The labor costs in a typical piece of clothing make up 1 to 3 percent of its retail price.On top of this, it’s not just the cheap labor that entices production to other countries. China is popular not just because of its cheap workforce but also because its industry is very efficient and productive from cotton production to finished garment. Wage increases have been shown to improve workforce morale and productivity, as well as reduce absenteeism and employee turnover. Paying a living wage could therefore improve quality and flexibility, allowing enlightened suppliers to retain—or even gain—a competitive edge.
1. CALCULATING FAIR AND BALANCED WAGE IS IMPOSSIBLE
From the workers’ perspective, there is little sense in this argument. The problem of low wages is obvious to workers and many companies alike, yet because companies can’t agree on a figure, many refuse to try raising wages.
The problem of low wages is obvious, yet because companies can’t agree on a figure, many refuse to raise wages.
Although this dilemma has existed for years, little attempt has been made by companies to reach a consensus, and when multi-stakeholder initiatives have tried, negotiations have failed. It isn’t the case that this consensus is impossible, its just that companies don’t want to find it.
In 2009, the Asia Floor Wage Alliance—an alliance of 80-plus garment workers’ unions, worker representatives, and non-governmental organizations from six Asian garment-producing countries—did all the hard work and calculated a figure for a living wage for garment workers: $283, more than four times the average monthly salary in Cambodia.
The number was based on what was needed to buy a food basket for a worker and her dependent family, as well as any additional costs she would have to pay to survive. The buying power of this figure was suggested to companies as a solution to the dilemma. Although many companies agreed that it was an interesting idea, none of them have, to date, officially used this figure as a living-wage benchmark.
2. CONSUMERS DON’T WANT TO PAY MORE FOR THEIR SHIRTS
It’s true that consumers have become used to paying only a very small amount for their apparel. It’s worth noting, however, that a garment worker’s wage is only 1 to 3 percent of the total cost of most clothing.
A garment worker’s wage is only 1 to 3 percent of the total cost of most clothing.
If a consumer is paying €8 ($10) for a shirt, the worker who made it is receiving only 24 cents at most. To double this wage would only be another 24 cents. The consumer would barely notice this type of increase, and if a consumer won’t notice it, a company probably won’t notice it that much either. These types of costs could be absorbed into company profit margins who make millions of euros per annum in profits.
3. GOVERNMENTS, NOT COMPANIES, NEED TO SET MINIMUM WAGES
While it’s true that minimum wages set by governments (often negotiated with business organizations and trade unions) should ideally be reasonable, there’s a clear reason why they aren’t. Governments have to think about their international competitiveness, and they’re all too aware that multinational fashion buyers will move elsewhere if labor costs become too high.
Governments are all too aware that multinational fashion buyers will move elsewhere if labor costs become too high.
The multinational fashion buyers hold the power in the situation, not the country governments. It’s down to the multinational companies who dominate garment-supply chains to show that they are willing to absorb the small increases in production costs that might occur, in order to give governments the confidence to raise minimum wages in the first place.
Fashion brands will need to work both across their entire supply base in different countries, and with other brands buying from each country, to move the wage issue forward.
4. LOW-INCOME COUNTRIES WOULD LOSE THEIR COMPETITIVE EDGE
The first and most obvious point to make here is that labor costs represent such a small proportion of the cost breakdown of a garment that even doubling them would make only a small difference.
Paying a living wage could even improve quality and flexibility, allowing suppliers to retain a competitive edge.
The labor costs in a typical piece of clothing make up 1 to 3 percent of its retail price.On top of this, it’s not just the cheap labor that entices production to other countries. China is popular not just because of its cheap workforce but also because its industry is very efficient and productive from cotton production to finished garment.
Wage increases have been shown to improve workforce morale and productivity, as well as reduce absenteeism and employee turnover. Paying a living wage could therefore improve quality and flexibility, allowing enlightened suppliers to retain—or even gain—a competitive edge.
5. WE’RE HELPING WORKERS WHO WOULD OTHERWISE BE UNEMPLOYED
It’s true that, for many workers, getting a job at a garment or sportswear factory is better than some of the alternatives—that’s why so many depend on them. The fact that people are desperate isn’t an excuse to exploit them. Workers aren’t getting their fair share of the benefits they are creating for the big companies.
The fact that people are desperate isn’t an excuse to exploit them.
We welcome the fact that millions of people are earning a wage. This alone, however, is not enough to lift them from poverty if employers can hire and fire at will, deny union rights, pay low wages that drive people to work inhumane hours just to survive, avoid paying sick leave, and avoid observing maternity rights.
For many workers, these jobs carry devastating hidden costs, such as poor health, exhaustion, and broken families, all of which are unacceptable and avoidable. Everyone wants and is entitled to a quality job that pays “just and favourable remuneration ensuring for himself and his [or her] family an existence worthy of human dignity,” per Article 23(3) of the Universal Declaration of Human Rights.
Photo by Michael Hughes for ActionAid.
6. THE COST OF LIVING IS LOWER SO WE CAN PAY WORKERS LESS
Of course it’s true that the cost of living in many countries is much lower than in the United States and Europe—that’s why we don’t compare our wage levels with workers elsewhere. We do know from our partners around the world, however, that the minimum wage in each country is never enough to provide a “living” wage for workers and many garment workers don’t even get paid the minimum.
A garment worker in Cambodia has to work two hours to afford one kilo of rice. The same worker in Norway can buy 14 kilos for just an hour of work.
A 2010 report from Norway’s Future in Our Hands revealed that garment workers in Bangladesh and India have to work approximately for three hours to be able to buy one kilo of rice. Garment workers in Cambodia have to work two hours to buy the same amount of rice while in Shenzhen, China, one hour’s work is enough. As a comparison, a garment worker in Norway can buy 14 kilos of rice for one hour of work.
A living wage enables workers to meet their needs for nutritious food and clean water, shelter, clothes, education, healthcare, and transport, as well as allowing for a discretionary income. It should be enough to provide for the basic needs of workers and their families, to allow them to participate fully in society and live with dignity. It should take into account the cost of living, social security benefits, and the relative standards of other groups. This is what we believe each worker should be able to earn within a normal working week and this currently isn’t the case.
Photo by Anti-Slavery International.
7. OUR COMPANY CODE OF CONDUCT SAYS WE PAY A FAIR WAGE
Putting a code of conduct on a website is not a guarantee that a fair wage is being paid. This is not to say that having this in a code of conduct cannot be useful. It can be used to hold companies to account and, if workers know about the code and what it contains, they can use this to demand better wages.
Putting a code of conduct on a website is not a guarantee that a fair wage is being paid.
The problem is that codes are only worthwhile when proper procedures are in place to implement, monitor, and verify these standards. Companies have to check whether the code is actually implemented and work with supplier factories to make sure that improvements are happening. It also isn’t enough to say that a “fair wage” is paid. Companies need to publicly state what “fair wage” means, using real figures and methodology, as well as publish a plan for how they intend to achieve it.
8. THE ECONOMIC CRISIS HAS CRIPPLED OUR ABILITY TO PAY A HIGHER PRICE
While we acknowledge that the economic crisis has had an impact on company profits, this is a very separate matter to the right to a living wage. A living wage shouldn’t be an bonus that companies can choose or not choose to pay depending on the stock-market performance.
A living wage shouldn’t be an bonus that companies can choose or not choose to pay depending on the stock-market performance.
Workers need a living wage not as a favor but as a necessity, whether it is the right time economically or not. A living wage isn’t only the privilege of the rich.
9. HIGHER WAGES WILL DRAW LOW-PAID NURSES AND TEACHERS INTO THE GARMENT INDUSTRY AND RUIN LOCAL EDUCATION AND WELFARE
Although this appears to be the case at first, this argument underestimates the positive impact higher wages in manufacturing may have on public- and private-sector jobs.
A living wage in manufacturing could see local economies lifted across all sectors and allow developing countries to progress.
With a rise in manufacturing salaries, local governments will receive a higher tax income, allowing them to offer competitive salaries to teachers and nurses. Likewise, with more money circulating in local economies, and more tax paid by public sector workers, the national treasury will receive a boost.
A living wage in manufacturing could see local economies lifted across all sectors and allow developing countries to progress. Although the garment industry purports to benefit developing country national treasuries, it actually prohibits development. All the benefits of cheap labor are siphoned off to profit top-level executives and international shareholders.
10. OUR SHAREHOLDERS DON’T SUPPORT LIVING WAGES FOR WORKERS
It’s a sad fact that companies cannot make decisions based on human rights but have to find the business case for doing the right thing. This fact isn’t going to change. But that doesn’t make it impossible to convince shareholders of the necessity to take action.
Companies like Marks & Spencer use “ethical practices” as their selling points and have increased profits by investing in CSR initiatives.
In 2009, following a series of media exposés, Primark shareholders agreed to appoint a CSR director to the company board, as well as employ a CSR team to address labor rights. Companies like Marks & Spencer use “ethical practices” as their selling points and have increased profits by investing in CSR initiatives.
Furthermore, on the factory level, studies have shown that workers who are well-nourished, work regular hours, and are paid well, work more productively and produce a better product. There are plenty of business cases for paying a living wage. With the right discussions with shareholders, there is no reason support cannot be built.