GoodWeave: Improve image of Nepali carpet industry
ANG SANU LAMA
KATHMANDU, June 21: Nepal´s carpet industry during the late 80s and early 90s is a perfect example of what happens to the industry if companies ignore their social responsibilities -- it affects the bottom line.
As the opprobrium of child labor became associated with Nepal´s carpet sector during the early 1990s, the demand for Nepali carpet -- which came mostly from European countries and the United States -- plummeted. Carpet industry was at its peak then, with about 32 million sq.m. exported to different countries in 1993.
To revive the industry and resolve the issues of child labor, carpet entrepreneurs, NGOs involved in children rights and international development organizations founded Nepal RugMarg in 1995. It has re-branded as ´GoodWeave´ and launched in September 2009 to incorporate new standards related to environment and social issues in addition to child labor.
GoodWeave is a label which is voluntarily licensed to carpet manufacturers/exporters in manufacturing countries and importers/retailers in the marketing countries.
“The exporters as of now have to pay 0.25 percent and importers have to pay 1 to 1.75 percent (depending on the country of import) of the invoice FOB value as label fees to RugMark offices in their respective countries,” according to Ghanashyam Shrestha, program officer of Nepal RugMark Foundation.
The Foundation has independent workplace inspection and monitoring mechanism to ensure compliance to GoodWeave criteria in producing countries. After eliminating child labor from workplaces, the Foundation provides them with a long-term and meaningful rehabilitation with appropriate education and vocational training.
The Foundation presently provides license to 87 carpet factories in Nepal, which is roughly 50 percent of the country´s carpet production capacity. These licensees together with their sub-contractors have a total of 383 factories. Carpet manufacturers exported a total of 1,363,712 sq.m. of carpets with GoodWeave/Rugmark labels between December, 1996 to June, 2010.
The Foundation rescued 2,092 child laborers from carpet factories over the period. Various rehabilitation and preventive programs of RugMark Nepal have supported 1,998 children so far.
Even five years ago, around 70 percent of the total carpet production capacity in Nepal was certified by GoodWeave. The slump in the carpet industry owing to the existing political situation, labor problems, long hours of power outage, which has led to the shut down of many carpet factories, are the major reasons behind the decline in the coverage of GoodWeave.
“GoodWeave has had a big impact in reduction of child labor in Nepal´s carpet sector. However, since it is a voluntary concept and not for free, many carpet exporters and importers avoid GoodWeave,” Sulochana Shrestha-Shah, managing director of Formation Carpets, said. “Therefore GoodWeave still needs to do a lot of activities so that more exporters, importers and stakeholders realize its importance.”
In addition to child labor, GoodWeave Nepal is in the process of incorporating international standards related to environment and social issues. This will include treatment of waste fluids coming out of the factory, ensuring minimum wage to workers, ensuring safe and clean work environment, regular health check-up, among others.
However, as the industry is not doing well at the moment due to external and internal problems, some entrepreneurs are not positive about the changes. “Since some of the compliances require investment on the part of the manufactures, it may take one to two years for the changes to be implemented,” opined Shrestha said.
The Foundation also is not in a position to support this change due to financial limitation owing to the loss of one of its funding source.
If these new standards are integrated, Nepalese carpet industry will gain a better social image and more recognition in their major markets. It will also improve their business as importers from developed countries recognize and prefer carpets made in more equitable conditions.