PS 2: Labor and Working Conditions
Once fully operational Phase 1 is expected to create a total of approximately 2,600 full-time jobs, of which 60-70% will be filled by women. Additionally, Hansae will outsource the operation of the cafeteria and building security services, which will entail approximately 48 additional workers.
Human Resources Policies and Procedures:
The sponsor has a corporate code of ethics and code of conduct, which is used as the foundation for drafting the Human Resources policies and procedures that apply to each subsidiary, in compliance with applicable national law. As reviewed during IFC’s appraisal of the facility in Nicaragua, Hansae’s Human Resources policy and procedures, which define the rights and responsibilities of the entity and the workers, are very closely aligned with the requirements of Performance Standard 2. The sponsor has worked with the Better Work Program in Nicaragua over the past 5 years and has been very receptive to addressing non-compliances and has engaged with the program in Haiti to gain better understanding of the country context and guidance on the process for establishing its operations there. Hansae will also implement its Human Resources policy specifically to address the needs of pregnant women, for example by allowing pregnant women to leave a few minutes before the general workforce as well as provide a temporary change in work station to allow for more comfort. Hansae is in the process of translating these into French, incorporating specific requirements as stipulated under Haitian law with input from a Haitian Labor Lawyer, before submitting these for official approval by the Ministry of Labor.
Working Conditions and Terms of Employment:
At the Hansae facility in Nicaragua, a collective bargaining agreement is in place. The terms of employment are stipulated in the written contracts of each worker and also stated during the induction speech provided to the workers at the start of employment. Hansae’s corporate code of conduct stipulates that employees should be compensated at rates at the national minimum standard or the local industry standard, whichever is higher, and that working hours should not exceed the limits as set by the national labor code. The draft internal regulation for Hansae Haiti states that the basic work week comprises 8 hours/day, 6 days/week with a 60-minute rest period each day. Salaries and other benefits in Haiti will be set on the basis of Hansae’s salary scales and in consultation with local salary surveys, aimed at being locally competitive. In Nicaragua, overtime is worked as needed, and is paid at 200% of the basic salary regardless of the day of the week. The basic salary is supplemented by piece-work rates and bonuses for meeting various production targets by production line (achieved if 85% of the production target is met), which represents an additional approximate 20% of the basic salary. Hansae in Nicaragua has worked with Better Work over the past 3 years to develop a fair compensation and incentive policy with realistic production targets and this approach will be replicated in Haiti as well. In Haiti, the basic salary will be 300 Haitian Gourdes per day and supplemented by production incentives (based on achieving 85% of the production target) estimated to be equivalent to 60 Haitian Gourdes (20% of the basic salary), which 97% of the workers are estimated to be able to obtain based on Hansae’s experience in Nicaragua after an initial ramp up period. This is consistent with the minimum wage in Haiti set by decree (as published in the official newspaper "Le Moniteur" No. 93 of 23 May 2016), which is 350 Haitian Gourdes including piece incentives completed in an 8-hour work day at an industrial plant exclusively focused on assembly for export.
Production targets are set by an in-house engineering team familiar with the type of equipment used and sewing processes required, while respecting ILO guidelines on need for rest. Targets are also validated for each production line by a team of trainers who understand the capacity and equipment limitations. At the Nicaragua facility, Hansae is implementing a pilot on two production lines to test the viability of establishing individual production targets, which has been well received by workers. On average, it is estimated that currently 80% of the production lines can achieve the targets but if there is a change in style being sewn, it takes some time to ramp up production again.
A similar approach will be used in the Haiti operation and moving forward, based on the outcome of the pilot in Nicaragua, Hansae could also establish individual production targets. The terms of the working relationship will be communicated to workers through written employment contracts, to be approved by the Haitian Ministry of Labor.
At the Hansae facility in Nicaragua, workers have unrestricted access to restrooms and drinking water, and the facility was the first to provide a breastfeeding center for nursing women. The sponsor will ensure that all factories are designed and equipped to the extent possible with the necessary infrastructure to ensure comfortable working conditions for workers, following the recommendations of Better Work. This will include unrestricted reasonable use of clean and unlocked toilet blocks (at least one toilet for every 25 men and one for every 15 women working in each factory building), 1 water fountain per area and as many as 4 water fountains in the sewing areas where there is a larger number of workers (such that there is 1 fountain per 66 workers as is the case in the Nicaragua facility), and covered eating area such that a seat is available for every worker who wants to eat in the workplace has one. Hansae will ensure that workers will not be subject to excessive heat with the highest temperature inside the workplace not to exceed 30 degrees nor to be hotter than the outside by providing sufficient ventilation and air circulation and providing adequate lighting adapted to workers’ needs, Additionally, the facility will include eye washing stations with sink in case of worker exposure to a chemical, and on-site medical clinic including a sufficient number of medical staff (doctors and nurses) for the size of the workforce.
Workers’ Organizations:
It is Hansae’s corporate policy to recognize globally the right of workers to form labor organizations and as stated in Hansae’s corporate Code of Conduct, the sponsor supports the freedom of association of its employees and has confirmed that it will permit the formal establishment of union membership among its employees in its operation in Haiti.
In the past, there have been media reports alleging instances of labor rights violations in the sponsors’ facilities in Vietnam, Myanmar, and Nicaragua. In Nicaragua, alleged labor rights violations (in 2003-2008) were related to the unwillingness of company management to recognize an independent workers’ organization, which was later resolved through mediation involving the Ministry of Labor. The sponsor now works successfully with 6 different labor unions, with which it meets on a monthly basis jointly with representatives from the Ministry of Labor, the municipality, the Ministry of Environment, Natural Resources, and Customs as required by the national labor code. In Haiti, a number of trade unions are active in the textile sector and it is anticipated that Hansae employees may decide to join one of these unions.
Non-Discrimination and Equal Opportunity:
Hansae’s corporate code of ethics as well as the code of conduct confirm that the sponsor does not tolerate discrimination, any form of physical and mental abuse, nor sexual harassment. The Better Work Program in Haiti has referred the company to a hiring agency to facilitate the hiring process, which should ensure non-discrimination and equal opportunity in employment practices.
The sponsor has a separate policy and procedure for handling sexual harassment in the workplace, which includes a presentation that is given twice a year as well as provides contact information for voicing a complaint. During IFC’s appraisal, no evidence of cases of harassment were identified at the facility in Nicaragua. Hansae will translate this into French and Creole and implement the same procedure in the facility in Haiti. In the Haiti context, the company will explore the possibility of developing additional gender-based violence training to further reduce any potential risks that can be associated with the textile sector. For example, in its Vietnamese operation, Hansae noted that among female garment workers that received training under Gap Inc.’s P.A.C.E.—Personal Advancement & Career Enhancement program, absenteeism rates were reduced.
Workers Engaged by Third Party
At the Hansae operation in Nicaragua, monthly compliance audits of contractor companies (which provide printing and dry cleaning) are also undertaken and the findings are also uploaded into the ERP system for follow up. Furthermore, any contractor employee can submit a grievance through Hansae’s grievance mechanism and Hansae management will follow up immediately with the contracting company as necessary. A similar approach will be followed at the facility in Haiti for contracted workers involved in cafeteria management and security services.
Grievance Mechanism:
Typically, the workforce at Hansae operations entails nationals at the operational level and expats in supervisory and managerial positions. At the global level, Hansae experienced labor rights issues at the facility in Vietnam, which were driven in part by miscommunications between management and workers. This could be prevented through better training of supervisory and managerial staff, in particular those interacting with local staff. Hansae has already benefitted from supervisory skills and communications training provided by the Better Work Program. In the Haiti context this will be further adapted to consider cultural differences between management staff and workers to further improve communications.
At the Hansae facility in Nicaragua, a procedure for reporting and monitoring employee complaints and suggestions is outlined in various documents (C-TPAT manual and the HR manual) and the company collaborated with the Better Work Program to implement this system. The practice observed during IFC’s appraisal visit of the facility in Nicaragua is that workers can anonymously share their opinion by means of a suggestion box located in the restrooms, which is reviewed and addressed on a weekly basis by a designated grievance team. Furthermore, any significant employee grievance that is not raised through this system will typically be identified and recorded as part of the Better Work audit cycle and addressed by the company. Hansae will develop a similar system for the operation in Haiti (as already referenced in the draft internal regulation for Haiti) and make use of the tools provided by the Better Work Program.
Protecting the Work Force:
Hansae’s corporate code of conduct stipulates that only children over 15 years of age and over the age of compulsory education can be hired to work. Hansae’s HR manual for the Nicaragua facility further stipulates that the recruitment of workers less than 18 years old is not allowed and the verification of age is required through proof of an official identity document as part of the recruitment process. The Better Work Program’s audits of the Nicaragua facility have confirmed that there has been no issue related to under-age workers. Hansae will implement a similar procedure in Haiti and as part of the hiring process, the company together with the hiring agent, will verify the status of prospective employees, including their age to prevent child labor.
Occupational Health and Safety:
Apparel manufacture is not a high-risk sector, but a number of occupational, health and safety hazards requiring additional mitigation are frequently prevalent. The textile cutting operation is frequently mechanized and the operators do not always wear a protective chainmail glove on the “holding” hand. Sewing machines are not universally fitted with guards to protect employees from broken needles, often because the employees remove them, considering that they are burdensome. Employees using a spot-removing spray do not always wear eye protection. There is a general need for improving ergonomics at work stations, especially where seated tasks for extended hours is required, through the provision of ergonomic chairs. The Hansae facility in Nicaragua has an OHS policy and a procedure for undertaking a job risk analysis, which includes a job description of each position, the risk associated with the required tasks, the necessary preventive measures including the use of Personal Protective Equipment when required. These findings are communicated to each worker. Hansae provides training to employees to ensure they have the necessary skills and awareness of compliance issues in areas such as fire safety and evacuation drills, health and safety/use of PPE, risk factors, ergonomics, chemical handling, grievance/abuse and harassment, labor law, and collective agreement/internal regulation. Furthermore, production line supervisors implement periodic breaks during the day for employees to undertake ergonomic exercises.
As a result of routine self-compliance audits, the Hansae operation in Nicaragua is considered to be in good compliance with national health and safety standards. Furthermore, as a result of the Better Work Program audits and due to the trainings provided, the Nicaraguan operation has made further improvements in its OHS performance in recent years as evidenced by a decrease in the number of accidents because the company has undertaken a number of awareness-raising campaigns around the topics of use of machinery, Personal Protective Equipment (PPE), and use of public transportation. Hansae has a formal accident investigation system in place and incidents are reported on a monthly basis to the Ministry of Work.
The sponsor will apply the findings from the job risk analysis to the facility in Haiti and translate the necessary materials into French and Creole. Furthermore, Hansae Haiti will enforce the use of machine guarding and personal protective equipment, as required and stipulated in the MSDSs when handling chemicals, and train employees in their use. Hansae will roll out a similar training program for its operations in Haiti and has shared with IFC a comprehensive list of EHS topics that will be covered by the training. The company is in the process of translating training materials into Creole and will share these with IFC. During the start-up phase of the operation, the sponsor plans to send staff from the Nicaraguan subsidiary to support the roll out of the training program in the Haitian subsidiary.
The design of factory buildings will incorporate air cooling systems and the use of LED lighting to ensure that temperatures inside buildings are kept sufficiently low to create comfortable working conditions for employees inside the building especially during the high summertime temperatures in Haiti. Each building will be provided with an adequate number of bathrooms and access to drinking water as recommended by Better Work Haiti and lockers for the personal belongings of workers.
