Project Name: RugMark Foundation USA
Challenge: Child labor in handwoven rug industry.
Solution: Changing the market dynamics so that there is no demand for child labor.
Ten years ago, RugMark USA was established to eradicate child labor in the handwoven rug industry. Using a unique "certification" method, RugMark USA has created a model that generates income to finance its programs for children and raises awareness among consumers about the prevalence of child labor. Nina Smith, RugMark USA's executive director, believes the RugMark model could be applied to other industries, including Brazil's shoe industry, India's silk weaving and embroidery sectors and the cocoa industry in West Africa. We talked with Smith about why the RugMark model works and what big challenges the organization is facing.
NOW: Why was RugMark established?
Smith: RugMark was created to address the problem of child labor which affects 1 in 7 children around the world and 300,000 children in the carpet industry. The problem has gotten better because of people like Kailash and since RugMark has been around...a strong legal framework has been put in place. When RugMark was founded in South Asia, the carpet industry was one of the worst perpetuators of child labor...so a decision was made to focus there.
NOW: What is the history behind RugMark?
Smith: It was founded by Kailash Satyarthi and a coalition of NGOS and businesses. At the time of RugMark's founding, Kailash had been rescuing and rehabilitating children [who were involved in child labor]. He realized that you could rescue 100 kids today and tomorrow 100 kids would take their place. So he came up with the idea to change the marketplace. RugMark launched in India and Germany in 1994 and then expanded to include a total of six national initiatives.
NOW: Where does RugMark work?
Smith: India, Nepal, Pakistan - those are the primary source countries for rugs and where the child labor problem is concentrated. About 50 percent of handmade rugs in the United States come from those countries.
NOW: Describe RugMark's strategy to change the use of child labor in the industry.
Smith: Our goal is to change the market dynamics so that there is no longer a demand for child labor. If we can educate the marketplace - consumers, interior designers, architects, importers, retailers - about what they can do then ultimately the message is sent to the manufacturers that child labor won't be tolerated - in essence eliminating the demand.
The idea has three components: First, you have to raise awareness and educate people about the problem of child labor and to look for our independently certified child-labor-free rugs. On the ground in South Asia we have an inspection and monitoring system. Companies whose rugs receive the RugMark label agree to random, surprise inspections at their factories or village-based looms.
The third element is "Rescue and Rehabilitation." When a child is identified, they're removed [from the workplace.] They're offered non-formal and formal education and/or vocational training and job placement. RugMark supports them until they reach grade 10 or the age of 18.
We've also launched child labor prevention programs that identify children of weavers that are at risk of entering the workforce. They are offered school sponsorship. And we've set up daycare and early childhood education programs for children of weavers, which increases children's chances of staying in school rather than entering the work force before legal working age.
If we require that children don't work, it's crucial we offer alternatives like these.
NOW: How do parents of these children react to RugMark's intervention?
Smith: Typically, people accept the option for their children to go to school. The important thing to realize is that NO PARENT wants their child to work. And it's a big myth that families are better off when children work. That's generally not the case. In the carpet industry, children are often not paid - they're considered "apprentices" and are working as bonded laborers. There's a predominance of bonded labor in the carpet industry. One child we helped worked for three years and over that time earned the equivalent of $45. This is tantamount to slavery. When children are educated, their entire family is better off down the road and the cycle of poverty and child labor is broken.
NOW: What needs to happen on the policy side to end child labor?
Smith: There are already good laws and international conventions that most countries have ratified. In fact, all the source countries where RugMark operates have laws against slavery and child labor. The U.S. also has good laws in place against importing goods made with slave labor.
The problem is with enforcement.
That's why we focus on interrupting the demand. The philosophy is that it's money that talks. If a big buyer from America says we love your rugs but are they woven by adults, the manufacturer listens.
NOW: How do you raise awareness about the child labor problem?
Smith: We have a public awareness campaign called "The Most Beautiful Rug," consisting of public service ads, media stories, point of sale outreach and an online component at www.rugmark.org. We're trying to inculcate the marketplace with these messages: "When a rug is made by child labor, it's ugly no matter what it looks like" and "The most beautiful rug is one made without child labor"
Most of our energy is going into educating the market here: consumers, interior designers, architects, salespeople, major retailers and individual stores.
Stores that sell RugMark rugs receive materials to educate salespeople and consumers. Our retailers report that in 19 percent of sales, talking about RugMark is helpful to closing the sale. Evidence of [the market appeal of certified rugs] is that the overall rug market is flat, while sales of RugMark rugs are up almost 30 percent from 2005 to 2006.
NOW: What is the financial outlook for RugMark?
Smith: In the long run, when we have enough certified rugs circulating we will be almost self-sustaining. RugMark USA collects a license fee and approximately 60 percent of what we collect goes back to the source country for schools and rehabilitation. The rest of the funding stays with us to build a child labor-free marketplace.
We've mapped out a path to financial self-sustainability. We have to because we aren't going to be able to attract grant money forever. The more we build the market the more fees we generate, the more money we have going back to the source countries for children's education.
NOW: What trends in the marketplace help RugMark?
Smith: The time is right [for RugMark]. There's the growing influence of the LOHAS market. LOHAS stands for Lifestyles of Health And Sustainability. The market is estimated at 63 million U.S. consumers. The Wall Street Journal called it the "largest market you've never heard of." People buy with their values. A lot of data shows that companies aligned with social causes experience more brand loyalty than others.
The green building sector grew by 30 percent last year, mirroring our own experience. Industry publications, such as Interior Design have identified that their readers want more information about sustainable products. Eighty percent of designers working at the top firms say they need more information about green products. Dwell magazine, one of our media sponsors, focuses exclusively on sustainable homes and has a growing following. So we can position ourselves to take advantage of these trends.
NOW: What do you see as RugMark's challenges?
Smith: Experiencing a real market jump to reach our social change tipping point. We need to get some major retailers - like Macy's Inc, Ikea, Pier One, Ethan Allen - on board. If they don't do it they're perpetuating [the child labor] problem.
The more we can drive this on the market side the more we can reach the average consumer, not just the high-end consumer.
What percentage of the market do we need to declare victory? When will we reach the social change tipping point? We believe that within the next decade and certainly within our lifetimes we can say we did it.