January, 2010

Does fashion sector offer opportunity to test ‘Responsibility Deal’ concept?

January 31st, 2010
As an article in today’s Times newspaper once again raises questions regarding low wages in the fashion supply chain, The Cooperatition Incubator asks whether this could be an area for major fashion retailers to establish a ‘Responsibility Deal’.

Key perspectives expressed in the article were:
  • Tony Nadaraja, chief executive of the Hirdaramani Group, a company that supplies Marks & Spencer, Tesco and Asda, said that the basic 8,000-8,500 rupees (£43-£46) of his machine operators was not a “living wage”.  Even with allowances and bonuses, average pay was £67-£70, he added: “We need to find ways of paying them about 15,000 rupees, at least, to allow them to live.”
  • Ashroff Omar, chief executive of Brandix, said the average monthly overtime worked in 2009 was 38 hours.  M&S and Brandix emphasised other benefits for workers including bonuses, a subsidised lunch and medical facilities. The factory has won international awards for environmental standards.  Both companies said workers would be given a pay rise of £2.70-£3.34 a month this year.
  • Workers at the Brandix Seeduwa plant, which produces M&S trousers, said that basic monthly salary of £45 to £50 barely covered rent, food and clothes.  Meeting other costs was difficult, they said, even though the factory provided for some of their needs — offering, for instance, subsidised food and free medical care.  Wage slips indicated that they regularly worked 35-50 hours overtime each month for a premium rate of 34p an hour.
  • Marks & Spencer said: “It is our view that M&S is one of the UK’s leading retailers for ethical performance out of the ETI membership. Unlike many other retailers, we have a permanent ethical compliance team on the ground in Sri Lanka … to ensure that suppliers meet our high standards.  There is no one definition of a living wage. We strongly believe that Brandix Seeduwa factory wages are very fair relative to the cost of living in Sri Lanka.”  The company said that machine workers at the Brandix Seeduwa factory, whose basic monthly wage ranged between £45 and £54 in 2009, plus attendance allowances and other benefits, earned over 25% more than the minimum wage in Sri Lanka. M&S said that it would strive to meet the ETI recommendations: “But there will always be some instances of not being able to meet this aspirational code because of the nature of the industry (global and labour intensive). It is the responsibility of the management of the supplier to ensure that this is not a regular occurrence.”
  • Next estimated a living wage at £86.50, even though many workers making its clothes earn less. Next acknowledged that similar 2009 basic wages of £50-£56 for workers making its own T-shirts, jerseys and children’s wear did not amount to a living wage, although bonuses and allowances took the lower figure up to £70.40. It said subsidised lunches were worth an additional £14.  Pam Batty, global code of practice manager, said: “As a basic wage this is less than what we think the living wage in Sri Lanka is, which is £86.50.  Our aim is that workers are able to make a living wage within normal working hours. That’s what we’re committed to in our code but we are not there yet in all cases.”  Next’s view that many garment workers were not earning a living wage was backed by local economists and union officials, who said basic salaries were inadequate.
  • Tesco and Asda said they were trying to drive “sustainable” improvements in the welfare of workers.
  • The Ethical Trading Initiative (ETI), which promotes a code of conduct on workers’ rights, says that a “living wage” ought to be paid — “enough to meet basic needs and to provide some discretionary income”. Employees should not have to work more than 48 hours a week on a regular basis.  The ETI admits there is a gulf between the code and actual pay. “The deplorable reality is that low wages remain a fact of life for many garment workers,” said Stephen Rylance, its spokesman.  In a statement the ETI said that its members, including M&S, Next, Tesco and Asda, were “at the forefront of good practice”. But “in this case the poorest-paid workers are saying they are struggling to meet basic needs. For those, even the efforts of the most responsible retailers are not yet good enough.”
  • Simon McRae, of War on Want, the anti-poverty charity, said: “The grim reality is that none of Britain’s high street retailers are doing the right thing by the people who produce their clothes.”
  • Factory owners were worried that if production costs increased then Sri Lanka could lose out to cheaper countries such as Bangladesh.