Following ETI’s 20th anniversary conference, Economic justice consultant Sabita Banerji reflects on the living wages discussion and eight steps to help companies make the leap of faith.
Earlier this month, our session on living Wages at the ETI-Elevate Conference on Responsible Supply Chains attracted around 100 delegates, including many from across the business world.
With growing calls on companies to improve human rights and be transparent, perhaps ETI was right in 2015 when we suggested that living wages were not only desirable and feasible, but also inevitable.
Our five panellists embodied what companies, trade unions and NGOs can achieve when they put their minds to it. Here’s what they told us it would take for companies to take the leap of faith:
1. Admitting something’s wrong…
Oxfam’s Rachel Wilshaw shared how workers around the world – whether in Moroccan strawberry fields, Vietnamese factories supplying Unilever, or Indian, Malawian and Indonesian tea plantations – were all struggling to survive despite being part of lucrative global trade.
Oxfam’s publication, In Work But Trapped in Poverty laid out the problem with case studies showing how minimum wages are rarely enough to live on and often leave people below the poverty line. The companies in question had started to recognise that something was wrong, and having acknowledged the problem, wanted to find out what to do about it.
2. Vision from the top
Once a company becomes aware and wants to act, the next question is who will provide the push for them to take that leap of faith?
Linda Ingolfsdottir of H&M explained how leadership from the top gave the company the courage to “stick its neck out” with their Fair Living Wage Roadmap. But even a company the size of H&M cannot achieve living wages alone, which is why collaboration is key. That’s why the Roadmap prioritises collective bargaining, she explained, and why the “revolutionary” collaborative platform, ACT, was now a core part of that strategy.
3. “Patient radicalism and new rules of the game”
Frank Hoffer, Executive Director of ACTwas on hand to take up the story. He told us that to bring about the systemic change - without which there can be no genuine, lasting change - requires “patient radicalism” that combines the determination for fundamental change with the patience to engage in inevitably complex processes.
It’s not enough for companies to make voluntary offers to play fairly within an unfair game – we need new rules of the game. And we need to remove the barriers to freedom of association and collective bargaining.
4. “If they are doing it so can we”
Like Linda, Frank reminded us that to bring about such radical change requires collaboration between all those who can influence wages: brands, suppliers, governments, and trade unions.
The new ‘rules of the game’ need to bring brands together to collaborate pre-competitively, to ring-fence labour costs and protect them from the price negotiation process. The labour cost itself must be set within the context of a collective bargaining process. ACT shows that some companies are willing to do this, and hope that other companies will say “If they are doing it so can we”.
5. Working smarter, not harder
Towhidur Rahman, Former Secretary General of Industriall Bangladesh Council (IBC), gave us the perspective from a supplier country. He reminded us that trade unions have no interest in destroying the industries that employ their members. They know that increased productivity means workers being able to earn more. The problem is that workers are already working far too many hours.
He called for support with skills training so that workers can work smarter, not harder. Brands can also help by funding research into wage issues in specific contexts and by raising workers’ awareness of their rights, including for example their right to freedom of association and collective bargaining. They can also back unions’ calls for labour reforms to ensure those rights are delivered. At present only 700 of Bangladesh’s 5,000 garment factories are unionised.
6. The price is right…?
Rahman also called on brands, when asking their suppliers for compliance, to consider if their pricing policy enables it. And Evelyn Astor of the ITUC took up this call. She reminded us of the supplier survey by the joint ETIs and the ILO which found that many suppliers have no written contract with their customers, and when written contracts do exist they often lack provisions for fair wages and working conditions.
Many suppliers also feel pressure to accept prices that are below the cost of production, forcing them to pay low wages or even delay payment of wages altogether, with the result that what seems like a great price for the brand can mean a poverty wage for workers.
7. Signal your willingness
Some brands have been known to urge governments in supplier countries not to raise minimum wages – despite their inadequacy. Evelyn urged brands that are willing to pay a price that enables a living wage to signal this willingness to governments and to encourage minimum wages to be raised to a living wage level.
She stressed that raising the minimum wage to a living wage can ensure a floor of dignity for all workers and help to create a level playing field between companies by taking low wages out of competition. She said companies should also signal their willingness to pay higher prices to their suppliers, who may otherwise be reluctant to quote a price that would cover living wages.
8. The golden thread of collective bargaining
The eagle-eyed among you will have recognised a common thread running through these paragraphs. Every speaker emphasised the vital importance of industry-level collective bargaining to make real progress towards a future in which the people who produce our food and clothes earn enough to feed and clothe themselves and their families, and to ensure fair ‘rules of the game’.
As the ILO says “Collective bargaining allows both sides to negotiate a fair employment relationship and prevents costly labour disputes… countries with highly coordinated collective bargaining tend to have less inequality in wages, lower and less persistent unemployment, and fewer and shorter strikes than countries where collective bargaining is less established.”
As Evelyn pointed out, individual workers don’t have the capacity to bring about radical change in the vast, global systems that are keeping them poor. It is only through unions, which effectively represent workers and their interests, that they can collectively negotiate with employers for living wages.
It is therefore vital for companies to respect freedom of association, i.e. workers’ ability to organise and join unions, to ensure their suppliers respect this fundamental right as well and to support unions in developing their capacity to negotiate effectively.
Will your company take the living wage leap of faith? The leading global brands who are members of ACT and Malawi Tea 2020 have taken the leap. And if they can do it, so can you. And you won’t be alone. Other brands, trade unions and NGOs will be there to support you.
So, what’s stopping you?