Paper Example on Primark: Examining Labour Conditions & CSR Compliance

1.1 Introduction

This report is conducted as part of the International Business Ethics course at the Amsterdam School of International Business. An assessment will be made of Primark and the extent to which the company succeeds to follow up on their own Corporate Social Responsibility report. This report will be narrowed down to the rules and regulations regarding the labour conditions that Primark has implemented.

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1.2 Company introduction

Primark is an international retailer established in 1969, offering the latest fashion, beauty and homeware for a low price. Currently the company has 345 retail stores located in eleven countries across the world, including Spain, France and the U.S. The company reported revenues of 8.3 billion Euro for the fiscal year ended September 2018 (Sabanoglu, 2019).

Primark obtains their goods from 1,003 factories in 28 countries as the company itself does not own any of these plants. Therefore, before the first order is placed, Primark demands the factories that make Primark products to commit to the standards in the Primark Code of Conduct (Primark, Global Sourcing Map, 2019).

The company has been involved in many incidents in the past according to the media. A widespread example is the small note found in the pocket of trousers sold by Primark. The note was allegedly written by a Chinese prisoner, working under terrible conditions (BBC,2014). There will be elaborated on media and news articles later on in the report.

1.2.1 Preview of the structure of the report

In this report, we will be assessing whether Primark has been conducting its business activities according to its published code of conduct. We will first point out the specific examples where Primark has broken its code of conduct. We will then analyse why Primark has failed to keep its promises and whether Primark has made any remedies. Consequently, we will carry out our assessment with reference to two academic articles, four ethics theories, as well as relevant laws and regulations. Lastly, we will make a concluding statement and provide recommendations on how Primark can improve its business process to live up to its code of conduct.

The research will be conducted in the form of a case study. Both internal and external information will be assessed. The main sources of information will come from the official website of Primark, scholar articles, government regulations as well as news reports. Furthermore, an evaluation of Primark's self image will be done of its social responsibility by looking at its official code of conduct. Primark's public image formed by the news reports and scholar articles will be described. Lastly the four ethics theories in making our judgement will be applied.

1.3 Problem Definition

As a result of the media outlets covering different incidents regarding child labour involving Primark in the past, a research question has been defined: Has Primark adhered to their labour conditions policies concerning labour in factories focussing on regulations in the last five years?

Chapter 2

2.1 Theoretical framework

Criteria used to assess the company's CSR policy, actual CSR activities, and leading to secondary questions, where provided based on four theories on virtue ethics by four different philosophers.

Criteria used to assess the company's CSR policy and actual CSR activities will be based on four theories on virtue ethics by four different philosophers as well as two academic articles. These philosophers are Emanuel Kant (deontology) , Stuart Mill (utilitarianism), Aristotle (nicomachean / internal Ethics), and Carol Gilligan (care ethics). The categorical imperative to Kant's theory of deontology is that ethical behavior should be based on universal laws stemming from your own brain and doing so is a person's duty. Different from the others, this theory is not context-related and focuses on the action itself. Stuart Mill's theory of utilitarianism however, looks at the consequences of our actions to decide if these actions are morally expectable. According to Mill, consequences have to be for the good of the majority but may not harm anyone, meaning everyone is equally valuable. This theory is indeed about context and includes all possible stakeholders. In addition, Aristotle's theory of ethics is based on the actor and his virtues, arguing the middle in two situations has to be found. Thus, a person should be neither egocentric nor reckless, in order not to burden society. Gilligan on the other hand believed all these philosophers overlooked the role of emotion in an individual's ethical decision making process. She argued that people may have a special obligation to the ones they love, the ones they depend on, and the ones depending on them.

Two academic articles have been selected which can be used as a framework for assessment.

The Economics of Child Labour: A Framework for Measurement by Richard Anker. He discusses the concerns and economic aspects of child labor and how this can be measured (Anker, 2000).

The UN Framework on Business and Human Rights by John Ruggie. The framework as described in their report aims for protection, respect and remedy against today's challenges (Ruggie, 2008).

Chapter 3

3.1 Company Self Image

To answer the main research question of this report, the essential parts of the firm's code of conduct relating labour conditions have been evaluated.

At first glance, Primark comes across as a brand that values ethics. In contradiction to other fashion brands, on Primark's website on the navigation bar there is also a category called 'our ethics' next to the types of women, men, beauty, etc. As previously mentioned in the company description the company does not own any of the factories producing their garments. Nonetheless, the company provides consumers with easy access to their global sourcing list, disclosing the factories that are cooperating with the firm as well as a gender split of all the workers per plant. The products produced in those plants make up 95% of all the sold Primark products (Primark, Setting High Standards, 2019).

Primark has set up an Ethical Trade and Environmental Sustainability Programme and is a member of the Ethical Trading Initiative ETI. The company believes that the 12 principles from their Code of Conduct set the basis for the above-mentioned program. Moreover, the company knows the impact their production levels have on the international footprint and has therefore set up an Ethical Trade and Environmental Sustainability team with over 100 employees (Primark, 2019). The firm prides itself on its low prices and claims to do this in combination with proper guidelines in the supply chain. Their reasoning on how the firm is maintaining these low prices is based on little advertising, cheap in-store design, and bulk buying (Primark, How We Do It, 2019).

The first point in the company's Code of Conduct states that the choice of employment is free. Therefore, employees can leave after giving proper notice and that there will be no practice of compulsory labor. Moreover, in the third point it states that working conditions for employees are safe (Primark, The Primark Code Of Conduct, 2019).

The firm also states in their Code of Conduct number 5 that there will be no practice of child labor. However, in the Code of Conduct's appendix, the definitions of what is considered a child are explained in more depth. Yet, the company has policies that allow children aged 14 to work in their supply chain, using the exception of the International Labour Organization ILO convention No. 138 (Primark, The Primark Code Of Conduct, 2019). The Code of Conduct states that people under the age of 15 are considered children (Barr, 2018).

Number 7 of the enterprise's Code of Conduct is about employees working hours. According to this section wages should be sufficient to satisfy basic needs. Furthermore, a workweek should not exceed 48 hours, excluding overtime. Next to this, overtime hours that are made can in no circumstance be forced and will be paid at 125% of usual salary. The firm states that including overtime an employee cannot work more than 60 hours in a seven day period. However, in another section the company mentions that it is allowed to work more than 60 hours if it is permitted by the national law with a collective agreement in place. Moreover, employee safety and health must be protected (Primark, The Primark Code Of Conduct, 2019).

3.2 Government Regulations

There are 28 countries around the globe that supply goods for Primark; ranging from European to Asian and North-American plants. From the 1,003 known factories are over 50% of them located in China. India comes in second place with 148 plants found in the country, according to Primark's Global Sourcing list as displayed on their website. To narrow it down, the focus will be on the two biggest suppliers who are mentioned above (Our Global Sourcing Map, 2019).

Laws in China concerning labor conditions might vary from province to employer. However, several requirements are applied nationwide. For example, working hours should not exceed eight hours a day or 40 hours per week. When overtime is demanded to be made by an employee, negotiations should take place with trade unions or employees themselves. Generally, overtime should be not more than one hour with the exception of exceptional circumstances in which it can be up to three hours a day but not exceeding 36 hours a month. The minimum age to work in China is 16 years. Moreover, there are no regulations on meal and rest breaks, but an employer is expected to treat their workers reasonably concerning breaks (Samuel, Zhenghe, & Zhou, 2018).

The minimum age to work in India is 14 years, and adolescents between 14-18 years are prohibited from working under hazardous circumstances or more than six hours a day. They are not allowed to work overtime and should be off for at least one day per week. Relevant processes that are seen as dangerous are printing, dying and weaving of cloth, wool-cleaning, cotton ginning and processing and production of hosiery goods, jute textile manufacture and coir making, and warehousing (Child Labour Law & Regulations in India, 2019). Furthermore, a person of 18 years or above is considered an adult in India. Adults are not allowed to work over 48 hours a week and should not work over nine hours a day. Workers should have at least one day off per week, and per 5,5 hours of work, there should be a break of at least 30 minutes. It is stated that including the time to rest, an adult should not work over 12 hours per day (Work Hours and Overtime Pay in India, 2019).

All the above-mentioned regulations should be concerned as Primark sources from those countries. The company does not have a good record of upholding the law as proven by their actions in December 2017 when the company was fined PS1.3m for paying its workers below the minimum wage in the United Kingdom (O'Connor, 2017).

3.3 News coverage

Primark has been in the news multiple times in the past. On the 23rd of April 2013, the Rana Plaza building in Bangladesh collapsed with 1134 workers dying, was Primark amongst others produced their goods (Rivera, 2018). Primark contributed over 14 million USD as a result, and six wee...