Living Wages: Recommendations for Brands

Posted on January 8th, 2020

Living Wages: Recommendations for Brands

Living Wages: Recommendations for Brands

In previous newsletters, we explored the need for increased wages from the perspective of underpaid workers. We also discussed the differences between the legal minimum wage and living wage. If you’d like to revisit these topics, click here.

Now, we will start discussing how brands can begin to work towards living wages in their production chains.

Steps towards paying living wages:

  1. No matter the size of the company, the first step towards paying living wages is recognizing the role and responsibility of a buyer (whether a wholesaler or retailer) on the wages of artisans.
  2. The second step is to ask about the wages and discuss the matter in general with the management of artisan groups or factories, as well as with the workers themselves. Simply asking about the topic can initiate a change, since a buyer always has power over the suppliers.
  3. The third step would be to compare the existing wages to the information and calculations available on living wages — more information will be provided in upcoming letters. Make a time-bound action plan to raise wages, if revisions are needed. This includes checking the price structure of final products and making sure they allow the payment of sufficient wages.

Recommendations for brands — by Oxfam Australia and Clean Clothes Campaign

Oxfam Australia interviewed hundreds of garment workers in Asia for their recent report, Made in Poverty, The True Price of Fashion (2019). They make the below recommendations to brands to initiate the work towards paying living wages. Keep in mind that these recommendations can be adapted to companies of any size — keeping things simple and making a practical step-by-step plan for your company is key to success!

1. Get the basics right on human rights

  • Be transparent. Publicly disclose factory list and update it regularly.
  • Fairly deal with human rights abuses. Support factories to establish effective grievance mechanisms.
  • Allow workers to organize. Adopt a positive and proactive freedom of association policy.
  • Consult with unions and workers´ representatives. Ensure that workers are able to have a representative say in regards their working conditions in all factories and be part of all wage negotiations.
  • Empower women workers. Adopt a positive and proactive gender policy and gender-sensitive targets

2. Make a credible commitment to living wages

  • Publicly commit to respecting the right to a living wage and work towards the implementation of living wages in the company supply chain. This must include a timeframe by which the brand will achieve key milestones, such as publishing a living wage roadmap or undertaking a living wage pilot program.

3. Develop and publish a living wage roadmap

  • Adopt an existing living wage benchmark or calculate a living wage using established methodology (we will discuss these in the next newsletter!). Brands should ensure — and if necessary, facilitate — a meaningful and transparent discussion and negotiation between workers, unions and management to determine steps to living wages and agree on plans to achieve them.
  • Recognize that purchasing practices and pricing policies have an impact on wages (and working conditions) and commit time and resources to calculate the labor costs of merchandise to ensure that prices facilitate the payment of a living wage at the very least. This means that the Freight on Board (FOB) price should cover a living wage labor cost.

4. Implement and monitor living wages in the supply chain

  • Conduct living wage pilots as appropriate to the supply chain and adjust the living wage roadmap based on lessons learned. Pilots should be done in collaboration with other brands whenever possible and support systemic change to adopt living wages through collaboration, coordination and dialogue among brands, factories, employers´ organizations, unions and governments.
  • Clearly indicate the commitment to stay in a sourcing country when wages increase and actively engage, advocate and support governments, industry associations and civil society to increase minimum wages to match living wages.
  • Supply regular public reports on the living wage programs, roadmap to a living wage, and the progress being made (or lack thereof).

Source: Oxfam Australia, Getting to a Living Wage: Recommendations for Brands (2017) and Oxfam Australia, Made in Poverty -The True Price of Fashion 2019

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