Living Wage and the Textiles Sector: the best wage is a negotiated one

Ruth Vermeulen and Jos Huber
Ruth Vermeulen and Jos Huber at the Global Sustainability Standards Conference
At the first Global Sustainability Standards Conference, four experts weighed in on living wage in the textiles sector. Altogether there were a fair number of questions to be answered, but also a range of actions and collaborative initiatives to work on wages in a practical way, including a major collaboration by six certification programmes.

In a packed session that was moderated by Verena Wiesner of the German Federal Ministry of Economic Cooperation and Development, three questions about living wage were posed at the start:  How to measure it?  How much it costs to implement it?  And how to collaborate to make wage growth happen?

Ruth Vermeulen of the Fair Wear Foundation talked about the complexity of the textiles sector – with all of its industrial bits and pieces of products - whereby an increase of a few cents on the price paid for one piece hits so many multipliers in its journey to the store hanger, such that the end price in a shop might be six times the original cost increase.  A major point Vermeulen made was that “living wage needs to be part of the manufacturing cost, not the competitive price.” 

Per Bondevik from the Ethical Trading Initiative Norway pointed out to the audience that living wage is about so much more than the wage itself.  He posed to the audience that we have to also look at whether employees are paid on time?  Do they receive overtime?  Do they know what deductions are being made from their pay, and what they are being paid, and how?  How are workers involved in wage dialogues?  Bondevik believes that in the future we will talk not about living wage, but more about collective bargaining agreements.  Vermeulen echoed this when she said “the best wage is a negotiated wage.”

Edwin Koster of Social Accountability International (SAI) talked about the important collaboration happening now among six sustainability standards including SAI, Fairtrade, GoodWeave, Rainforest Alliance, Forest Stewardship Council and UTZ Certified where they have agreed to a shared definition of living wage and a shared methodology for calculating it.  Soon they will be testing the methodology in four countries and sectors and will be training local partners to increase the number of living wage estimates that are available.  They have a goal of eventually having these living wage estimates in fifty countries.  The cross-sectoral collaboration is facilitated by ISEAL and will cover standards systems working in toys, electronics, textiles, forestry and farming.   The collaboration also aims to “break open the lack of clarity in living wage” according to Koster, by putting all of the country-specific living wage estimates in a public database that anyone can use, comment on, or even criticise. 

Jos Huber of the Netherlands Ministry of Foreign Affairs echoed some of the major takeaways from a successful European Conference on Living Wages last November in Berlin that was co-hosted by the Dutch and German governments.  Her Ministry is initiating a working group of governments in OECD countries to reach out to global brands in their own country to take up this issue.  According to Huber, stakeholders in producing countries such as Bangladesh, need to see a “coalition of global buyers who will make public their support for living wage.”  Bangladesh, for example, saw a 77% increase in the minimum wage last December 2013, but still have a long way to go towards a living wage. 

A question was asked, what role can sustainability standards and ethical labels play in all of this?  Huber mentioned the “in between situation” that happens once living wage estimates are available but steps and supply chain complexities to get there seem overwhelming.  It was suggested that standards and certification programmes might help factories and farms move steadily towards those wages through standardization and improvement programmes.  Huber also said that governments have a role to play through referencing living wage in their own procurement policies. 

The audience was an engaged one, with questions especially about the confounding multiplier in the textiles industry.  One audience member asked bluntly and bravely, “if a multiplier exists, and it does exist, why are poor workers paying for that and not us?”  Another audience member asked if middlemen in the supply chain could also be subject to more rigorous standards?   An example was posed of one buyer making a commitment to pay a living wage, but being unable to really affect workers because each factory serves a range of buyers and workers make pieces for a whole assortment of brands (hence, even with this business’ commitment, only a tiny fraction of a worker’s pay check  was paid at the higher rate). 

Questions also came up about the business case for a living wage.  Could a company benefit when they paid higher wages? Vermeulen told the story of one knitting factory in Turkey that made a bold decision: to pay a decent wage.  Vermeulen quotes the factory owner as saying, ‘the price I get now is lower but the yarn costs more.  However, my workers are happier and it’s hard to get skilled workers here.’  In the end, he felt that the quality of his product and the productivity of his in-demand workers made all the difference.

Huber ended the lively session by saying we need all of these initiatives: “good labour practices, high wages, and good social conditions on the shop floor.”  Vermeulen added that we must continue to compare the brands and encourage them to “make the step and be transparent in what they are doing.”  Koster had the final words, which he posed to the entire audience: “for those of you unfamiliar with the concept of a living wage: overcome your fear.  It can be done.  It’s not rocket science.”