While leading global brands have vowed to pay a fair living wage to workers in their supply chains, there is further work to be done, according to a new academic study.
Aiming to start a conversation about apparel companies’ commitments to paying living wages in the global supply chain, researchers at the University of Sheffield concluded brands are falling short in terms of meaningful action to implement their commitments. There was acknowledgement that companies are making ambitious commitments in the Sheffield Political Economy Research Institute study. In January, Remi Edwards, Tom Hunt and Genevieve LeBaron started the project, which did not involve any on-site visits.
The group defines a living wage as one earned in a standard work week — no more than 48 hours — that allows a garment worker to be able to buy food for herself and her family, pay rent, pay for health care, clothing, transportation and education and have a small amount of savings for when something unexpected happens.
The 20 companies highlighted — Gap, Amazon, PVH, Uniqlo, Gucci, C&A, Decathlon, G-Star Raw, Levi Strauss, Under Armour, Nike, Hugo Boss, Fruit of the Loom, Inditex, Tchibo, Adidas, H&M, Puma, Zalando and Primark — were analyzed in part based on data from a survey conducted by the Clean Clothes Campaign, which was shared with the University of Sheffield researchers. But many of the brands such as H&M, Puma, Primark and Hugo Boss pushed back, challenging the findings.
“We also did a lot of secondary analysis of documents that the brands have made available publicly such as company reports, statements where they have said they are signing up for a multi-stakeholder initiative such as ACT (Action, Collaboration, Transformation) or Ethical Trading Initiative — but primarily company reports,” Hunt said. “What this report has done is to assess the promises the brands have made by signing up to initiatives, which profess a commitment to living wage payments, and whether, for example, the company’s code of conduct is in line with the requirements of that initiative. If the initiative says a living wage must be paid to workers — including such basic features as covering the basic needs of the worker and his or her family — does the company’s code of conduct for suppliers match that commitment brands have made by signing up for an initiative.”
Amazon, Fruit of the Loom, Gap, Hugo Boss, Levi Strauss and Zalando did not respond to the CCC’s survey questions, according to the report. Seventeen of the 20 brands in the study are members of initiatives that profess commitments to living wage payments “yet there are significant discrepancies between what the brands determine to be a living wage,” according to Hunt. He noted that H&M, C&A and G-Star Raw are the only three of the 20 companies that had committed to a wage payment with all the components that abide by the CCC’s definition, Hunt said.
A Hugo Boss spokeswoman said it is not conducive to have different approaches and definitions of a fair wage circulating. She said, “Hugo Boss is convinced that an individual company cannot enforce higher wages on its own. This is only possible within the framework of binding, sector-wide guidelines. As a member of the German Partnership on Sustainable Textiles, we will participate in the ‘Living Wages’ alliance initiative, which is currently being launched. We are confident that the principle of negotiations between employers, employees and employee representatives on wages can be established on an international level in cooperation with the trade union federation IndustriALL and its initiative ACT (Action, Collaboration, Transformation) and that the planned initiative will thus deliver generally valid and transferable results.”
Social responsibility, fair working conditions and the well-being and safety of its employees are fundamental for Hugo Boss, she said. In turn, the company and its suppliers abide by Hugo Boss Social Standards, which are based on internationally recognized standards such as the core conventions of the International Labor Organization (ILO) and the United Nations Universal Declaration of Human Rights, the spokeswoman said. “Due to our conducted wage data collection, we know that the total remuneration of our suppliers regularly exceeds the national minimum wages.” She said, adding that audits are essential to supply chain management.
With a private label business that amounts to 10 percent of its overall business, Zolandobelieves that ACT is a solution and that’s why we joined and are committed to its purpose, a spokeswoman said. Last fall Zolando joined the Memorandum of Understanding of IndustriALL Global Union and ACT. The company’s private label business is a member of the Social Labor and Convergence Project, and auditing is aligned to their standards. Audits are conducted in existing private label factories every 12 months and any “critical instance of noncompliance” requires evidence of improvement to continue to the business relationship, she added. Zolando’s Hong Kong-based Ethical Trade team visited 68 factories in 2017.
A Gap spokeswoman said, “As a condition of doing business with Gap Inc., we require that all suppliers comply with all applicable wage and benefits laws. We also partner with other global brands and stakeholders to engage governments in the countries where we source to encourage the development and implementation of effective wage-setting mechanisms.”
The company spokesperson, along with several others cited in the study, referenced information about its position on wages and benefits on its site. “We know there is more work to be done, but we remain committed to doing our part to create a better future for garment workers in our supply chain and around the world,” the Gap official said.
Researchers pointed to such issues as outsourcing living wage commitments to MSIs; confusion about the definition of living wage; no clear road map or benchmarks; reliance on flawed social auditing; lack of transparency about wage data, and freedom of association rights that are not enforced. The study noted that there is no internationally agreed upon definition of “living wage,” with corporations, civil society organizations and international ones like the United Nations Human Rights Office of High Commissioner’s Committee on Economic, Social and Cultural Rights offering contrasting definitions. Hunt noted how the Asia Floor Wage calculates what a living wage is in different countries, albeit primarily Southeast Asia ones, based on an assortment of factors.
To illustrate how “It is not easy to define a ‘fair’ wage, a Puma spokeswoman noted how a recent wage project conducted by the Fair Wage Network for Puma in Bangladesh listed five different living wage figures for that country alone. “
“As a general principle, we believe wages need to be negotiated by local institutions, ideally via collective bargaining agreements where workers, management and the government are represented, rather than being mandated by multinational companies or other international organizations. To help improve industrial relations at our suppliers, Puma is an active member of the ILO/IFC Better Work program.” the spokeswoman said. “When it comes to wages, we regularly monitor our suppliers and our compliance program has been accredited by the Fair Labor Association since 2007. In the interest of transparency, we collect wage data for our core suppliers on an annual basis. From this data, we know that on average our core suppliers pay 21 percent above minimum wages excluding overtime and bonuses, and 84% above minimum wage including overtime and bonuses.”
There are methodologies that companies could commit to, which would ensure that workers in each different country would be paid a living wage, according to Hunt, who also cited the Anker methodology and one from the Worker Rights Consortium. “Some companies, Amazon, for example, their supplier code of conduct rests entirely on minimum wage,” Hunt said. “Minimum wages are often set well below what would be determined the poverty line. The Asia Floor Wage is trying to say, ‘No, let’s go above this in order to have a common definition of what a living wage ought to be in garment producing countries.’”
An Amazon spokesman declined to address that specifically. He pointed to the company’s online Supplier Code of Conduct that “incorporates internationally recognized human rights standards, which include that suppliers must pay their workers in a timely manner and provide compensation (including overtime pay and benefits) that, at a minimum, satisfy applicable laws. We partner closely with our suppliers and business partners to drive continuous improvement in working conditions; we have dedicated teams that work directly with suppliers in key sourcing regions, track and report performance, and set goals at a senior executive level to improve working conditions.”
In addition to Amazon, Hunt singled out Levi Strauss and Zalando for having supplier codes of conduct “that rest entirely on minimum wages set by governments in supplier countries.” Asked about the claim, a company spokeswoman said, “Levi Strauss & Co. believes that everyone who works has the right to wages ensuring a standard of living adequate for the health and well-being of themselves and of their family, including food, clothing, housing and medical care and necessary social services. At a systemic level, we encourage governments to set a minimum wage consistent with the cost of living and establish comprehensive and regular mechanisms for minimum wage reviews, and we have established programs in sourcing countries that promote financial literacy, women’s health and overall worker well-being. We have not reviewed the report and therefore cannot comment on its content.”
The Levi Strauss team was provided access to the 44-page report Thursday.
Executives at Uniqlo, Under Armour, Fruit of the Loom, Inditex, Tchibo, Decathlon and Adidas did not respond to requests for comment. A G-Star Raw spokeswoman acknowledged the e-mail but postponed any further comment.
The confusion about the definition of a living wage has resulted in a recommendation that that be corrected to find a globally accepted view of what that is, Hunt said. The researchers recommend that the International Labour Organization take this on as a recommendation. To date, the ILO has not yet been approached about this matter, according to Hunt. There may be an opportunity to do so at a conference in early July in Geneva, he said.
A Primark spokeswoman said, “Every factory making Primark products must commit to meeting the standards set out in the Primark Code of Conduct, which states that wages must be paid in line with the law or industry benchmark, whichever is highest and that wages must always be enough to meet basic needs and provide some discretionary income. Our code is based on standards set by the Ethical Trading Initiative, which in turn is based on those of the UN’s International Labour Organization. Our team of more than 110 ethical trade experts audits every factory making Primark products at least once a year, sometimes more, to check that all the standards in the code are being met, including checking that all suppliers pay wages in line with our code. Collaboration to address this industry issue is key, which is why we are a founding and very active member of Action, Collaboration, Transformation, an initiative between international brands, manufacturers and IndustriALL to support fairer wages across the textile and garment supply chain.”
In a statement issued Thursday, the H&M Group noted how earning a living wage is a fundamental human right, and the reason why it was one of the first companies to put commitments in place to achieve this. The statement continued, “To make fair living wages a reality for garment workers around the world, there are certain steps that must be taken first to create the foundations necessary for systemic change to take place. In the five years since we started working on our strategy to achieve living wages, we can see that these processes are now starting to fall into place: by empowering garment workers and making fair negotiations possible, by improving our purchasing practices to ensure that they support fair living wages, for example by excluding labor costs from price negotiations, and by forming necessary industry collaborations that will enable the entire industry to take steps forward. In order to secure significant wage increases, it’s essential that the work done at individual factories — which our goals for 2018 were about — is accompanied by industry solutions, such as industry-wide collective bargaining agreements supported by brands committing to responsible purchasing practices. We are therefore working together with 21 other brands and the global union IndustriALL, [which] represents garment workers, toward this goal. This would be a true game-changer and turning point for the industry.”
The H&M spokeswoman also cited online information detailing how it hosted a Fair Living Wage summit last year in Phnom Penh, Cambodia, as well as being one of the few apparel companies to make wage data publicly available to show the increases in workers’ wages. The H&M Group has “had a dialogue” with the CCC for several years and despite sharing the same end goal — that every garment worker should earn a fair living wage — “we disagree on how to best achieve progress. We listen to recommendations from the ILO and the global trade union IndustriALL on how a company such as ours should address this complex issue. They support our way of working, and we will continue to listen to them,” the statement read.
All in all, according to Hunt, there is “very limited” transparency put forward by brands regarding wage payments. In addition, with “very little data” to go on, it is very difficult to evaluate companies’ progress, he said. “Brands have taken steps to say they want to improve pay and conditions for workers in the wake of the Rana Plaza,” referring to the 2013 factory collapse that left 1,134 workers dead. “It’s surprising they are making less information available than you might think, given the emphasis that has been placed on improving conditions in the supply chain,” Hunt said.
A Gucci spokeswoman said Thursday, “Gucci, as sole representative in the luxury sector, welcomed the opportunity to take part in the Clean Clothes Campaign report to clarify how the wages system works in Italy. Gucci has always paid strong attention to the working conditions in its supply chain. We pride ourselves in being a company striving to take responsibility in ensuring that the rights of manufacturing workers across its supply chain are respected and implemented.”
She also cited an assortment of other initiatives including its Culture of Purpose and commitment to disclosure of supply chains among others.
A Nike spokesman said, “Everyone in Nike’s supply chain has the right to compensation sufficient to meet their basic needs and provide some discretionary income. Nike’s Code of Conduct requires our suppliers to pay their employees at least the local minimum wage or prevailing wage (whichever is higher), including premiums for overtime, legally mandated benefits, and compliance with social insurance regulations. We are also working with our suppliers, industry partners and academics to explore new ways to advance sustainable improvements in worker compensation.”
He also referenced additional information about Nike’s approach to human rights, responsible sourcing and supply chain compensation that is available through the Nike Purpose site.
A PVH spokeswoman said the company is unable to comment on the specific report, but noted its new Forward Fashion corporate responsibility strategy that refers to specific goals and targets for living wages.
The report was funded through the Economic and Gender Justice in the Global Apparel Project at the WSR Network, which is supported by the NoVo Foundation.
This article was updated with additional information on May 31.