Not enough: The living wage gap in major garment producing countries is 45 percent

WageIndicator Foundation and The Industry We Want (TIWW) have launched the Industry Wage Gap Metric. The metric shows the average percentage gap between minimum wages and the living wages. In the major garment producing countries, this gap is 45 percent.

The wage gap means garment and footwear workers in the selected countries are earning far less than needed for a decent living. WageIndicator and TIWW apply their metric to garment and footwear industries in Honduras, Turkey, Bangladesh, Romania, Morocco, Pakistan, India, Cambodia, Vietnam, Mexico, Tunisia, China and Indonesia. These countries were selected based on their trade volume and market relevance, among other criteria.

What is a living wage?

TIWW defines a living wage as the minimum income necessary for a worker and their family to meet basic needs, including some discretionary income. This should be earned during legal working hour limits. There is a broad consensus that current wages in most garment producing countries are well below any meaningful understanding of a living wage. TIWW accepts any interpretation of a living wage that has been endorsed by local Trade Unions and has a transparent methodology.

Indexing the difference between what a worker will receive as their minimum salary and what they should earn to provide for themselves or their family, is only the first step in this project. According to TIWW, "stage two will focus on moving towards the collection of real wage data. We will work to determine minimum standards for the collection of real wage data and potential methods for harmonising such efforts." WageIndicator will play an important role in the data collection phase, via its established channels.

The wages collected by WageIndicator, TIWW and others, will then be used to enable change: "In stage three, we will set positive wage growth targets for each of the 13 countries over the next four years and devise a methodology for gathering data and tracking this."

The 13 countries included in the data are the crux of manufacturing and global supply chain for the fast fashion industry, which is why despite the many calls to action for sustainability, worker safety and fair wages, the problem remains unresolved and ongoing.

Brands do not pay garment worker wages

While brands do not directly pay garment workers, they do negotiate sewing prices per item and have considerable clout to influence factory owners to pay a fair wage to employees. No factory wants to lose orders and brands generally prioritise getting the cheapest sewing price and best possible margin per garment, over ensuring workers receive adequate salaries.

Actions, goals and reality not in alignment

As one of the fast fashion industry's largest companies with very vocal sustainability goals, H&M is a good indicator of a company where actions, goals and reality do not always align. In its current e-commerce offer H&M sells items such as a cropped t-shirt for 2.99 pounds, a halterneck dress for 9.99 pounds and cargo jeans at 12.99 pounds, all of which include fabric, sewing, packing, shipping and a profit margin. H&M will be squeezing its suppliers who must find ways to produce these garments at rock bottom prices.

Nearly a decade ago, in 2013, H&M said it would deliver a “fair living wage” to more than 850,000 workers across 750 factories by the end of 2018. How this is assured in 2022 is not known. What is known, however, is that on its website H&M retails extremely cheap garments, which if it is to make a profit from sales volumes, the factories that employ the seamstresses sewing these would need to produce them at less than half of their retail cost.

Research by Deloitte Access Economics for Oxfam Australia revealed that on average only between 2-4 percent of the price of a piece of clothing sold in Australia goes toward workers’ wages in factories. The Clean Clothes Campaign reported similar figures, said Good on You, explaining that “wages for production will scarcely exceed 3 percent of the price you pay in the shop.”

Good on You, an ethical and sustainable brand ratings platform, says many of the people employed in the cut-make-trim part of the fashion supply chain still work in unsafe factories and live in deplorable conditions. Garment factory wages in Bangladesh are the lowest in the world, for example, and while workers’ living conditions may not be a direct legal responsibility of the large international corporations that own the major high street brands, their profits flow from the fact that people are receiving low level wages to sew their clothes.

“Nobody in full time employment should live in poverty,” wrote John Gerner in a New York Times op-ed piece in 2003, questioning what is a living wage. Two decades later the idea of economic fairness in the fashion industry remains as disparate now as it was then.

Article source: WageIndicator Foundation and The Industry We Want