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The Unilever CSR Chronicles IV: Discrimination, Exclusion, Exploitation

Posted to the IUF website 15-Jul-2009

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The squalid reality of contract labour and Unilever's 'response' to 'concerned stakeholders'

July 5 demonstration by members of the National Federation of Food, Beverage and Tobacco Workers, who travelled to Khanewal to show solidarity with the struggle against disposable jobs at Lipton Pakistan.

Long unaccustomed to being challenged on the reality behind their CSR claims, Unilever has responded to the "alternative annual report" distributed by Dutch union FNV-Bondgenoten at the May 14 shareholder meeting in Rotterdam . A particularly sensitive issue for Unilever is employment practices in Pakistan, where they've received an endless series of awards including "Excellence" in Best Workplace Practices. Unilever Pakistan claims they were "selected for this honour for their much acclaimed Personal Vitality Health Passport annual initiative to ensure the health and well being of all its employees". The IUF's Casual-T campaign has exposed the brutal system of discrimination and exploitation behind these claims, forcing Unilever on the defensive.

How do they respond? To justify the August 2008 closing of its Karachi Lipton tea factory, Unilever in its Summary of Stakeholder Concerns and our Response invokes a rise in smuggling (hardly a new phenomenon) and the increased cost of transporting tea from the South to the North of the country. What they don't tell "concerned stakeholders", however, is that when the plant was closed, machinery was simply moved to the nearby "nameless factory" which produces Lipton and Brooke Bond teas with 100% disposable jobs supplied by labour contractors! The former Unilever Pakistan Works Manager moved along with the machinery, where he now heads a company called “Trust Professional” which is contracted by Unilever Pakistan to produce its branded beverages. What's the difference between this operation and the plant that was closed? The Unilever Karachi plant had 122 direct Unilever employees. Same smugglers, same transport costs, but no employees, and no employer responsibility in the nameless factory, thanks to 100% outsourcing.

The closure of the Karachi plant left only Khanewal as the last directly owned and operated Unilever tea factory in Pakistan. Casual workers at the Khanewal factory, many of them employed continuously for 10, 15 and even 20 years and more as contract workers, have formed an Action Committee to fight for direct, permanent employment by Unilever. As the IUF campaign has gained traction, Unilever Pakistan management has escalated its attack on Action Committee members by denying them work and driving them deeper into poverty.

Unilever concedes that the ratio of permanent to contract workers at their Khanewal factory is "skewed" in favour of contract workers- it could hardly be otherwise in a factory where there are just 22 direct employees out of over 500 workers. However their designation of all but 22 posts as "non-core" is simply ludicrous - it is an industrial impossibility.

The real acrobatics come when Unilever attempts to demonstrate that there is neither poverty nor inequality nor discrimination… because "service providers comply with minimum wage, social security and retirement contribution requirements."

Once again, here are the facts concerning discrimination and casual workers at Khanewal.

Casual workers are paid the legal monthly minimum wage of 6,000 Rupees -just 33% of the lowest wages of the 22 direct employees. But in order to receive their 6,000 Rupees per month they are required to work at least 26 days each month. If they don’t get 26 days’ work in a month, they are paid as little as 232 Rupees per day, the equivalent of 3 US dollars and a poverty wage by any definition.

Benefits such as the productivity bonus and other non-wage benefits make up a significant portion of the total packet of a permanent Khanewal worker and typically add up to more than the annual wage of even an outsourced worker putting in 26 days per month. These benefits are not on offer to casuals.

It was only in response to Action Committee agitation that the labour contractors began reluctantly complying with legal requirements to include the casuals in the social security and old-age pension schemes - government programs for which Unilever can claim no CSR credit nor financial contribution. The Casual-T campaign forced Unilever to agree to monitor implementation of the law, but half of the casual workers who've joined the Action Committee still lack cards issued by their contract agency employers certifying participation in the state pension insurance system EOBI; 30% are still awaiting their social security cards.

At the same time that these benefits were paid for the first time after decades of evasion, management slashed workdays and wages. Since October 2008, those contract workers who did not join the Action Committee demanding permanent jobs and trade union rights are paid minimum wages according to the skill classifications of the Punjab Minimum Wage Board. Contract workers who did join the Action Committee have been paid minimum wages for unskilled workers and/or have been demoted.

Shahid Mahmood, for example, who has worked as a fitter at Unilever Khanewal for 13 years, says "Before I joined the action committee I was paid 326 Rupees per day. After I joined the committee and filed a legal case my wage was lowered to 232 Rupees, which is the minimum wage for an unskilled worker. Other fitters who didn’t join the action committee are still getting 326 Rupees.”

Action Committee member Irfan Hayat explains: “When we started this struggle for the right to permanent jobs and formed the Action Committee of contract workers, I was a “Safety Champion” –a safety officer under the KAIZEN productivity programme. I was trained in 2003 and my job was to prevent accidents and find hazards in the factory as part of KAIZEN. I was paid a daily wage rate of 240 Rupees plus additional 4 hours’ pay like overtime, but not like the permanent workers. I was earning 8,000 to 8,500 Rupees each month. But the Unilever Khanewal factory Works Manager and Human Resources manager were angry about our Action Committee and our demand for permanent jobs. They told me to withdraw my legal case. I refused. So they demoted me. I’m a machine operator now on 232 Rupees, which is the minimum wage of an unskilled worker. “

According to Muhammad Usman "There are 12 contract workers in QA (Quality Assurance). I have a diploma in computing I’ve worked in QA for 2 years. But I’m “unskilled” and the minimum wage for an unskilled worker is 232 Rupees and no other benefits. That’s it.” Many other Action Committee members have similar stories to tell.

While Action Committee members - many with histories of long experience at the plant - are being demoted from higher- to lesser-skilled jobs, over 100 new workers - with no seniority and no skills - have been employed since the beginning of 2009. They have been hired for one purpose only: to foment divisions among the casual workforce and to weaken the Action Committee.

Beginning April 27, Unilever began sending home without work some two-thirds of the 237 casual workers who have joined the Action Committee. Under the "No work, no pay for Action Committee members" policy, workers contesting their permanently precarious status are being given just eight days to a maximum of eighteen days' work per month. That is just 9% to 24% of the lowest wage of permanent workers.

Unilever's claims about alleged benefits to casuals - benefits which they have never seen - is intended solely to obscure the message of the Casual-T campaign. The key issue is that Unilever Pakistan organizes, manages and profits from a system of employment based almost exclusively on disposable jobs through contract labour. One of the main purposes of this system is to limit the ability of workers to exercise their rights to freedom of association and to bargain collectively with Unilever as the responsible employer. Under this system, it is Unilever which determines staffing levels and individual job assignments on a daily basis, thereby directly determining the working conditions for these contract workers. Yet Unilever persists in rejecting employer responsibility.

Unilever's managerial authority as the real employer is attested to by the fact that two main contract labour agencies supply exclusively to the Khanewal factory. Riaz Ahmed &Brothers and Abdul Majeed & Sons - whose official addresses are private residences and whose sole operations are in fact located in the Unilever Khanewal factory - together supply over 450 workers.


While maintaining absolute authority to determine the employment and working conditions of over 500 workers in the Khanewal factory, the system allows Unilever to restrict the rights of these workers to represent themselves in collective bargaining with the company for whom they really work, i.e. Unilever. This right is limited to a mere 22 workers. It is simply ludicrous o deny that the system is built on discrimination. Of course workers at Riaz Ahmad & Brothers and Abdul Majeed & Sons - or at the multiplicity of micro contractors who each supply a handful of casual workers to Lipton Pakistan - are "free" to form unions, share in a mythic contract agency productivity or profit-sharing bonus, and exercise their collective bargaining rights in this outsourced Garden of Eden. In the real world of power, their rights are brutally and systematically violated.

While Unilever's Pakistan management attempts to break the resistance of the Khanewal Action Committee, how much of the Khanewal production slack is being made up at the nameless Karachi "Godown", a major manufacturing facility masquerading as a warehouse? Does Unilever know? Are they prepared to make the figures public in their next CSR report? Are they prepared to tell Pakistan consumers that the company bears no responsibility for the product, since they don't manufacture it themselves? Are they willing to turn over their human resources awards to the labour contractors? Or provide figures on the growing contribution of outsourced labour to the doubling of net sales and operating profits in Pakistan over the past 3 years?

According to Unilever, the only substantial difference between the handful of permanent workers and the thousands of disposable employees in their Pakistan operations is that permanent workers are in possession of a Personal Vitality Health Passport. Everyone has benefits, and (of course) everyone who manufactures a Unilever product, whether or not they are employed by Unilever, has rights in abundance According to Conventions of the ILO, the system is based on human rights violations, discrimination and exclusion. Through the Action Committee, the Khanewal workers are demanding their rights.

Corporate management at Unilever knows this. They would be well advised to stop putting CSR spin on an indefensible, squalid system of exploitation and start good faith negotiating for a solution.