FWF has published Labour Minute Costing, a new report that provides guidance to brands, factories and trade unions on the practical steps necessary to create wage floors in factories. Based on real-world examples, the report covers three main topics:
- How to calculate the total cost of bringing a factory’s lowest-paid workers up to any given living wage benchmark – e.g. creating a wage ‘floor’ in a factory.
- How to incorporate the increase in wages into normal product costing systems, in a transparent and verifiable manner.
- How to ensure that increased costs can be shared fairly among all of a factory’s customers, without violating EU competition law.
The report was written by by Doug Miller, Emeritus Professor of Worker Rights in Fashion at the University of Northumbria, and Klaus Hohenegger, director of Sourc!ng Solut!ons GmbH. It is based in on pilot work conducted by FWF in Macedonia, with the support of CNV Internationaal.
At first glance, living wage discussions seem to have little to do with competition law. Yet garment brands’ concerns about potential violations of competition law have blocked efforts to collectively raise wages in factories that supply multiple brands. But the fact is, as long as companies take some key precautions, their efforts to raise wages collectively do not present a serious legal risk.
When I visited Bangladesh in 2014, one year after Rana Plaza collapsed, hope was blowing through the air. Hope, that after so many years of repression against trade unions, positive development was possible.
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A guest blog by Doug Miller, emeritus professor Worker Rights in Fashion, University of Northumbria
Hats off to Fair Wear Foundation for really doing the necessary groundwork (wage ladders/labour costing/living wage cost engineering/seeking clarification on the Anti-Trust-competition in respect of buyer collaboration). All this helps us get closer to mechanisms for eradicating poverty wages in the global apparel industry. We are I think now at the cusp of nailing the implementation questions when it come to a ‘living wage’. For me there are a number of key realisations in this debate.
A guest blog by Jenny Holdcroft, Policy Director at IndustriALL Global Union
The Bangladesh Accord has seen an unprecedented level of cooperation between global brands and trade unions which has enabled comprehensive, industry-wide solutions to be applied to fire and building safety in Bangladesh’s garment factories. This experience has opened up possibilities for new solutions to be found to other entrenched supply chain rights challenges, including the struggle for a living wage.
There is a strong relationship between wages and pricing. As FWF’s Margreet Vrieling explains, ‘Wages are often the first place that factories look to cut costs in order to keep prices low.’ So constant calls from brands for lower prices result in real pressure on workers’ wage levels.
A guest blog by Oxfam GB’s Ethical Trade manager Rachel Wilshaw
One of the initiatives highlighted in Oxfam’s new briefing paper Steps towards a living wage in global supply chains is that of the UK living wage campaign. This was started by parents in the East End of London, whose long working hours on the minimum wage meant they had little time to spend with their families. The Living Wage Foundation was established in 2011 to develop and promote a scheme which accredits employers who pay £7.85 per hour (£9.15 in London) compared with a national minimum wage of £6.50.
Clearly productivity needs to be part of the living wage discussion. But how does this work in the garment industry? How can workers produce more garments per hour?
The vast majority of garment workers – in some regions as many as 95% – are women. Women are found in the lowest-paid jobs in garment factories, and are much less likely than men to work in better-paid supervisory or managerial roles. Women are low-paid: they and their families stand to gain most from a living wage in the apparel sector, and in future blogs I will explore the reasons why.
Most discussion around retail costs of living wages has centred on the idea that the living wage premium (i.e. the additional per item cost that would be paid for living wages) would be passed on to the consumer.
As explained in our post, ‘How much more would living wages cost consumers?,’ our research of selected outdoor products found that, if we assume the cost of wage increases can be transferred directly to consumers, retail prices would increase from less than one percent to 7%, depending on the product and the size of the wage increase. This is to say that consumers could cover the cost of living wages by paying several cents to less than $5 USD more for our hypothetical items, which ranged in price from $45 to $1,000.
A blog by FWF’s Kees Gootjes.
In 2003, an attempt at regulating some of the excesses of corporate governance had the unintentional effect of creating a ‘race to the top’ in top level salaries. While causing public outcry, there are some important lessons the millions of underpaid garment workers worldwide can learn from what happened in The Netherlands – with a little help from FWF’s new and improved Wage Ladder tool.
For more than a decade, discussions about living wages often end in stalemate, as various actors disagree about exactly how to measure living wages. While exact methodologies are important, FWF believes that issues other than measurement are the key to unlocking living wages.
Together with its stakeholders, FWF developed the FWF Wage Ladder, which allows us to leapfrog past the wage measurement debate and start working on improving workers’ wages today.
FWF’s research on costs for brands and consumers and development of costing sheets and other tools represent real strides in helping brands and factories answer the critical question: How much more do wages costs?
It is also important to gauge the corollary costs of living wage implementation. In addition to increased production costs, what changes, if any, will there be to monitoring fees or taxes and duties? Or where training is required (e.g. through FWF’s Workplace Education Programme), how much does that cost?
The story of FWF member brand Mayerline and one of its suppliers, the first Turkish knitwear company with a Collective Bargaining Agreement
Effective collective bargaining is the most sustainable way to improve working conditions and help secure living wages for workers in the garment sector. Brand involvement can be crucial in creating an enabling environment. This is clearly shown by the Collective Bargaining Agreement (CBA) signed in December 2013 between the Textile, Knitting and Clothing Workers’ Union of Turkey (Teksif) and a supplier of FWF member brand Mayerline.
Workers sit at the core of all of this work. FWF’s approach is designed to integrate workers wherever possible. Examples include our worker-focused interview methodology; the inclusion of worker representatives in monitoring and remediation discussions when possible; worker complaint and training programmes; and worker surveys.
‘Ultimately, it is not up to outsiders to decide what a living wage should be,’ explains FWF’s Ruth Vermeulen. ‘It is up to the workers and unions and local collective bargaining processes.’
The country context has a great deal of influence on the wage situation in any given factory. We sat down with FWF’s Head of Verification, Margreet Vrieling to get a better sense of the wage situation in Turkey.
FWF maintains that there are structurally-integrated practices in the garment industry that will need to be addressed if there is any hope of making living wage implementation scalable. One such practice pertains to the way factories calculate factory margins.
In December 2014, Oxfam International published its policy paper Steps Towards a Living Wage in Global Supply Chains. The paper outlines some compelling reasons for responsible companies to act now for living wages and examines positive developments on wages.
In the FWF Code of Labour Practices, a living wage is defined as a wage paid for a standard working week that meets the basic needs of workers and their families and provides some discretionary income. ‘Basic needs’ further includes costs like housing (with basic facilities including electricity), nutrition, clothing, healthcare, education, drinking water, childcare, transport, and savings.
But how can this be translated into a specific amount?
Consumers want products made by people who are treated fairly and receive a wage they can live on.
As FWF’s Head of Communications Sophie Koers explains: ‘Various marketing studies and consumer surveys indicate that a significant number of consumers will pay a premium to buy clothes that are made fairly. We know the demand is there. Our focus now is on building solid models for delivering living wages to reliably meet that demand.’
It is a fair question. In principle, minimum wage standards should be set at a level that covers basic needs. In principle, legal minimum wage levels are set through balanced, democratically supported social dialogue processes. The reality, however, is different.
The FWF approach to living wages is pretty simple:
At FWF we are doing all three of these in tandem. Of course, of these three tranches of work, the third is the most important for workers. And to take effective action on wages, FWF members and stakeholders need tools. To this end, tool development continues.
In this 16 minute video, Ivo Spauwen methodically walks us through the various components of FWF’s Living Wage approach.