Will brands and retailers be willing to pay a 25% mark-up on garment orders to fund living wages?
Leading NGOs and academics are calling for brands to sign up to legally binding proposals to help secure living wages for garment workers. The Asia Floor Wage Alliance, Clean Clothes Campaign and Worker-driven Social Responsibility Network (WSRN) want brands to pay 25% extra on every garment order they place with suppliers. This could largely translate to an increase in the average unit value realisation ranging from US$ 0.50-1 per garment.
This would be ring-fenced and used by suppliers to fund living wages. The money would be visible on the payslip of garment workers. The NGOs say the whole process would be independently monitored, with workers having access to a 24-hour complaint mechanism to report violations.
The living wage contribution would apply to every country from which a brand is sourcing, to avoid penalising any particular country for implementing the agreement before competitors.
In a statement, Clean Clothes said, “Unlike voluntary codes of conduct, this programme will be enforceable, through a legally-binding agreement between grassroots unions, labour rights groups and brands.”
Wage Forward: Break the poverty chain.
AFWA, CCC and WSRN have launched a website that sets out a concrete proposal for an enforceable, binding agreement between global brands and unions on the payment of living wages to garment workers. The groups represent a broad coalition of unions, advocacy groups and NGOs and have received tremendous support from other allies across the globe. By launching this public website all actors can provide input and suggestions, and engage in discussions as well as offer support and endorsement.
“It’s about time that a credible proposal is made in which brands are truly held accountable for the dreadful circumstances under which workers and their families have been living for decades while they, the brands, were making gigantic profits. Brands’ CSR reports are full of promises regarding wages. Now it’s time for them to put their money where their mouth is,” remarked Anannya Bhattacharjee, president of the Garment and Allied Workers Union.
Brands are the primary profit accumulators in the garment supply chain, dictating what prices are being paid while barely abiding by minimum wage standards. Because of the extremely low prices brands pay for labour, most workers are forced to work overtime hours in order to make ends just meet. Voluntary brand or multi-stakeholder initiatives have thus far failed miserably to address this core issue of the garment industry and not led to any wage increases for workers and certainly not to payment of a living wage.
According to industry sources, while environmental and social norms are lofty ideals, buyers are ready to shift orders from one supplier to another for a gain of just a few cents.
WageForward.org highlights the important benefits of the Enforceable Brand Agreements (EBA) and Worker-driven Social Responsibility (WSR) approach. Just as the Accord on Fire and Building Safety in Bangladesh and the Fair Food Program have dramatically improved the safety and living conditions of supply chain workers, EBAs within the garment industry hold real promise for addressing the crises caused by poverty wages.
Iwan Kusmawan, Head of International Department, National Leadership SPN said, “Industry stakeholders are busy talking about what a ‘just recovery’ from the Covid-19 crisis would look like. An enforceable brand agreement on living wages must certainly be part of that.”
The central element of the proposal is the payment of a living wage contribution on every order signatory brands place with any supplier. This contribution directly goes to workers. The contribution is largely based on the gap between statutory minimum wages and estimated living wages. Unions in many production countries have set concrete living wage demands. A regional living wage formulation, the Asia Floor Wage, was developed by a group of trade unions in Asia who demanded that brands pay this gap. Analysis of these and other credible living wage benchmarks confirms that wages on average need to triple. The calculation of the living wage contribution then factors in variations per country as well as wage increases reached through collective bargaining and translate this into a percentage to be added to the price paid by the brand. The proposed agreement will also include strong protections for workers’ right to organise and the guaranteed access to a 24-hour complaint mechanism to report violations to the agreement. Grassroots unions, brands and labour rights groups will be signatories to the agreement and signatory brands will be required to terminate business with suppliers that violate the agreement. If they don’t, they will face legal action as the agreement is legally-binding.
WageForward.org has launched during a time in which many workers’ main concern has shifted from the lack of payment of a living wage to sometimes a lack of any payment whatsoever.
Ineke Zeldenrust, International Coordinator of the Clean Clothes Campaign said, “Brands’ behaviour during the pandemic has once again shown us the complete ruthlessness of brands towards the people making the products they are selling. Workers are bearing the brunt of this crisis. Their wages are deferred or simply not paid. This happened on a massive scale since March and is unfortunately still ongoing.”
“The fact that these workers have been paid poverty wages all along means that they do not have savings to fall back on. Had they been paid a living wage over the past couple of years, it would have been a very different, less ugly picture,” Theresa Haas, Director of Transnational Strategies, Worker-driven Social Responsibility Network.
WageForward.org highlights how immediate action is required from brands to ensure workers receive full wages and benefits, including severance, during the pandemic. Proposals have been developed for an Enforceable Severance Guarantee Fund, a Wage Assurance and a Supply-Chain Relief Contribution. “The remedy for workers’ immediate needs must be combined with these types of enforceable measures in order to prevent future human rights violations in the global garment industry,” they say.
Asian garment makers unite to pressure western brands
Meanwhile, apparel manufacturers from the six nations that make most of the world’s clothes have forged a common front to negotiate better terms with Western fashion brands, whose cancelled orders devastated Asian garment workers early in the pandemic.
“We want to come together to tackle the common problems we face. This is not about setting a minimum price for orders. This is about ethical business practice,” Miran Ali, a spokesman for the STAR Network of Asian suppliers, said. Ali said that the new initiative would give Asian manufacturers a “stronger voice” in setting pay and delivery terms with Western high-street brands.
The group represents nine associations in six nations: the world’s largest garment producers – China, Bangladesh and Vietnam – as well as Pakistan, Myanmar and Cambodia.
Collectively, they represent 60% of the world’s clothing exports, said Ali, and employ millions of workers. Suppliers in other nations are free to join, he added.
Raising the bar
The aim is to bolster the textile sector, devastated by a pandemic that has worsened widespread job insecurity and low pay. “We are banding together to create standard conditions,” said Ken Loo, spokesman at a Cambodia-based garment association. “No one is under any obligations to abide by these terms but we hope it will be a guideline for all buyers and suppliers.”
Early last year, fashion companies cancelled billions of dollars worth of orders as Covid-19 shuttered stores worldwide, leading to wage losses of up to US$ 5.8 billion, according to the Netherlands-based pressure group Clean Clothes Campaign.
While orders picked up in the second half of 2020, Western brands demanded price cuts and delayed payments to suppliers who were desperate for any orders to survive, according to researchers.
Ali said a united front would help firms hold out against such pressure, and that unions would sit on its advisory board.
“There is no platform that calls a buyer out on unethical regional practice. For instance, a buyer can’t just place an order in South Asia, leave us with the liability and then decide to place its orders in another region. That’s unethical.”
About 60 million people work in Asia’s garment industry and industry experts say the falling sales have left workers open to fresh exploitation, be it out of work altogether or employed by firms that undercut rivals on price to win scarce contracts.
Campaigners have urged manufacturers to use the initiative to improve workers conditions, not just boost their own profits. “We would hope that the initiative would include a clear roadmap of how better deals with brands will lead to higher wages and safer work conditions for workers,” said Meg Lewis, head of campaigns at Labour Behind the Label, a non-profit based in Britain.