Competitiveness and CSR in the Jordanian apparel industry

The textile and apparel industry in Jordan is heavily reliant on migrant workers. Based on a report of abusive treatment of these workers, factories were exposed to sharp increase in public inspections along with an equally significant increase in auditing visits from buyers and their agents. Most buyers remain committed to Jordan today, but some have started removing orders as a direct result of increased compliance costs and lack of trust in the public inspectorate. The Government of Jordan has taken numerous measures to improve overall labor administration and social dialogue.

This report expresses the view of the private sector on the current reforms in the textile and apparel industry in Jordan. It aims to assist the Jordanian Government and donors in developing the right “bottom-line” incentives to improve compliance with labor law and buyer standards and promote continued industry competitiveness.

The report finds that :

• With lower trade barriers, the global textile and apparel industry has grown more competitive. This has meant increased pressure on buyers and manufactures to produce at lower cost and at faster speed
• Compliance with labour standards is a key factor when apparel buyers make sourcing decisions
• Jordan has become a more expensive sourcing location due to increased compliance costs
• Manufacturers are responding to the variety of buyer and agent requests without a developed data tracking or analysis system.
• Since many manufacturers do not directly communicate or negotiate with their buyers, there are limited incentives for them to collect data beyond the minimum requirement
• There is little coordination between buyers’ CSR, Quality Assurance (QA) and Sourcing department requests
• Buyers rarely assess the linkages between productivity and CSR. Nor are they able to make a strong, evidence-based, business case to their manufacturers to invest in long-term CSR improvements
• Labour, electricity and water shortages in the country, a continual downward pressure of price, and shrinking lead times has resulted in manufacturers focusing on meeting the most basic requirements of buyers and doing little to proactively improve their operations and address systemic CSR issues.

Key recommendations highlighted include that;

• the government must engage in dialogue with the Jordanian private sector, buyers, worker representatives, and Better Work Program on information-sharing and transparency, with the objective of increasing public inspection risk management and reducing inspection and private auditing burden on factories
• it must also complete labor law revisions, in particular attempting to bring Jordanian law in compliance with ILO Article 87 on Freedom of Association
• manufacturers should discuss with buyers the potential of providing a single set of data to all buyer representatives
• buyers must share data analysis with manufacturers and work jointly on remediation efforts
• ‘better work’ should train internal compliance officers within the manufacturing facilities