Factory Survey Analysis 2015

Transcription

1 Factory Survey Analysis 2015

2 Survey Introduc.on In partnership with ELEVATE, FDRA conducted its sixth annual footwear industry survey. The survey looks at: *Key social compliance areas, e.g. working hours, wages, health and safety management. *Produc.on *Recruitment process and labor shortage Previously the annual factory survey was distributed amongst FDRA s Chinese Member factories and factories that have amended FDRA events in China. This year the survey scope was extended to emerging key manufacturing countries in South- East Asia and the Americas. Between Mar 18- April 22, 2015, 123 responses were received. 2

3 Produc.on Hubs Global Responses Country Number % China % Vietnam % Cambodia 1 0.8% Philippines 1 0.8% Mexico 1 0.8% Guatemala 1 0.8% Total % Legend: City in China % Among China Responses China Responses By Provinces 46% 31% 12% 11% Fujian Guangdong Zhejiang Other Province 3

4 Products Which Gender do You Cater To? What Type of Footwear Makes Up The Majority of Your ProducOon? 92% 76% 73% 65.9% Shoes (Cement) 45.5% Sandal & Indoor 15% 33.3% Boots (Welts) 32.5% Athle.c Shoes (Strobel) Women's Men's Kid's Baby's 66% of surveyed factories make cement shoes, followed by sandal & indoor shoes (46%). 17.9% Shoes- High end (Handsewn) 16.3% Vulcanized Shoes Women s represents the largest wearer segment, almost all respondents (92%) produce shoes for women, while baby shoes make up a considerable amount of producdon (15%). 14.6% Rubber Shoes (Injec.on molding) 13.0% Special Footwear 4

5 Products Total # of Pairs of Shoes Shipped (Billion) (China) 2014(Global) 0.7 In 2014, a total of 0.47 billion pairs of shoes were shipped by surveyed Chinese footwear factories. This increased from 0.3 billion in Avg. # of Pairs of Shoes Shipped Per Factory (Million) However, despite the overall growth in producdon volume, Chinese factories are facing increasing compeddon from emerging countries. 2014(China) 2014(Global) Share of US. Footwear Imports China Vietnam According to the United States official import data, although China remains to the single largest footwear exporter, its share decreased by 3% from 2013 to On the other hand, Vietnam maintains a two digits increase in two years in a row. # Pairs Imported (2014) 1.8 billion 0.3 billion % Share 79% 12% % YOY (2014) - 3% 19% 5

6 Factory Size % of Respondents Have More than 1,000 Workers By Country 25% 83% Vietnamese factories tend to be larger factories, whereas the average size of Chinese factories decreases significantly for three years in a row. In light of increasing oversea compeddon and operadon cost, Survey 2015 reveals a significant drop in percentage of large Chinese footwear factories, dropping from 47% two years ago to 25% this year. Factory Size (High Season) by Survey Year (China Data Only) 4% High Season Survey 2012 High Season Survey 2013 High Season Survey 2014 High Season Survey % 6% 5% 25% 19% 18% 19% 15% 17% 11% 9% 29% 26% 27% 23% 47% 38% 37% 25% 6 < < < <

7 Who Are the Workers? Employee Structure Avg. Age % Female % DomesOc Workers Migrants Survey % 67% Survey % 69% Survey % 62% Survey 2015 (China) 34 62% 59% Survey 2015 (Vietnam) 28 75% 40% Female workers condnue to make up the majority of the workforce. The workforce in Vietnam is significantly younger than the Chinese workforce. 64% Workers EducaOon Level (ELEVATE Data: Footwear and Electronics Industry) Footwear Electronics 26% 22% 24% 16% 49% Footwear factories tend to ayract a reladvely older workforce with limited educadon background than other industries. Middle school or lower High school Voca.onal school or higher 7

8 Who Are the Workers? Use of Juvenile Workers by Factory Size (China) 38% of Chinese manufacturers employ workers aged between 16 to 18 to varying degrees. This is 7% more than the percentage obtained in 2013 data. % of respondents use juvenile workers 42% 41% 62% It is a more common pracdce amongst larger factories with 62% of factories that have more than 1,000 workers udlizing juvenile workers. 0% 5% < < < < An increasing percentage of factories use redred and juvenile workers, suggesdng that Chinese factories are ge[ng creadve in fulfilling labor needs and such pracdce is not compliance risk free. 8

9 Business Prospects and Challenges What Are the Most Significant Business Issues You Are Facing? Survey 2015 Survey 2014 Survey 2013 Survey 2012 Raw Material Cost % 1 59% % % Wage & Compensa.on % 3 40% % % Business Compe..on % 5 19% 8 9.9% % Labor Shortage % % % % Finding Good Management % % % / / Economic Downturn % 8 8.2% 9 6.6% / / RMB Currency Apprecia.on % % % % Worker Reten.on throughout the Year % % % 6 9.7% Worker Reten.on around Chinese New Year 9 8.9% 8 8.2% % / / Increasing transporta.on costs % / / / / / / Tougher Regula.on and Legisla.on % 8 8.2% % / / Unpredictable energy availability % / / / / / / 9

10 Seasonal Fluctua.ons 季节性波动 Footwear Survey 2014 (China) % of Respondents Have Experienced Seasonal FluctuaOon Electronics (China) % 33% Seasonal FluctuaOon by Industry Toy (China) % 24% 58% Despite the overall decrease in Chinese factory size, they condnue to experience seasonal fluctuadons, which are even stronger than previous years. 80% of Chinese factories have experienced low and high seasons, resuldng in a fluctuadon of 31%. This is up 7% from the survey However, this is less of an issue for Vietnamese factories. 33% of factories in Vietnam experienced seasonality of producdon, and their average fluctuadon is 5%. Footwear Survey 2015 (China) 31% Footwear Survey 2015 (Vietnam) 5% 10

11 Seasonal Fluctua.ons Seasonal FluctuaOon by Factory Size (China) % Factories Use Labor Brokers (China) 65% % More Workers between High & Low Season (Survey 2015) % More Workers between High & Low Season (Survey 2014) < % 40% % More Workers between High & Low Season (Survey 2013) 300 < % 15% 32% 28% 26% 20% 20% 22% 19% 21% 20% 17% 18% 500 < % 18% 24% 35% < < < Number of Workers % of Chinese Factories Use Labor Brokers % of Chinese Factories Use Temporary Workers Among Chinese factories, small factories are hit the hardest by seasonal fluctuadon, and they turn to temporary workers during high season to help meet producdon needs. 11

12 Labor Shortage % Chinese Factories Have Experienced Labor Shortage in % 61% 8% Fujian Guangdong Zhejiang Labor shortage is reported to be less of an issue this year with only 5 Chinese factories feeling labor shortage is a serious challenge for them. Is Labor Shortage a Problem for Your Factory? (China Data Only) (1=Not a Problem; 10=Big Problem) 20% 15% 19% 14% 14% Poten&al Explana&on: Given the less than opdmal situadon and the wave of factory shutdowns in China, the pool of available workers is larger and it is becoming less of a challenge to recruit workers. 10% 5% 0% 7% 7% 9% 12% 7% 7% 5%

13 The Cost of the Workforce Avg. Increase of Minimum Wage in China Avg. Increase of Monthly Wages Paid By Chinese Respondents (Low Season) 14% 10% % of Migrant Workers Covered by Social Insurance in the Manufacturing Sector* Accident Insurance Medical Insurance Pension 34.2% 22.1% 21.4% Wage level growth is sdll lagging behind the increase in legal minimum wage. Unemployment Insurance Maternity Insurance Housing Social insurance is pardcularly acute for the footwear industry given the fact that it udlizes a reladvely older workforce than other sectors. 13.1% 9.3% 5.3% *Source of Data: NaDonal Bureau of StaDsDcs of the People s Republic of China 13

14 Working Hours Weekly Working Hours Low Seasons High Seasons Avg. Max. Avg. Max. Survey Survey % of Change 2.0% % - 0.7% % Workers Maximum ConsecuOve Working Days without Rest Avg. Max. Survey Days 78.0 Days Workers Maximum ConsecuOve Working Days Workers' Maximum Consecutive Working Days without Rest This year s survey results show that 91% of factories are able to control their hours within 60 per week during low season, and 64% during high season. The reported maximum number of working hours is much less. It is observed that factories using temporary workers tend to have longer consecudve working days than those who do not use temporary workers. Use temporary workers Don't use temporary workers 14

15 Are Workers Given a Voice? # of Complaints Received Worker Sa.sfac.on Most Frequently Used Channels 77% 30% Talking to Supervisors 17% Regular Mee.ngs With Workers 90% % Factories received 10 or less complaints per year 16% Using Sugges.on Box % Factories conduct worker surveys to measure worker sa.sfac.on 24% of respondents have not received any worker feedback in the past 12 months. Among those who did, they report that one in every 100 have voiced up. Small factories are less likely to conduct worker surveys than large factories. Considering the fact that they are the ones that are hit the hardest by seasonal fluctuadons, addidonal support is suggested to help them beyer manage seasonality and its implicadons on compliance. 15

16 Worker Reten.on 4% Avg. Monthly Turnover Rate 72% % New Workers Retained 3 Months 17% Workers Didn't Come Back aner 2015 New Year Factories report an average of 4% of monthly turnover rate. Considering the fact that factories lose around 28% of new hires within the first three months and experience a seasonal fluctuadon of 31%. The 4% is believed to be overesdmadng the stability of footwear workforce and not taking into account of the turnover of temporary workers. 16

17 CSR and EHS Management % of Respondents Have A Full-time Staff Responsible for CSR Survey 2014 Survey 2015 ExisOng Procedure to Evaluate Health & Safety Risks 73% Survey 2015 Survey % Fire safety 81.3% 92.9% 45% Chemical management and 78.0% 88.8% 33% safety Occupa.onal diseases 70.7% 78.6% Machinery safety 65.0% 78.6% Electrical safety 64.2% 77.6% Building structural safety 44.9% 52.0% China Vietnam Confined spaces management 38.2% 41.8% Nearly all surveyed factories indicate that they have dedicated staff for CSR and compliance issues, and 61% of them have full Dme personnel devoted to this mayer. 17

18 Audit Experience Avg. # of External Audit Experienced/Year 7 Audits More factories are being audited. On average footwear factories experience at least one audit per every other month. 5 Audits The analysis shows that: Chinese factories that have experienced more audits in the past year tend to have conducted more fire drills than others. % of Factories 5% # of External Audits Survey % 62% 64% Survey 2014 Survey % 19% 22% 14% 7% 8% 1% 0 > 0 < 6 > 6 < 12 >12 9% However, factories with frequent audits are not more likely to have a full Dme staff responsible for CSR and compliance mayers. Neither are they in a beyer posidon in terms of seasonal fluctuadon, wage compliance or worker retendon. 18

19 Knowledge of FDRA Code of Conduct Do You Know about FDRA s Code of Conduct? Do You Think It s Easy to Comply with? 87% 73% 13% Know FDRA Code of Conduct Don't know Easy to comply with Challenging to comply with 27% of surveyed factories have not heard about the FDRA Code of Conduct, among those who do, the majority find it challenging to be compliant with. No difference is observed between Vietnamese and Chinese factories, yet none of the surveyed factories in Cambodia, Guatemala and Mexico is aware of the FDRA CoC. 19

20 Summary Chinese factories are facing increasing compe..on from emerging producing countries, and con.nued domes.c challenges in regards to labor shortages and increasing labor and material costs. Wages con.nue to be a top challenge for Chinese factories for a number of reasons. An increasing number of footwear factories are u.lizing re.red, juvenile and temporary workers to fill labor gaps. Survey shows that the collec.on of worker feedback in footwear factories is s.ll limited, improperly documented and underu.lized. There is no evidence sugges.ng that assessments have a posi.ve impact on factory performance with regards to working hours, wages, communica.on and health and safety. 20

21 Thank You! 1319 F St. NW Suite 700 Washington, DC Phone: Fax: info@fdra.org 21