Asda

Asda/George

Responded to survey: yes

MSI involvement: yes, Ethical Trading Initiative [what's this?]

Grade 2.5: Can offer concrete examples of steps to increase wages in the supplier base, but pilot projects are limited in scope and have significant omissions. [what's this?]

Summary

An unconvincing response. A pilot project in Bangladesh will look at productivity improvements only; meanwhile Asda wants to take credit for work done by collaborative groups without going into specifics.

Position on living wages

While workers in factories are not Asda’s employees, we have an expectation that workers in those factories will be treated fairly. Clause 5 of the ETI Base Code makes the following expectations of suppliers and specifically of production sites: Living wages are paid...In the case of factories paying living wages to their workers, there are practical difficulties that the ETI has grappled with for a number of years.

Work so far on living wages

Asda's work on wages so far has been limited to minimum wages, and has consisted entirely of 'participation' in various collaborative bodies, with no indication of how active this participation was:

"[I]n 2005, after long and hard lobbying by UK retailers (including Asda)...the UK government established the Gangmaster Licencing Authority (GLA), an NDPB with a remit to police the UK produce industry and regulate the activities of labour providers to that industry. This includes ensuring that workers are paid in accordance with the UK minimum wage...

"In 2006, for example, the Bangladeshi government increased the minimum wage for garment workers from 960 Tk (a level that it had been at for the previous 12 yeas) to 1600 Tk, in part due to pressure from such organisations as the international MFA forum, of which Asda is a member. Is this enough? Some estimates suggest that the national minimum wage in Bangladesh would need to reach at least 3,000 Tk for it to become a living wage. There is certainly more lobbying, more work that needs to be done on the issue."

As we have noted in other profiles, Tk3000 is far from the highest estimate of a living wage in Bangladesh: it was was by trade unions used as a figure for the national minimum wage negotiations in summer 2006 – the minimum wage a that point was set at Tk930 - not as a living wage figure. It was based on political feasibility, not on basic needs. At the time, the living wage in Bangladesh was usually estimated as significantly higher, around Tk4500-6000. With double digit inflation in Bangladesh over the 18 months between this point and December 2007 – not to mention since then – the living wage figure will undoubtedly have increased substantially. At the time of writing, rioting workers in Bangladesh are calling for a wage – the 2008 equivalent of that Tk3000 – of Tk4500.

Plans on living wages

"The ETI is currently developing a project proposal to address some of the questions outlined above. That proposal is still in development, and so it wouldn’t be appropriate for me to discuss it here. We have some concerns about the methodology proposed...

"In addition, however, we are developing a project here in Asda intended to run for the next 18 months. Our project will focus on 6 factories in Bangladesh...It is our view that one of the mistakes in previous such projects (a mistake made in some current and proposed projects) has been to attempt to ‘impose’ requirements top-down, retailer to factory. Such an approach, in our view, has not been successful because ultimately it results in those factories becoming less competitive than their neighbors and, as a result, factories lose their customer base.

"Our intention is to assist factories in becoming more efficient in their production techniques, and encourage them to align worker pay with these productivity improvements. In doing this, we believe that a more sustainable model will emerge, one that will take advantage of market forces and allow workers to receive greater levels of compensation while at the same time ensure that the factories themselves remain competitive."

Other significant information

None

Our comments

Although a project in six factories in Bangladesh is not to be sneezed at, it appears that it will look only at productivity. Indeed, compared to our four pillars:

No collaboration with other brands or stakeholders is mentioned, and Asda says it has 'concerns' about the ETI project which have led it to strike out alone. It is surprising that Asda has given up on this project so easily, given its assertion that, “experience has taught us that we are far more successful in tackling these issues when we join with others than when we work in isolation.”
Trade unions and worker organising are not mentioned: although the project is described as 'bottom up', it will apparently be accomplished without worker participation in its design.
Asda will not examine its own purchasing practices. It dismisses this approach rather tritely: “Unfortunately, the solution does not appear to be that simple...price increases paid by retailers to factories do not necessarily trickle down to workers.“ We note Asda's concern about factories that increase wages losing their customer base – yet as a customer itself, Asda is ideally positioned to prevent this happening by commiting to stay with suppliers that pay a living wage!
There is no concrete goal of reaching a living wage.

Asda can't have it both ways. If it believes collaborating through the ETI is the best way of working, it ought to be at the forefront of ETI's work on living wages, lobbying for a project that it thinks will be effective, and describing its own contribution to the other collaborative work for which it claims credit.

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