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Poverty wages: the excuses are running out

June 19, 2013


“A living wage is a human right,” says Ineke Zeldenrust, Coordinator of the Clean Clothes Campaign’s International Secretariat (above), “and the right of workers to a living wage needs to be respected. Full stop.”  MSN spoke with Zeldenrust about why cross-border organizing is necessary to win respect for that right.

The global fight for a living wage has garnered a lot of attention in the past year, as workers mobilize around the world to improve their countries’ minimum wages, and international campaigns push brands to take a more active role in improving wages in their supply chains.

The right to a living wage has also now been afforded international recognition in the recently-adopted United Nations Guiding Principles on Business and Human Rights, the so-called “Ruggie Principles”. The Principles state that while governments have the ultimate duty to protect human rights, corporations also have a duty to respect human rights even where states fail to adequately protect them.

“The Ruggie framework made it very clear that the right to a living wage is recognized in the UN Declaration on Human Rights,” says Zeldenrust. “The framework is quite clear that all human rights are included in the rights companies are compelled to respect.”

If a living wage is an internationally-recognized human right, however, it’s still noticeably absent from the corporate social responsibility (CSR) programs of most global brands. And local employers certainly aren’t paying wages that meet workers’ basic needs and provide some discretionary income. In fact, wages in the global garment industry are well below estimates of a living wage.

LOW AND GETTING LOWER A recent study conducted by the Worker Rights Consortium (WRC) of real wage rates in 15 garment producing countries worldwide found that between 2001 and 2011, workers’ wages have actually declined in real terms. The study found that “on average, prevailing straight-time wages—pay before tax deductions and excluding extra pay for overtime work—in the export-apparel sectors of these countries provided barely more than a third—36.8 percent—of the income necessary to provide a living wage.” In some countries, like Vietnam and Bangladesh (two of the world’s largest and fastest-growing sourcing destinations), prevailing wages were only 22% and 14% of a living wage, respectively. Although real wages actually grew in Vietnam, the WRC calculates it will take another 37 years at this rate to arrive at a living wage.


Brand excuses

Part of the problem is that endless debates over how to determine what constitutes a living wage by local standards have allowed companies to avoid taking concrete steps to raise wages toward living wage levels.

Brands claim they can’t commit to a standard that they can’t measure, and as a result don’t commit to do anything beyond payment of the legal minimum wage or prevailing industry wage, both of which represent poverty wages in the vast majority of garment-producing countries.

In an effort to get beyond this fruitless debate, Asian trade unions and NGOs launched the Asia Floor Wage Campaign (AFWC) in 2009.

The AFWC developed a formula to calculate a minimum living wage (Asia Floor Wage - AFW) for each major garment-producing country in the region. If the AFW were implemented, workers in different countries in the region would earn a sufficient base wage to purchase the same level of goods and services, which would prevent manufacturers in each country from gaining a competitive advantage by providing a lower living standard for their workers.

For the past four years, the Campaign has been lobbying apparel brands and major suppliers to commit to meeting the AFW standard in all of their Asian supply factories and, most interestingly, to bargaining directly with trade unions in the producing countries, together with their suppliers, on how to reach the AFW for their country.

Zeldenrust says this is a different bargaining model than the traditional one that focuses only on negotiations between trade unions and their direct employers.

“If you negotiate only with your direct employer, you’ll reach a dead end,” she says. “The money just isn’t there to negotiate meaningfully. Prices that brands pay to the supplier need to be set at a level that allows for the direct employers to pay a living wage for a 48 hour working week.”

According to Zeldenrust, it’s only when you can negotiate across borders and up the supply chain that you can achieve progress toward a living wage.  “We need to build that negotiating power,” she notes.

Wage campaigns

Workers in many Asian countries have been exerting new-found strength to win increases in the local minimum wage, and to force the issue of a living wage onto the agenda.

Minimum wages have been raised in Cambodia, Malaysia, Vietnam, Thailand, Indonesia, and China over the past year as workers have grown more assertive in pressing their demands for wages that meet their basic needs.

However garment industry wages in Asia are still well below living wage estimates, and in many cases wage increases are still lagging behind the rising costs of basic goods like food and electricity.

In Cambodia, for example, mass protests forced employers to the bargaining table to determine industry-wide wage levels. Once at the table, however, employers balked at negotiating a meaningful increase in the minimum wage and the government imposed a new minimum wage of US$80/month, up from $61, but well below independent estimates of a living wage level for the country.

Central America

Recent research carried out by Central American labour rights groups and MSN shows a huge and widening gap between what workers earn in the maquila sector and official estimates of the basic basket of goods and services needed by workers and their families to survive.

Although there are tripartite (industry, unions and government) negotiations taking place in El Salvador, Nicaragua, Honduras and Guatemala to set minimum wage rates, and specific tripartite negotiations for the maquila sectors in Nicaragua and Honduras, those negotiations  are haunted by the real or perceived threat of losses in foreign investment and brand orders.

The low prices paid by international buyers to their suppliers add to the pressure to keep wages low.

Recently, trade union federations in Nicaragua agreed to a three-year schedule of minimum wage increases that, even after the third year, will still leave workers’ incomes at a fraction of a living wage. In Honduras, employers raised the threat of mass factory closures in the run-up to negotiation of the last tripartite agreement in order to constrain wage demands.

Meaningful action

In this context of wage competition between garment-producing countries, pressure needs to be put on brands and retailers at the top of the global supply chain to ensure that the workers that make their products are receiving a living wage, and that national efforts to improve wages will not be met with a shift of orders to other countries.

“If you’re a brand,” Zeldenrust concludes, “you need to know the current wage levels in your supplier factories and what would constitute a living wage by local standards. We’re going to measure you not by whether you got the numbers exactly right, but by whether you make a meaningful proposal and show a willingness to negotiate in good faith to actually achieve wage increases that lead toward a living wage.”

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