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Hard Labor: How fashion brands helped unwind a nation's system of forced work

In early October 2019, two men from the tax department of Uzbekistan's Jizzakh region knocked on the door of a 36-year-old clothing entrepreneur called Ugiloy. They told her to report to a nearby field and pick cotton for the rest of the fall harvest.

The demand was not a surprise, said Ugiloy, who had been forced to pick cotton as a schoolgirl and was ordered to do the same in each of the past seven years. This year, she hired three volunteer cotton pickers and paid them a total of 2.9 million som, or $300, to work in her place. "I wanted to keep my clothing shop open because it is my livelihood," said Ugiloy, who declined to provide her last name for fear of repercussions.

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THIRD IN A SERIES

Read the first article here and the second article here.

Each year, tens of thousands of Uzbeks pick cotton against their will, or risk fines or the loss of jobs and benefits. A vestige of Soviet-era central planning, the program mainly dragoons public sector employees, including doctors, teachers, nurses, bankers and police officers, to harvest cotton between September and November. With a total of 2.5 million people in the fields — including forced-labor crews — it remains one of the largest recruitment programs anywhere in the world.

Cotton is a vital $1 billion-a-year cash crop for the Uzbek government. For years, farmers were required to buy seeds and fertilizer from a state-run company, meet state production quotas and sell their cotton to the state at artificially low prices. But with a new reform-minded president in place since late 2016, there are signs that the practice is much less systematic today, and slowly is being rolled back. The number of Uzbeks forced to work the fields has fallen from one million a decade ago to potentially less than half that.

Listen to the latest episode of ESG Insider, the third installment in a series on "Hard Labor." Stream now on Soundcloud, Apple Podcasts or Spotify, and subscribe to catch future podcasts.

Much of the credit goes to western fashion companies that blacklisted Uzbek cotton, and adjusted their supply chains to buy the fiber from elsewhere. As a result, a swath of players including Levi Strauss & Co., Marks & Spencer Group PLC, Nike Inc., Kering SA's Gucci and Zara-owner Industria de Diseño Textil SA have achieved a rare advance in the battle against forced labor in consumer supply chains.

In recent months, the Uzbek government has further responded to the brands' demands by raising wages for voluntary cotton pickers, increasing mechanization of the harvest and tabling a bill that, for the first time, criminalizes forced labor. In recent years, the government also has stopped forcing schoolchildren to pick cotton — a major point of contention for western brands — and in March 2019 the U.S. Department of Labor removed Uzbek cotton from a list of products made with child labor.

'Uzbek cotton pledge'

"The first step was for us to acknowledge there was a problem," said Erkin Mukhitdinov, first deputy minister of labor, in an interview in Tashkent, the Uzbek capital. "Our hands may not be reaching the bottom of the issue, but we are trying."

Corporate pressure began to build in 2011, when more than 60 of the biggest names in the clothing business, including Walmart Inc., Burberry Group PLC, The Gap Inc. and The Walt Disney Co., joined a boycott known as the "Uzbek cotton pledge." Additional pressure was applied by the Cotton Campaign, an advocacy group of trade, labor and human rights organizations. Today, more than 300 companies have committed to not knowingly use Uzbek cotton.

"It's a case of tough love," said Patricia Jurewicz, founder and vice president of Responsible Sourcing Network, a project of California nonprofit As You Sow, which oversees the pledge. "For many years, they weren't listening to us or trying to improve things, but once we used the influence of brands and retailers, the government has come to the table."

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A laborer picks cotton during Uzbekistan's 2019 fall harvest.

Credit: S&P Global Market Intelligence

In October, members of Cotton Campaign, longtime critics of the Uzbek government, sat down in Washington, D.C., with Sardor Umurzakov, the Uzbek minister for investments and foreign trade. The minister presented his government's road map to fight forced labor and reform the cotton sector. At the end of the meeting, Umurzakov even set up a WhatsApp chat group with members of the Cotton Campaign.

"I realized we need to have direct contact," said Umurzakov, during an interview at his Tashkent office following the U.S. visit. "Without full eradication of forced labor we won't be able to attract foreign investment."

Uzbekistan has a population of 32 million and is the seventh-largest producer of raw cotton. The cotton motif is on plates, posters and pottery, and the national emblem features stems with open cotton bolls. Under pressure to create jobs for a fast-growing working-age population, the government wants the export boycott lifted because it considers forced labor in cotton to be no longer systematic or state-driven. Nonetheless, plenty of cases still exist, even if the prevalence is in dispute. The International Labor Organization estimates that 170,000 adults were forced to pick cotton in 2018 while the Uzbek-German Forum for Human Rights, a nonprofit group that also monitors the harvest, puts the 2018 estimate at 400,000 and possibly more. The Uzbek government doesn't dispute the ILO figure.

A dramatic shift

Whatever the true figure, there has been a dramatic shift from a decade ago, when forced labor cases each fall numbered one million. The boycott was effective "because major markets such as the U.S., Europe and Canada were closed to Uzbek cotton exports," said Nate Herman, senior vice president of supply chain of the American Apparel & Footwear Association, which represents more than 1,000 brands and was an early party to the boycott.

For fashion brands, the big challenge was traceability. How, for example, could Levi be sure that jeans made in a Bangladeshi clothing factory contained no Uzbek cotton? To do so, Levi had to trace the cotton from the factory to the fabric supplier, and from there to yarn spinners and the cotton brokers who purchase raw cotton from different sources. "It's not an exact science and we haven't perfected it," said Herman. "But it has had an impact."

Germany's adidas AG signed the pledge in 2011. In an email, a spokesman said Adidas now buys all its cotton via a consortium known as the Better Cotton Initiative, or BCI, which eschews all Uzbek fiber. Sweden's H & M Hennes & Mauritz AB says it prohibits suppliers from buying cotton on its behalf from Uzbekistan, and aims to get all its cotton via BCI by 2020. Britain's Tesco PLC, one of the first retailers to blacklist Uzbek cotton, requires suppliers to identify the source of raw cotton used in every Tesco product.

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Some investors have taken up the cudgel. In the summer of 2015, Ron Roman, a lecturer in corporate responsibility at San Jose State University in San Jose, Calif., became aware of forced labor in Uzbekistan's cotton sector and filed a shareholder proposal pressing Costco Wholesale Corp. to increase transparency in the cotton supply chain for its Kirkland Signature products. That November, Roman agreed to withdraw his proposal in exchange for Costco signing the cotton pledge.

Mercy Investment Services Inc. of Saint Louis, Mo., has been discussing the Uzbek forced-labor issue with Target Corp. for more than five years. The U.S. department store chain, one of America's biggest cotton importers, signed the pledge in 2011, and plans to get all its cotton for its "owned brand" and "national brand" products from sustainable sources by 2022.

"We ask for updates about any changes in their supply chain, the kind of audits they're doing [to identify Uzbek cotton] and what they've learned from these audits," said Pat Zerega, senior director of shareholder advocacy at Mercy, which focuses on socially responsible investing. "Target is such a big company, we think there's a reputational risk here that connects to financial risk."

Target refuses to buy cotton yarn, fabric or garments not just from Uzbekistan, but also from Bangladesh. The Asian country used to be the biggest importer of Uzbek cotton, buying 63% of its annual supply from Uzbekistan in 2006. But prodded partly by western brands' rejection of Uzbek cotton, Bangladesh's imports of Uzbek cotton fell to 21% in 2014, and have tumbled further since then.

Cotton exports shrink amid boycott

The effect on Uzbekistan has been severe. In 2010, with fewer than 60 signatories to the cotton pledge, Uzbekistan exported 2.5 million bales of cotton. Today, there are 312 signatories and exports have shrunk to fewer than 700,000 bales, a 70% drop, according to data compiled by the U.S. Department of Agriculture. "Twenty years ago, 50% of our exports was raw cotton, but now it's less than 1%," said Umurzakov, the foreign trade minister. "And from next year, we're stopping exports of raw cotton" because the country plans to make more cotton textiles at home.

That won't automatically reduce forced labor, of course, since cotton will continue to be produced. Many district officials still enforce annual production targets. Farmers, in turn, especially rely on forced-labor crews in the late fall, when it is colder, when cotton bolls are less plentiful on the shrubs, and when volunteer pickers are scarce. A late October visit to several farms, coupled with interviews with local cotton pickers and reports from field monitors, showed that forced labor remained a feature of the 2019 harvest.

In one field in Jizzakh, under the watchful eye of a foreman, a group of inmates from a local prison used bare hands to separate the cotton fiber from the bolls, then tossed the fluffy white clumps into large sacks on their backs. A few fields over, a group of well-toned young men, some in military fatigues, worked quietly but efficiently. Their supervisor said they were volunteers. But a woman from a local village, who was picking cotton of her own volition, suggested otherwise. "They're cadets from an academy in Tashkent," about 230 miles away, she said.

The men declined to be interviewed. However, according to the Uzbek-German Forum, or UGF, there were reports of cadets from the ministry of internal affairs in Tashkent sent to pick cotton in the region. In addition, in just the first two weeks of the 2019 harvest, Berlin-based UGF said it "received dozens of messages" from its monitors and other sources chronicling forced labor.

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Workers in Uzbekistan prepare to weigh a bag of freshly picked cotton.

Credit: S&P Global Market Intelligence

"Everything is the same; forced labor continues in Bagat," one resident from a district west of Tashkent wrote to UGF on Oct. 2. "If you do not believe it, go to the district department of hygiene and epidemiology. You will not find a single employee. Everyone left for the cotton fields with overnight stays."

Public-sector workers mobilized

On Sept. 27, an order signed by the acting minister of emergency situations and obtained by UGF required 2,100 emergency and fire services personnel to harvest cotton in Jizzakh district. Other reports of forced labor among public sector employees featured policemen, oil depot workers, bank clerks and pension fund employees. According to UGF, an independent radio station called Ozodlik on Sept. 4 published a letter from an employee of chemical company Farghonaazot, who complained that the factory managers "eat well but we have to go to Jizzakh, live in a cattle shed and eat prison food."

Umida Niyazova, director of UGF, a human-rights activist and now a resident of Germany, recalls that, when she was 11, her mother, a teacher, came home in tears because she had been ordered to pick cotton for a month. Her mother was distraught because she had three children to look after. "Thirty-three years have passed since then, and we still have this forced labor system," said Niyazova.

The ILO has monitored the Uzbek cotton harvest since 2015. On a recent morning, several members of its monitoring team drove to a cotton field in the Tashkent district. The field had been selected using randomly generated GPS coordinates, so that farmers could not be forewarned. After receiving consent from the farm supervisor, the monitors used a checklist to interview three cotton pickers and recorded their answers on a tablet computer. Questions included: Did you find work on picking cotton on your own or did someone call you? Do you know that according to the law no one has the right to force you to work?

"They are volunteers," concluded Shukrat Ganiev, a human-rights activist and one of the ILO monitors, at the end of the hour-long process. Ganiev and a colleague gave the cotton pickers caps and T-shirts bearing the slogan "Your work is your free choice." All told, the ILO says its 2019 team has done 900 interviews in about 300 cotton fields across Uzbekistan. The agency will obtain additional data via phone interviews of about 3,000 Uzbek citizens, and use the two to create a "representative sample" of the country's 2.5 million cotton pickers to estimate how many were forced.

Signs of progress

In 2018, the ILO's monitoring indicated that 7% of cotton workers, or 170,000 adults, were forced to work— a 48% decline from the 2017 figure. The ILO also found that wages had increased by up to 85% year over year. These statistics, it said, indicated that forced labor was more of a local practice than state imposed, and that progress had been substantial. "We are certainly not trying to paint a rosy picture," said Jonas Astrup, the ILO's chief technical adviser in Uzbekistan. "But we now have a government that wants to address this issue."

Not everyone agrees with the ILO's methodology or its estimates. In April 2019, UGF published its own measure of forced labor for the 2018 harvest, based on field monitoring, interviews with cotton pickers, government employees and media reports. It noted that on Nov. 12 — near the end of the harvest, with fewer voluntary pickers in the field — the government reported that 8,059 tons of cotton had been harvested across the country. A worker can pick anywhere from 10-20 kilos of cotton per day, "meaning that approximately 400,000-800,000 people picked cotton that day, a significant majority of whom were forced," UGF said.

Separately, in July 2018, professor of criminology Kristian Lasslett and another colleague at Ireland's Ulster University said various flaws in the ILO's approach "seriously undermine the credibility, accuracy and ethicality" of its 2017 harvest report." Said Astrup of the ILO: "We disagreed with their conclusion. Our methodology is approved by an independent review board and it takes into account any ethical concerns."

The Uzbek government hopes to further reduce forced labor by increasing mechanized harvesting in four of the country's 13 provinces from 10% today to 96% over the next three years. And instead of exporting cotton, it plans to use the fiber domestically, producing $7 billion-worth of finished textiles and clothes by 2025, up from $2 billion today, according to Umurzakov, the foreign trade minister.

In Tashkent a few weeks ago, Uzbekistan's president, Shavkat Mirziyoyev, instructed the governors of all 13 provinces to do more to ensure that local officials complied with the reforms. According to Umurzakov, who attended the meeting, the president said: "Instead of using forced labor, I'd prefer not to have the cotton. Let it stay in the fields."