‘Start paying higher wages. Now. Analyse what worked and what didn’t. And then keep going.’
This sentence summarises FWF’s advice to brands that seek to make real strides towards living wages in their supply chains. And it offers more concrete advice on how to do this in Living Wages: An Explorer’s Notebook.
Use the tools below to further support efforts to raise wages in your supply chain.
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.
Update: Full Labour Minute Costing Report now published
In this post we explore labour minute costing and some of the potential it represents. This is the first in a series dealing with labour minute costing and its implications for living wages. Read more
From a business perspective, a very real question when considering living wages is: ‘How much is this going to cost?’
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.
Jo Morris, Visiting Professor in Practice, London School of Economics and Political Science, Gender Institute, examines the not-so-obvious relationship between gender-based violence and living wages.
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.
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.
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.
Violations of FWF’s Code of Labour Practices with regard to overtime and living wages go hand in hand. One cannot be addressed without considering the other.
Consumers want products made by people who are treated fairly and receive a wage they can live on.
As FWF’s Associate Director 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.’
If legal minimum wages are in place, why do we need living wages?
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:
1. Methodically identify and investigate the obstacles to living wage implementation
2. Develop tools to overcome the obstacles
3. Get out there and do it
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.