What we pay workers in developing countries

On Wednesday night, I was out talking about my research. Since the fashion industry had been on my mind lately, I decided to use it as an example of how we can measure companies’ sustainability. When I was about to speak I realised the audience was, apart from two women, only men. On average 50+. A crowd that might not be so concerned with fashion.

In hindsight, I’m glad I didn’t adjust my examples to the audience.  I suspect 50+ men do not get preached to about environmental problems and working conditions in the fashion industry so often. They were surprisingly interested. I was asked about child labour, so there is some awareness in this crowd too.

This time, I used working conditions in the supply chain as one indicator of how ambitious a company is in regards to sustainability. These issues are of course not limited to the fashion industry. A recent Swedwatch report shows that the tobacco industry might be worse. Child labour in combination with hazardous argochemicals is a  very bad combination (smokers- choose organic and Fairtrade!). While wine production might not be equally bad, there’s still good reason to consider how certain wine stays so cheap.

There are many components to working conditions but one of the most important ones is wage. There are certain key terms or certifications that we can look for as they indicate what the company is paying the workers.

Many companies simply pay minimum wage. This is the legal minimum in a country and part of what lures companies to start production in a ‘new’ developing country. But these ‘new’ low wage countries come with problems, as HM recently learnt (again!) when it got out that they (again) had child labour in the supply chain earning less than the minimum wage. Getting labour in Myanmar as cheap as a third of the hourly rate in China must have been very tempting.

Paying the minimum wage is, in many cases, not sustainable as it is not necessarily enough for workers to support themselves. Consequently, the companies get trouble over time because workers have to work overtime to support themselves.

Recognising that they have to go beyond minimum wage, some companies then decide to pay a ‘fair wage’. It is sometimes unclear what this exactly entails, but it is should be more than minimum wage. Norwegian Varner (Dressman, Bik Bok, Cubus, Volt, Solo etc.) is in the process doing something in this area but we don’t know what they will eventually decide on.

A little more ambitious and well defined is the concept ‘living wage’. According to most, a living wage should at least be able to support the worker and a child or half a family. If you’ve seen documentaries where female workers send their children away because they cannot take care of them, then living wage sounds pretty good. HM has said that they will pay a living wage for ‘strategic’ suppliers from 2018. It’ll be interesting to see if they achieve this goal.

A decently ambitious standard that requires companies to pay living wage is SA8000, used by for example Aiayu.

Some companies go further and adopt some kind of Fairtrade certification. This generally means that the community of workers get paid a little extra in order to invest in the community. Two examples are  Patagonia (American Fairtrade) and Serendipity Organics (FLOCERT).

Even more ambitious are, from my point of view,  artisan collaborations. Rather than putting people in factories, when working with local artisan groups and communities companies support people in their existing traditional craft skills. This has a cultural value of its own. One fashion example in this category is People Tree. Within furniture there’s American West Elm. IKEA also has occasional collections in this category.

It is always important to check how big part of the production any of these initiatives apply to. Sometimes companies announce these initiatives so boldly that it seems as if it concerns the whole company when in fact it is only a pilot project.

A final note on poverty. Many chains argue that by placing orders in developing countries they help alleviate poverty in that country. It would be worse if they closed production (as if paying minimum wage or closing production are the only two options). However, if companies wanted to alleviate poverty there are many other ways to do so. Putting people in factories for long hours and paying minimum wage (and sometimes failing at that) is arguably not the best way. 

Another thing we often hear is that Western companies pay more than local companies. So Western companies are already doing something good by being slightly better than these companies. But that’s why our companies placed the production there, because its among the lowest wages in the world. How difficult is it to be ‘good’ when you are comparing yourself to producers acting at the bottom?

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