Quote

Workers still find themselves struggling to survive on the breadline, working excessive overtime just so they can make ends meet.

 
Clean up fashion report | Print |  E-mail
Article Index
Clean up fashion report
Introduction
The workers´ perspective
What the companies say
Conclusion
What we want
Let´s Clean Up Fashion
References
 

What the companies say

Living wages

This year’s company responses saw a definite change in a significant number of companies’ attitudes.  Only one quarter (6 of 24) companies admitted that workers in their supply chains were not earning a living wage in 2006; in 2007, this figure is nearly two-thirds (14 of 23, but only four are actually doing anything concrete on the living wage).  It is no longer the norm for companies to deny responsibility, to deny that there is a problem, or to hide behind the typical argument that they do not know how to define a living wage.

A few still cling to these excuses.  Sainsbury’s, for example, tells us that all workers in its Bangladeshi factory start on wages of Tk 1851.  Apparently basing its figures on conversations with workers and local people, Sainsbury’s continues,

We believe that even at the bottom end of the wage structure then there is a level of discretionary spend and that this constitutes a living wage.

This is a pretty astonishing statement, flying in the face of a clear consensus that Bangladeshi wages are unacceptably low.  Sainsbury’s close rival Tesco told us last year that it uses a working figure of Tk3000 as a living wage (see box below).

How much is a living wage?

Bangladesh has had more attention paid to it than any other country over the past year, and the result is that more organisations have put a figure on a living wage than anywhere else.  A quick comparison of these figures shows how differently the living wage is viewed by some brands and by workers’ organisations:

  • Sainsbury’s says the minimum wage of Tk 1851 (£14) per month should constitute a living wage, and has calculations to back up its case.

  • Tesco’s work on the ground gives it a figure of Tk 3000 (although this is not implemented).

  • During the 2006 minimum wage negotiations, Bangladeshi trade unions called for a minimum wage of Tk 3000, a low-end figure that they thought was politically palatable.

  • Next is still calculating, but based on local estimates it says that the figure must be somewhere between Tk 3000 and 4000.

  • Jakir Hossain of Bangladeshi think-tank Unnayan Onneshan estimated the figure to be around Tk 4300 in 2006.

  • The Bangladesh Institute of Labour Studies has calculated that for food alone, a family of four needs Tk 4800.

 

Next, there is Levi Strauss & Co, who state this year:

Markets set wage rates. Where wages fail to keep workers above the poverty line, governments should set minimum wages consistent with the cost of living.

Of the brands that replied to us, it is the only one to explicitly turn its back on the living wage.  The flaw in its position is that major brands play a huge role in determining the market rate – a role they could use for good, especially if they worked together.  They also have a key influence on governments, who fear that setting the minimum wage too high will cause the brands to move production to somewhere cheaper.

Other brands that seem content to keep their workers on minimum or prevailing wages included Mosaic Fashions (Oasis etc) and Laura Ashley and Matalan.

A number of brands continue to acknowledge that wages are rarely sufficient, without indicating that they plan to take any steps to correct this.  Pentland Group (Speedo etc) said that while it did discuss with factories that it requires fair wages to be paid,
We acknowledge that new worker wages will probably remain at minimum wage level for the forseeable future in many factories.
Arcadia Group (Topshop etc), takes a familiar stance:

Until practical industry guidance is established we rely on solid benchmarks specified by ILO conventions, the prevailing industry wage and the minimum wage set by law in the country from which we source.

As we said last year, this is a somewhat academic argument: if we accept that workers are not earning a living wage, we should also accept our obligation to increase their wages.  Other brands taking this stance include French Connection.

The problem is that everybody seems to be waiting for somebody else to make the first move.  A significant number of companies claimed that they couldn’t move forward because they were the only ones who wanted to, lamenting their peers’ apathy.  “We are the only ones,” said one company representative to us, wistfully.  This company, like most of those above, is not a member of the Ethical Trading Initiative (ETI) a forum that exists specifically to help companies collaborate with each other and with other stakeholders.

Most ETI member brands have developed a slightly more nuanced approach this year, and it seems fair to say that a consensus has been reached on the need for something to be done to get past this impasse.  George at Asda exemplifies this change of tack the best.  In 2006, it told us,

Unfortunately there is no clear universal definition of the living wage and therefore the ETI Base Code cannot be applied.  Governments should set their minimum wage at levels that are linked to the country’s cost of living and local requirements.

In 2007, it has changed its mind, stating instead that,

Defining a living wage is not the issue, but Asda recognises that there are real practical difficulties in ensuring that a living wage is actually paid to the workforce rather than increasing producer margins...The only way we’re going to solve this is in collaboration with other retailers.

Asda wasn’t prepared to go into detail on what it plans to do to surmount these difficulties.

Many ETI members say that they had been applying pressure within ETI for the development of a living wage methodology.  These include Monsoon, Primark, and Sainsbury’s.  Such a project would be great, but it should accompany and inform companies’ individual work on a living wage, rather than allowing them to sit back and relax for another few years; otherwise,  there is a danger that an ETI working group could provide an excuse for some to kick the living wage into the long grass.

A couple of companies seem to have begun to take matters into their own hands, whether or not they were waiting for the ETI to deliver.  For example, New Look says that in Bangladesh it is “planning to build up the right context of living wage.”   It says it intends to “develop a quantitative figure” to be used by suppliers and factored into price negotiations.

Meanwhile Next has a unique project underway:

As a step towards understanding and defining the living wage in different countries and regions we have initiated a series of country studies of the living wage in our key sourcing regions.  We are undertaking these studies with our teams focusing on local regions, with reference to external bodies and experts and local research....With this exercise and information, we as a business will be better equipped to look at the broader picture of implementing this requirement.

Although Next assured us that this was a step towards an ultimate goal of paying workers a living wage, it said it was waiting for the results of this study before deciding how best to use it.

Freedom of association

For workers to have meaningful access to their right to freedom of association, they need to be made aware of their rights, and of the support available to them from local labour rights organisations – trade unions or NGOs who specialise in organising and defending workers.  In Let’s Clean Up Fashion 2006, we made the point that workers need to receive training from these very organisations if they are to overcome the anti-union atmosphere that prevails in most workplaces, often in subtle ways that are not easily picked up by auditors.

In 2007, we are disappointed that we have to make the same arguments all over again.  A particular offender here is Matalan, which continues to exclude Freedom of Association altogether from its code of conduct.  Many companies say they make it clear to their suppliers that they do not tolerate trade union suppression, but ignore the argument made above.  These include Asda, French Connection and Pentland.

A familiar argument from companies is that they have begun to educate suppliers in this area, but because their suppliers are sceptical of trade unions they must move slowly, perhaps towards elected workers’ committees rather than trade unions.  New Look even applied this argument to a UK-based factory, where trade union rights are quite clearly protected in law.  We find it hard to believe that the brands have as little power over their suppliers as this.

We are also shocked by many companies’ trust in suppliers: an apparent belief that giving factory managers a day’s training, or a stern talking to, would be enough to convince them of the value of trade unions.  Workers make clear that factory managers will say whatever is necessary to meet companies’ expectations, but will undermine this in the way they treat workers as soon as the company’s back is turned.

Although a number of companies have admirable plans to set up supplier training, often with local organisations’ involvement, no company plans to ensure the systematic training of workers for which we are calling.  It is Gap that comes closest to this, with a global collaboration with garment workers'  trade unions.  A few companies were also able to give individual examples, such as this one from Sainsbury’s,

Our Indian factory have a local trade union named “Kamgar Ekta Sangathan” ( which means Workers unity organization in English) which is recognized by Central and state government. This union is active all over India and works for workers welfare and rights. The union conducts training and seminars regularly every month, on site at the factory. Union members are democratically voted in by the workers on the site. In addition to the seminars and training, the factory, to promote the access for the Unions, has [to] provide the union their own premises on site which the workers are free to join, and use as the point of contact for any issues.

Monitoring and verification

We explained in Let’s Clean Up Fashion 2006 how the ‘social audits’ used by most retailers to check up on working conditions in factories fail to pick up many problems with working conditions.  The ETI subsequently published a document on “the growing crisis in social auditing.”

The solution is not just more and better audits, although increasing the number of unannounced audits, and the emphasis placed on gender-sensitive, off-site worker interviews will help.  What is needed is a system of monitoring and verification that involves local organisations – trade unions and labour rights NGOs whose day-to-day contact with workers gives them the ability to cast a knowing eye over audit results.  Ideally a factory would be unionised, and the union able to explain what conditions are really like, but in the absence of a trade union in the factory, organisations ‘on the ground’ will at least be able to help calibrate the audit results.

Arcadia Group was able to give an example of an intervention that used a local organisation, at a UK factory.  Self-assessment had shown up the use of homeworkers in the factory, which triggered an Arcadia visit.  The factory was unionised, and so the visit involved discussions with the trade union representatives and members to ensure that they were aware of their rights, and to get an idea of actual conditions in the factory.

Most companies, for example M&S and Primark, say that getting a thorough auditing system in place is a necessary first step before the issues raised in our report are considered.  We disagree.  Why start auditing against the minimum wage if you will only confuse suppliers by raising the standard to a living wage?  Why get suppliers used to audits and then suddenly place another demand on them in the form of worker education?  Why start down the failing, top-down route when you could learn from all your competitors’ mistakes and start with a bottom-up, worker-orientated approach that will really find out and solve the problems that concern workers themselves?

The Corporate Social Responsibility industry: setting the bar too low

Many companies, especially those whose CSR programmes are relatively new, rely heavily on consultants with many years’ experience of ethical trading; others have long-serving CSR Managers.  A lot of money is made and spent on CSR and ethical trading.

The credibility of CSR professionals rests on a long track record of experience developing and managing ethical trading programmes, and as such their ideas of what works are intimately bound up with the past decade of codes of conduct and ethical trading, a decade marked by poverty of ambition, procrastination, and desperately slow progress.  These professionals may know well what works from a company’s perspective, but this is very different from knowing what will actually benefit workers on the ground.

The most authoritative evaluation of ethical trading to date, the ETI impact assessment, lays out in explicit detail how, while there have been some gains for workers from ethical trading programmes, the millions of pounds invested in them by fashion companies have failed to deliver the significant improvement in wages and working conditions that they could and should have.24

When creating or overhauling an ethical trading programme, brands and retailers therefore have two choices: look at what others around them are doing and imitate, or adopt an ambitious and innovative plan that avoids dead-ends like over-reliance on social auditing in favour of real progress for workers.  Broadly speaking, the first approach focuses on management systems, while the second is worker-orientated.

It is not surprising that retailers usually end up with the first approach: the people on whom most of them rely for advice on ethical trading, be they in-house managers or external consultants, are often stuck in the past decade’s way of doing things: focused on management systems rather than workers themselves.  Even when CSR professionals are genuinely committed and ambitious themselves, they are often constrained by priorities set higher up in their company.  The result: companies continue along the same route of poverty of ambition and lack of creativity that has resulted in the current failing approach.

Of course, there is much to learn from the past ten years, and a role for ‘experts’ with experience in ethical trading.   Yet the real experts on these issues, the workers themselves, are rarely properly consulted or involved in the development of any of these processes.  It is they who are most acutely aware that the last ten years of CSR initiatives have largely failed to deliver substantial benefits.

When CSR professionals set out their idea of what a ‘best practice’ ethical trading programme looks like, they are peddling faulty goods, because from a worker-orientated perspective, such a thing has yet to be created.

Brands need to listen to workers, not suits in a London office, no matter how many years they have been working in this field.

 



Last Updated ( Friday, 14 September 2007 )
 

Supporters

Tearfund Women Working Worldwide The National Group on Homeworking Methodist Relief and Development Fund Community: The Union For Life HomeWorkers Worldwide War on Want Labour Behind the Label Ethical Consumer No Sweat