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NEWSLETTER 15, JUNE 2002
The CCC continues to call for a living wage
CCC UK report shows companies still need to be pressured
to pay workers wages they can live off of
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 In
1999, European campaigns for payment of a living wage in
the garment and sportswear industries were launched, in
response to a global situation of deteriorating wages and
poor working conditions. Despite high profit margins, major
retailers were minimizing costs by relocating supply to
countries with low wages and minimal regulation, and by
subcontracting to semi-regulated or unregulated sweatshops
and home workers.
Retailers had begun to react to public pressure by formulating
codes of conduct. These generally stated that suppliers
should pay their workers the national minimum wage or the
local prevailing industrial wage. Testimonies from workers'
organizations demonstrate that legal minimum wages are rarely
based on realistic cost of living calculations, are often
set below subsistence levels to attract foreign investment,
and often fail to rise with inflation. Piece rate workers
in particular are commonly paid less than the minimum wage.
Clearly there is a need for campaigners working to improve
conditions in the global garment industry to take up wage
issues. The CCC encourages activists to demand that workers
are paid a living wage. European garment companies and retailers
have a responsibility to pay their suppliers enough to allow
factories to pay their workers a living wage. The following
is excerpted from a report produced by the UK CCC on wage
issues: "Wearing Thin: the State of Pay in the Fashion
Industry."
Definitions formulated by trade unions, campaigners and
academics demonstrate agreement that a living wage should
cover basic needs, include an additional discretionary income
and cater for dependents
There are two main approaches to quantifying a living wage.
The "formula approach" (variously calculated on
the basis of average household size, cost of basic needs
per person and savings, or on a fixed proportion of the
national median wage) has the advantage of simplicity -
but fails to address diversity or to empower the workers
whose lives it seeks to improve. The "negotiated approach",
based on consultations with workers, allows definitions
to be tailored to local circumstances but it is problematic
when unions are weak or suppressed. The onus in these circumstances
is on companies to take concrete steps to demonstrate their
commitment to fair remuneration in spite of the weakness
of unions.
Workers' wages generally constitute a tiny fraction of
the retail price of garments and sportswear (from 0.5% -
4%) and company profits are considerable. Whilst in recent
years consumers have demonstrated an increasing willingness
to pay more for fairly traded products, it should be possible
for companies to increase wages without increasing costs
to consumers. Retail companies have a responsibility to
pay suppliers sufficient to cover the cost of living wages,
and to establish systems to ensure that increased payments
to suppliers result in higher wages for workers.
Survey: wages in supplier countries 2000-2001
Between November 2000 and 2001, the European Clean Clothes
campaign worked to update and expand its information on
wages in the garment and sportswear industry. Evidence from
10 countries convincingly demonstrates that legal minimum
wages are insufficient to cover the basic needs of even
single workers - with the result that many are working excessive
overtime. In each country, there is also evidence of suppliers
paying less than the legal minimum wage. Workers' rights
to form and join independent trade unions are commonly denied,
suppressed or undermined by an increase in the use of casual
and home workers, which severely affects workers' ability
to negotiate living wages.
Living on or below the minimum wage: the impact on workers
in 1999
Workers in Bombay, India , reported finding their
factories closed and the workforce dismissed after they
had pressed their employers to pay the minimum wage. The
same employers then re-opened elsewhere with new workers.
If paid, the minimum wage covered food costs and little
else. It did not cover the costs of education and healthcare,
housing and caring for dependents, and was only upgraded
every five years. Workers were constantly living on the
edge, indeed were easily pushed beyond the edge by the need
for housing repairs, the costs of illness or a marriage
in the family. The priority of trade unions was to see the
legal minimum wage implemented. To estimate a living wage
seemed too unrealistic to contemplate .(1)
In Vietnam , where wages are fixed in US dollars
but paid in Vietnamese currency, already low wages were
found to have been adversely affected by fluctuations in
exchange rates between the two currencies. Sport shoe workers
earning £1.10 in 1998 had to work:
2¼ hours to buy 6 eggs
3 hours to buy 1 kilo beans
4 hours to buy 1 liter of cooking oil
12 hours to buy 1 kilo chicken (2)
In Indonesia , garment and sportswear factory workers
who could not make ends meet earning the equivalent of $2.40
(£1.50) a day in 1997 saw their purchasing power decline
by 140% in 1998 as a result of massive inflation and devaluation
of the rupiah. Some garment retailers and buyers rushed
to cash in. The New York Times reported a US clothing company
boasting that it was "enjoying a bonanza" because
sourcing from
"Asia is suddenly less costly, which means a windfall
profit for the lucky retailer… Weaker Asian currencies
make whatever is produced in the region less expensive in
dollars. And rising unemployment in Indonesia, Sri Lanka
and the Philippines holds down the wages of those who make
[our] clothing there. Plus there is a spill over effect
into other Asian countries, sensing competitive pressure
and holding back on what they charge." (3)
Although the inflation rate had been stemmed by 1999,
the Asian crisis left Indonesian factory workers budgeting
for basic survival only as they attempted to recover from
the previous year's catastrophic fall in purchasing power.
According to several studies by UN organizations and the
Jakarta-based Urban Community Mission (UCM), Greater Jakarta
at the beginning of 1999 would have had to more or less
double the minimum wage in order to cover the basic needs
of single workers. Many of Europe's high street retailers
and major international brands source from Indonesia.
In Bulgaria , the minimum wage in garment factories
surveyed by the Clean Clothes Campaign (CCC) was below the
official poverty line. There were considerable contradictions
between the statements made by managers and those made by
workers on the issue of wages. On the basis of the figures
given by workers, they had to work:
50 minutes to buy 1 kilo of bread
1 hour 40 minutes to buy 1 kilo rice
3 hours to buy 250 g salami
10 hours to buy 1 kilo pork.
Workers were making ends meet by growing their own food
where they could and by making use of their rural connections,
working on relatives' land at weekends in exchange for food.
Some workers were found to be on half pay when orders were
low.
Other means of underpaying workers
Piece rate does not necessarily mean underpaying but
is frequently used to do so. There are many different schemes.
Sometimes a basic rate is paid and bonuses added on a piece
rate system, sometimes all is paid by piece rate. Sometimes
a production target is set which workers have to reach within
a given number of hours. Such targets are frequently set
too high and workers have to work extra time - unpaid -
in order to reach them. Piece rate workers are frequently
paid less than the legal minimum wage. Research carried
out among UK homeworkers in 1999 showed that piece workers
were least likely to earn the legal minimum wage and that
the method of calculating pay was a major factor in determining
whether or not homeworkers received the legal minimum wage.
This is echoed by several Asian case studies.
In Indonesia in 1999, PT Tuntex and PT Tainan (then supplying
Nike, adidas and the Gap) operated systems of extraordinarily
high fines for mistakes:
- Rp5000 (72% of the daily minimum wage) for failure to
turn off a machine, tidy up a worktop or for a sewing mistake
- Rp6000 (86% of the daily minimum wage) for taking menstrual
leave (a religious requirement for some women, to which
they are legally entitled) or being late
- Rp25000, or 3.6 times the daily minimum wage, for losing
a tool!
The government of Thailand in the late 1990s introduced
a new law enabling manufacturers, "in the event that
an employer has to stop production, permanently or temporarily,
for unexpected reasons" to pay employees 50 % only
of their wage. Many manufacturers, among them Par Garment
which in 1999 also supplied Nike, adidas and the Gap, have
abused this law, announcing a temporary closure when orders
were low. From September to November 1998, Par Garment workers
were on half pay as the management announced closures on
a total of 26 days.
In October 1999, the UK Clean Clothes Campaign (Labour
Behind the Label) invited the public to send postcards to
major retailers calling on them to commit to a living wage
for all workers in their production chain; pay suppliers
a price sufficient to cover a living wage for all workers;
and ensure that workers have the opportunity to play their
part in determining a living wage. 80,000 postcards targetting
12 major companies were distributed. Three of these had
no code of conduct, two had codes that made no reference
to wages and seven stated that their supplier must pay the
legal minimum wage.
Seven companies responded directly to consumers, and four
addressed follow-up questions from Labour Behind the Label.
Whilst three companies demonstrated some concern to pay
fair as opposed to minimum wages, most failed to answer
specific living wage-related questions and none acknowledged
the need to pay suppliers a price sufficient to cover a
living wage for all workers. (4)
Ethical trading initiatives and the living wage issue
In the late 1990s, six UK garment companies started working
with the UK Ethical Trading Initiative (ETI). This requires
company commitment to the ETI base Code of Conduct, including
payment of living wages. Because of this commitment, these
companies were deliberately not targeted in the Labour Behind
the Label postcard campaign. However, responses to recent
Labour Behind the Label questioning indicate that at least
three companies are monitoring payment of minimum as opposed
to living wages. While this is an appropriate first step
in situations where suppliers fail to pay the minimum wage,
it is only an adequate response if companies are also engaging
in consultations as to what constitutes a living wage. None
of the companies indicated awareness of the insufficiency
of minimum wage rates. Three highlighted the need to consult
with local organizations although only one outlined the
steps being taken to do this.
Members of the European Clean Clothes Campaign are also
working with retailers in France, the Netherlands, Sweden
and Switzerland on the implementation of base codes of conduct
that include living wage clauses. Responses to Labour Behind
the Label questioning suggest that progress will require
a more explicit and pro-active commitment to living wages
than at present on the part of some of the participating
companies. Where the debate is sufficiently advanced, a
key issue arising relates to ways of raising standards in
countries where unions are weak, without further undermining
the union position.
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Living wage campaigns
around the world
Living wage campaigns, involving
coalitions of NGOs and trade unions and targeting
local and multi-national companies, are currently
active in the United States, Switzerland, Belgium,
and the Netherlands as well as in the UK.
In the United States in 1998,
a coalition of organizations hosted the Living Wage
Summit at the University of California in Berkeley
to "increase understanding of how to determine
a living wage and develop coordinated strategies
for winning a living wage in the global garment
and sportswear industry" .(5)
Over 50 participants attended, including human rights
groups, trade unions and other worker organizations,
women's organizations, civil and immigrant rights'
organizations, student groups and academics from
North and Central America, Hong Kong and the Netherlands.
Discussions among the participants led to the drafting
of one of the first living wage formulae to be proposed.
Since then, Global Exchange
has put the wage issue at the center of its 'Stop
GAP Sweatshops' campaign, linking the wage issue
to the right to organize and to workers' ability
to negotiate living wages. In late 2000, former
professional footballer Jim Keady (fired from his
job as a university coach for refusing to wear the
Nike swoosh) and activist Leslie Kretzu, spent a
month in Indonesia trying to live on the full time
wages of Jakarta footwear factory workers. They
shared that experience, which left them hungry and
exhausted, with thousands of US students and briefed
members of the Congress on their findings.
In Switzerland, the Clean
Clothes Campaign integrated the living wage issue
into a campaign calling on Triumph to pull out of
Burma and another on working conditions in the company's
Filipino supplier. The Filipino workers complained
that their wages have fallen from 500 to 310 pesos
due to daily production targets set so high that
they could not be met during basic working hours.
In Flemish-speaking Belgium,
the Clean Clothes Campaign integrated the wage issue
into its Euro 2000 campaign, targeting adidas in
particular as one of the official suppliers to the
tournament. Workshops, street actions and a 15,000-strong
youth rally were organized, while 50,000 people
were photographed displaying a badge calling for
a living wage to be paid. The photos were collated
and presented to adidas.
The Clean Clothes Campaign
in the Netherlands highlighted a living wage as
one of the key demands of the last two years' campaigns.
It featured high on the list of demands made of
sponsors during Euro 2000 and related campaign materials.
A national coalition of Dutch NGOs and trade unions
members of the Clean Clothes Campaign put their
name to a poster calling for a living wage to be
paid, of which 180,000 were distributed. The public
was asked to donate a symbolic amount of money as
an indication of its wish to see wages increased
in the sportswear and garment industry. Nike and
adidas were asked to convey that money to workers.
No response came from adidas while Nike informed
the CCC that they would not accept the check.
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Signal to supplier countries that enforcement
of labor standards, including increased wages, will not lead
to automatic re-location in search of cheaper labor
- Carry out research on the value of workers' current
wages
- Consult with local trade unions, human rights and other
relevant organizations and academics to determine appropriate
living wages
- Establish prices to suppliers which reflect the cost
of paying living wages
- Press for the enforcement of workers' rights to organize
and bargain collectively
- Negotiate the level of a living wage with genuine representatives
of workers
- Strengthen transparency and accountability.
Ethical trading initiatives and campaigns should:
- Insist on the above
- Insist that company moves to improve wages are matched
with improvement in the right to organize and bargain
collectively
- Stress that where sourcing is from countries or factories
where unions are weak, companies have a responsibility
to arrive at an adequate measure of a living wage through
study and consultation
- Strengthen alliances in order to maintain pressure
on companies
- Strengthen transparency and accountability.
To read the entire report on the UK CCC's investigation
into the living wage, "Wearing Thin: the State of
Pay in the Fashion Industry," please see the CCC
website: http://www.cleanclothes.org/ftp/wearing_thin.PDF
Notes:
- Hensman, R (1999), "Wages in the Garment Industry
in Bombay"
- Interfaith Centre on Corporate Responsibility, "Sport
Shoe Production in China, Vietnam and Indonesia (1998),
p.30
- Kernaghan C (1998), "Made In China: Behind the
Label", National Labour Committee, p41
- Ymprasert, J (March 1999), "The Case of the Par
Garment Manufacture"
- Sweatwatch, December 1998, "A Working Living Wage
Methodology"
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