INDUSTRY CODES | Toys, Apparel, Jewelry

The problem with company codes of conduct is that they lead to a Babel-like proliferation of interpretations of what is appropriate conduct and create the potential for absurdly large numbers of audits of local facilities. Also, international organizations that have analyzed the content of company codes are not impressed with the rigor of the standards incorporated in most of them.

A step forward out of the confusion of every-company-for-itself on the code front is the development of industry-wide codes of conduct. This at least reduces the number of codes and audits within a particular industry. Whether or not the industry codes are more rigorous than a given company code depends of course on which codes are being compared.

Three industries may exemplify the industry-codes approach – toys, apparel and jewelry.

The Toy Industry

The toy industry has developed the ICTI-CARE program under the auspices of the International Council of Toy Industries (ICTI), of which the British Toy and Hobby Association is an active member (each member of the BTHA must sign on to the ICTI code). The Toy Industry Association (TIA) is the U.S. member, somewhat less active than the BTHA. The ICTI Code of Business Practices includes monitoring and certification provisions. The ICTI code has been critiqued by the German Fair Toys Campaign, China Labor Watch and the Asian Labour Update (Asia Monitor Resource Center).

The Apparel Industry

The industry has developed the Worldwide Responsible Apparel Program (WRAP) Apparel Certification Program, led by the American Apparel and Footwear Association. The WRAP program has been described in some detail by Business for Social Responsibility (BSR) and the Resource Center for the Americas. It has been critiqued by the Maquila Solidarity Network.

The Jewelry Industry

An industry-code approach is being pursued by the jewelry industry’s nascent Council for Responsible Jewellery Practices, which is in part responding to the “No Dirty Gold” campaign by NGOs led by Oxfam and Earthworks.

COMPANY CODES | What Are They?

The Company Code of Conduct addresses
sustainability issues - social (workplace),
economic, environmental.

A company code of conduct is a statement of how seriously the company takes its environmental and social responsibilities.

The company code can refer to industry-wide codes and multi-stakeholder-initiative (MSI) standards, which are two other building blocks in the CSR framework.

Companies may create their code of conduct in response to governmental or NGO concern about the adequacy of the company’s social and environmental behavior.

A company code is a beginning because it establishes that the company not only plans to operate to ensure its financial survival but plans to do so while maintaining certain standards of conduct.

Extensions of the Company Code

The company code is the beginning of a multi-step program for bringing itself into line with public social and environmental expectations.

The second step is to identify what it might cost to fix workplace or environmental abuses, including increasingly those in the company's supply chain. For industries and situations where abuses are widespread, it may take years for a company to meet even minimal environmental or social standards.

A company and its executives – or an industry-wide coalition of companies seeking to improve practices – must decide how much and over what period to invest in CSR. This affects how soon it can meet mandated and voluntary standards. The company's and industry's response will depend only partly on the ethical concerns of its executives – it will depend also on how deeply rooted and extensive existing noncompliances are and how expensive it may prove to end them.

The company code typically articulates its mission in a way that recognizes that it sits at the intersection of three circles – markets, ethics and law, the common element of which is reciprocity (quid pro quo, fairness to stakeholders). The sustainable company must make a profit, must obey the law and must operate in an ethical way.

Examples of Company Codes

Among the many company codes that have been written, the following are of special interest: Aeon (Japan), Coop Italia, Dole, Hasbro, Mattel, McDonald’s, Nike, Otto Versand (German), Phillips-Van Heusen, Reebok, Timberland, Toys R Us, Disney and Voegele (Swiss). Smaller and less well-known companies with codes include Kesko (Finnish), Switcher (Swiss), Cutter & Buck, Eileen Fisher and Patagonia.

When the Council for Responsible Jewellery Practices was first set up, it drafted an industry code of conduct. Many of its members, like Rio Tinto, already had a company code of conduct and some produce well-regarded CSR reports.

The Weaknesses of Company Codes

Many companies who develop their own codes may find that this was an expensive and unnecessary step if the company then proceeds to adopt an MSI standard. The public relations and internal-efficiency value of an industry code or MSI standard is much greater than that of a company code, even a high-quality one.

The main weakness of individual company codes is that without some standards their proliferation adds to the confusion. Unique company codes make it difficult for suppliers trying to sell to multiple buyers, for consumers comparing company policies and practices, for retailers trying to factor CSR into their procurement, and for workers seeking to determine their rights.

In an attempt to sort through the confusion and look at the actual content of company codes, the ILO and OECD a few years ago discovered that only two-thirds of company codes they reviewed addressed workplace discrimination. Fewer provided for workplace safety. Only one-fifth addressed freedom of association or training. Fewer than 20 percent required one day’s rest in seven. Fewer than one-third commited the company to monitor implementation.

Evolving Corporate Strategy on a Company Code

Since company codes are being questioned, two main corporate strategies for developing a company code seem to be evolving:

• A company code is presented as just a first step. The code may be adopted as a preliminary to adhering to higher standards. In this approach, a company code is an acknowledged preliminary step before adopting an industry code or MSI standard. In this case, the company code will set standards somewhere higher than the level company is already achieving, but not at the level required by the industry code or MSI standard. The investment in the code should be kept to a minimum because the company will be reinventing the wheel.
• A company code is presented as a substitute for higher standards. Some company codes are designed give the company time to consider the cost and feasibility of adopting an industry-wide code or MSI standard. In this case, the company may design its code of conduct so that it is not challenging and creates no pressure for the company to set its standard above the level it is already achieving. The code’s main purpose could be as a place to refer NGOs and other public inquiries–the buck stops there. Such codes of conduct are properly criticized.

The social and environment issues facing companies go well beyond creating a code of conduct. They require implementation – monitoring, auditing and remediation, especially among suppliers. These issues point toward a challenging code of conduct and toward group solutions, whether at the industry-wide code level or through MSI standards.

Outlook for Baby Boomers Reaching Retirement Age

April 14, 2006 - How will the job market be affected by the wave of baby boomers reaching retirement age? One good piece of advice for most of them: "(1) Lower your spending in anticipation of retirement, and then (2) don't retire."

This is the topic of an article in the Washington Post today, "Working To Fix Our Fiscal Woes, by C. Eugene Steuerle, of the Urban Institute-Brookings Tax Policy Center. The main concern he addresses is that

[W]orries about ... imbalances in Social Security's bankbook [is] largely a work-related fiscal woe, as the number of workers supporting each retiree falls by an estimated one-third over the next 30 years. ... [A] postwar boom in the U.S. labor force is just now ending. Since around 1950, the percentage of adults who worked rose almost every year except in recessions. But now the great swell of working boomers is starting to retire, and most of the gain in female labor force participation is over. If Americans keep retiring at the same ages they do today, the share of adults who are working will fall markedly. The effect on the economy will be roughly equivalent to increasing the unemployment rate by 3/10 of 1 percent every year for 20 years straight starting in 2008. That means a lower rate of growth for workers, goods, services, and government revenues.

Steuerle spells out the fiscal implications of Americans working an average of five years more than they do today, say from 62 to 67 years old.

Since a typical 62-year-old couple today is likely to have at least one spouse who lives another 25 years, most couples need to line up resources for 30 years or more to play it safe. In short, the most important financial decision facing most people in their 60s is when to retire. ... Working longer helps the nation, too. Additional time on the job increases national income, while boosting the revenues needed to float government programs, including those serving the elderly. ... Workers on average would have an annual income 55 percent higher if they retired for five fewer years, saved some of their additional earnings, and delayed receipt of Social Security benefits.

Along the way, the problems with the funding of Social Security would, he says, be largely solved.

[L]ook out about four decades, when fiscal and Social Security problems are projected to be the most severe. ... Five more years of work would generate more in additional taxes to the government (including Social Security and income taxes) than the amount of the shortfall. That same five years would produce enough additional Social Security taxes alone to cover half of the shortfall, if benefits were kept constant.

With personal and national interests pointing toward working longer - is American business ready for the implications of this? What will it mean to have a workforce that stays on the job another five years?

This column is one of a series. Every other weekday it edits a column is submitted by ten prominent think tanks on a rotating basis (each think tank chooses its authors and topics) - American Enterprise Institute Brookings Institution Cato Institute Center for American Progress Center for Strategic and International Studies Council on Foreign Relations Heritage Foundation New America Foundation RAND Corporation Urban Institute.

IT Jobs by State - First Quarter of 2005

At CityEconomist we have been perusing data on IT jobs in the first quarter of 2006 and were surprised to find that Arizona, Illinois and Connecticut have been growing these jobs fastest of the 15 states with the largest IT vacancies. We have been looking at a two-year span, comparing this last quarter with the first quarter of 2004.

The data come from corporate web sites tracked daily with a web spider developed by my colleague Henning Seip of Skillproof. He checks on a quarter of a million job vacancies every day. We have been especially interested in IT jobs because IT is crucial in driving business innovation.

Arizona IT job vacancies grew 217 percent, Illinois vacancies grew 143 percent and Connecticut vacancies grew 136 percent between the first quarter of 2004 and the first quarter of 2006.

The next seven fastest-growing states were, in order, Washington, Massachusetts, New York, California, Texas, Florida and New Jersey. Only one state, Maryland, showed a decline in jobs (14 percent). The other four, slower-growing, states were Georgia, Pennsylvania, Virginia and the District of Columbia.

On the same basis as the state data, the U.S. metro areas with the fastest-growing IT vacancies over the past two years were Phoenix, where the vacancies doubled; San Jose, where they grew 170 percent, and San Francisco and Seattle, where they grew 130 percent. They grew 157 percent in the Chicago area and 122 percent in the Minneapolis area.

Only one of the 15 metropolitan areas with the most IT vacancies has lost ground in the last two years. That is Baltimore.

The growth rate has been slower in 2005-2006 than the previous year. Two metro areas in southern California – San Diego and Los Angeles – have registered a decline in IT job vacancies in 2005-2006.

The growth in job vacancies has been led by IT sales and marketing, which grew 132 percent over the two years and 42 percent during the most recent year, from the first quarter of 2005 to the first quarter of 2006.

It was followed in both periods by IT process design and IT management. What this suggests is that the IT jobs that are growing fastest are close to business operations – sale, process design and management of IT services.

U.S. jobs seem to be growing to keep pace with growth among IT service providers overseas.

New York City exemplifies the shift in demand for IT skills. Employer demand has increased 50 percent or more in eight skills areas in the first quarter of 2006 compared with a year earlier.

In order of available jobs, the skills that are gaining in demand are: Linux, Sybase, Perl, C# (Microsoft’s C Sharp), Peoplesoft, Offshore team coordination, SOAP and MCSE.

Meanwhile, demand for other skill areas has declined.

In order of available jobs, the declines are in: SAPDB2 (IBM), Websphere (IBM), Windows NT/2000/2003, MQSeries, Weblogic (BEA) and Wireless.

Programmers skilled in Java, Unix, SQL and HTML are in the greatest demand, with an increase of 24 percent or more openings for each skill in the first quarter than a year earlier.
Although software development is not growing as fast as other skill categories, it is still the largest category of skills required by employers.