The 10 favourite excuses used by factories
Excuse nº1: Setting a fair minimum wage is the government’s responsibility, and not that of companies
Although in an ideal world, the minimum wage set by governments (and in general negotiated with companies and unions) should be equitable, there is a clear explanation as to why this is not the case. Governments take their international competitiveness into account, and are fully aware that the buyers in fashion multinationals will look elsewhere if the labour costs are too high. The textile industry is one of the most mobile in the world. Due to procurement and production practices, low salaries are always a decisive factor in the selection of suppliers.
This means that the power is in the buyers’ hands, rather than being with the government.
It is therefore up to the multinationals who dominate the supply chains in the textile industry to commit to living wages and to reassure the governments that they will continue sourcing also when they increase the minimum wage.
If they are to resolve the salary issue, the brands need to consider taking both the overall supply chain into account in all countries, as well as holding discussions with other brands that have supply chains in each of these countries.
Excuse nº2: It is impossible to pay a living wage because there is no consensus on how to calculate the rate.
This is an unacceptable argument from the workers’ point of view. For them, the issue of low salaries is all too obvious, as indeed is also the case for many companies. Nevertheless, the latter have not made any concrete efforts to try to find a solution. The alliance for a minimum wage in Asia, (Asia Floor Wage Alliance) includes over 70 textile workers’ unions, workers representatives, and NGOs from the six Asian textile-producing countries. The minimum wage is based on the means a family needs to buy a basket of food for a worker and his or her family. It also takes other basic needs into account. The AFW model for calculating the living wage was presented on many different occasions, and many companies found it was of interest, but only a few of them have started to officially use this indicator as a reference framework for a living wage.
The Clean Clothes Campaign (CCC) has also laid out concrete demands in terms of salaries for Eastern Europe and Turkey; they have been defined in conjunction with local organisations. It would be implemented in a series of staggered wage increases to reach the living wage. The first urgent action should be to increase salaries so that they correspond to at least 60 percent of the current average national wage.
It is therefore not impossible to reach consensus on how to calculate the living wage, but for the moment, companies are not willing to commit.
Excuse nº3: Countries with low salaries might lose their competitive edge if pay were to be increased.
On this point, it is essential to bear in mind that the labour costs only constitute a very small part of the final sale price of a garment; even if they were to double or triple the wages of those working in factories, the impact on the price would be minimal. The labour costs involved in making a garment generally only represent between 0.5% and 3% of its sale price.
Cheap labour is, however, not the only reason that explains the delocalisation of production to other countries. China’s success can be attributed in part to low labour costs, but the industry’s efficiency and productivity at national level is significant. It can provide an overall supply chain organisation for the industry, ranging from growing cotton to finished garments. This is not something that most other countries can boast.
It has been proven that an increase in salaries would increase morale and productivity, as well as reducing absenteeism and staff turnover.
Therefore, the fact of paying a living wage would also improve quality and adaptability and allow enlightened suppliers to remain competitive.
Excuse nº4: Our company is helping to create jobs in developing countries. By working in this country, we are providing jobs to people who would otherwise not have any work.
Work in a garment or sportswear factory is often the only accessible source of income for people and their families. This is why the stakes are so high. This strong dependency should not be a pretext for exploiting people. Those working in these factories do not receive a fair wage given the profits that they help create for the big brands.
Textile workers need their jobs, but also deserve the opportunity to lift themselves out of poverty.
Work alone cannot lift them out of poverty if the employers can hire and fire at the drop of a hat, deprive workers of their right to unionise, pay them a mere pittance that obliges them to work inhumanly long hours to survive, and avoid paying sick or maternity leave. These jobs have a devastating impact on many people: their health suffers, they work themselves overly hard, and families break up. This is unacceptable and can be avoided. According to the Declaration of Human Rights (article 23, para 3), all people have the right to decent employment and “to a just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity”..
Excuse nº5: The cost of living is lower in the textile-producing countries. It is therefore normal for salaries to be lower.
It is indeed true that the cost of living is significantly lower in many countries than in Europe. This is why we can’t compare our level of pay with that of other workers in other parts of the world. We do know however, thanks to our partners in the textile-producing countries, that the minimum wage in these countries is never enough to equate to a living wage, and that many workers in the trade are not even receiving the minimum wage.
A living wage allows people to feed themselves properly and have access to clean water and housing, to clothe themselves and ensure access to education, healthcare and transport, as well as having a little left over for other things. It should be enough to cover the basic needs of a person and his/her family and enable them to fully participate in society and live in dignity. It should take the cost of living into account, include social security services, and take other aspects of life into account. We believe that it is what all workers should be paid for a normal week’s work.
A living wage is not something that enables people to get rich. It merely allows them to live with a minimum of dignity.
Excuse nº6: Consumers don’t want to pay more for their clothes
It is true that consumers have got used to cheap clothes. However the cost of salaries only represents between 0.5% and 3% of the cost of items.
When a consumer pays 10 CHF for a shirt, the person who made it is only paid 5 to 10 cents. So to double that salary would only add 5 to 30 centimes to the overall cost, which would not hit the consumers’ pockets very hard. And if it does not make a huge difference for consumers, this is unlikely to make a huge difference to the companies either. The millions of francs of profit margins made by the multinationals in the textile and clothing industry should easily be able to absorb these increases. Even if the price difference were to be totally included in what consumers pay, it would be so little that it would definitely not be dissuasive when buying a T-shirt of a pair of trousers.
The percentage of a worker’s salary in the garment industry only accounts for between 0.5% and 3% of the final price of most clothes.
Salaries could be increased to the level of a living wage without having more than a marginal impact on the end-price of the fashion brands. A higher sales price, however, does not provide any guarantees of payment of the living wage. Some very prestigious high-end brands also have their clothes made in low-cost labour markets and pay the seamstresses a salary that doesn’t allow them to live life with dignity.
Excuse nº7: According to our code of conduct, we pay fair rates.
A code of conduct published on an internet site is in no way a guarantee that a living wage is paid in the factories. It does not however mean that it is not useful to include the concept in the code of conduct, as it enables us to call the companies to account. Furthermore, if the workers become aware of the existence of this code of conduct and its contents, they can use it to demand better pay. The issue with codes of conduct is that they are only useful if there are control procedures in place to verify the implementation. Companies should verify the effective implementation of their code of conduct and check that the situation in their own and their suppliers’ factories have improved. Additionally, claiming to pay “fair wages” is not enough.
Companies should publicly define what they mean by “fair wages” on the basis of facts and figures, as well as methodology, and do so by publishing a detailed plan of how they intend to achieve this rate.
Excuse nº8: Given the economic crisis, we can’t afford to pay more for our products.
The economic crisis does have an impact on companies’ profits, but this is quite a separate issue from the workers’ right to a living wage. According to the Guiding Principles of the United Nations on Companies and Human Rights, paying a living wage is not an option that companies may or may not choose to implement, or some new-fangled measure of corporate social responsibility that might be implemented when the economic context allows.
The living wage is not a favour to workers: it is a necessity and a duty, irrespective of the economic context. The living wage is not merely a privilege for the rich.
And, as the Universal Declaration of Human Rights stipulates, everyone has the right to “just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity” (Universal Declaration of Human Rights, article 23.3).
Excuse nº9: If we increase salaries, we will attract over-qualified people.
If we increase salaries, we will attract more qualified people, such as medical personnel or teachers who prefer to work in a factory if the salaries are better than those on offer in hospitals or schools. It would therefore have a negative impact on health and education in the country.
Even if this might appear true at first sight, this argument underestimates the positive impact of higher salaries in industry on the public (and private) sectors.
If wages are increased in the industrial sector, local governments may be forced to pay more attractive salaries to teachers and healthcare workers.
But if more money is in circulation in a country, the Tax Office should ultimately be able to offset this deficit. A living wage could have a dynamic impact on local economies and thereby help developing countries’ to move forward. The garment industry, even if it states that it is stimulating the economy in these countries, is actually hindering their development, as the profits linked to badly paid work are taken up by the shareholders in the West.
Excuse n°10: Our shareholders are not in favour of paying a living wage to workers in the garment sector.
It is sad to see that companies don’t take their decision in the light of human rights, but rather on the basis of profit. Even if no change is in sight, it doesn’t mean that it’s impossible to convince shareholders of the need to act. Following a series of events published by the media, the Primark shareholders (ABF) accepted the nomination of a Director of Corporate Social Responsibility (CSR) to the Board, and also the creation of a CSR team that was responsible for the issue of human rights at work. That was in 2009.
Companies like Marks and Spencer have made “ethical practice” one of their flagship sales arguments and made additional profits by investing in CSR initiatives. At factory level, surveys have shown that well-fed, well-paid workers who work a reasonable number of hours are more productive and make better quality goods.
The argument in favour of a living wage can be founded on many different commercial reasons. Holding intelligent conversations with shareholders shows that there is no coherent reason why they would refuse to support the living wage.