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Following labour shortages in many of its industrialised regions, legal minimum wages have been increased in 27 of China’s provinces, autonomous regions and municipalities between February and August 2010. Although these increases are regarded as a step in the right direction, minimum wages in China still fall (far) short of living wages.
In 2009 FWF conducted a study that focused on wage levels in several cities that are key for China’s garment industry. According to the findings from this study, legal minimum wages for regular working hours were only about 60% of the amount that would be sufficient to meet workers’ basic needs. Payment of minimum wages, therefore, cannot be a satisfactory benchmark for compliance with the FWF Code of Labour Practices in China. FWF expects companies to commit to wage levels that provide workers the means to live in decent conditions with their families.
In response to the gap that presently still exists between actual wages that are being paid and living wages FWF has integrated the ‘wage ladder’ into its audit methodology. The wage ladder is a benchmarking system used to chart wage levels in a factory relative to various available wage standards in a country or region. By means of the wage ladder FWF will be able to chart wage levels at individual factory relative to other (living) wage standards. The wage ladder will be included in reports of factories audits that are carried out from July 2010 onwards. Information taken from wage ladders will be used as input for management system audit reports, by means of which FWF publicly reports on the extent to which affiliate members companies effectively implement the Code of Labour Practices, including their commitment to facilitate the payment of living wages on factory level.