It is time to take real action for living wages in the garment industry. And at FWF, our advice to brands is simple:
‘Start paying higher wages. Now. Analyse what worked and what didn’t. And then keep going.’
The guidance and tools below are designed to help you do just that. They are organised according to FWF’s wage increase cycle, which is designed to help you get started now, and keep improving.
BEFORE YOU START
For a practical overview of living wage implementation, check out: Living Wages: An Explorer’s Notebook. This is where to start your wage journey, offering concrete steps for rolling out a plan for your brand.
If you are working with other brands, don’t miss FWF’s ‘Competition Dos and Don’ts’, simple tips for brands to keep safe while working with other businesses to raise wages. (And for a more in-depth legal analysis, please see: Arnold & Porter’s competition law opinion to FWF.)
How much more do living wages actually cost?
The first step in the cycle is calculating how much more living wages actually cost. Our work in numerous factories has helped us to conclude that higher wages are not nearly as costly as many have claimed. How to calculate your brand’s/supplier’s costs:
Publications to explain FWF’s costing approach
- FWF’s Labour Minute Costing explains this practical approach to calculating brands’ share of living wage costs per factory. Access this publication for insights into this practical approach.
- Using Due Diligence in Labour Costing to Meet Wage Compliance offers guidance for integrating human rights due diligence and transparency in costing between brands and their suppliers.
Tools for calculating costs
- FWF’s Labour Minute Costing Calculators allow brands and factories to ring-fence the labour cost based on a transparent methodology for costing/pricing of goods. When wages go up, e.g. because of a rise in the legal minimum wage, or application of a CBA wage level or a living wage benchmark, the tool allows you to calculate the impact such increases have on the manufacturing (CMT or FOB) price of garments. The calculator enables suppliers and buyers to determine the cost of one minute of labour in a factory, taking into account factory-specific variables such as workforce composition, bonuses and insurance and actual overtime hours. This tool is an important step forward in ensuring brands’ purchasing practices related to pricing (CMT and FOB) support living wages.
- FWF Labour Minute Calculator for Bangladesh
- FWF Labour Minute Calculator for Myanmar
- FWF Labour Minute Calculator for India (Tamil Nadu)
- FWF Labour Minute Calculator for Romania
- FWF Labour Minute Calculator for Vietnam
- FWF Labour Minute Calculator for North Macedonia
- FWF Labour Minute Calculator for Turkey
- Watch this space for more LMC Calculators currently in development
- FWF’s wage calculation templates offer a more in-depth complementary tool to the LMC calculator, which can be used to calculate how much more each individual worker would receive whenever a wage floor is increased. The templates can also be used as a verification tool to ensure that additional payments from brands reach individual workers.
- Please contact your FWF brand liaison to access the tools. These will be posted soon.
- FWF’s Wage Ladder consolidates a range of living wage benchmarks for garment producing countries/regions. Choose a benchmark to use in calculating costs. Access the tool here.
KNOWING WHERE THE MONEY WILL COME FROM TO COVER HIGHER WAGES
It is common that brands and suppliers first seek to get a sense of how much more living wages would cost and then figure out how to cover the short fall, i.e. who pay more? Will the retail price reflect incremental costs? Will the supplier be asked to cover added costs out of margins? Or does the brand find efficiencies in its structures/practices and apply these to wage increases?
- Productivity: the Key to Funding Living Wages? – exploring the relationships between productivity, efficiency and living wages – and re-conceiving and challenging conventional industry thinking about who covers the costs of higher wages.
- (Coming soon) Where Can Brands Find the Money?
HOW TO ENSURE THE MONEY REACHES WORKERS?
Involved in ensuring money reaches workers is deciding who gets how much more? That is, if a supplier creates a wage floor for the lowest paid workers, workers with seniority likewise would expect wage increases (FWF publication on wage grading – coming soon).
Once it is clear who is getting how much, it is important to verify that all the extra money paid by a brand is received by workers. This becomes particularly challenging when multiple brands are paying additional funds to ensure higher wages. (Coming soon: FWF’s audit tool)
WORKER INVOLVEMENT AND SOCIAL DIALOGUE
Workers sit at the centre of FWF’s wage increase cycle, and should be involved at each stage. It is important to meet workers (and the existing system for social dialogue in place in factories) where they are. FWF is working with Strategic Partnership trade union partners, FNV and CNV, to develop guidance in this regard. In the meantime, please contact your brand liaison to discuss current workplace social dialogue and the broader context. See also FWF’s Worker Education Programme.
See also FWF’s Brand Performance Check Guide, which offers much-needed accountability as a background to any living wage efforts. See specific indicators that capture brand efforts to ascertain wage levels, link them to their own prices, and then take action to raise wages systematically throughout their supply chains.