Child Labour Issues of Unilever in India

Feel good, look good and get more out of life – that is what Unilever these days advertise as a punch line. Unilever claims that company is guided with clear values and standards. Company claims that ‘Consumers, employees, suppliers, competitors, shareholders… we apply the highest standards of ethics and consideration to all.’." [http://www.unilever.com/ourvalues/people/Values_and_standards/?linkid=navigation Values and standards] " the Unilever website, URL accessed 01 November 2007.] Also the company claims that “Our Code of Business Principles embodies our commitment to human rights”. [" [http://www.unilever.com/ourvalues/environment-society/sus-dev-report/employees/respecting-rights.asp?linkid=navigation Respecting rights] " the Unilever website, URL accessed 01 November 2007.] Though Unilever to be highly ethical and standardized in its operations and in dealing with labor issues, it seems that various instances are happening in the several part of the world in which many of them may look contradictory to the Unilever

As competition increases worldwide, more and more multinational corporations (MNCs) are outsourcing their production to third-party contractors in developing countries where wages are low. The extent of global outsourcing is impressive and still increasing. In this process, many MNCs were blamed for their involved in intolerable labor practices in the developing countries. Unilever and its subsidiary in India – Hindustan Lever Limited (HLL) received widespread criticism in late 1990’s and in early 2000’s on the ground of its labor practices in its cotton fields and its seed business in India. Though HLL was involved in hybrid seed business since 1980’s, it was the introduction of new cotton hybrid ‘Brahma’ in 1997 helped HLL to placed itself in one among the first fifth in India in cottonseed business "Child Labour and Trans-National Seed Companies in Hybrid Cotton Seed Production in Andhra Pradesh", Dr. Davuluri Venkateswarlu, Study commissioned by India Committee Of The Netherlands (ICN), The Netherlands, 2003] . Studies by Davuluri Venkateswarlu showed that in the year 2000-2001, HLL was engaged in production of hybrid cottonseeds, having convert|2500|acre|km2 of land as hybrid cottonseed farms in Andhra Pradesh employing 25000 child labours Table 5, "Child Labour and Trans-National Seed Companies in Hybrid Cotton Seed Production in Andhra Pradesh", Dr. Davuluri Venkateswarlu, Study commissioned by India Committee Of The Netherlands (ICN), The Netherlands, 2003] . His studies further claims that children were from the age group of 6 to 14 years and majority of the children were girls.

Labour conditions

The nature and working conditions of the children along with the wages were nowhere near to the values and standards the Unilever claims in the 'business partner codes'." [http://www.unilever.com/ourvalues/purposeandprinciples/business_partner_code/ Business partner codes] " the Unilever website, URL accessed 01 November 2007 ] . Venkateswarlu, D (2003) and Venkateswarlu, D (2004) "Child Labour in Hybrid Cotton Seed Production in Andhra Pradesh: Recent Developments", Dr. Davuluri Venkateswarlu, Study commissioned by India Committee Of The Netherlands (ICN), The Netherlands, 2004] shows that the seed producers prefer to have advance agreements with laborers before starting off the seed cultivation. They were recruited by the farmers on long-term contract basis (the contract is for entire crop season) by giving loans/advances to their parents. The average advance/loan amount paid against each child is Rs 1500. About 90% children employed in these farmers were recruited through this method. His studies also reveal that about 95% of the children employed were in debt bondage. Though the initial agreement between the farmer and parent of the child be only for one crop season it is observed that in most cases the agreements were extended for later crop seasons through additional loans for which one reason is the debt bondage. Wage rates were fixed for the whole season at the time of agreement itself. On average children were paid about Rs 18 per day which was about 30% less than the adult female and 55% less than the adult male wage rates in the market. Children, mostly girls had to work for 9 to 12 hours a day in accordance to the seasonal needs. The case of migrant children was much worse and they were to work for 12 to 13 hours a day as they were under the complete control of the employers. Work camps were set up for them and it is reported that cattle shed of the employer became house of these children’s in the working seasons and in the time of diseases, no proper health care was provided by the farmers. Children were to work in cotton field with no proper protection so that most of them were exposed to the pesticides and insecticides and other chemical fertilizers which have an impact on the health of these children in long term. Children working in the cottonseed fields are directly exposed to poisonous pesticides like Endosulphan, Monocrotophos, Cypermethrin and Mythomyl for prolonged periods. Their exposure to Endosulphan, which is an organochlorine, affects their nervous system and the symptoms are precisely what children working in cottonseed fields often complain of: headaches, weakness, disorientation, convulsions and respiratory problems. In the absence of long term monitoring of the health of children, there is no way of assessing the permanent damage such exposure has on the health of these children.

Involvement of Hindustan Lever Limited

Seed business is not a core activity of HLL. In March 2002, as a part of long term strategy Hindustan Lever Limited (HLL) transferred its seed business to a subsidiary company called ‘Paras Extra Growth Seeds’ and formed a joint venture partnership with Emergent Genetics . HLL sold 74% of its share in Paras Extra Growth Seeds to Emergent Genetics and holds the remaining 24% of the share" [http://www.emergentgenetics.com/news_media/archives/2002_03_30.html News and Media] " the Emergent Genetics Website, URL accessed 01 November 2007] . Even though the majority of the seed business is sold out to the Emergent Genetics, it is still clearer that Unilever is linked with child labor, even if they are not employing the child labor directly. Even if the company is not directly involved in child labor employment, they are benefiting and thereby encouraging the trend by buying and putting their labels on the seeds produced with the children’s labor. The economic relationship between Unilever and child labour is multi-tiered and complex and it can be simply shown using the following diagram.

"It is important to note that in the entire process at no point of time, Unilever made any direct agreement with farmers either for production or for payments". All the transactions were routed through seed organizers only. Although company was not directly involved in the production process and making agreements with seed farmers they exerts substantial control over farmers and production process by way of supplying foundation seed, advancing production capital, fixing the procurement prices and quality controls. The company fixed the procurement price to be paid to the farmers by the seed organizers well in advance. Seed organizers did not have any control over it. They simply got service charge or commission (Rs.15- 20 on each packet of 750 grams weight) from the company. Also it is interesting to note that there existed a huge difference between companies’ procurement prices and market prices. During 2001-2002 the market price of HLL's cottonseed ‘Brahma’ is about four times that of procurement price. The company procured the seed from farmers at Rs.290 per kg where cost of production for farmers are calculated as Rs. 220 per kg and sold the same seed in market at Rs. 1100 Table 7, "Child Labour and Trans-National Seed Companies in Hybrid Cotton Seed Production in Andhra Pradesh", Dr. Davuluri Venkateswarlu, Study commissioned by India Committee Of The Netherlands (ICN), The Netherlands, 2003] .

Media attentions and protests

The severity of the situation of child labor in the cotton farms came out with the report of the Venkateswarlu, D. in 2003. Even before the issue had the some attention of newspapers and other media, but not in a stronger way. The 2003 report helped to drive more attention of newspapers and other media as well as various organizations like government, international agencies like [International Labour Organization|International Labour Organization (ILO), United Nations Children's Fund (UNICEF), United Nations Development Programme (UNDP), and non-governmental organizations (NGOs) to the issue of child labour. Unilever was not the only MNC involved in the child labour issue. A few of the others were Syngenta India (subsidiary of Syngenta AG ), Advanta India (subsidiary of Advanta BV), Monsanto India and Mahyco (subsidiaries of Monsanto), Proagro (subsidiary of Bayer) and Mahendra Hybrid Seeds (for Emergent Genetics). Various international NGOs and unions in Europe and USA have started campaigning against the role of Unilever and other MNCs in encouraging child labour in cottonseed production. The campaign was first taken up in 2002 by the Dutch organisations like India Committee of the Netherlands (ICN), Amnesty International Netherlands, NOVIB/Oxfam Netherlands and the Federation of Netherlands Trade Unions (FNV)" [http://www.fnv.nl/ The Federation of Netherlands Trade Unions Website] " URL accessed 01 November 2007] with regard to Unilever and Advanta which have its headquarters situated in The Netherlands. In the UK Anti Slavery Society" [http://www.antislavery.org/ Anti-Slavery International Homepage] ", URL accessed 01 November 2007] " [http://www.anti-slaverysociety.addr.com/index.htm Anti-Slavery Society Homepage] ", URL accessed 01 November 2007] took up the issue with Unilever. The international campaign gained momentum in 2003, mainly through publicity in national and international written media, correspondence and dialogues with companies and pressure by social investors and public opinion, putting MNCs under severe pressure to initiate steps to address the problem of child labour.

Local NGOs like the Mamidipudi Venkatarangaiya Foundation (MVF)" [http://www.mvfindia.in/ Mamidipudi Venkatarangaiya (M.V.) Foundation HomePage] ", URL accessed 01 November 2007] , Andhra Pradesh Mahila Samatha (APMS)" [http://www.apmss.org/default.asp Andhra Pradesh Mahila Samatha Society HomePage] ", URL accessed 01 November 2007] , Sri Hanumantharaya Educational Charitable Society (SHECS) in Kurnool, SPEED, Sramika Vikas Kendram, Koneru, Villages in Partnership (VIP)" [http://www.vidal.org.in/node/39 Villages in Partnership (VIP) HomePage] ", URL accessed 01 November 2007] , Mahila Samakya in Mahaboobnagar and Social Service Centre" [http://www.socialservicecentre.org/ Social Service Centre HomePage] ", URL accessed 01 November 2007] in West Godavari were some of the NGOs actively involved in the campaign against child labour in general and the cottonseed sector in particular in the state of Andhara Pradesh where the problem was highly worse. Association of Seed Industry (ASI)" [http://www.asi.org.in/ Association of Seed industriers HomePage] ", URL accessed 01 November 2007] - a national association of the planting seed industry in India where all major MNCs including Emergent Genetics be a member, also taken up the issue of child labour.

Response from Unilever

Responding to the issue of use of child labor in production of its cottonseeds" [http://www.blonnet.com/businessline/2001/06/21/stories/01212001.htm Even multinationals employ girl children for a profit] ", By Ch. Prashanth Reddy, The Hindu Business Line, June 21, 2001, URL accessed 01 November 2007] HLL denies any direct contact with seed farmers and also the use of forced child labor as such in production of seeds" [http://www.blonnet.com/2001/06/25/stories/252518la.htm Hid Lever Clarifes] ", By Shubhabrata Bhattacharya, The Hindu Business Line, June 25, 2001, URL accessed 01 November 2007] " [http://www.indiaresource.org/news/2003/4024.html Unilever Denies Child Labour Link] ", By Simon Fraser, BBC News Online, May 6, 2003. News retrieved from [http://www.indiaresource.org/ India Resource Center (IRC)] Website, URL accessed 01 November 2007] . HLL, in a press statement issued on 25-6-2001, states that "`HLL has third-party seed organizers who get seeds produced from numerous farmers on sale/purchase basis and supply them to HLL. In no case, HLL deals with any farmer, either for production or for payments. … HLL or the seed organizer has no direct or indirect role in the farmer's practice of either taking help from his family members or employing labor`" [The Hindu Businessline, 25-6-2001] .

Sooner than later, Unilever has transferred its seed business to a subsidiary company called ‘Paras Extra Growth Seeds’. Later Mr. Mohan Rao, the person in charge of Human Resource Development of Paras Extra Growth Seeds, in a consultative meeting of seed companies, NGOs and government departments against child labour in Hyderabad on August 3rd 2002 acknowledged the problem of child labor in hybrid cottonseed production and assured that they are committed to address this problem.

Results

ASI along with various seed companies started acting to eliminate child labour in cottonseed industry in India through collaboration with the MV Foundation, a leading child rights organisation in India by September 2003. In addition to taking part in ASI sponsored activities, various MNCs took additional steps to address the issue at their company level. Unilever decided to sell the remaining 24% shares it owns of Paras Extra Growth Seeds. Emergent Genetics, partly owned by Unilever organized various orientation meetings for their farmers. Surprise visits by officials of the company to check the employment of child labour were also made.

However, in all the initiatives undertaken by ASI, one crucial aspect missing, which the seed companies alone can address, is procurement price policy. Various studies by Davuluri Venkateswarlu reveal a clear linkage between procurement pricing and employment of child labour in cottonseed production. Even though companies obtain a huge profit margin, they do not seem to be making any rational calculation about the cost of cultivation while fixing the procurement price to be paid to their seed farmers. With the procurement prices of companies willing to pay, seed farmers cannot afford to pay better wages to the labourers and still make reasonable profits. Unless better wages are paid, farmers would not be in a position to attract adult labourers to work in their fields in sufficient numbers. Anyhow, the recent trends in the employment of child labour in cottonseed production in the state clearly indicate a significant decline in the total number of children employed in this sector. Table 6 Table 6, "Child Labour in Hybrid Cottonseed Production in Andhra Pradesh: Recent Developments", Dr. Davuluri Venkateswarlu,Study commissioned by India Committee Of The Netherlands (ICN), The Netherlands, 2004] in the studies of Davuluri Venkateswarlu in 2004 shows that total number of children employed by Unilever and its subsidiaries in cottonseed farms in Andhra Pradesh declined from 25,000 in 2000-01 to 4950 in 2003-04. However, the decline in numbers cannot be entirely attributed to interventions initiated by different agencies. Much of the decline can be attributed to the reduction in the total area under cottonseed production in Andhra Pradesh to some other parts of India

More Labour Issues

In India at Mumbai, Hindustan Lever Employees Union (HLEU) in Mumbai is fighting against the fraudulent sale and closure of HUL factory" [http://www.iuf.org/cgi-bin/dbman/db.cgi?db=default&uid=default&ID=3745&view_records=1&ww=1&en=1 Outlaw Conduct by Unilever Indian Subsidiary Prompts International Union Action at OECD] ", the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF)Website, URL accessed 28 September 2007] . In Nepal there is an ongoing dispute between Unique, a Unilever subsidiary and the workers. The loaders in the company are pressing for a much higher salary and Unique discarded the need. In Pakistan also, Unilever is facing workers’ protest against the unfair labor practices and false police charges at the Rahim Yar Khan factory" [http://www.ptudc.org/content/view/125/36/ Unilever Pakistan: Workers protest against threats and repression by management] ", Pakistan Trade Union Defense Campaign (PTUDC) Website, URL accessed 28 October 2007] .

Achievements of Unilever

In contradiction of many bad labour practices reporting against Unilever, it is also credited with a lot of social responsibility practices since a couple of years. Various awards shows this in a clear cut way. Unilever Pakistan won the ‘Excellence Award’ in the Best Workplace Practices category, at the Asian CSR Awards held in Vietnam in 2007" [http://www.dailytimes.com.pk/default.asp?page=200710