Living wages for garment workers: are global clothing companies doing enough?

While references to living wages are apparent within the commitments of global garment companies, our latest research demonstrates that there is a large gap between commitment and action; with negative consequences for low-wage workers employed within supplier factories

In the wake of the Rana Plaza garment factory collapse in 2013, consumer pressure, coupled with a range of civil society campaigns highlighting the scale of the tragedy in Bangladesh has led global garment companies to publicly commit to the improvement of working conditions for people who make the clothes they sell. These commitments have been outlined through various corporate social responsibility (CSR) programmes; and often include commitments to pay a living wage found within individual company codes of conduct, as well as living wage commitments made through membership of external collaborative initiatives (which has become more frequently the case in recent years). New SPERI research, led by myself, in collaboration with Genevieve LeBaron and Tom Hunt on twenty leading global garment companies has found that while many have made commitments to living wage payment, they are yet to demonstrate any meaningful progress or results. We published our report on 30th May 2019, which included analysis of survey data from fourteen  companies collected by Dutch NGO Clean Clothes Campaign, as well as publicly available information from six other garment companies.

Garment production is concentrated in South and South-East Asia where legal minimum wages are often set at a fraction of living wage rates, as calculated by the Asia Floor Wage Alliance. This calculation is based on the amount of money a worker needs to earn in a standard working week (without overtime) in order to provide for their basic needs and those of their families; including food, shelter, transport, education and healthcare. This primarily Asian and overwhelmingly female workforce – around 80% – are therefore routinely paid less than they need to provide a decent standard of living for themselves and their families.

Corporate commitments to living wage payment may therefore appear a welcome step forward for the industry and its workforce. This may paint an effective picture of a bright future for garment workers. However, there is scant evidence that these programmes are taking meaningful steps to achieving living wages on the ground, and therefore they are compounding the very problems they appear to be tackling.

Our research showed that companies are frequently outsourcing living wage commitments to external collaborative programmes such as Action, Collaboration, Transformation (ACT), Fair Labor Association and Fair Wage Network. These programmes themselves are ineffective and unlikely to deliver living wages in the industry; primarily due to their lack of enforcement and accountability mechanisms and their unwillingness to adopt robust living wage benchmarks. Furthermore, companies often join multiple initiatives at once, but as each initiative takes a different approach to the issue of living wages, it  makes it difficult to discern which of these approaches companies are indeed taking, if any.

Additionally, and relatedly, there is widespread confusion among companies and initiatives over what constitutes a living wage. Companies’ public commitment, supplier codes of conduct (that set the terms of sourcing relationships), and the respective definition of a living wage defined by the various initiatives are frequently out of step with one another. Among seven companies in the study that were members of the ACT scheme, only two had a code of conduct commitment to pay wages that was in line with the ACT definition. This raises questions as to the sincerity of these companies’ commitment to, and viability of, the ACT programme itself. Another common problem across the companies and initiatives studied was that workers families are often left out of wage commitments. In addition, the vagueness of language in supplier codes of conduct can render wage requirements to be reduced to simply the legal minimum wage, which is often way below living wage level. Three companies (Amazon, Levi Strauss and Zalando) only made reference to legal minimum wages in their supplier code of conduct, with no reference to basic needs. Only three companies (H&M, C&A and G-Star RAW) of the twenty we investigated committed to a wage payment that would cover all basic components of a living wage.

These companies and all others in the study are falling short of a convincing plan for how they will achieve living wage payment. Again, many brands here fall back on their respective membership of external initiatives to demonstrate their ‘living wage roadmap’ for the future. As previously mentioned, these initiatives, along with companies’ internal plans (where they exist!) are lacking living wage benchmarks. Methodologies such as Asia Floor Wage and Anker methodologies can provide robust benchmarks that account for a wage that, earned in a standard working week, provides for the basic needs of workers and their families. However, there is apparent reluctance among companies and initiatives to clearly incorporate these already-existing benchmarks into their living wage programmes. Benchmarks are crucial as they show what is necessary for workers to live with dignity thus guiding the process. Benchmarks are also important in enabling the monitoring of progress towards this.

Monitoring progress is made more difficult by the fact that only three companies published any wage data for supplier factories. Furthermore, the companies all primarily rely on social auditing to enforce and monitor their own supplier’s compliance with wage requirements in the code of conduct, a method which is widely known to be flawed and ineffective due in large part to its susceptibility to manipulation and deception.

The research also found support and protection of freedom of association rights to be patchy across the twenty  companies. All twenty contained a requirement in their code of conduct that suppliers must respect freedom of association rights, but only seven stated any kind of system of preferential sourcing from suppliers that actively supported these rights. Freedom of association is crucial in achieving wages as it enables workers to organise and bargain collectively, as well as enabling them to raise grievances with management without threat of dismissal or poor treatment. The weakness of enforcement of these rights is particularly concerning given that companies and initiatives, and ACT in particular, hold the negotiation process with unions as a key mechanism for delivering living wages in the garment industry. Inadequate support for this mechanism therefore casts further doubt on the viability and sincerity of living wage commitments.

The problems evident in both the commitments made and the mechanisms in place to achieve them suggest that living wages are unlikely to be paid within dominant approaches. There is no evidence that a single worker in the supply chains of the companies considered in this study are being paid a living wage, yet the companies benefit reputationally by publicly claiming to be meaningfully pursuing living wage payment. Willingness to adopt the language of living wages encourages consumers to buy products that in reality maintain the status quo of low-wage work across the garment industry.

This problem exists in the context of a broader set of labour standards issues that are – primarily but ineffectively – dealt with through voluntary external initiatives and supplier codes of conduct monitoring through social audit schemes. Moving forward, companies should adopt robust living wage benchmarks, exercise greater wage transparency, ensure their core purchasing practices allow for living wage payment and enforce greater support for freedom of association, involving worker organisations at every step of the process.