-Industries produces 16,800 t-shirts a day.  After all operating expenses his profits were $1,512 a day, $30,000 a month, and $360,000 for the year.

And remember, he is paying his workers two-to-three times what Mr. Sassine is paying at Gilanex to sew Disney garments.  Also, Mr. Sassine has three factories (not one) and has 700 people working (not 200).  It is reasonable to assume he is making a lot of money.

Haitian factories producing for U.S. companies are shipped piece goods--which are woven, shaped, dyed, cut and printed outside of Haiti--for assembly.  The multinationals sole interest is to access the low wages--not to develop Haiti's industry.  The only way the Haitian factory owners can increase their profits even more (given that the contract price is set by the retailers or the large apparel companies) is to further squeeze their workers by holding down wages.

They also cut corners in other ways.  Last year, we were told, Mr. Sassine, illegally, was not paying into the national workers pension fund.

The U.S. Commerce Department confirms that money is being made: "Traditionally, the manufacturing sector has been very profitable for foreign firms in Haiti.... Haiti's abundance of low-wage, productive labor, and available factory space, offer an attractive scenario for investment and joint venture production."

Perhaps in a momentary slip, several H.H. Cutler contractors in Haiti admitted to a reporter that their profit margins were 12 to 17 percent.  Even this could be a gross understatement, but as it is, this is still three to four times greater than the average profit of U.S. apparel manufacturers, who operate on a 4 to 5 percent profit margin.

 

4. Can You Survive in Haiti on 28 cents an hour, or 38 cents?  No.  This is truly a starvation wage.

Even if we consider one of the highest paid workers sewing Disney clothing at the Gilanex factory, she earned just $3.00 a day, or 38 cents an hour.  At a bare minimum (the vast majority of people would have far higher expenses than we are using here), it costs her 27 cents to get to and from work riding a crowded tap tap. The very cheapest housing, even for a one room, dirt-floored shack without running water, that leaks and floods during the rainy season, costs 79 cents a day to rent.  Since it is necessary to purchase water by the bucket and the average family uses six buckets a day, that costs another 48 cents.  Each day, rent, water and transportation consume at least $1.52, leaving just $1.48 of her $3.00 a day wage.  There are six people in this woman's family, which is the average in Haiti.  Ignoring all other expenses--electricity, medical expenses (the workers and their families have no health coverage), infant formula (which costs $3.08 for a can of powdered milk that would last one week), tuition ($7.00 per month for primary school), clothing (the cheapest children's shoes, used, cost $2.00) and so on--that still would only leave just 25 cents per day for each person to survive on (or 8 cents per meal).  Haiti, like most poor countries, is not a fantastically cheap place to live.  One of the simplest meals a family can prepare, with rice, beans, tomato sauce and bread, costs $2.89.

The Haitian workers are trapped in grinding hunger, which most of us cannot even imagine.

 

5. Is 58 cents an hour an unreasonable shocking proposal which the largest most powerful multinationals in the world are unable to even consider?

The current minimum wage of 36 gourdes a day (at the time $2.47, or 31 cents an hour) was established in June 1995.  Originally set below subsistence levels, since that time inflation has further drastically reduced the real purchasing power of the assembly workers' wages.  According to U.S. government figures, the inflation rate in 1995 was 30.2 percent, while in 1996 inflation climbed another 20 percent.  In the first half of 1997, the inflation rate has been estimated at 10 percent.

So real wages continue to decline in Haiti.

Even the dollar value of wages - what it costs the U.S. companies - has been falling, as devaluation has lowered the value of the gourde.  In 1995, the exchange rate was 14.48 gourdes to the dollar.  Today it is 16.70 gourdes to the dollar, and by the end of the year it is expected to fall to 17.66.  Wages which in 1995 were worth 31 cents an hour, are today worth 27 cents, and by the end of the year they will be worth only 25 cents - almost a 20 percent decline.

Given that Haiti has to import 70 percent of what it consumes, prices are soaring, real wages are declining, people are suffering and it is costing the multinationals even less to produce in Haiti.

This proposal by the Haitian workers fits well within the "common standards" the "Universal Declaration of Human Rights" established in 1948:

"Everyone has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented if necessary, by other means of social protection."

It might by useful to seek out Disney and H.H. Cutler for their interpretation of this universal right.

 

6. Can the multinationals and their contractors make a profit controlling 99.55 percent of the sales price of a garment?

The highest paid workers in Haiti sewing Disney garments can be found at the L.V. Myles factory, where the faster sewers, by no means the majority, can earn 42 cents an hour.  When we interviewed these women they were sewing 101 Dalmatians children's outfits, which sell for $19.99 in the U.S.  Total direct wages on each finished garment amounted to only six cents, which is just 3/10ths of one percent of the sales price.  If the 58 cent-an-hour wage proposal were accepted, this would add only three cents to the direct labor cost in each garment, which would now total nine cents, amounting to just one half of one percent of the sales price.

This would leave Disney, H.H. Cutler/VF and Wal-Mart in possession of 99.55 percent of the sales price of the garment.   It is ridiculous to claim that they are not making an enormous profit.  If this garment were produced in the U.S., the labor cost would equal 10 percent of the sales price.

There is a lot of greed driving this system. 
Last year, the CEO of the Walt Disney Company, Michael Eisner, awarded himself a stock option worth $181 million, on top of his $8.7 million salary.  This was, the New York Times noted, the largest corporate grant in the history of the United States.  His total compensation amounted to $102,000 an hour.  It would take a worker in Haiti sewing Disney garments 156 years to earn what Michael Eisner earns in one hour.

If only the $181 million grant were redirected by the Disney Company to Haiti, it would be possible to double the wages of all 19,000 assembly workers in the country for the next 16 years.

It is not so much an issue of money not being available to raise wages as a question of what the companies see fit to do with it.

 

7. Are worker rights respected in Haiti?  If so, how is it with real wages well below the subsistence levels--and falling--there is not a single union with a contract in any of the assembly plants?

It would perhaps be nice if Disney and H.H.Cutler set up extracurricular activities for the workers--like a glee club--or joined with the Gilanex plant in subsidizing basic needs (Mr. Sassine brags about distributing free toilet paper--in small quantities--at work). But what the workers really need and want is the right to organize a union.  They want a contract.  They know that this is the only way they can begin to empower themselves, restore their rights, and climb out of misery and--at least--into poverty.

It is this right to organize which is being illegally blocked.  Every serious journalist who has taken a look at this confirms that if the workers attempt to organize they are ignored, then threatened, demoted, laid off, offered bribes, pressured, fired and blacklisted.

Who can the workers turn to for protection--the Ministry of Labor?  The Ministry of Labor in Haiti is seriously underfunded, understaffed, ill-equipped, ill-paid, and ill-trained.  In 1996, Ministry of Labor officials explained that they had no money, that, in short, they were "paralyzed", and up to that point had never visited an assembly plant.

Could the workers turn to the courts for protection?

This would be completely impossible.  The U.S. government continues to alert businesses to beware of "Haiti's slow, inefficient courts and justice, and its antiquated legal systems...."  "Haitian law...is severely compromised by weak enforcement mechanisms, a poor judicial system...."  Forget the courts.  We are told, "Working through the Haitian courts is a lengthy process and cases often go on for years.  For this reason, many disputes are settled out of court".

Nor is there much along the lines of corporate disclosure.  For example, "Haitian laws do not require external audits of local operating companies.  Local companies keep various sets of books, depending on their use...."  How convenient.

In Haiti--which is by no means an isolated situation, it is similar in El Salvador, Indonesia, etc.--workers producing goods for export to the U.S. market are stripped of their rights, isolated and vulnerable.  Surrounded by enormous unemployment and poverty, there are 1,000 other people who would take your job should you be fired.

The president of H.H.Cutler--now threatening to pull out of Haiti--Mr. Tom Austin explained his business philosophy to Grand Rapids Press business reporter Mary Ann Sabo.  Responding to a question regarding the below- subsistence level wages in Haiti, and whether this was fair or just, Mr. Austin stated, "I'm not in a position to change the wages around the world or decide the fairness, and I wouldn't if I could.  We live in a market economy and the market determines what the wages are, and it is the most effective allocation of resources".  (Remember that what we are talking about here is increasing the wage level by only 3 cents per garment.)

According to Austin, it is all in the hands of the individual Haitian worker.  They control their own fate.  Mr. Austin will sit down with them any time.

"Individual people make individual bargains about what their labor is worth."

Very handy for the giant multinationals, in the global sweatshop assembly industry workers are illegally denied their rights, unions are busted, and individuals are free to negotiate their worth with the companies.  All checks and balances protecting against corporate abuse are thrown out.

Besides, Mr. Austin believes that 28 cents an hour "is a living wage."  After all, they're alive, aren't they.

In their attempt to organize, the Haitian workers' struggle once again fits clearly with the "common standards" established by the Universal Declaration of Human Rights, namely, "Everyone has the right to form and to join trade unions for the protection of his interests."

This is pretty fundamental stuff, which should not have to be gone over again and again.  What do Disney and H.H. Cutler have to say about this universal right?  Will they put actions where their words are?

 

8. Why is the U.S. Embassy in Haiti giving companies the green light to violate labor laws?

Based on information provided by the U.S. Embassy in Port-au-Prince, the U.S. Commerce Department is sending the following advice to companies interested in investing in Haiti.

Tax, labor and health and safety laws and policies are theoretically universally applicable, but are not universally applied or observed.  As such, they do not distort or impede the efficient mobilization and allocation of investment.  Many in the private sector provide services (usually health care) for their workers that are not provided by dysfunctional state agencies.  Although voluntary, this decision could be a competitive disadvantage."  (Haiti Investment Climate, U.S. Department of Commerce, Doc #4708, April 1996.  Faxed by the Commerce Department to the National Labor Committee March 24, 1997)

If the U.S. Embassy and the Commerce Department are sending this out in print, in broad daylight, one can only imagine what is said to the companies behind closed doors. 
There should be an investigation, and whoever is behind such thinking should be immediately removed from the Embassy and replaced by someone who will promote and honor internationally recognized worker and human rights.  The U.S. Embassy in Haiti must represent all the people in the United States, and not just the multinationals.

 

9. What sort of companies are we dealing with? 

H.H. Cutler's parent company, VF, produces clothing in Burma, while refusing to participate in the work of the White House Task Force to Eliminate Sweatshop Abuses.

For over a year, the VF Corporation has produced clothing in Burma, in cooperation with the vicious military dictators.  On May 5, 1996, for example, a VF subsidiary located in Holly Pond, Alabama imported  17,703 pounds of men's and women's Lee shirts made in Burma.  Just two months before, in February, the VF Corporation shut down two factories in Alabama, putting 1,040 workers out of their jobs.

The VF Corporation is now refusing to participate in the efforts of the White House Task Force to Eliminate Sweatshop Abuses, which is struggling to establish, for the first time, verifiable human rights standards for the entire industry.

VF will not open its factories, or its contractors plants, to independent monitoring by local respected religious and human rights leaders.  Candice Cummings, VF's vice president and general counsel, claims that these respected religious and human rights leaders will be biased, and therefore cannot be trusted.

VF would like to keep its operations behind closed doors, continuing with business as usual.

If H.H. Cutler is allowed to relocate from Haiti to China, they will not have to worry about independent monitoring.

 

10. Why pressure the multinationals like Disney and Wal-Mart?  Isn't it all in the hands of the governments in the developing world, for example in Haiti?

The multinationals have enormous leverage over developing countries.  They control the flow of investment and assembly jobs.  They use this power to unleash a competition among desperately poor countries fighting over jobs by offering low wages, the least benefits, no unions, no regulations and no taxes.  In many ways, the developing world subsidizes the multinationals.

In Haiti, several multinationals are involved in the production of Disney garments, including H.H. Cutler/VF, Wal-Mart, Kmart and, of course, Disney.  The combined annual sales of just these four corporations amounts to $168.5 billion  (H.H. Cutler/VF--$5.1 billion,  Wal-Mart--$107 billion,  Kmart--$34.4 billion,  Disney--$22 billion), which is 190 times greater than the entire national budget of the government of Haiti, which is $833 million.  On top of that, 65 percent of Haiti's budget comes with strings attached, since it is made up of foreign aid and loans.

The multinationals have the money and most of the cards in their hands.  They have to be reckoned with.

These are also our companies.  They are based in the U.S. and we purchase their products.  If we raise our voices, we have the power to influence these multinationals.  This has been demonstrated, with the GAP, Phillips Van Heusen, and others.  We may not be able to influence the Haitian government, which must respond to the Haitian people, but surely if we engage these U.S.-based companies they must listen to us.

Often we search for ways to have an impact.  This is very direct and do-able.  If we can hold the U.S. corporations accountable for their human rights practices, to pay a living wage and respect the environment, we can change the world.

 

11. The campaign to defend human and worker rights in Haiti has been successful.  We are only at the beginning.  Much more needs to be done.

 The very fact that Disney/H.H. Cutler's intention to pull out of Haiti is being raised as an issue at all--and even in the media--proves how far the campaign has come.  In the past, under the norms of business as usual, the corporations could cut and run as they chose, in silence.  Not a question would have been raised.  The people in Haiti would have faced this, suffered this and fought this out alone, isolated and pitted against the largest multinationals in the world.  Now that is no longer the case.

From New York to Los Angeles, to London and Toronto, people understand these issues better now.  In the eyes of more and more people, the corporations--especially the likes of Disney--are responsible for their human rights practices.  Human values are every bit as important as the corporate bottom line.

The campaign has kept Disney and H.H. Cutler in Haiti for the last year, and with an enormous international effort, we may again be able to keep Disney in Haiti, with or without H.H. Cutler.

  When the National Labor Committee visited Haiti in August of 1995, we discovered that over half of the assembly plants in Haiti producing under contract for U.S. companies were illegally paying below the minimum wage.  Included among these companies were at least two H.H. Cutler contractors--Quality Garments and Charles Handal--where we found wages as low as 12 cents an hour.

Today, as a result of pressure from the campaign, most companies in Haiti pay at least the minimum wage.

The squeaky wheel usually gets the grease.  Given the international attention generated by the campaign, Ministry of Labor representatives have at least started visiting some of the factories.

Despite their well advertized corporate codes of conduct, their stated sourcing guidelines and their claims that they would monitor themselves by policing their contractors to guarantee respect for human rights, the U.S. companies never sent representatives to Haiti to inspect and to demand that their contractors respect human and worker rights.  Haitian factory owners told us that the U.S. companies only started asking these questions after the campaign began.  Before that, human rights issues were never raised.  Then, in response to the campaign, Disney, Cutler, Wal-Mart, Kmart, J.C. Penney and others sent representatives to Haiti for the first time asking to see their contractors' books, looking at the bathrooms, seeing if there was sufficient ventilation, and so on.

Of course, this was totally inadequate, but it shows that companies do respond to pressure.  Workers in Haiti producing for U.S. companies are still blatantly denied their right to organize.  They are still paid a starvation wage.  The only monitoring which is effective must be carried out by local respected religious and human rights organizations that the workers trust.

Because of the campaign, the issue of a corporation's responsibility to pay a living wage--which they could easily afford--is better understood.

The impact on Disney has been considerable, which is no small feat given that they are the second largest media/entertainment conglomerate in the world.

Disney has had to admit it has problems with its worldwide contracting.  Disney has begun a review of its corporate code of conduct, its sourcing guidelines and its monitoring or compliance program.

Disney was forced to include, for the first time, the right to organize as a part of its corporate code of conduct--which is to be displayed in each factory translated into the local language.

Disney was forced to pull out of Burma.

Disney felt enough pressure so that it finally entered into discussions with the White House Task Force to Eliminate Sweatshop Abuses.

Would Disney have done any of this without the campaign?  Of course not.

Two new unions organized by Batay Ouvriye at least got a foothold at Classic Apparel and at BVF, two Disney contractors, before they were effectively neutralized.  But at least there was not the wholesale firing and blacklisting of all the organizers as was typical in the past.  The next organizing drive may very well work, in part because of the spotlight of attention directed at the companies by the campaign.

Now even the mainline media has discovered the issue of worker rights in Haiti, which surely was not the case in the past.  The media is now asking questions about worker rights, wage levels, corporate mark-ups and profits, challenging a company's ability to cut and run to relocate production to places like China.

The companies now face at least a little heat from public scrutiny.

After the coup, following President Aristide's return, Haiti all but fell off the map as far as U.S. policy makers and the mainstream press were concerned.  This is the typical scenario.  It was an open and shut case.  It was time to move on.  The U.S. people needn't be concerned or involved. 
Probably the most significant achievement of the campaign was to help keep the issue of justice, of human and worker rights in Haiti, a focus of concern for the U.S. people and internationally.

The National Labor Committee essentially took the very broad national network we developed in the Kathie Lee/Wal-Mart and Gap campaigns and attempted to engage this widespread coalition alongside the Haitian people in their struggle to defend human rights.  We attempted to create a direct link between the people of the U.S. and the people of Haiti.  We did this by putting a human face on what the companies were doing in Haiti.  Pressuring the U.S.-based multinationals would be the vehicle for that concrete solidarity.

Disney has in fact received well over 6,000 letters from grammar school children--a very powerful statement.

More is in store for Disney and the other multinationals.  The campaign will continue full steam ahead.

 

An Appeal to Walt Disney Company. April 1996