VIETNAM NATIONAL UNIVERSITY

UNIVERSITY OF ECONOMICS AND BUSINESS

SCHOOL OF BUSINESS ADMINISTRATION
***

FINAL ASSIGNMENT
CORPORATE SOCIAL RESPONSIBILITY
BSA3040-E*

Student’s Name: Kieu Huyen Trang

Student’s ID: 20050370
Class QH2020E QTKD CLC4
Lecturer: Ph.D Tran Thi Hien
Ph.D Vu Thi Van Anh
Mas. Pham Nhat Linh
Mas. Nguyen Thu Thao

Ha Noi – 2023
 ACKNOWLEDGE
Firstly, I would like to convey my gratefulness to the University of Economics for
including Corporate Social Resposibility in the curriculum. I’d really like to give my
special thanks to the subject lecturers, Ms. Tran Thi Hien and Ms. Nguyen Thu Thao, in
particular, for teaching and imparting valuable knowledge to me over the course of this
class. I got quite a lot of additional knowledge, as well as an effective and serious study
spirit, throughout my time in the teacher's class. This will undoubtedly be useful
information I will be able to readily go forward in the future.

Corporate Social Responsibility is an interesting, practical, and helpful

subject. However, many surprises remain because to inadequate understanding and ability
to comprehend reality. Despite my best efforts, it is impossible to prevent errors and
inconsistencies in many areas. I'm hoping you'll look at my work and make ideas to help
me improve it.

Finally, I wish you good health, prosperity, and happiness. Thank you very much!
 TABLE OF CONTENTS

EXECUTIVE SUMMARY....................................................................................................2

INTRODUCTION................................................................................................................4

FINDINGS...........................................................................................................................6

DISCUSSION......................................................................................................................8

CONCLUSION..................................................................................................................13

RECOMMENDATIONS....................................................................................................14
 FINAL ASSIGNMENT
CORPORATE SOCIAL RESPONSIBILITY - TOPIC 1
IN TERM OF LABOUR’S PRACTICES

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 EXECUTIVE SUMMARY
I. Topic area

In this research article, we will delve into Zara's CSR activities and focus on the
crucial issue of labor that the firm is facing. We will explore specific issues related to
wages, working hours, and working conditions of the employees, along with proposed
solutions and benefits to improve the situation.

II. The purpose of essay

- Analyzing Zara’s CSR in terms of labor’s practice.
- Providing approaches to improve Zara’s lobor right.
III. Theoretical backround

ISO 26000 (International Organization for Standardization) will be used theoretical

foundation throughout this essay: Labor’s practices and human rights.

IV. Material & Methodology

The principal technique of inquiry is a content analysis – the article draws on

existing research on the topics of CSR also based on Inditex's annual report.

V. Layout

The main content consist of 6 parts:

 Introduction
 Findings
 Discussion
 Conclusion
 Recommendation
 References

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VI. Summarise recommendation
 Enhance communication and transparency
 Ensure fair wages
 Improve working conditions
 Train and develop employees
 Establish monitoring and evaluation mechanisms
 Collaborate with stakeholders
 Build a socially responsible company culture

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 INTRODUCTION
I. Overview about fast-fashion industry’s CSR
The fast-fashion industry is known for the production and consumption of
affordable clothing at a rapid pace, but it has caused significant negative impacts on the
environment and society. While some brands have implemented CSR initiatives, there is
still a need for further improvements in the fast-fashion industry to minimize negative
effects and drive sustainable change.
II. About Zara
a. Overview
Zara is a Spanish fast-fashion brand that focuses on design, production,
distribution, and sales through its extensive retail network. It offers a wide range of
products including clothing,
accessories, shoes... Founded in 1975
by Amancio Ortega and Rosalía Mera,
Zara is the flagship brand of the Inditex
group, the world's largest apparel
retailer. With a strong global presence,
Zara operates in 202 markets through its
online platform and has over 7,000
stores in 96 markets, employing approximately 174,000 workers worldwide.
b. History
Zara, founded by Amancio Ortega in 1975 in A Coruña, Spain. By the early 2000s,
Zara had stores in various countries worldwide, including Japan, Singapore, Russia, and
China. In 2010, Zara launched its online boutique, expanding its reach further. Today,
Zara is recognized as a leading global brand, ranking 24th on Interbrand's list of best
global brands in 2017.
c. Vision and mission
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 Vision: Contribute to the sustainable development of the society and
environment in which we are interacting.
 Mission: "Delivering what customers need, faster than any competitor", ZARA
is popularly known as a mid-range but very trendy fashion brand, capable of
delivering the latest trends at the fastest pace to customers aroundthe world at
very affordable prices.

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 FINDINGS
I. Reason for writing

Fast-fashion brands need to prioritize CSR to increase customer trust, comply with
laws and social standards, protect the environment, foster good community relationships,
and build brand reputation. CSR enhances customer attraction and retention, mitigates
legal issues, reduces environmental impact, and establishes a positive image and
community engagement. That's why I choose this topic.

II. Major problem: Labour’s practice of Zara

1. Low wages:

In 2011, Zara faced allegations from a group of workers in Spain regarding the
payment of extremely low wages. These workers received approximately 3.5 euros per
hour, which fell below the minimum wage established by Spanish labor regulations. The
revelation triggered substantial controversy and led to public outcry, along with mounting
pressure on the company from both the general public and social activist organizations.

2. Long working hours:

In 2014, Zara received criticism for violating labor regulations by demanding that
store employees in Turkey work over 65 hours per week, surpassing the legal limits. This
excessive workload placed immense pressure on the employees, raising concerns about
their well-being and fairness in the workplace.

3. Poor working conditions:

In 2017, an investigation at a Zara garment factory in Bangladesh uncovered that

workers were subjected to poor working conditions, including unsafe environments and a
lack of health protection measures. The workers had to work in unclean and poorly
ventilated settings, posing risks to their health and safety.

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 4. Exploitation of workers:

In 2019, a Zara subcontracted factory in Brazil underwent an investigation that

exposed worker exploitation and unfair wage practices. The investigation revealed that
employees were subjected to long working hours while receiving meager compensation.
Moreover, the workers were not adequately compensated for overtime work, which is a
legal requirement. This revelation shed light on the labor rights violations and
exploitation within Zara's supply chain, raising concerns about the company's
commitment to fair and ethical labor practices.

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 DISCUSSION
I. Summarise the major problem

One of the primary challenges that Zara is encountering is the sustainability and
reputation of the company within the fashion industry. While Zara has implemented
certain CSR initiatives to improve its business environment and social impact, there are
still criticisms regarding the use of unfair labor practices:

 Low wages
 Long working hours
 Poor working conditions
 Exploitation of workers
II. Alrernative solutions, evaluate the advantages and disadvantages

Low wages
Solutions 1. Increase minimum wage: Zara can voluntarily increase the
wages of its workers to ensure they receive a fair and livable
income. This can be done by revising the company's wage
policies and aligning them with industry standards and living
wage benchmarks.
2. Implement a living wage policy: Zara can establish a living
wage policy that takes into account the cost of living in
different regions where the company operates. This would
ensure that workers' wages are sufficient to cover their basic
needs and support a decent standard of living.
Advantages 1. Improved worker morale and productivity: Offering fair wages
can boost employee morale, job satisfaction, and motivation.
Workers who feel adequately compensated are likely to be

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 more engaged and productive, leading to higher quality output
and customer satisfaction.
2. Enhanced brand reputation: Taking a proactive stance on fair
wages demonstrates Zara's commitment to social
responsibility. This can enhance the company's reputation,
attract socially conscious consumers, and potentially result in
increased brand loyalty and positive word-of-mouth.
Disadvantages 1. Increased labor costs: Raising wages may result in higher
labor costs for Zara. This could impact the company's
profitability, especially if not accompanied by corresponding
adjustments in pricing or operational efficiencies.
2. Competitive disadvantage: If Zara raises wages while its
competitors do not, it may face a competitive disadvantage in
terms of pricing. This could potentially lead to a loss of market
share if consumers prioritize lower-priced alternatives.
Long working hours
Solutions 1. Implement working hour limits policy: Zara can establish clear
policies on working hour limits and ensure that employees are
not pressured to work excessive hours. This can ensure a
balance between work and personal life for the employees.
2. Enhance time management and task allocation: Zara can
improve time management and task allocation for better
efficiency. This helps ensure that employees can complete their
work within reasonable hours and avoid having to work
overtime.

Advantages 1. Improved health and well-being: Limiting working hours

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 allows employees to have time for rest and recovery. This
improves their health and enhances labor productivity during
working hours.
2. Increased employee satisfaction and motivation: Employees
having time for personal life and engaging in extracurricular
activities lead to higher job satisfaction and motivation. This
improves work performance and employee loyalty.
Disadvantages 1. Impact on business schedules: Limiting working hours may
have an impact on Zara's business schedules. If there are not
enough staff members to ensure opening hours or serve
customers, it may result in revenue loss and affect the
company's reputation.
2. Requires careful time management and task allocation: To
implement working hour limits, Zara needs to have effective
time management and task allocation. This requires special
attention to ensure fairness and reasonableness in task
assignments.
Poor working conditions
Solutions 1. Improve workplace safety and health standards: Zara can
invest in creating a safe and healthy working environment by
implementing proper safety measures, providing necessary
equipment and training, and regularly conducting inspections
and audits.
2. Enhance employee welfare programs: Zara can introduce
employee welfare programs such as healthcare benefits,
wellness initiatives, and work-life balance policies to address
poor working conditions and promote the well-being of
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 employees
Advantages 1. Improved employee morale and productivity: Creating better
working conditions can boost employee morale, job
satisfaction, and loyalty. This, in turn, enhances productivity
and overall performance.
2. Enhanced brand reputation: Demonstrating a commitment to
providing good working conditions can positively impact
Zara's brand reputation, attracting both customers and potential
employees who value ethical and responsible practices.
Disadvantages 1. Increased costs: Implementing improvements in working
conditions may require financial investments in infrastructure,
equipment, training, and employee benefits. This can lead to
increased operational costs for the company.
2. Potential resistance to change: Some employees or
stakeholders may resist changes to working conditions,
especially if it disrupts established practices or requires
additional efforts. Managing resistance and ensuring smooth
implementation can be challenging.
Exploitation of workers
Solutions 1. Implement fair labor practices: Zara should establish and
enforce policies that ensure fair treatment of workers, including
fair wages, reasonable working hours, and adherence to labor
laws and regulations.
2. Strengthen supply chain monitoring: Zara can implement
robust monitoring systems to track and audit their supply chain,
ensuring that subcontractors and suppliers adhere to ethical

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 labor practices and do not exploit workers.
Advantages 1. Enhanced brand reputation: Taking steps to address worker
exploitation demonstrates a commitment to ethical business
practices, which can enhance Zara's brand reputation and
attract socially conscious consumers.
2. Improved employee loyalty and productivity: Creating a fair
and safe working environment fosters employee loyalty and
motivation. When workers are treated fairly and respectfully,
they are more likely to be productive and engaged in their
work.
Disadvantages 1. Increased costs: Implementing fair labor practices and supply
chain monitoring may involve additional costs for Zara. This
can include higher wages, improved working conditions, and
investments in supply chain audits. These increased costs can
impact the company's profitability.
2. Supply chain complexity: Monitoring and ensuring ethical
labor practices throughout the supply chain can be challenging,
especially in complex global supply networks. It requires
significant resources and coordination to identify and address
potential instances of worker exploitation.

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 CONCLUSION
In conclusion, the research on corporate social responsibility and the issue of labor
in Zara has highlighted important and necessary insights to understand and reshape the
company's direction. The issues of low wages, long working hours, poor working
conditions, and worker exploitation have been thoroughly analyzed. Proposed solutions
such as fair wage increases, improvements in working conditions, and enhanced
compliance with legal regulations have been put forward. However, it is important to
note that implementing CSR requires ongoing commitment and effort from Zara to
ensure sustainability and generate positive impact on both the community and its
workforce.

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 RECOMMENDATIONS
As a middle-manager, here are some concise proposals to address the issues:
 Increase transparency and communication channels to address concerns and foster
collaboration.
 Review and adjust the wage structure to ensure fair compensation.
 Implement work-life balance policies, such as flexible working hours and rest
breaks.
 Invest in training and skill development opportunities for employees.
 Strengthen health and safety measures in the workplace.
 Collaborate with stakeholders to share best practices and improve labor conditions.
 Conduct regular audits to ensure compliance with labor standards.
Implementing these proposals will demonstrate a commitment to responsible labor
practices and create a positive impact on the workforce and the company's reputation.

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 REFERENCES
1. Zara profile
Zara profile & history
2. 'Pleas in Zara apparel': Why fashion labels can't fix labour exploitation
Why fashion labels can't fix labour exploitation
3. Zara Workers’ Face Violations In Supply Chains
Zara Workers’ Face Violations In Supply Chains
4. Zara owner Inditex faces fines in Brazil over poor working conditions claim
Zara owner Inditex faces fines in Brazil over poor working conditions claim
5. The real story behind those desperate notes that Zara workers left in clothes
The real story behind those desperate notes that Zara workers left in clothes
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