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By OLIVIER BAILLY,
JEAN-MARC CAUDRON and DENIS LAMBERT
Ikea, the home furnishing multinational,
with 410 million customers worldwide and 160mg catalogues in
circulation (more than copies of the Bible), is doing fine. Its
revenues continue upwards, from $4.3bn in 1994 to $19.4bn in
2005, more than 400% growth. It would be hard to do better. Ikea
now plans to conquer Russia and China, which have so far resisted
its spread. As Ikea's in-house magazine Read Me explains,
the aim is to improve the daily life of the largest possible
number of people and, to achieve that, shops must constantly
sell more things to more customers (1).
Ikea is in no doubt that the
act of purchase is the secret of happiness.
What is remarkable about a multinational so strongly associated
with global uniformity and consumerism is that Ikea manages to
fend off the attacks of consumer organisations, third-world activists
and environmental watchdogs. This is no mean achievement. It
has succeeded in establishing close links with its customers
thanks to unbeatable prices and special children's areas in all
shops, inventing an all-embracing concept in which buyers can
find everything immediately--and preferably plenty of other items
they didn't really want.
There is no shortage of stories
about the strength of bonds between the shop and its customers.
In 2004 a Stockport town councillor in Lancashire, Britain, bragged
that having an Ikea store was an honour for the town (2). At
Mougins, in the south of France, local people started a petition
which read: "If you are fed up with making a 200km round
trip, lasting two hours, just to shop in your nearest Ikea, then
seize this opportunity (maybe the last) to bring a new Ikea to
the Alpes-Maritimes department" (3). This is remarkable:
people organizing a petition, which collected more than 2,000
signatures, standing up for their rights and organizing because
a furnishing store lacks an outlet within 100km. Of course success
on this scale has its downside. When the firm opened a store
in Saudi Arabia in 2004, it offered a $150 check to the first
50 shoppers through the door. There was almost a riot, with two
deaths, 16 injured and 20 fainting fits.
What is behind the global love
affair with Ikea? Apart from attractive prices, one of the keys
to the firm's success is its social and environmental image.
Keen to find a source of cheap, compliant labor it started outsourcing
part of its production to a manufacturer in Poland in 1961. Since
then Asia has supplied an ever-growing share of its products.
China (hardly known for its defense of workers' rights) has overtaken
Poland to become Ikea's top supplier, accounting for 18% of purchases.
In all 33% of what is promoted as "made in Sweden quality"
comes from Asia (4). According to The Observer, developing
countries' share in Ikea's manufacturing activities rose from
32% to 48% between 1997 and 2001 (5).
Keep the
price down
From the start Ikea offered
extremely low prices. In A Furniture Dealer's Testament,
published in 1976, Ikea's founder Ingvar Kamprad explained that
he wanted every effort to be made to keep prices as low as possible,
placing high demands on fellow workers. Without tight control
over expenses the firm would not be able to fulfil its mission
(6).
However, despite Ikea's current
claims, low prices always incur a high social cost. Between 1994
and 1997 three documentaries screened by German and Swedish television
accused the firm of using child labor under degrading conditions
in Pakistan, India, Vietnam and the Philippines (7).
In 1998, after the discovery of wretched working conditions in
Romania, the International Federation of Building and Wood Workers
threatened to boycott Ikea, leading to an agreement between the
union and the retailer (see tomorrow's CounterPunch instalment,
"The sins of the founder found out"). The
Iway, as Ikea's code of conduct on the environment and working
conditions is known, establishes as a basic requirement for any
business relationship that there should be no forced or child
labour. Item seven of the guidelines, on worker health and safety,
describes working conditions for employees, who must be provided
with appropriate protective equipment.
It also purports to protect
the right of employees to form or join a union, stipulating that
subcontractors should not prevent them from doing so. The Iway
condemns any form of discrimination, by race, creed or sex. Subcontractors
must not pay their workers less than the country's minimum wage
and working hours must not exceed the local limit. It seems odd
to draw up a code of conduct just to indicate an intention to
obey the law (rather like making a solemn undertaking to drive
on the left when visiting Britain). It is more important that
the Iway has a positive impact on the conditions of work at subcontractors.
Ikea has certainly ended child
labour practices in subcontracting factories, although the Iway
prefers to refer to local legislation, pointing out that "national
laws or regulations may permit the employment or work of persons
13 to 15 years of age or 12 to 14 years of age on light work"
(8).
What about
the workers?
But things are not quite the
same when it comes to the right of workers to organize and join
unions. During a trip this May to a village close to Karur in
Tamil Nadu province, a textile production centre in southeast
India, we talked to some people working for an Ikea subcontractor.
Shiva (9) was prepared to answer questions from western visitors
but her white-haired mother was worried. What would happen if
Shiva lost her job? Her wages were the family's only resource,
supporting the two women and Shiva's 15-year-old son.
Shiva barely criticized her
employers, and talked about tea breaks and equipment to protect
eyes and hands. The environment she described seemed healthy
enough. And at first sight the working conditions in Karur seemed
fine. The premises were clean and well ventilated. There were
tea breaks and good quality equipment. Copies of the Iway were
posted on the walls of the factory.
This is corroborated by other
sources. "Ikea offers the best conditions, there is no doubt
about it," said Maniemegalai Vijayabaskar, an assistant
lecturer at Madras Institute of Development Studies and joint
author of a study commissioned by Oxfam-Magasins du Monde on
Ikea's suppliers (10). He added: "They put on a human face
to avoid criticism and controversy. But they don't make much
effort to improve working conditions."
In 2003 the Dutch trade union
federation asked the Centre for Research on Multinational Corporations
(Somo) to investigate Ikea suppliers in three countries: India,
Bulgaria and Vietnam. In each case investigators met workers
from three or four companies and conducted interviews outside
the workplace. They visited the factories and talked to the management.
Their conclusions concerned
10 suppliers representing about 2,000 employees, noting in the
final report: "There are still numerous violations of Ikea's
code of conduct in all three countries in all factories researched."
The most common concerned freedom
of association and collective bargaining for wages and overtime.
In the worst case there was no trade union, employees worked
a seven-day week and the minimum wage was not honored. No one
was "aware" of Ikea's code of conduct.
From what we saw in India,
trade unions are still not represented at Ikea's subcontractors.
Officially they are tolerated but, according to Shiva, they are
not really necessary. She said: "When there is a problem
we hold a meeting and we talk about it. It's often when they
want to remind us about the cleanliness of the toilets. If I
want something, I can tell the manager." Xana, a younger
worker without any dependants, described things differently:
"A union? No, they wouldn't allow it. And if inspectors
visit the factory, the bosses remind us of the lies we should
tell them."
There is nothing unusual about
this; attempts to set up a union are generally thwarted. Ikea
must have expected this, just like any other multinational starting
business in India. Wages are kept particularly low. Shiva claims
she earns 2,300 rupees a month ($48.30) and it costs her 500
rupees ($10.50) to take the bus to work. Can she really survive
on such wages? When her mother cooks, the recipe is always the
same. "We eat simply, soup and rice with sauce. We eat meat
once a week, on Sundays. But not this week because it's the end
of the month." We met 10 days before the end of May.
The Ikea code of conduct offers
no guarantee that workers will get enough to eat or furnishings
for their homes. There are no Malm beds in Shiva's two-roomed
house. Just a few calendars on the wall, some black and white
photographs, a couple of mats, two small chests for clothes,
a clock and household gods. Asked what she would do if she earned
1,000 rupees more a month, she outlined her idea of comfort:
"We'd get a gas cooker with a bottle. Cooking over a fire
is a nuisance because the smoke gets in your eyes. In the rainy
season it's hard finding dry wood, and collecting it is a lot
of work."
Among Ikea suppliers there
is nothing unusual about Shiva's poverty. Manjula, who had just
married, also works for an Ikea supplier. She said she earns
2,360 rupees ($49.60), but her payslip for October showed that
figure corresponded to her gross earnings, from which national
insurance payments were deducted. For 24 days' work in October
she took home 1,818 rupees ($38.10). Even working six days a
week she comes close to the absolute poverty line, without contravening
the Ikea code of conduct. To earn a little more she had to work
overtime. "They work 12 hours a day, not including travel
time," said Vijayabaskar. "At maximum output they may
work as much as 15 hours a day."
Beyond the
8-hour day
Ikea tries to reduce overtime
but pressure of tight deadlines and the need to earn more make
it inevitable. The official eight-hour day is 9.30am to 1.30pm,
2.30 to 6.30pm. Kalaya, who lives in a poor neighbourhood of
Karur, said: "If you work overtime from 7 to 8 or 9pm, they
don't pay you. If you work till 10.30pm they give you 50 rupees
[$1] more. The extra work is generally done twice a week."
Assam, who works at the same
factory, said there was no overtime. The day we spoke the machines
ran late into the night and we saw groups of workers going into
the factory until 8pm. With strict instructions from management
and the fear of losing a job, people may gloss reality. Denoosha
made no bones about needing extra cash. She spoke to us briefly
when she left work, then said she must be off. She had another
job, from 8pm to 1am, which earned her 80 rupees ($1.70) plus
food.
Ikea views Shiva, Kalaya and
Denoosha as labor costs that must be strictly limited. It is
precisely because of low labour costs that the firm sources products
in India. To make things worse its subcontractors contract work
out to cope with fluctuating demand. At this point the Iway code
of conduct becomes completely theoretical, with no control over
anything but the deadline for delivery.
Even for official suppliers,
auditing of compliance with the code of conduct is extremely
uneven. Ikea's 46 purchasing offices, in 32 countries, carry
out most (93%) of the audits. The firm's Compliance and Monitoring
Group has a staff of five (three in 2004) and is tasked with
implementing the code of conduct. It trains the purchasing offices
and carries out audits: 53 in 2005 (11). External auditors, such
as KPMG, PricewaterhouseCoopers and Intertek Testing Services,
only did seven audits in 2004. Ikea admitted that the number
was low but explained that "[2004] was a year with a low
number of third-party audits. [2005] will in contrast be a year
with a high number of audits" (12). In 2005 external consultants
did 26 out of a total of 1,012 audits.
The third-party audits are
integrated into Ikea's internal auditing system. Auditors cannot
publish their findings, which are reported directly and exclusively
to the firm's management. Each audit, carried out at two-yearly
intervals (every six months or year in Asia), takes one or two
days. It considers 90 criteria defined in the Iway code of conduct.
In an eight-hour day that means checking one criterion every
10 minutes. How can anybody check that no pressure is being exerted
on trade union representation in just 10 minutes? What about
overtime, payment of wages on time, breaks, child or forced labour?
The solution is simple: auditors ask the boss, check company
records, or interview workers at the factory.
The people checking compliance
are well-meaning but under the circumstances it is impossible
to carry out a proper audit. They can only skim the surface,
with little chance of employees providing a full account of their
working conditions, particularly as the auditors are checking
production quality at the same time. Ikea auditors visited Toneesh,
a quality controller, twice last year. He said: "They ask
a few questions, above all on product quality, to check production.
They are Indians, based in Delhi or Chennai, but also Europeans,
who only talk to the top-level management.
Because of the language barrier
the workers cannot talk to them directly."
Kalaya confirmed this: "Yesterday a man from Ikea came to
the factory. He showed us a video on preparing a quality product.
And he asked questions, but only about the product." This
approach seems unlikely to prevent Kalaya from working unpaid
overtime.
In practice Ikea merely sands
off some of the rough edges of exploitation. Employees have access
to filtered water, gloves and separate toilets. They sometimes
have tea breaks. But tea is no help in making ends meet. As soon
as social issues such as wages, union representation and overtime
raise their head, the tune changes. Ikea is the main beneficiary
of the semblance of social responsibility embodied in its code
of conduct. As Vijayabaskar pointed out: "Ikea unloads the
cost of its social policy on its suppliers." At the same
time it boosts its image with commitments that cost it nothing,
steering well clear of child labour, which really upsets western
consumers.
Ikea's supposedly socially
responsible attitude makes no difference to the hard lives of
some of its workers. For Ikea to claim to be an ethical enterprise
it should be able to offer them a decent living. This does not
mean luxuries--televisions or mobile phones--just enough money
to buy food more often, keep their children at school without
needing to do two jobs, and have a proper day off every week.
Or even the chance for Shiva to treat herself to a tiny luxury
from Ikea's shelves.
Translated by Harry Forster
Olivier Bailly is a journalist, Jean-Marc Caudron
a researcher and Denis Lambert the secretary-general of
Oxfam-Magasins du Monde (Belgium); they are joint authors of
'Ikea, un modèle à démonter' (Editions Luc
Pire, Brussels, 2006)
Alexander Cockburn and Jeffrey
St Clair write: This article appears in the December edition
of the excellent monthly Le Monde Diplomatique, whose English
language edition can be found at mondediplo.com
This full text appears by agreement with Le Monde Diplomatique.
CounterPunch will feature one or two articles from LMD every
month.
In Tomorrow's CounterPunch:
Who Owns Ikea?
(1) In the first French-language
issue of Read Me, the Ikea international in-house magazine,
March 2006.
(2) "Un Ikea sinon rien!",
Courrier International, Paris n° 722, 2-8 September
2004.
(5) "Trying to assemble
a perfect reputation", The Observer, London, 25 November
2001.
(6) "The testament of
a furniture dealer", a brochure published by Ingvar Kamprad
in 1976. See also Bertil Torekull, Leading by design: the
IKEA story, HarperBusiness, New York, 1999.
(7) The German documentary,
Mattan, is mentioned by Manuel Balza Duran and Davor Radojicic
in "Corporate social responsibility and NGOs", Avdelning,
Linköping, 30 January 2004. The Swedish programmes are quoted
by Susan Christopherson and Nathan Lillie in Neither Global
Nor Standard, Oxford University, November 2003, and in "The
Teflon shield", Newsweek International, 12 March
2001. See also "Ikea accused of exploiting child workers",
BBC, 23 December 1997.
(8) Iway standard, item 15.
(9) As several people we interviewed
were afraid they might lose their job if identified, we have
changed all the names of the workers quoted.
(10) LA Samy and M Vijayabaskar,
"Codes of conduct and supplier response in the Ikea value
chain", AREDS and MIDS, 2006. http://www.madeindignity.be
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