Label STEP was established in 1995 by the Berne Declaration, Bread for all, Caritas Switzerland, Swiss Catholic Lenten Fund and Swissaid together with IGOT (the Swiss Industry Association for Clean Oriental Carpet Trade) as an independent foundation to promote fair trading and working conditions in the handmade carpet industry.

In 2007, Label STEP was merged with the Max Havelaar Foundation (Switzerland) (www.maxhavelaar.ch), the national labelling initiative of Fairtrade International (FLO).

The Label STEP philosophy is based on the principles of Corporate Social Responsibility. It follows a company label rather than a product certification approach. Label STEP is managed separately and branded distinctly from the Fairtrade International  (FLO) Label. Its purpose however is the same, namely to promote fair trade. Label STEP is a full member of Swiss Fair Trade, the umbrella organization of the fair trade organizations in Switzerland (www.swissfairtrade.ch).

Label STEP’s mission is to

1. Improve working and living conditions of weavers and workers in the handmade carpet industry
2. Empower weavers and workers
3. Foster environmentally sound carpet production 
4. Support sustainable development of the handmade carpet industry and enhance the market prospects of this product.

Label STEP attributes its label to all importing and retailing companies that commit to the Label STEP Standard. All handmade carpets included in the range of products of a Label STEP license holder are subject to the requirements of the Label STEP Standard. The requirements are laid down in this Standard.

Label STEP monitors the working conditions of weavers and workers and verifies the compliance with the Standard requirements throughout all stages of production and of all suppliers related to the Label STEP license holders. The purpose of monitoring and verification is to

• check where handmade carpets come from and under what conditions they have been produced
• identify gaps vis-à-vis the Label STEP Standard
• advise stakeholders how to address these gaps and monitor the implementation of corrective measures
• inform license holders and the actors in their supply chain about the need for improvement and their responsibility for inducing and motivating change.

As a craft, carpet weaving requires only little equipment and technology. A (homemade) loom, wool, the design and the know-how of the weaver are sufficient. Due to this, carpet weaving is not limited to the formal sector and is often prevalent in remote rural zones, where there are limited cash income opportunities. Weaving is very often done in homework by the poorest population of a country. Carpet weaving provides almost always an additional income to agriculture. In some countries, people work on orders placed by big exporters or contractors, in others, where carpet weaving has a long tradition, weavers also produce carpets and sell them afterwards at bazaars or to collectors.

Label STEP is currently active through local STEP offices in Afghanistan, Kirgizstan, India, Iran, Morocco, Nepal and Pakistan, and also works in Turkey; in these countries more than 10 million of persons are involved in the production of handmade carpets. For Nepal and Afghanistan handmade carpets are the main export items.

Label STEP and its license holders through the Standard want to achieve the following specific objectives:

1. Working conditions provide the workers and weavers with the necessary health and safety facilities to work in an enabling environment and to create a high quality product.
2. Living wages allow the weavers, workers and their families to meet basic needs and have a life in dignity. Decent wages contribute to the sustainability of the industry.  
3. Children's rights are respected. Companies contribute to enable children found to be performing child labour to receive education according to their age.
4. All employees enjoy equal terms of hiring, remuneration, training, promotion, pension, ending of contracts and any other work related issues.
5. Workers have the right to form and/or to join trade unions of their own choosing and to bargain collectively. This implies the promotion of the organization of weavers and building their capacity to negotiate working conditions and monitor compliance on their own.
6. Workers are employed of their own free will.
7. Management and workers treat each other with mutual respect. The worker is the base of success for a company.
8. Working hours allow workers to relax and rest from work.
9. Negative environmental impacts of the manufacturing of handmade carpets are identified and minimized.

Carpet weaving takes place mostly in cottage industry. Due to the high number and diversity of actors involved and the informality and complexity of the carpet industry, Label STEP is not certifying operators on the manufacturing side but grants the label to the licence holders at the end of the supply chain – importers and retailers. The license holders are thus the key actors in the system, as they are ultimately responsible for enabling verification and implementation of corrective measures along their supply chains. In case of continued non-cooperation, Label STEP can withdraw the license from a license holder.

Verification is carried out throughout the supply chain, from retailer to importer, exporter, contractor and subcontractor to the weavers and workers. The pivotal point for monitoring and verification in the manufacturing process are the exporters.

Label STEP distinguishes four categories of workplaces: home based production, loom shed / workshop (up to 40 workers), manufacturing (more than 40 workers) and factory. 

An important focus lies on wages. The local Label STEP coordinators and auditors calculate the living wage according to the formula of the ETI (Ethical Trading Initiative - www.ethicaltrade.org) in every country for urban and rural regions in order to have a clear indication about the goal to reach. In the verification reports the governmental minimum wage, the market rate, the wage paid and the living wage are calculated down to 8 hours work and noted in order to be easily compared. The aim is to raise the awareness of Label STEP license holders, exporters and contractors about the need to pay decent wages and to consequently push them to pay living wages which include a discretionary income to all weavers and workers.

In addition, STEP focuses on working conditions, particularly on health and safety, and the fundamental principles and rights at work as defined by the ILO: Prohibition of child labour; elimination of discrimination; freedom of association and the right to collective bargaining; and elimination of forced and bonded labour.

The Participatory Verification & Monitoring Approach (PVM) developed by Label STEP is a unique and innovative way of enabling weavers and workers to monitor their working conditions and compliance with standard requirements by themselves. PVM is being applied in remote rural areas in Pakistan, Afghanistan and India. Through training and organisation weavers and workers are enabled to know and defend their rights on their own.

Label STEP also works towards commitments from the operators in the supply chain (contractors, exporters, importers, licensees) to Corporate Social Responsibility principles (CSR), by facilitating the dialogue between all stakeholders of the industry, including the local government.

The Label STEP Standard is composed of 10 specific standards, each defining requirements against which all actors in the supply chain will be monitored and audited to verify compliance.

Each specific standard begins with an introductory statement that describes the intent. Then the standard itself is presented and further guidance for interpretation is provided. It concludes with the sources the specific standard refers to.

For monitoring and verification, the standards are further broken down into compliance criteria in order to translate standard requirements into verifiable control points. These points are evaluated during the verification process to determine compliance with the Standard. Nonconformity with a compliance criterion is a non-conformity with the respective standard requirement and gives rise to corrective action.

Label STEP standards follow relevant international standards, particularly those of the International Labour Organization (ILO). ILO standards are set in Conventions, the core ILO Conventions having the force of international law.

Label STEP expects the actors in the supply chain to respect national law, unless it conflicts with internationally recognized standards, in which case the higher standards prevail.

The compliance criteria specifying the standards are based on Label STEP's experience in the field of verifying and monitoring the production of handmade carpets since 1995, in all major handmade carpet producing countries.

The Standard applies to:

1. All countries producing handmade carpets worldwide
2. All stages of production: 
   - Carding and spinning of wool 
   - Dyeing of wool 
   - Loom preparation 
   - Weaving, by far the most labour intensive of all processes mentioned 
   - Felting and stitching
   - End washing and clipping 
   - Finishing.
3. All four categories of workplaces as defined by Label STEP:
   a) Home based production
   b) Loom shed / workshop (up to 40 workers)
   c) Manufacturing plant (more than 40 workers)
   d) Factory

The purpose of the Standard is to improve working and living conditions of weavers and workers in the handmade carpet industry through the implementation of the specific standards and compliance criteria. License holders commit their company to adopt and implement these standards and to undertake the necessary steps to achieve real improvements in their supply chain. The standards are translated into compliance criteria used as reference in the monitoring and verification process. Both, standards and compliance criteria take into account the circumstances of differing realities in the countries and at the workplaces.

Label STEP together with the license holders works systematically towards the full implementation of the requirements as defined in standards and Compliance Criteria. There are minimum requirements which have to be fulfilled at any time and at any place, such as no abusive child labour and other core labour standards. Non-compliance with minimum criteria calls for immediate remedial action. There are process-related requirements, which need a certain time to be implemented and for which usually a timeframe is agreed between Label STEP and its partners within the supply chain (example: health and safety requirements). Finally, there are criteria set as recommendations to enhance best practice, such as to wear dust masks when weaving.

If non-compliance with specific criteria is not a shortcoming at only one workplace but appears to be a structural problem, Label STEP raises the issue with all stakeholders to find a common solution. This may give rise to specific projects to address the problem, for instance in the field of health and hygiene, environmentally sound production, or skill training and other industry related issues.

Special attention is given to abusive child labour. Is this the case, the license holder is requested to urge his suppliers to immediately stop employing children, and to make sure that they are safely brought back to their parents and attend school. Local authorities are informed and civil organisations working in this field involved. In case of continued child labour the license holder will loose the license.

In regular visits, local Label STEP representatives verify and monitor the compliance of the handmade carpet production with the Standard. There is a continuous dialogue between STEP representatives and the partners in the license holder's supply chain. Non-compliance with criteria leads to corrective action plans. Achievements are checked again during the following visits and Label STEP as well as licence holders informed about progress through regular reports.

The local Label STEP representatives play a key role as auditors in the verification and monitoring process. Duties include providing advise to license holders, exporters, contractors, weavers and workers on how to improve compliance, and enhancing the full implementation of the Standard. Furthermore, Label STEP representatives through well designed projects contribute to the industry development and help the producers of handmade carpets to gradually raise the quality and sustainability of their work and to strengthen their commitment to Corporate Social Responsibility.

Label STEP promotes the handmade carpet as a creative piece of art with high social, economic and cultural implications and as a precious and modern decoration object. The Standard is a means for enhancing the improvement of working and living conditions of the weakest participants: the weavers and workers.

For the definition of technical terms see appendix.

This version of the STEP Standard for the Handmade Carpet Industry comes into effect January 1st, 2012; it supersedes all previous versions.

Copyright © 2011 Label STEP, Max Havelaar Foundation (Switzerland). All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or otherwise without the prior written permission from the copyright holder.

§ 1
Intent: Protection of workers' health and safety.
Standard: Working conditions are safe and hygienic in order not to harm the health of the workers.
Guidance: Sufficient space, light, drinking water, ventilation and emergency facilities must be available, adequate to the type of work.
Appropriate measures are taken to prevent injuries. In defined cases, first aid kits must be available.
Sources: ILO Conventions 155 on Occupational Health and Safety and 177 on Home Work; ILO Recommendations 164, 171 and 184.Work; 

§ 2
Intent: Payment of living wage and protection of agreed wages.
Standard: Wages paid for regular work or overtime work meet or exceed legal minimum wages and/or market rates, whichever is higher. Terms of payment and deductions must be agreed upon in advance, preferably in writing.
Guidance: The local living wage, calculated on the basis of the ETI (Ethical Trading Initiative) formula, is set as a goal.
The terms of agreement define clear wages. If piece rates are agreed (for instance by knot; by square foot, square inch or square meter; per kaghaz, raj or piece rate or any other locally used measure) these rates allow a worker to produce the amount of pieces needed to reach the wage agreed beforehand during a normal working day of 8 hours at average productivity.
Payment is made timely and in a manner acceptable to both employer and worker. Advance payments do not entail interest.
Sources: ILO Conventions 131 on Minimum Wage Fixing and 177 on Home Work; ILO Recommendations 85, 135 and 184.

§ 3
Intent: Prohibition of child labour, as defined by the ILO.
Standard: Child labour as defined by the ILO and United Nations is forbidden. Stricter national legislation prevails. Working conditions resembling slavery or harmful to children's health or jeopardising their education are forbidden.
Guidance: The term “child labour” is defined as work that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development.
Sources: ILO Conventions 138 on Minimum Age, 177 on Home Work and 182 on Worst Forms of Child Labour; ILO Recommendations 146, 184 and 190.

§ 4
Intent: No forms of discrimination.
Standard: Discrimination of any kind is forbidden. Any distinction, exclusion or preference made on the basis of race or caste, colour, religion, gender, age, sexual orientation, national origin, political affiliation, social origin or union membership, and which may affect equality of opportunities or treatment at the workplace, is forbidden.
Guidance: All workers shall have equal rights in terms of hiring, remuneration, training, promotion, retirement, ending of contracts or in any other aspect of employment.
Sources: ILO Conventions 100 on Equal Remuneration, 111 on Discrimination, 143 on Migrant Workers, 158 on Termination of Employment and 177 on Home Work; ILO Recommendation 143.

§ 5
Intent: Respecting freedom of association and the right to collective bargaining.
Standard: Workers have the right to establish their own organization and/or to join trade unions or other organizations of their own choosing. Companies facilitate collective bargaining with trade unions or other forms of independently organized worker representations.
Guidance: The employer has to enter into collective bargaining if legal requirements are fulfilled, for instance, if a given ratio of trade union member is achieved. The employer meets on a regular basis with democratically elected and independently organized worker representatives to discuss issues raised by the workforce and to negotiate agreement, particularly on improving working conditions.
Sources: ILO Conventions 87 on Freedom of Association, 98 on Right to Organise and Collective Bargaining, 135 on Workers' Representatives, 154 on Collective Bargaining and 177 on Home Work.

§ 6
Intent: No forced or bonded labour.
Standard: Forced or bonded labour is forbidden. Workers are employed of their own free will. They are aware of their rights and obligations towards the employer.
Guidance: All workers are on service on a voluntary basis. They shall be free to leave at any time, after due notice as stated by law or in the contract. Written contracts are strongly recommended.
Sources: ILO Conventions 29 on Forced Labour and 105 on Abolition of Forced Labour.

§ 7
Intent: No harsh or inhumane treatment, no sexual harrassment.
Standard: The use of corporal punishment, mental or physical coercion and verbal or physical (sexual) abuse is forbidden. Disciplinary measures are well defined and communicated to the workers.
Guidance: Well defined measures means that the offences and the respective sanctions are clearly stated and that no other measures are in use than the ones defined in advance. Deductions from wages for disciplinary measures are not permitted. Communication to workers includes but is not limited to announcing the disciplinary measures in writing and in an understandable form (words and/or pictograms).
Sources: ILO Conventions 111 on Discrimination and 29 on Forced Labour.

§ 8
Intent: Limiting hours of work and application of weekly rest.
Standard: Working hours and overtime must comply with national law and industry standards. A worker is entitled to have at least one full free day every seven days.
Guidance: The maximum working hours per week are as defined by national law but shall not exceed 48 hours on a regular basis. Overtime is applicable to time-bound contracts (not to piece rate work). It shall not exceed 12 hours per week and cannot be required on a regular basis.
Sources: ILO Conventions 1 on Hours of Work and 14 on Weekly Rest.

§ 9
Intent: Identification of environmental risks and minimizing their impact.
Standard: In larger dyeing and end washing units an environmental improvement plan must be in place to ensure continuous progress towards an ecologically sound production.
Guidance: Ecologically sound production includes in particular the reduction of use of water and energy, treatment of waste water, air filters, reduction of hazardous ingredients and careful disposal of waste accruing in the production. In all departments that have an environmental impact the responsible persons are made aware of the environmental risks by the Label STEP auditor. Problems and possible solutions are discussed along the whole supply chain as well as with the local authorities.

§ 10
Intent: Acceptance of STEP audit : Transparency and access to information.
Standards: The stakeholders of Label STEP commit themselves to facilitate the access to all information necessary to carry out the audits conducted by Label STEP auditors.
Guidance: Carpet dealers are obliged to provide Label STEP with a full account of all their purchases and supply chains, to allow inspections to take place and, whenever necessary, to initiate measures for improvement. Auditors can meet with the workers free and without interference.
Sources: Contract with license holders and Label STEP Standard.

License holders / Licensee
Importing and retailing companies who are allowed to use the label STEP. They must commit to the Code of Conduct and provide the information relevant for verification. All handmade carpets included in the range of products of a Label STEP licensee are subject to fair trade requirements.

Exporters
They are the link between the producing countries and the buyers of the carpets in the consuming countries. They can be local or international companies. They place orders with local contractors and then often act as investors, providing the raw material, the design and prefinancing; or they buy the finished product from producers (loom sheds, manufacturers) or collectors. Thanks to their direct contact with the production, they are of pivotal importance in the verification and monitoring process.

Contractors
They are the intermediaries between the exporters and the subcontractors or weavers. They may act only as agents (in cases where the exporter is the investor) or as entrepreneurs themselves (when the exporter is merely a trader, without investment in the production). If a contractor-agent works regularly with an exporter or is even his employee, he has a double role: at one hand he acts as a contractor, distributing the raw material and making the payments to the sub-contractors or the weavers; on the other hand he acts as a supervisor controlling the quality and progress of the work. If the contractor is the entrepreneur/investor himself, he buys and distributes the raw material and is often the owner of workshops, a manufacture or loom sheds; or he contracts with home workers.

Workers
The term is used here in a broad sense: It refers to all employees engaged in the different activities in the making of the carpet, such as dyeing, washing and finishing (not weaving with the exception of weaving in factories when partly using machines). They always work at the facility (factory or manufacture/workshop) of their employer, in contrast to the home workers who work in their homes. They may be paid on wage or piece rate basis. The term worker also includes personnel working in administration or general services, but NOT management (middle and senior).

Weavers and Home workers
They do the hand weaving or hand felting, either in their homes as home worker or in a loom shed or manufacture. They are always paid on piece rate. In the same group are included workers who do the hand spinning or/and hand carding of wool and any other activity which is done on a home basis.

Home Based Production / Homework
In the carpet industry, a sector characteristic for its informality, homework is very widely used for weaving and felting of carpets. Home workers in this sense are persons, mostly women, who work in their home or in other homes in the same village. Several weavers/home workers may work in one house, being mostly family members or close relatives. Either they work on orders placed by a contractor or exporter and are paid by the contractor/exporter or the loom holder on piece rate basis. Or – in places where carpet  production has a long tradition – they produce the carpets on their own and sell them at bazaars or to collectors.

Loom shed / Workshop
Small production unit with about 3 to 40 workers, with a very basic infrastructure and informal organisation. At loom sheds only spinning, balling and weaving is done. A workshop can include several stages of the carpet production: assorting wool, carding, spinning, balling, felt production, dyeing, weaving, washing, clipping and finishing.

Manufacturing plants
Larger production unit, mainly located in more densely populated areas or in towns, with 40 or more workers. Infrastructure and organisation is better than in a loom shed, but still quite simple and informal. Manufacturing can include all stages of the carpet production.

Factory
Centrally located large production unit, with more sophisticated equipment and partly using machines but still with a high content of manual work (handtuft, handloom). Industrial infrastructure and formal organisation. Factories usually include all stages of the carpet production and all employees work at the facility.

Wage paid
The wage paid is the net wage handed over to the weaver/home worker or the worker for a certain amount of carpets produced (informal sector) or the net wage paid to a worker (formal sector). Fringe benefits, bonuses, social security contributions, taxes, extra payments to loom holder weavers using their personal looms etc. are not included in the wage paid. The wage paid is defined at the local level and takes into account the specific circumstances of the context.

Living Wage
The wage required to support an employee and his/her dependents and provide some discretionary income. In any event it must allow to meet basic needs such as nutrition, clothing, shelter, education and health care.

ETI (Ethical Trading Initiative) Formula for calculating living wage
The formula calculates the living wage from the cost of basic needs per person, multiplied by average household size, then divided by the average number of earners per household, with an allowance for savings added on: 

(Average household size x cost of basic needs per person ÷ Average number of adult earners per household) + savings (set at 10% of income)

The living wage is to be earned over a maximum working week of 48 hours and basic needs are defined as housing, energy, nutrition, clothing, health care, education, potable water, childcare, transportation and savings.

CSR - Corporate Social Responsibility
CSR is a built-in, self-regulating mechanism whereby business monitors and ensures its compliance with the law, ethical standards and international norms. The goal of CSR is to embrace responsibility for the company's actions with regard to the environment and in its relation with all stakeholders (suppliers, consumers, employees, community). In one word: the best possible balance between people, planet and profit.

P V&M - Participatory Verification and Monitoring
This is a form of monitoring social standards (in the case of Label STEP the Label STEP Standard) with the active involvement of the weavers and workers. In the informal context of the carpet industry, external V&M is very difficult and can only be carried out randomly and in spots. Through training and organisation (forming of committees) the weavers and workers are enabled to know their rights and to monitor themselves the working conditions and to negotiate improvements.

1. Background and Guidance

 1.1. Governance, Purpose and Mission
 1.2. Context
 1.3. Objectives of the Standard
 1.4. Verification Approach
 1.5. Structure of the Standard
 1.6. References
 1.7. Scope
 1.8. Implementation
 1.9. Definitions
 1.10. Application
 1.11. Copyright

2. Standards

3. Appendix: Definitions

3.1. Actors in the Supply Chain
3.2. Production Sites
3.3. Other Definitions

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