Analysis: Progress needed on supply chain living wage
At present, Cambodian garment and footwear workers receive US$100 per month
A new report suggests retailers are still failing workers in their supply chains by not paying a living wage. The survey, which aims to provide greater transparency for consumers on the living wage issue, concludes that while some work has been done, much more progress is needed. just-style takes a closer look.
The report from The Clean Clothes Campaign (CCC), entitled: 'Tailored Wages' surveyed Europe's 50 leading fashion and sportswear brands on what they are doing to ensure their supply chain workers are paid what is deemed 'a living wage'.
"A living wage is a human right," CCC believes - but suggests the majority of workers in the global fashion industry earn no more than EUR6 (US$8.28) a day in an industry worth over EUR34bn across Europe. It also suggests this flies in the face of company claims to be working ethically.
The report suggests very few companies were doing enough, and that while half of the firms surveyed say wages should be enough to meet workers' basic needs only four - Inditex, Marks & Spencer, Switcher and Tchibo - were able to demonstrate clear progress towards their implementation. Even these brands have a long way to go.
Living wage debate
The issue is an ongoing one for workers in the global garment industry, with recent research by the Fair Wear Foundation (FWF) suggesting that "compounding price escalation" is one of the main obstacles to introducing a living wage.
A benchmark established in 2009 through the Asia Floor Wage Alliance (AFW) gives recommendations on what a living wage should be.
This reinforces the report's view that "companies can no longer shirk their responsibility for ensuring a living wage is paid by saying there is no definition to the term."
Of the companies CCC surveyed, Adidas was highlighted as one that has not yet committed to paying a living wage.
The sportswear group says it currently uses the legal minimum wage or prevailing industry wage as a benchmark to check if its factories are paying a fair wage.
"The Adidas Group has examined the question of fair wages and has concluded that the best way to improve the general welfare of workers is to work with our business partners at the enterprise level to promote wage-setting mechanisms which are transparent and have been developed with the direct input of workers...," the company said.
"Although we value the work that has been done by the labour NGOs to develop the Asian Floor Wage...we do not require our suppliers to follow a proscribed living wage methodology when considering the cost of living for workers."
The report authors, however, say it is "disappointing" that a company of Adidas's size has yet to commit to a living-wage strategy, and continues to monitor across its suppliers only that factories pay a minimum wage. This, it says, does not commit it to real action.
Another company highlighted is Gap Inc. The clothing giant, a member of the Ethical Trading Initiative, says it remains "committed" to the principle of a living wage and wants to do its part to help ensure workers are being "treated fairly and that their compensation reflects that".
"While there is no universally agreed-upon calculation for a living wage, we have made it a priority to ensure that our suppliers comply with legal wage and benefits laws, the violation of which is an ongoing problem in the apparel industry," it said.
Again, CCC describes Gap's response as "disappointing", adding: "Gap's submission, although containing many fine words and sentiments, shows little proof of real work that will improve wages for workers making its clothes. Gap's proposals to look into productivity projects and ensure it is paying the minimum wage are also sadly insufficient."
Meanwhile, Italian fashion company Benetton, which was recently accused of violating the terms of the Bangladesh Accord by not disclosing the names of its suppliers in the country, also appears on the non-committal list.
Benetton says it ensures wages paid for a standard working period "shall always satisfy as a minimum the basic statutory minimum wage, the prevailing industry wage or the wage negotiated in collective agreements".
The firm, however, failed to respond to requests for information by CCC.
"Benetton has a policy that promises a living wage for workers; however, no evidence has been given as to how a living-wage plan is implemented. Without evidence to prove otherwise, we suspect that little is being done to make this a reality," the report noted.
Of the 50 companies surveyed, the report names four brands - Inditex, Marks & Spencer (M&S), Switcher and Tchibo - that have demonstrated progress towards implementing a living wage. But it points out that none of these are as yet paying this to all of their supplier bases.
Spanish textile titan Inditex has been working with trade unions to increase pay, demonstrated by its International Framework Agreement, which report authors say is "commendable". It has cited benchmarks in countries including Morocco, Spain and Portugal. For Asia, however, no benchmarks have yet been established.
The authors note: "While the focus on freedom of association is very welcome, the focus on delivering improvements to wages needs to be improved and developed if workers in the company's supplier factories are to start seeing concrete improvements to their economic well-being."
UK retailer M&S says it is in the process of implementing a living-wage as part of its Plan A commitment. The group says it aims to pay a fair living wage in the least developed countries it sources from, starting with Bangladesh, India and Sri Lanka, by 2015. It too hasn't provided details.
"M&S is undertaking significant work to make sure the prices it pays are enough to ensure the basic needs of its workers are met," CCC says.
"The company's ‘Plan A' commitment to pay a living wage is commendable. M&S has yet to disclose the figures it is using to benchmark a living wage and much of its model relies heavily on purchasing practices - without real data we remain unsure about the real progress being made."
Switcher has also committed to paying a living wage and claims to use the AWF as a benchmark, adding it is a "central element" considered before entering into a supplier relationship. However, this has only been implemented in Bangladesh and in four out of six of its supplier factories in China. The study found that in its supplier factory in Romania, actual wages are far below a living wage.
Nonetheless, the authors say: "Switcher demonstrates more initiative than other companies regarding the implementation of a living wage. The solidarity fund in Bangladesh, one of Switcher's projects, is internationally acclaimed and has great potential for use in other factories. The company now needs to work systematically on the implementation of a living wage in other areas of its supply chain outside of Bangladesh."
Tchibo has also confirmed its commitment and says it has adopted the AFW as its benchmark in China. In Bangladesh, it has adopted a wage ladder that includes AFW, local union demands and living-wage figures calculated by workers as part of training exercises.
"Tchibo is working towards payment of a living wage in a committed way, but it has some way to go," the report notes.
"Disappointingly, no data was available about how many of its supplier factories are paying the current Asia Floor Wage, which must surely be important if this is a company-wide KPI. We hope that the AFW benchmark will soon become integrated into work across the company, particularly on pricing."
Despite efforts by some companies to achieve a living wage, CCC expresses its disappointment that progress is still only at the trial stage.
"There are very few retailers who have tried to truly ingrain throughout their business work towards a living wage. Change is not happening fast enough and the wage situation is reaching a critical breaking point.
"Consumers have been told not to worry: brands care and are doing the best they can. The problem is their best isn't good enough and workers can't wait any longer. It is time to make sure the garment industry provides not just any work, but decent work to the millions of women and men producing the clothes we wear."
Click here to view the full report.
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