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Will H&M fulfill its pledge by paying a fair, living wage by 2018?

By Vivian Hendriksz


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Business |IN-DEPTH

London - It has been a little more than four years since Swedish fashion retailer H&M promised to pay all garment workers in its supply chain a 'fair living wage' by 2018 - but will the company manage to fulfill this goal? With the start of 2018 just around the corner, Clean Clothes Campaign and its global partners are urging H&M to step forward and share its plan which would see every garment worker on its payroll receive a living wage.

H&M's pledge to pay all 850,000 of the garment worker in its supply chain a fair living wage, one which the company defines as satisfying all basics needs of employees and their families in addition to offering some discretionary income, was welcomed as an industry-leading choice. Most garment workers struggle to earn the legal minimum wage, which in the majority of developing countries barely covers a third of their monthly living expenses. The wages garment workers in Cambodia, Myanmar, Bangladesh and India earn, most of which are women, are far from what most would deem a living wage - a salary that enables a worker to live a decent life, by covering housing, bills, food, access to medical care as well as access to education and transportation - at the moment.

H&M: 'We believe everyone working in the textile industry should earn a wage they can live on - regardless of who they are and where they work'

The Swedish retailer previously unveiled its strategy to pay all its garment workers a living wage by 2018 on November 25, 2013. The initial plan addressed a number of sectors including H&M's purchasing department, supplier practices, workers' rights, as well as the local governments' responsibility. H&M included its new strategy in its Code of Conduct and began pilot programmes at two of its factories (one in Cambodia and one in Bangladesh) which would establish pay plans for fair, living wages. At the time H&M stated that it aimed to roll out this strategy out to all of the 750 garment factories its sources from by 2018. However, not long after H&M announced its new pledge concerning living wage, it reformulated its vow and stated it would put 'mechanisms' in place to ensure the payment of living wages to at least 80 percent of the garment workers in its supply chain.

Since the start of its fair living wage initiative, H&M has remained rather quiet concerning its plans to pay its garment workers a fair, living wage, raising questions to how sincere their pledge really was. According to H&M latest fair living wage update, which is from May 2017, the company is still in the process of setting up a system. The fashion retailer noted that in order to ensure fair living wages are paid across the industry and all its sourcing markets it must collaborate with numerous stakeholders, such as governments, suppliers, brands and trade unions. One of its main goals is to ensure employees are represented by trade unions which can negotiate collectively, which is why H&M offers factory training concerning workplace cooperation, negotiation skills, collective bargaining and labour law. In addition, H&M aims to ensure all garment workers are knowledgeable concerning wages, benefits, and rights and that each wage takes individual worker's skills, experience, and performance into consideration.

H&M unlikely to pay at least 80 percent of its garment workers a fair, living wage by 2018

However, at the time of its update, only 290 garment factories in Bangladesh, Cambodia, China, India and Ethiopia and Myanmar were enrolled in H&M's workplace dialogue and industrial relations programs, with the goal of having democratically elected worker representatives in place at 50 percent of its suppliers' factories in 2018. What's more, only 236 factories in Bangladesh, Cambodia, Indonesia, India, China, Turkey, and Myanmar are currently participating in H&M's improved wage management system, with the aim to roll this out to suppliers representing 50 percent of H&M's product volume in 2018. At the moment, average wages at H&M supplier factories in Bangladesh, Myanmar, Cambodia and India are only slightly above the national minimum wages, according to the Clean Clothes Campaign, which suggests that H&M is unlikely to fulfill its pledge of paying at least 80 percent of its garment workers a fair, living wage by 2018, let alone all its garment workers.

H&M maintains it wants all its suppliers to offer their employees good working conditions, which includes fair wages. “One important milestone in our Fair Living Wage Strategy is our 2018 goal when suppliers representing 50 percent of our total product volume should have democratically elected worker representatives and improved wage management systems in place," said Anna Gedda, Head of Sustainability at H&M to FashionUnited in a statement. "This work is progressing according to plan.” In its 2016 Sustainability Report, H&M highlights that achieving systemic change requires "a huge amount of collaboration between stakeholders" and in order for any solutions for fair and living wages to work, they have to connect the relevant stakeholders at the right time and in the right way. "For example, because we share suppliers with many other retailers (and factory workers receive the same wage no matter which brand they are making products for), we must build partnerships with other brands to drive sustainable change across the industry."

H&M also highlights it must engage with other local governments and other partners to promote the required legal framework to enable negotiations concerning living wages between employers and workers representatives, which it does by regularly advocating stronger wage legislation in "priority countries" each year. The national minimum wage in garment producing countries is set by the national government. But most governments are in no rush to lift wages for fear of losing garment orders, which play a critical part in local economies, to other neighboring countries, argues the Clean Clothes Campaign. "Brands could influence these wages, by reassuring governments that raising minimum wages will not make them leave, investing in long-term relationships with their suppliers and assuring them that they will continue to receive orders even if prices go up, and taking direct responsibility for wages through direct payments on top of their orders to their supplier factories, meant to raise wages to living wage standards," explained Ineke Zeldenrust, of Clean Clothes Campaign. "As the most important player for Bangladesh’s export, H&M can have considerable influence over these wages."

Clean Clothes Campaign: 'H&M certainly has the financial means to ‘walk the talk’

The Clean Clothes Campaign argues that although the goal H&M originally set in 2013 was ambitious, it is achievable for a company as large, profitable and powerful as H&M is. "H&M certainly has the financial means to ‘walk the talk’, and has stated time and again they want to be a leader on these issues. We have looked at the numbers and if H&M were to reallocate just one year of its annual advertising budget towards wages, they could pay their Cambodian workers a living wage for 6.5 years," added Zeldenrust. H&M's net profit for 2016 was more than 2 billion USD and based on calculations from the Clean Clothes Campaign, it would only cost the Swedish retailer 1.9 percent of its net profit from 2016 to pay all its workers in Cambodia the additional 78 USD every month to have a fair, living wage.

H&M stresses that it has always been its vision "all textile workers should be able to live on their wage." The Swedish company continues to work on wages issues internally, as well as in collaboration with other stakeholders, such as the UN body International Labour Organization, global unions and non-governmental organizations. It remains the only fashion company of its size to have implemented a strategy for fair living wages - but whether this strategy is sufficient to bring about long-lasting change for garment workers wages remains to be seen.

Photos: Courtesy of H&M

Clean Clothes Campaign
Living wage
worker rights