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,

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).

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

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:

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,

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

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:

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,

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?