{"id":140,"date":"2017-04-12T12:45:07","date_gmt":"2017-04-12T11:45:07","guid":{"rendered":"https:\/\/www.masina.rs\/eng\/?p=140"},"modified":"2021-07-28T14:05:06","modified_gmt":"2021-07-28T13:05:06","slug":"real-cost-shoes","status":"publish","type":"post","link":"https:\/\/www.masina.rs\/eng\/real-cost-shoes\/","title":{"rendered":"The True Cost of Our Shoes"},"content":{"rendered":"
\"\"<\/a>
Photo: bargainmoose.ca \/ Flickr<\/figcaption><\/figure>\n

\u201cAbiti Puliti\u201d campaign and the \u201cChange your shoes\u201d initiative published a report based on research of production strategies of three world-renowned shoemaking brands: Tod\u2019s, Geox and Prada. <\/strong><\/p>\n

The report\u00a0titled \u201cThe True Cost of Our Shoes<\/a>\u201d\u00a0presents a detailed insight into functionality of production and distribution chains of luxurious brands, at whose one end is an expensive product, marketably refined and packed, while at the other, hidden from the public, are degrading work conditions for ever-cheaper labor worldwide.<\/p>\n

Relentless race for increased profits unceasingly changes global production routes since capital\u2019s mobility, outsourcing strategies and adjustment in international and national laws enable continual decrease in production costs through relocation to regions where labor is cheaper. Consequently, work conditions are globally degraded, jobs are less safe and salaries are lower. These companies\u2019 large revenues\u00a0is directly tied to new market conditions and privileged position of \u201cimportant names\u201d in the production chain.<\/span>1<\/sup><\/a><\/span> Revenues\u00a0which were generated by the ever increasing imbalance between the production cost and final product\u2019s price is not equally distributed to all of the production actors.<\/p>\n

Relocation of production to Europe<\/strong><\/p>\n

Relocation of production to regions of cheaper labor, mostly in Asia, caused the decrease of labor cost worldwide, so today we are witnessing the process of reshoring<\/em>, which is a term which describes the return of production to countries of origin (back-reshoring<\/em>) or relocation to Eastern Europe (near-reshoring<\/em>).<\/p>\n

Eastern European devastated economy is the root cause of the region\u2019s cheaper labor cost than in some Asian countries. Additionally, these countries\u2019 governments are competing in attracting foreign investors and in establishment of the so-called \u201cFree Zones\u201d with special business conditions and securing of various favors such as additional financing through subventions, free infrastructure, release from import and export taxes, tax concessions, etc. Additional privilege for business in Eastern Europe is accomplished through OTP (Outward Processing Trade), specific customs system which enables companies to export raw material outside of EU, and to import back semi-manufactured or finished products while paying the tax only on the value of additional processing. In this manner companies are enabled to increase the network of subcontractors without much additional cost.<\/p>\n

Suppliers of Tod\u2019s are currently located in Italian provinces where labor is cheap. Prada\u2019s current practice is the return of production to Europe, to Italy \u2013 but mostly to Eastern European countries. All of Geox\u2019s main suppliers are not from Italy but mostly from Asia and a few from countries of Eastern Europe.<\/p>\n

Production chain and its hierarchy\u00a0<\/strong><\/p>\n

Delegation of some of the parts of the production process to third parties is nothing new in business practices of large companies. The novelty of today are companies which do not own their own factories \u2013 the complete production of a brand has been outsourced.<\/p>\n

Fragmentation of the production process stipulates the infrequency of the fully in-house production chain. Tod\u2019s is a rare example of full production of high-grade shoes in its factories, another is Geox which owns a factory in Serbia where it holds a full production process of low- and mid-grade shoe models (this factory produces only 3% of the company\u2019s total production).<\/p>\n

Fully external production chain is a much more frequent practice. In this case other factories are responsible for complete production of shoes. Although the supply contract is signed with a single party, in practice many other companies are included in the system. Sometime the production process is a mixture of both (mixed chain shoe production) where the assembly of the final product is occurring directly in company\u2019s factories, while parts are obtained from a subcontractor.<\/p>\n

Due to the dominant position large brands have in the market, they are in the position to completely dictate the production conditions, which often means that subcontractors are forced to sign unfavorable contracts. According to some testimonies, amounts received by subcontractors were not even enough to cover basic costs of production which led to small companies\u2019 bankruptcy and loss of jobs.<\/span>2<\/sup><\/a><\/span> Drastically short delivery deadlines and low prices stipulate delegation of some of the production stages to less profitable companies with poor work conditions. Fragmentation of the production process enables easier labor exploitation, which increases as we move from brands\u2019 central location to the periphery of the production process.<\/p>\n

The report lists examples of particular subcontractors which were forced to work in gray zone, thus increasing insecurity of work conditions: work from home or untaxed cash salaries. Although companies formally sign contracts only with the leading supplier, quality control is performed throughout the whole chain, without interest for the production conditions. The report also states cases of delayed payments which resulted in unpaid workers\u2019 salaries at different levels of the production chain. Labor union activities are much harder, if not outright prohibited, in these conditions.<\/p>\n

Geox\u2019s Business in Serbia<\/strong><\/p>\n

Part of research which relates to Geox company\u2019s business in Serbia confirms media reports<\/a> on numerous irregularities and violations of workers\u2019 rights in this company.<\/p>\n

The report reminds that Geox\u2019s factory in Vranje was open in January of 2016 through the Serbian government\u2019s subventions valuing 11 million Euro. In return, the company was obliged to employ 1,250 workers who were to receive a salary equivalent to the legal minimum increased by 20%. However, Geox paid most of its workers the minimum amount until September 2016, while salary slips frequently neither list overtime hours, nor they were paid. Additionally, workers reported illegal labor contracts, irregular job terminations, verbal harassment and lack of adequate work conditions and safety.<\/p>\n

Media pressure, which ensued after some of the female workers decided to publicly address poor work conditions in this factory, was somewhat successful. Salaries at Geox were increased, overtime work was brought down to its legal frame and two labor unions were registered.<\/p>\n

However, workers still report numerous irregularities which Campagna Abiti Puliti<\/em> informed the company about on February 13th, 2017. The company did not respond before the report\u2019s publication.<\/span>3<\/sup><\/a><\/span>\u00a0The report warns that, although salaries were increased to the amount 20% larger than the minimal legal salary in Serbia (according to the latest report the lowest salary at Geox is approximately the equivalent of 230 Euros in Serbian dinars per month), this amount is still not enough to cover basic life expenses, if we take into account that the average consumer basket for a three-member family is approximately 520 Euros a month.<\/p>\n

The fact that there is an evident fear to speak publicly about the conditions of subcontracting, production and working conditions, underlines the pressure dominant brands exercize over the other participants of the production chain. Subcontractors fear the cancellation of their contracts, while workers fear that they will loose their jobs.<\/p>\n

The long list of requests addressed to companies, EU members\u2019 governments and the EU Parliament, which concludes the report, somewhat underlines that global production chains are designed to encourage the race to the bottom, the race to destroy workers\u2019 rights, wherever the workers are. The report emphasizes the importance of informed consumers, independent media and international solidarity networks, which, along with labor unions, should pressurize companies to behave responsibly and in accordance to national laws, international conventions and the UN Guiding Principles on Business and Human Rights.<\/p>\n

Translation from Serbian: Nenad Porobi\u0107<\/p>\n","protected":false},"excerpt":{"rendered":"

… READ<\/a><\/p>\n","protected":false},"author":6,"featured_media":144,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[13,172,20,8],"form":[],"concept":[],"contents":[],"coauthors":[19],"class_list":["post-140","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-capitalism","tag-geox","tag-production","tag-workers-rights","infinite-scroll-item","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-25"],"acf":[],"yoast_head":"\nThe True Cost of Our Shoes - Ma\u0161ina English<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.masina.rs\/eng\/real-cost-shoes\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The True Cost of Our Shoes - Ma\u0161ina English\" \/>\n<meta property=\"og:description\" content=\"... 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