[DEBATE] : Ikea's dirty secrets
p.waterman at inter.nl.net
Wed Dec 20 10:18:30 GMT 2006
Le Monde Diplomatique
'LOW PRICES, HIGH SOCIAL COSTS'
Secret hidden behind Ikea's wardrobes
The Swedish furnishings retailer Ikea has a
public image of Scandinavian design style sold
cheaply. It is secretive about its business
affairs, and though it declares its good
intentions about the pay and conditions of its
many third world workers, it will not guarantee
By Olivier Bailly, Jean-Marc Caudron and Denis Lambert
Ikea, the home furnishing multinational, with 410
million customers worldwide and 160m catalogues
in circulation (more than copies of the Bible),
is doing fine. Its revenues continue upwards,
from $4.3bn in 1994 to $19.4bn in 2005, more than
400% growth. It would be hard to do better. Ikea
now plans to conquer Russia and China, which have
so far resisted its spread. As Ikea's in-house
magazine Read Me explains, the aim is to improve
the daily life of the largest possible number of
people and, to achieve that, shops must
constantly sell more things to more customers
(1). Ikea is in no doubt that the act of purchase
is the secret of happiness.
What is remarkable about a multinational so
strongly associated with global uniformity and
consumerism is that Ikea manages to fend off the
attacks of consumer organisations, third-world
activists and environmental watchdogs. This is no
mean achievement. It has succeeded in
establishing close links with its customers
thanks to unbeatable prices and special
children's areas in all shops, inventing an
all-embracing concept in which buyers can find
everything immediately - and preferably plenty of
other items they didn't really want.
There is no shortage of stories about the
strength of bonds between the shop and its
customers. In 2004 a Stockport town councillor in
Lancashire, Britain, bragged that having an Ikea
store was an honour for the town (2). At Mougins,
in the south of France, local people started a
petition which read: "If you are fed up with
making a 200km round trip, lasting two hours,
just to shop in your nearest Ikea, then seize
this opportunity (maybe the last) to bring a new
Ikea to the Alpes-Maritimes department" (3). This
is remarkable: people organising a petition,
which collected more than 2,000 signatures,
standing up for their rights and organising
because a furnishing store lacks an outlet within
100km. Of course success on this scale has its
downside. When the firm opened a store in Saudi
Arabia in 2004, it offered a $150 cheque to the
first 50 shoppers through the door. There was
almost a riot, with two deaths, 16 injured and 20
What is behind the global love affair with Ikea?
Apart from attractive prices, one of the keys to
the firm's success is its social and
Keen to find a source of cheap, compliant labour
it started outsourcing part of its production to
a manufacturer in Poland in 1961. Since then Asia
has supplied an ever-growing share of its
products. China (hardly known for its defence of
workers' rights) has overtaken Poland to become
Ikea's top supplier, accounting for 18% of
purchases. In all 33% of what is promoted as
"made in Sweden quality" comes from Asia (4).
According to The Observer, developing countries'
share in Ikea's manufacturing activities rose
from 32% to 48% between 1997 and 2001 (5).
Keep the price down
>From the start Ikea offered extremely low prices.
In A Furniture Dealer's Testament, published in
1976, Ikea's founder Ingvar Kamprad explained
that he wanted every effort to be made to keep
prices as low as possible, placing high demands
on fellow workers. Without tight control over
expenses the firm would not be able to fulfil its
However, despite Ikea's current claims, low
prices always incur a high social cost. Between
1994 and 1997 three documentaries screened by
German and Swedish television accused the firm of
using child labour under degrading conditions in
Pakistan, India, Vietnam and the Philippines (7).
In 1998, after the discovery of wretched working
conditions in Romania, the International
Federation of Building and Wood Workers
threatened to boycott Ikea, leading to an
agreement between the union and the retailer (see
"The sins of the founder found out"). The Iway,
as Ikea's code of conduct on the environment and
working conditions is known, establishes as a
basic requirement for any business relationship
that there should be no forced or child labour.
Item seven of the guidelines, on worker health
and safety, describes working conditions for
employees, who must be provided with appropriate
It also purports to protect the right of
employees to form or join a union, stipulating
that subcontractors should not prevent them from
doing so. The Iway condemns any form of
discrimination, by race, creed or sex.
Subcontractors must not pay their workers less
than the country's minimum wage and working hours
must not exceed the local limit. It seems odd to
draw up a code of conduct just to indicate an
intention to obey the law (rather like making a
solemn undertaking to drive on the left when
visiting Britain). It is more important that the
Iway has a positive impact on the conditions of
work at subcontractors.
Ikea has certainly ended child labour practices
in subcontracting factories, although the Iway
prefers to refer to local legislation, pointing
out that "national laws or regulations may permit
the employment or work of persons 13 to 15 years
of age or 12 to 14 years of age on light work"
What about the workers?
But things are not quite the same when it comes
to the right of workers to organise and join
unions. During a trip this May to a village close
to Karur in Tamil Nadu province, a textile
production centre in southeast India, we talked
to some people working for an Ikea subcontractor.
Shiva (9) was prepared to answer questions from
western visitors but her white-haired mother was
worried. What would happen if Shiva lost her job?
Her wages were the family's only resource,
supporting the two women and Shiva's 15-year-old
Shiva barely criticised her employers, and talked
about tea breaks and equipment to protect eyes
and hands. The environment she described seemed
healthy enough. And at first sight the working
conditions in Karur seemed fine. The premises
were clean and well ventilated. There were tea
breaks and good quality equipment. Copies of the
Iway were posted on the walls of the factory.
This is corroborated by other sources. "Ikea
offers the best conditions, there is no doubt
about it," said Maniemegalai Vijayabaskar, an
assistant lecturer at Madras Institute of
Development Studies and joint author of a study
commissioned by Oxfam-Magasins du Monde on Ikea's
suppliers (10). He added: "They put on a human
face to avoid criticism and controversy. But they
don't make much effort to improve working
In 2003 the Dutch trade union federation asked
the Centre for Research on Multinational
Corporations (Somo) to investigate Ikea suppliers
in three countries: India, Bulgaria and Vietnam.
In each case investigators met workers from three
or four companies and conducted interviews
outside the workplace. They visited the factories
and talked to the management.
Their conclusions concerned 10 suppliers
representing about 2,000 employees, noting in the
final report: "There are still numerous
violations of Ikea's code of conduct in all three
countries in all factories researched." The most
common concerned freedom of association and
collective bargaining for wages and overtime. In
the worst case there was no trade union,
employees worked a seven-day week and the minimum
wage was not honoured. No one was "aware" of
Ikea's code of conduct.
>From what we saw in India, trade unions are still
not represented at Ikea's subcontractors.
Officially they are tolerated but, according to
Shiva, they are not really necessary. She said:
"When there is a problem we hold a meeting and we
talk about it. It's often when they want to
remind us about the cleanliness of the toilets.
If I want something, I can tell the manager."
Xana, a younger worker without any dependants,
described things differently: "A union? No, they
wouldn't allow it. And if inspectors visit the
factory, the bosses remind us of the lies we
should tell them."
'We eat simply'
There is nothing unusual about this; attempts to
set up a union are generally thwarted. Ikea must
have expected this, just like any other
multinational starting business in India. Wages
are kept particularly low. Shiva claims she earns
2,300 rupees a month ($48.30) and it costs her
500 rupees ($10.50) to take the bus to work. Can
she really survive on such wages? When her mother
cooks, the recipe is always the same. "We eat
simply, soup and rice with sauce. We eat meat
once a week, on Sundays. But not this week
because it's the end of the month." We met 10
days before the end of May.
The Ikea code of conduct offers no guarantee that
workers will get enough to eat or furnishings for
their homes. There are no Malm beds in Shiva's
two-roomed house. Just a few calendars on the
wall, some black and white photographs, a couple
of mats, two small chests for clothes, a clock
and household gods.Asked what she would do if she
earned 1,000 rupees more a month, she outlined
her idea of comfort: "We'd get a gas cooker with
a bottle. Cooking over a fire is a nuisance
because the smoke gets in your eyes. In the rainy
season it's hard finding dry wood, and collecting
it is a lot of work."
Among Ikea suppliers there is nothing unusual
about Shiva's poverty. Manjula, who had just
married, also works for an Ikea supplier. She
said she earns 2,360 rupees ($49.60), but her
payslip for October showed that figure
corresponded to her gross earnings, from which
national insurance payments were deducted. For 24
days' work in October she took home 1,818 rupees
($38.10). Even working six days a week she comes
close to the absolute poverty line, without
contravening the Ikea code of conduct. To earn a
little more she had to work overtime. "They work
12 hours a day, not including travel time," said
Vijayabaskar. "At maximum output they may work as
much as 15 hours a day."
Beyond the 8-hour day
Ikea tries to reduce overtime but pressure of
tight deadlines and the need to earn more make it
inevitable. The official eight-hour day is 9.30am
to 1.30pm, 2.30 to 6.30pm. Kalaya, who lives in a
poor neighbourhood of Karur, said: "If you work
overtime from 7 to 8 or 9pm, they don't pay you.
If you work till 10.30pm they give you 50 rupees
[$1] more. The extra work is generally done twice
Assam, who works at the same factory, said there
was no overtime. The day we spoke the machines
ran late into the night and we saw groups of
workers going into the factory until 8pm. With
strict instructions from management and the fear
of losing a job, people may gloss reality.
Denoosha made no bones about needing extra cash.
She spoke to us briefly when she left work, then
said she must be off. She had another job, from
8pm to 1am, which earned her 80 rupees ($1.70)
Ikea views Shiva, Kalaya and Denoosha as labour
costs that must be strictly limited. It is
precisely because of low labour costs that the
firm sources products in India. To make things
worse its subcontractors contract work out to
cope with fluctuating demand. At this point the
Iway code of conduct becomes completely
theoretical, with no control over anything but
the deadline for delivery.
Even for official suppliers, auditing of
compliance with the code of conduct is extremely
uneven. Ikea's 46 purchasing offices, in 32
countries, carry out most (93%) of the audits.
The firm's Compliance and Monitoring Group has a
staff of five (three in 2004) and is tasked with
implementing the code of conduct. It trains the
purchasing offices and carries out audits: 53 in
2005 (11). External auditors, such as KPMG,
PricewaterhouseCoopers and Intertek Testing
Services, only did seven audits in 2004. Ikea
admitted that the number was low but explained
that " was a year with a low number of
third-party audits.  will in contrast be a
year with a high number of audits" (12). In 2005
external consultants did 26 out of a total of
Skimming the surface
The third-party audits are integrated into Ikea's
internal auditing system. Auditors cannot publish
their findings, which are reported directly and
exclusively to the firm's management. Each audit,
carried out at two-yearly intervals (every six
months or year in Asia), takes one or two days.
It considers 90 criteria defined in the Iway code
of conduct. In an eight-hour day that means
checking one criterion every 10 minutes. How can
anybody check that no pressure is being exerted
on trade union representation in just 10 minutes?
What about overtime, payment of wages on time,
breaks, child or forced labour? The solution is
simple: auditors ask the boss, check company
records, or interview workers at the factory.
The people checking compliance are well-meaning
but under the circumstances it is impossible to
carry out a proper audit. They can only skim the
surface, with little chance of employees
providing a full account of their working
conditions, particularly as the auditors are
checking production quality at the same time.
Ikea auditors visited Toneesh, a quality
controller, twice last year. He said: "They ask a
few questions, above all on product quality, to
check production. They are Indians, based in
Delhi or Chennai, but also Europeans, who only
talk to the top-level management. Because of the
language barrier the workers cannot talk to them
Kalaya confirmed this: "Yesterday a man from Ikea
came to the factory. He showed us a video on
preparing a quality product. And he asked
questions, but only about the product." This
approach seems unlikely to prevent Kalaya from
working unpaid overtime.
In practice Ikea merely sands off some of the
rough edges of exploitation. Employees have
access to filtered water, gloves and separate
toilets. They sometimes have tea breaks. But tea
is no help in making ends meet. As soon as social
issues such as wages, union representation and
overtime raise their head, the tune changes. Ikea
is the main beneficiary of the semblance of
social responsibility embodied in its code of
conduct. As Vijayabaskar pointed out: "Ikea
unloads the cost of its social policy on its
suppliers." At the same time it boosts its image
with commitments that cost it nothing, steering
well clear of child labour, which really upsets
Ikea's supposedly socially responsible attitude
makes no difference to the hard lives of some of
its workers. For Ikea to claim to be an ethical
enterprise it should be able to offer them a
decent living. This does not mean luxuries -
televisions or mobile phones - just enough money
to buy food more often, keep their children at
school without needing to do two jobs, and have a
proper day off every week. Or even the chance for
Shiva to treat herself to a tiny luxury from
Translated by Harry Forster
Olivier Bailly is a journalist, Jean-Marc Caudron
a researcher and Denis Lambert the
secretary-general of Oxfam-Magasins du Monde
(Belgium); they are joint authors of 'Ikea, un
modèle à démonter' (Editions Luc Pire, Brussels,
(1) In the first French-language issue of Read
Me, the Ikea international in-house magazine,
(2) "Un Ikea sinon rien!", Courrier
International, Paris n° 722, 2-8 September 2004.
(3) http://www.ipetitions.com/petition/ ...
(4) "Social & Environmental Responsibility Report 2005", Ikea.
(5) "Trying to assemble a perfect reputation",
The Observer, London, 25 November 2001.
(6) "The testament of a furniture dealer", a
brochure published by Ingvar Kamprad in 1976. See
also Bertil Torekull, Leading by design: the IKEA
story, HarperBusiness, New York, 1999.
(7) The German documentary, Mattan, is mentioned
by Manuel Balza Duran and Davor Radojicic in
"Corporate social responsibility and NGOs",
Avdelning, Linköping, 30 January 2004. The
Swedish programmes are quoted by Susan
Christopherson and Nathan Lillie in Neither
Global Nor Standard, Oxford University, November
2003, and in "The Teflon shield", Newsweek
International, 12 March 2001. See also "Ikea
accused of exploiting child workers", BBC, 23
(8) Iway standard, item 15.
(9) As several people we interviewed were afraid
they might lose their job if identified, we have
changed all the names of the workers quoted.
(10) LA Samy and M Vijayabaskar, "Codes of
conduct and supplier response in the Ikea value
chain", AREDS and MIDS, 2006.
(11) "Social & Environmental Responsibility Report 2005", Ikea.
(12) "Social & Environmental Responsibility Report 2004", Ikea.
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