The Impact of a Living Wage for Garment Workers

Just how much should hard work be rewarded? This question is at the heart of the living wage debate.

Living Wage_UN Universal Declaration of Human RightsMore than five years after 1,138 garment workers lost their lives to fashion in the Rana Plaza disaster, we look at whether the campaign for a living wage can help to turn the tide against inequality.

Research by Deloitte Access Economics for Oxfam Australia reveals that on average only between two percent and four per cent of the price of a piece of clothing sold in Australia goes toward workers’ wages in factories. Similar global research by the Asia Floor Wage Alliance, found for an average item of clothing, only “between 0.5% and 3% of the cost goes to the worker who made it”.

It’s important to note that, as shoppers, it would cost us very little for brands to change this. Even if big brands passed the entire cost of paying living wages on to consumers, it would only cost an extra 1% of the retail price – that’s just 10 cents for a $10 t-shirt – for living wages to be paid to the women and men who make our clothes.

What is a living wage?

A living wage is the bare minimum required for workers to have a decent life. In China the average garment factory worker is paid more than a living wage, the minimum legal wage remains well under a living wage and many workers remain in poverty. In Bangladesh, Vietnam and Indonesia typical wages are only one quarter to one half of what a worker needs for a decent life. The living wage movement took off in Baltimore in 1994, when the city passed living wage laws when it became clear that many of the people living in Baltimore’s homeless shelters were actually employed in full-time jobs! Campaigners found that it was simply not possible to sustain a decent quality of life on the city’s minimum wage.

According to Jon Gertner, this response indicated the basic belief “that no one who works full-time should have to live in poverty.” Simply put, the logic behind the push for the living wage is based on the rather instinctive assumption that a person who works long, hard hours should be rewarded by not having to live below the poverty line. Although most governments and companies support this in principle, the fact is that the reality is often far bleaker.

How are living wages calculated?

There are two widely accepted methodologies:

  1. The Asia Floor Wage Alliance brings together unions and labour activists and has calculated minimum living wages in many Asian countries; and
  2. The Anker Method, named after Richard and Martha Anker who developed the method in partnership with the Global Living Wage Coalition, usually produces somewhat lower recommended minimum wages.

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Both factor in a low-cost but nutritious diet for a small family, basic acceptable housing, other essential expenses such as health and clothing, and a small margin for unexpected circumstances.

A snapshot of the living wage campaign in Bangladesh

There are many legitimate concerns about the ethics and impacts of the fashion industry (especially in poorly regulated, developing countries), but that doesn’t mean that the fashion industry hasn’t also brought benefits to countries such as Bangladesh. According to Sarah Labowitz and Dorothée Baumann-Pauly,“Since the arrival of the garment sector in the late 1970s, the country’s poverty rate has fallen from 70 percent to less than 40 percent, accompanied by increases in life expectancy, literacy, and per capita food intake.” Certainly a pleasing statistic.

But there is a reason many companies have flocked to Bangladesh in recent years, and it isn’t due to their reputation for human rights or safe working conditions. From a business perspective, high productivity and low overheads are always important, but the question remains: how is it possible to make clothing so very cheaply?

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Many of the people employed in the cut-make-trim part of the fashion supply chain work in unsafe factories and live in deplorable conditions. In fact, garment factory wages in Bangladesh are the lowest in the world. Workers’ living conditions may not be a direct legal responsibility of the large international corporations that own the major high street brands – but then again, if their healthy profits flow from the fact that people are living in abject poverty, surely they have to take responsibility? The living wage campaign aims to overcome this injustice by calling on companies’ to ensure their profits don’t come at the cost of their employees living conditions.

Living wages in the sportswear sector

The Clean Clothes Campaign and Collectif Ethique sur l’Etiquette have conducted research on the wages and conditions of workers in the sportswear sector. They have found that Adidas and Nike do not pay living wages; worse they are moving production away from China where wages are steadily growing to countries like Vietnam, Cambodia and Indonesia  with lower wage standards and where human rights violations are more common.

The campaigners are calling on Nike and Adidas to establish a roadmap with specific targets for guarantee of payment of a living wage to all workers in their supply chain with clear time commitments. They also call for the brands to make living wages possible through long term commitments to their suppliers factories, to publish annual statements of the actual wages paid and the results of all social audits of suppliers factories and to support the efforts of unions to negotiate fair wages in supplier countries.

Does a living wage guarantee a better life?

There’s a danger that where wages are increased, local service providers will increase the price of rent and groceries. This means that unless it is implemented meaningfully, an increase in wages may not fully translate into an improved quality of life. And if such an increase is not across the board, then increases at one factory may mean losing work due to retrenchment if international brands move their orders to cheaper competitors.

This is why it is so important that brands work in coordination with unions, governments, and others to address the problem. Brands should also commit for the long term to suppliers that do the right thing by their workers.

Additionally, it is important to make sure that costs aren’t cut elsewhere as a result of the wage increase–if brands continue to squeeze them on price, factory owners may offset increases in wages with a decrease in safety measures within the factory. But one thing we can say for sure: if wages are not increased the workers who make our clothes are condemned to a life of poverty and danger.

Who is responsible for making a change?

It’s clear that protecting the rights of fashion’s lowest paid workers is complicated. But who is responsible for trying to improve the system? Should companies and consumers be responsible for living conditions in factories, or should it fall under the jurisdiction of the government and local authorities?

Given the unstable political situation in the countries where labour rights are often an issue, effective government intervention isn’t always possible, and local industry players often have excessive influence with governments, which they use to protect their short-term interests at the expense of their workers. According to Sarah Labowitz and Dorothée Baumann-Pauly, for instance, “The government of Bangladesh lacks the resources, administrative capacity, and often the will to protect workers in garment factories”.Fashion Revolution

There are a number of organisations that are working towards a Fair Trade model in the fashion industry, including the Ethical Trading Initiative and the Clean Clothes Campaign. The Tailored Wage Report published by Clean Clothes Campaign ranked the approach to living wages of 50 major clothes companies from Adidas to Zara. A brand’s approach to a living wage is a key factor taken into account in rankings such as the Fashion Revolution Transparency Index (which rates 100 of the largest fashion brands), Baptist World Aid’s Ethical Fashion Report (300 brands available in Australia) and in the Good On You app (1200 brands rated with a focus on Australia, the US, New Zealand and Canada).

What should brands do?

According to Oxfam, brands should first get the basics right on human rights – publish a list of their suppliers respect workers rights to organise via unions, establish effective grievance processes and empower women workers with positive policies and targets.

On living wages, they should:

  1. Make a credible commitment to paying a living wage
  2. Publish a living wage roadmap
  3. Implement and monitor living wages in the supply chain

Oxfam publishes a company tracker, that monitors 16 large brands available in Australia, including Cotton On, Country Road, Just Jeans and H&M. At time of writing 9 of the 16 companies were recorded as meeting the transparency requirement, but only 6 had made any kind of commitment to paying a living wage.

Of the 1200 brands rated in the Good On You app, just 154 are rated “Great” for labour rights based on the certifications they hold (eg Fair Trade) and/or their strong record on respecting the rights of their workers.

What can you do as a shopper?

Oxfam is calling on consumers to send a message to brands asking them to commit to paying a living wage and move forward to implement that commitment. Why not sign the Oxfam pledge to

  • Stand in solidarity with the women who make our clothes
  • Let big brands know loud and clear that the women working in their factories, making my clothes must be paid a living wage.

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Oxfam will keep you up to date with the next action to take. First up you’ll be asked to call on Big W and KMart to commit before Christmas to paying a living wage to the workers in their supply chain.

Final thoughts

It is clear that the tragic events at Rana Plaza didn’t occur simply because the structure of the building was unsafe. Rather, it was possible because the very structures that inform interactions between workers and management are highly unstable and unequal. After Rana Plaza, big companies donated millions, intended as compensation for victims – but surely it would make more sense to provide a decent wage and safe working conditions in the first place?

Despite the fact that the cost of living in certain countries may be lower, the salaries paid in the textile industry still don’t provide an adequate level of comfort for a worker to exist with basic dignity, hygiene or health. No matter which way we look at it, no matter where we place the blame – when we purchase fast fashion we are often participating in a system that leads to the chronic exploitation and humiliation of some of the world’s most vulnerable inhabitants.

At Good On You, we believe in supporting companies that protect and nurture employees at all levels of the supply chain. Check out some of our ‘Good’ and ‘Great’ rated brands to discover the ways some companies are working to support developing economies, protect their workers and produce clothing that looks good too.

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Original article by Yvette Hyman published 2015, updated by Good On You editorial team October 2017 and again in June 2018.

Feature Image via Eko Hernowo. Additional images via Wikimedia, Fashion Revolution, SoFa Design Institute,  and Oxfam Australia.

Yvette Hymann

Author Yvette Hymann

Yvette likes writing, reading and long walks on the beach. She has been described as a crazy cat lady more than once in her time, and is actually quite okay with that.

More posts by Yvette Hymann

Join the discussion One Comment

  • Anna says:

    This is an excellent insight into the living wage debate and how it is governed. Having lived in, revisited and traded ethically with Cambodian social enterprise for some years now, I see how it is so true that the living wage needs to support a full time employee (and their family) to live out of poverty. Hopefully this shift in industry and government standards for the minimum wages catches up with the need soon. You guys are doing such a great job in build awareness and demand for ethical production. ?

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