H&M encouraging suppliers to pay workers digitally

Swedish retail group H&M is encouraging its suppliers to pay their workers digitally through mobile money or other digital forms, rather than cash, after becoming the first fashion brand to join the United Nations' Better Than Cash Alliance.

By paying workforces digitally it will help improve the lives of nearly 2 million workers, said H&M, as digital payment over cash improves the livelihoods of its workforce by enhancing transparency and cutting factory costs.

"Digital payments are an efficient and scalable way to improve the lives of the employees of our suppliers. They offer a faster, safer and more transparent way to receive their salary, increase financial inclusion and support women's economic independence," said Gustav Loven, social sustainability manager at H&M group. "Also, for our suppliers, paying wages digitally can generate savings, increase security and provide more accurate data on wages."

Around 65 percent of the 1.6 million people employed in the H&M group’s supply chain are women and many of them have limited access to the financial services needed to improve their lives, with many factory workers worldwide paid entirely in cash, which the group said can be cumbersome, expensive and a dangerous processes for both factories and workers.

By encouraging suppliers to pay wages through digital channels, such as bank accounts, cards or mobile money, H&M is hoping that it will promote good working conditions, fair living wages and sustainable economic growth.

“H&M group is taking a bold step in recognising how cash-heavy supply chains limit efforts to empower workers and prevent companies from increasing transparency. And, it’s inefficient,” said Dr Ruth Goodwin-Groen, managing director of the Better Than Cash Alliance. “H&M group’s leadership will help inspire other companies in the industry, and beyond, to make the shift to digital payments and contribute to inclusive growth, as well as to the Sustainable Development Goals, in emerging markets.”

Research from the Better Than Cash Alliance reveals that garment manufacturing factories in Bangladesh transitioning to digital payments can save approximately 750 hours of production a month, due to workers spending less time away from the production line and can reduce costs by more than 85 percent within two years by paying workers via a hybrid mobile money/bank account model. At the same time it brings previously unbanked workers into the financial system and builds financial skills.

Better Than Cash Alliance is a United Nations-based partnership of governments, companies and international organisations accelerating the transition from cash to digital payments.