New Governance and the Role of Public and Private Monitoring of Labor Conditions: Sweatshops and China Social Compliance for Textile and Apparel Industry/CSC9000T

Abstract

Effective regulation has broadly three essential components. First the law must develop standards; Second there must be sufficient monitoring of compliance to detect non-compliance; and third there must be some form of motivation to avoid non-compliance. The growth in international trade has created significant challenges for all three of these stages. This paper will focus upon emerging regulatory vehicles used to detect non-compliance. The traditional regulatory model involves a law, state inspectors and legal sanctions for non-compliance. One of the largest challenges for the state is how to adequately monitor compliance. Countries like the United States and China have literally tens of millions of workplaces. It is impossible for the state to monitor the activities in every workplace without the support of non-state actors.

New governance scholars have observed the limitations with the reliance upon the regulatory state and propose transforming government into a series of public and private networked relations. New governance models include non-state stakeholders in a participatory and collaborative process to develop more effective regulatory responses. Accordingly the focus of new governance regulation is not state control, but improved regulatory responses that provide better outcomes for all stakeholders. These regulatory responses still retain the threat of punishment. Rather than focusing upon large state interventions, new governance focuses upon decentred regulation and regulatory nodes. This form of regulation has been proposed and adopted in a range of areas including labor laws, environmental laws and school reforms.

One of the benefits of private regulations is that they can encourage the state to develop enforceable public regulations. The creation of these public regulations can have a positive or negative result. If the public vehicle increases monitoring and enforcement then clearly this is positive. There is however a risk that the state intervention prevents the private regulatory model from operating without replacing it with an effective public regulation. The act of turning private institutions and practices into state sanctioned institutions and practices alters the nature of the private vehicles. Some private enforcement vehicles are effective precisely because they are not state controlled. To maximise the potential from both public and private enforcement the integrative linkage model has been developed.

Integrative linkage focuses on maximising the regulatory outcome and tailors the combination of public and private institutions and practices in each case. Arguably integrative linkage can assist countries with poor labor rights records, where there is public and private resistance to change, to better develop public regulatory models. Kolben observes that the “interplay of private regulatory regimes and regulatory capacity in developing states” has not been tested sufficiently in the literature and to date and the assumption surrounding the connection between integrative linkage and improved regulation is conjectural. This paper will build upon Kolben’s research and analyse how the operation of private regulations in China have encouraged the state to develop a public regulation that largely copies and replaces existing private regulatory regimes. While the creation of this model may have long term positive effects, this paper will highlight how the use of integrative linkages in this particular cases has created serious concerns surrounding the independence, quality of auditors and potential for capacity building.

Part I of this paper will analyse the monitoring problems associated with Chinese occupational safety and health (OSH) laws. In an environment with low monitoring and enforcement it is especially critical that any integrative linkages do not reduce the effectiveness of private monitoring vehicles. Part II of this paper will explore how international concern over sweatshops has developed and part III will analyse what private monitoring vehicles have developed to fill the regulatory gap caused by the failure of China to effectively enforce labour laws. These private monitoring vehicles are largely external to China and are beyond state control. China has regarded non-Chinese based regulation as potential threats to national sovereignty and prosperity. In response China has introduced an integrative linkage model which will be analysed in part III. This integrative linkage model modifies the operation of the existing private monitoring vehicles. The way in which this integrative linkage model is structured has the potential of weakening the effectiveness of the private monitoring vehicles and overall reducing the level of monitoring. This paper argues that integrative linkages have the potential of substantially improve regulatory outcomes, but the state and commentators need to ensure that the inclusion of private institutions and practices into such models does not reduce the effectiveness of the private vehicles.

Keywords: Occupational Health and Safety, CSC9000T, New Governance