Textile discounter KiK admits to flaws in labor relations | Business| Economy and finance news from a German perspective | DW | 06.08.2010
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Textile discounter KiK admits to flaws in labor relations

The textile discounter KiK admits to having "made mistakes" in treatment of employees and suppliers in developing countries. But critics doubt the chain, which offers t-shirts for just three euros, will really change.

KiK suppliers in Bangladesh

A new documentary exposes "inhuman" conditions for KiK suppliers

The German clothing discounter KiK has long suffered from bad publicity surrounding its labor practices. Some media reports have shown that the lump-sum salary payments it makes leave some employees in Germany earning less than 3 euros ($4) and hour, and the working conditions of Asian seamstresses supplying the company have been described as "inhuman."

One of the results of KiK's aggressive tactics can be seen in the company's nearly 3,000 stores, where a pair of shorts can be had for 4 euros, and a t-shirt for as little as 3 euros.

Two documentaries aired Wednesday on German television exposed the company's practices to nearly 4 million viewers. They put the company, which failed in court to hinder the films being shown, on a defensive path.

KiK said Thursday it had been focusing on its core business during a time of significant growth and "certainly made mistakes," which it regrets.

KiK clothes for one euro

KiK lures customers with significantly discounted clothes

It also added a new position to its upper management on August 1. Michael Arretz, who has been with KiK since 2007, was named Director of Sustainable Management and Corporate Communication.

"The appointment is also a signal that KiK wants to better position itself in the area of quality control and by strengthening its social and ecological accountability," Chief Executive Stefan Heinig said in a statement.

Doubts persist

But not everyone is convinced of KiK's sincerity. Gisela Burckhardt, of the Clean Clothes Campaign, said her organization has negotiated with KiK more than once since publishing a study of the company's labor practices in 2008.

"It becomes apparent that there's no way forward against public opinion, so the company says it will change everything," she told Deutsche Welle. "But, in fact, very little has changed."

A KiK textile discount store

The documentary exposed what happens behind KiK's facade

KiK grants apprenticeships to young people and engages in charities, but Burckhardt dismissed much of what the company does to improve the conditions of workers as thinly veiled public relations efforts.

"It's simply a contradiction if on the one hand I force down prices, and on the other hand I demand social standards are maintained," she said. "That's just not logical corporate policy."

According to Burckhardt, salaries for the producers of brand-name clothing in developing countries account for about 0.5 percent of a product's price. In the case of KiK's generic-brand clothing, salaries may account for less.

"Even if one were to raise wages, prices here in Germany wouldn't change drastically," she said. "Nevertheless, companies calculate down to every last cent. In the end what we need is a sector-wide solution."

European employees pressured

Cornelia Hass, a spokeswoman for the services trade union Verdi, said KiK staffs its stores with many part-time workers without employment contracts or union representation.

Reports indicate the company has on occasion demanded job applicants disclose any illness, handicap or union membership. It is also being investigated by federal prosecutors because a former member of its upper management said the company had checked employees' credit scores and fired those with financial problems.

"It's simply demeaning behavior towards employees," Hass told Deutsche Welle. "Employees have rights. Especially in retail, employees act as the public face of a company and deliver a significant contribution to its success."

Still from NDR TV report showing seamstresses in Bangladesh

KiK tried to get an injunction against the NDR documentary

Hass said she would be more convinced of KiK's sincere desire to change its practices if it would join an employers' association and commit to granting employment contracts.

"With wage agreements the company would have to search for a competitive edge not only by reducing personnel costs, but also in other areas, such as better service and better quality," she said. "Not only would that be good for employees, but it would also be an advantage for consumers."

Haas described the absolute focus on inexpensive wares as bad for society as a whole.

"We're demanding a broad re-thinking in the entire commercial sector," she said.

Documentary challenged

Burckhardt praised the televised documentaries saying they represent solid research and a major contribution to public knowledge about KiK's the businesses practices.

"I think that's very important, and I'm very glad (the documentaries) were aired," she said.

The journalist from public broadcaster NDR who made the documentaries, Christoph Lutgert, travelled to Bangladesh twice and gained access to a workplace there, where he filmed conditions along with products sporting the KiK logo. KiK had initially managed to stop the documentary being aired when an employee stated under oath the seamstresses were no longer employed by the company.

KiK is part of the Tengelmann Group, is headquartered in Germany and operates in several European countries.

Author: Gerhard Schneibel

Editor: Sean Sinico

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