Overtime and Living Wages

Date: 19/07/2018

Overtime and Living Wages are two issues that go hand in hand. One cannot be addressed without considering the other.

In various garment-producing countries, overtime-as-the-norm is depressing regular/base wage rates. If we consider the prevalence of hefty overtime taking place consistently, it is clear that workers have come to rely on working very long hours in order to earn enough to live on. A look at wage ladders in China, for example, shows that wages only hover around living wages estimates when regular wages and overtime wages are considered together.

Any strategy to increase wages or to reduce overtime needs to address both issues. If we seek to reduce overtime, we need to consider ways to raise wages or workers will object to reductions in overtime. To find out the root causes of overtime, we must also examine the role played by poor planning and weak productivity gains.

A recent report on ‘Purchasing practices and working conditions in global supply chains’ based on a global survey carried out jointly by ILO and ETI stressed that insufficient lead times and inaccurate technical specifications provided by the brands are among key factors leading to lower wages and increased overtime hours. Among industrial sectors, textile and garment manufacturers were identified as the suppliers facing the most inadequate lead times. ‘Clearly, lead times are getting shorter and suppliers must produce more rapidly, which they increasingly do by resorting to overtime, casual labour or even outsourcing of production in order to meet their deadlines,’ the study stated.

Reward workers
Until wages record steady growth and workers can enjoy a decent life based on their regular income, the garment industry will remain unstable. This comes at a cost for all stakeholders.

Ensuring that pay systems are progressive and reward workers in a manner that reflects their skills, education, performance and experience must be a priority for the private sector. This can be achieved by putting functional wage management systems in place in all factories to enable payment of proper wages in line with individual contracts, legal regulations and, preferably, also based on collective agreements at sectoral and national levels.

Collective bargaining
Strong industrial relations allow wages to be negotiated between workers and employers. Collective bargaining ensures that wages and payment structures are sufficient and fairly reflect the workers’ contribution to growth and competitiveness.

To increase productivity while maintaining high quality standards, suppliers must focus on innovative business processes and invest in firm-level training. They must also attract, and retain, a skilled workforce particularly for middle and higher management positions.

To sustain growth and quality, brands need to help factories review their human resources policies and processes. Strong social dialogue promotes good workforce motivation and competitiveness. Retail companies must also look closer to home and examine their own practices. Adequate lead times and clear communication of technical specifications are also critical to ensure that workers earn a living Wage and do not have to rely on excessive overtime to make ends meet.

Based on information provided by Ivo Spauwen, former FWF Verification team member.



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