“Who pays for a higher wage for garment workers?” ask FWF experts Doug Miller and Klaus Hohenegger
FWF experts Doug Miller and Klaus Hohenegger have published a comprehensive article entitled “Who pays for a higher wage for garment workers?” in industry publication Just-Style.
Focused on statutory minimum wage increases expected in several countries, the articles highlights the importance of calculating the minute cost of labour and making the wage component of garment prices visible during buyer-supplier negotiations to ensure workers are paid what they are legally due.
The FWF experts point out that in a margin-driven industry, buyers are often unwilling to shoulder the higher costs of compliance with new legal wage requirements while suppliers resist open costing. Higher statutory wages, even if they fall short of a living wage level, are a step in the right direction. Unless brands assume their responsibilities and reflect the wage increases in their purchasing policies, however, factories may end up reducing their workforce or increasing pressure on workers to produce more or work longer hours.
FWF expects member brands to ensure that all workers manufacturing their garments and products are at least paid the statutory minimum wage. Brands must also work toward paying a living wage that allows workers to cover basic needs such as food, housing, education and enjoy decent living standards.
This paper examines the application of human rights due diligence in the area of wages. In order for wage compliance to be achieved and for wages to improve, both a greater transparency in cost price negotiations between apparel buyers and their suppliers, and a precise determination of the labour component must take place.
Fair Wear Foundation and the Dutch Agreement on Sustainable Garments and Textile wrote a combined letter to Prime Minister Sheikh Hasina of Bangladesh. In the letter, the two organisations urged the government of Bangladesh to show leadership and ensure a fair and negotiated increase of the minimum wage for the garment industry and take the collective demand of workers and unions into account.
‘Together, our business members buy hundreds of millions of dollars of products from Bangladesh,’ the letter read, ‘and many of our members have contributed significantly to the successful growth of the textile industry in your country. For Bangladesh to continue having a successful textile industry, the lives of the workers will have to improve.’ As the current minimum wage in the garment sector is BDT 5,300 (EUR 60 per month), Bangladeshi workers have one of the lowest minimum wages in the world.
For wages to increase, the letter detailed that workers and their representatives need to be allowed to campaign for higher minimum wages without consequences. They also need their collective demands on minimum wages to be heard. In FWF’s Code of Labour Practices, the freedom of association and the right to collective bargaining is one of the eight codes member brands commit to as FWF members.
Bangladesh is one of the largest producing countries for the world’s clothing and shoes. It is also a country struggling to meet a living wage for its millions of garment factory workers. FWF believes that member brands producing in Bangladesh can have a large voice in demanding increased wages for the workers who make their clothes.
On Human Rights Day 2017, we are happy to share the FWF Best Practice video of Continental Clothing, a pioneer in the movement to ensure that all workers receive a fair wage for their work.
In the video Continental’s Mariusz Stochaj explains how they worked together with a factory in India in order to pay higher wages to the workers. With this innovative Fair Share project in India, Continental Clothing won the FWF Best Practice Award 2016.
Together with local NGO SAVE, Continental Clothing conducted research into how much was needed to pay a living wage: it turned out it was only 10 pence per T-shirt. With this data, Continental devised a plan on how to ensure that the money would go to the workers making the clothes.
‘Everybody’s talking about reducing costs, and suddenly we’re coming along, saying: Hey, I volunteer to pay you more.’
The video gives a good example of how a brand can work to raise the wages of the workers. ‘We’ve demonstrated that it’s possible’, says Mariusz in the video. ‘It shows that India doesn’t have to be some kind of a sweatshop.’
INITIAL REPORT OF A COMPLAINT AT A FACTORY IN VIETNAM SUPPLYING DEUTER
On 1 July 2017, FWF received a complaint through its local complaints handler from an employee who was employed by the factory. The complainant claimed his and his co-worker’s labour contracts were illegally unilaterally terminated by the factory. The complainant wants the factory to compensate him ( and his co-worker) in accordance with Article 42 of the Labor Code.
FWF decided that the case was admissible on 1 July. Deuter informed the supplier and received a reply immediately. According to management, the complainant (and his co-worker) misbehaved, shouting to and threatening workers and disobeying factory manager’s instructions. Factory sent over payment details of the co-worker. On 13 July, the complainant sent FWF the minutes of the unsuccessful mediation dated 10 July 2017. The minutes noted that the complainant did not agree with the two months of compensation as the factory proposed. The parties were entitled to request the Court to settle the case in accordance with the law.
Following the Court decision, the factory transferred the compensation (41,700,000 VND) to the local government on enforcement of civil judgement on November 6, 2017. Then the local government on enforcement of civil judgement paid this compensation to the complainant on 14 November 2017. The complainant confirmed that he received the compensation with no further complaints and thanked FWF for helping him. HR manager and the complainant also sent the scanned payment records for confirmation.
Dutch workwear brand Schijvens wins Best Practice Award
Schijvens is the proud winner of this year’s FWF Best Practice Award. The Dutch workwear brand managed to establish a living wage at their supplier in Turkey. Schijvens faced the challenge of wages being paid under the table, without proper registration systems. They learned some valuable lessons during the process, including figuring out the needs of local workers and the importance of raising all salaries (not just the lowest ones) to maintain wage differences that reflect workers’ skills and experience.
Their successful introduction of a living wage in the factory is an exciting step. As Schijvens explained in their submission, ‘While the main beneficiaries are the employees who got a salary raise, we believe that paying a good salary will also lead to loyal hardworking employees, so in the end Schijvens will also benefit.’
For over 150 years, Schijvens has operated in the Netherlands as a family-owned business, specializing in casual, contemporary corporate clothing with tailor-made designs. Schijvens places a high value on sustainability and has been active as a FWF member since 2010.
The two runners-up of the 2017 Best Practice Award were German outdoor brand Jack Wolfskin and German fashion brand Hessnatur. When one of Jack Wolfskin’s suppliers in Indonesia went bankrupt, the brand stepped up by establishing a welfare fund to help support the affected factory workers. They calculated the unpaid wages and severance owed and compensated workers with the proportionate amount based on the brand’s production share.
Joint training programme
Hessnatur collaborated with a non FWF-member brand to improve internal communication between management and workers at a supplier in Turkey through a joint training programme. They did so in response to a complaint about freedom association that they received through the FWF helpline and were determined to foster a long-term relationship of trust and open dialogue with the factory. Elected workers’ representatives now meet monthly with factory management.
The other shortlisted entries this year were submitted by VAUDE, Mammut, and Stanley and Stella. Fair Wear Foundation is extremely proud of these member brands for their excellent achievements in improving working conditions and for serving as role models for other brands that are hoping to create sustainable change in the garment industry.
Intermediate report of a complaint at a factory in Romania where ODLO has production – October 2017
In February 2017, a former employee at the factory stated that the situation did not support good working conditions and could even violate labour rights. Specifically, turnover was high experienced employees were given extra workload without extra time allocation or a wage increase. Further, there was cronyism instead of hiring qualified personnel. Workers were also discouraged from registering for medical leave. Finally, it was alleged that verbal abuse occurred on a daily basis.
An on-site investigation was carried out by ODLO in May. The investigation found that the workload of experienced workers had continued to increase since 2014, without overtime payment or compensation. A new CBA was negotiated with more restrictive rules. According to the factory management the lack of qualified personnel that drives hiring choices; from the investigation it appears that there was no consultation with worker representation when there was a restructuring of the company. Practices of cronyism were not found. Regarding medical leave, the main issue found was the structuring of rest leave during low season periods, and without consultation with worker representatives; this led to workers using medical leave in lieu of rest. Finally, workers confirmed instances of verbal abuse, and threats of losing their jobs. It became clear that internal communication channels are not working, and that standards for safe working conditions are not met.
FWF recommends Odlo to create an overview of the findings and discuss measures with factory management to improve the situation. A verification audit will be planned in 2018 to verify the complaint.
Final report of complaint at factory where members Continental Clothing, Epona, Manroof, Nudie Jeans source from – July 2017
On 30 April 2017, a worker stated that the factory was not paying the corresponding premiums for working on a Sunday or working overtime. Also, there is no way the worker can verify the amount paid, as no payslips are given by the factory. Finally, the worker said the salary is not enough to make it a living wage.
From FWF’s investigation and findings, workers at that factory need to be actively informed about their working hours and wage and overtime calculations. The factory must begin issuing either weekly or monthly payslips, which must contain the breakdown of payment. Also, all overtime work must be paid at a premium rate, and records clearly kept.
The complainant was informed about the outcome of the investigation and confirmed receiving additional payment.
Final report of complaint at a factory in India that supplies Odd Molly – 21 July 2017
On 3 February 2017, a worker contacted FWF’s helpline to complain that work had been offered at a different factory from the same owner in the understanding that employment at the previous factory would be terminated and final payment provided. However, full and final payment has not been received. Further, piece rate workers at the factories were not getting social security benefits, or most of the legal protection that hired workers have, such as notice pay or earned leave.
As the factory was unwilling to cooperate on the complaint and the brand has since stopped business relations, no further remediation can take place. The complaint is closed and remains unsolved.
Intermediate report of a complaint at a factory in China that supplies Continental Clothing –29 August 2017
On 24 February 2017, a worker at the factory called the complaints line and stated that the factory was overcharging workers on their social security deductions to the tune of 92.2 RMB per month. The worker was told that workers were free to waive the fees, for the higher amount. The complainant requested the factory pay the excess money back to workers and start deducting the correct amount.
The factory claimed they were doing a reimbursement of 3 RMB per day. However, documentation showed that this was related to bonus payments and had no bearing on the social security status of the workers.
The supplier needs to ensure that the correct amount of social security is paid. Furthermore, workers are entitled to receive a back pay for the excess that was paid.The brand needs to verify whether the correct amount of social security is now deducted from the wages and whether workers have received a back pay.