Productivity and wages rise at Echo Sourcing's factory, with New Look's support

Collaboration between UK fashion retailer New Look and one of its Bangladeshi garment suppliers on an initiative to raise wages and lower working hours is starting to bring benefits for more than 2,000 workers: in the first year, the wages of the lowest grade of workers increased by 24 percent, while overtime rates dropped by 46 percent.

Rabeya has worked in a Dhaka-based garment factory in Bangladesh for over four years. She is an experienced machine operator and has won two awards for her skills. As well as providing food for her immediate family, her monthly wages have to cover her mother and father in-laws' needs as well as her child's education.

Alongside some 20 million people who depend on the garment sector in Bangladesh for their livelihood, Rabeya has seen prices of staple foods like rice and bread escalate over the past few years - the average Bangladeshi garment worker now spends up to 70 percent of their monthly wages on rice alone. Many workers end up being forced to work long hours to earn enough to live on.

Rabeya works for a factory complex owned by Echo Sourcing Ltd, a major supplier to the UK fashion retailer New Look. In September 2007, the two companies started working together on an ambitious project to raise wages in the factory while reducing working hours. The aim was to create sustainable improvements to the pay and conditions of the factory's, at that time, 1,000-plus workers by improving efficiency and increasing productivity.

Echo introduces a package of benefits for workers

With New Look's support, Echo's factory re-organised work processes and brought in industrial engineering personnel to help improve productivity. It developed a robust human resources system and after consulting workers extensively on their needs and priorities, introduced a package of benefits including additional medical care and crèche facilities, a matching provident fund, a production incentive scheme, improving the nutritional value of the daily hot meal and bonuses for improved attendance the latter benefits being funded directly by New Look.

New Look provides supportive buying practices

As well as providing some funding, New Look has supported the project by improving its buying practices. For example, it has improved its forecasting of demand, to help reduce last-minute changes to orders, and provides longer lead times for orders, both of which have enabled Echo to improve production planning and productivity. To create buy-in for the initiative, New Look buyers were trained to understand the impact of their buying decisions (for example, lead times and prices) on workers; and a voluntary scheme of ‘ethical champions' was introduced into the buying team to help build understanding of workers' issues throughout the team.

Results so far

Since the start of the project in September 2007, average wages for grade 7 workers - the lowest grade, who are typically ‘helpers' assigned to machine operators - increased by 24 percent. In the same period, overtime reduced by 46 percent.

According to Rabeya, "The production targets set by the factory are very reasonable. Everyone in the community says it is a good factory, and that wages, including overtime wages, are paid together.

She is able to pay for her child to be educated by a tutor at home, and has helped pay for four members of her extended family to get married. One day, she says, she would like to buy land in the village to build a house for all her family.

Of Echo, she says, "I want to work here for the rest of my life".

Rehana, another of Echo's garment workers, says, "I had a low income before. My family used to send rice to me, but now my salary has increased and I can send some money to my family. They do not need to send rice to me now."

Both Echo and New Look are also seeing business benefits including greater efficiency and productivity, reduced absenteeism and staff turnover, which is now significantly below the Bangladeshi average. The average length of employment for workers in the factory has also increased.

In turn, New Look is getting a better quality product and security of supply. Both companies say they now have a much better understanding of each others' business, and greater trust. "It just works better for everyone", says Alan Osborne of New Look.