Garment workers have the right to a living wage
By Kirsten Kossen, Senior Human Rights Advisor, ASN Bank
The chances that the people who made what you are wearing today were paid a salary that covers their basic needs are close to zero. Wages in all major garment production countries are insufficiently low. A 2019 Clean Clothes Campaign report showed that the minimum wage in garment-producing countries in Asia ranged from only 21% (in Bangladesh) to 46% (in China) of a living wage. This often leads to other challenges such as excessive overtime, child labour, malnutrition and more.
For years, worker representatives and rights organisations have been working very hard to change this situation. They have spoken to fashion brands, provided guidance to them and even named them and shamed them, but progress is still very slow.
At ASN Bank, I see this lack of progress from up close, as we engage with all of the fashion brands that are part of our investment funds. All these 15 listed brands will need to have processes in place by 2030 to be able to pay a living wage.
Of course, we only have a small influence and only on a small number of fashion brands. We need to speed things up. Since most fashion brands do not seem to be intrinsically motivated to make sure that the workers in their supply chains get paid enough, enforceable legislation is needed.
This is why ASN Bank, alongside Fair Wear Foundation and Fashion Revolution, launched Good Clothes Fair Pay, a European Citizens Initiative (ECI) that can move things in the right direction.
What does the legislation involve?
Good Clothes Fair Pay is a European Citizens’ Initiative (ECI) to call on the European Commission to introduce legislation requiring that brands and retailers in the garment and footwear sector conduct due diligence in their supply chain to ensure workers are paid living wages. The initiative calls for brands to take measures in order for their suppliers to be able to pay a living wage, for instance:
Companies will be required to conduct research throughout their entire supply chain to identify risks that would prevent workers from earning a living wage, which is a violation of their human rights.
Companies will have to make a concrete plan on how they will mitigate those risks and they have to make this plan together with stakeholders such as trade unions to ensure that the company is taking the right approach.
Companies must have fair purchasing practices. This means paying their suppliers in time, which means not later than sixty days after delivery and not cancelling orders at late notice. This is to avoid orders already in production being cancelled and the supplier having to take a loss, which could lead to workers being laid off without warning.
Companies must be open and transparent about their production locations, the number of employees and their entry-level salaries. Every year they will need to publicly report on their progress. In this way, they can be held accountable.
An accessible grievance mechanism should be in place too where stakeholders can raise their concerns about the right to a living wage not being respected. The company has to report on the concerns made as well as the actions they are taking to deal with those concerns. The earlier a potential violation is on the radar, the sooner work can start to prevent the violation from occurring.
It puts an emphasis on requiring brands to identify risk groups that are particularly hard hit by low wages, such as women and migrant workers.
Building on corporate sustainability due diligence
Our proposal, if implemented, will help the garment sector implement the new due diligence legislation proposed by the European Commission, as it makes the requirements very clear and concrete. Our proposal could very well be an inspiration or even a blueprint for clarifying due diligence on other risks and for other sectors. The fact that this proposal for legislation exists is, of course, a true milestone and a very important step toward respecting human rights and the environment by European companies. However, in terms of ambition and clarity, there are some flaws that our ECI addresses:
Scope of legislation
The European Commission proposal has a limited scope, as it only includes large companies. The reality in the garment sector is that many fashion brands are small and medium-sized enterprises. The Katalyst Initiative estimates that thousands of brands fall into this category, and are therefore not covered by the draft proposal. This is specifically problematic for respecting the right to a living wage in the garment sector. Brands source from the same factories, whether you’re a large brand or a small brand. For living wages specifically, suppliers are far more likely to be able to pay their workers a living wage if all of their customers are adjusting their purchasing practices in tandem to enable them to do so. Therefore, the scope of our proposal encompasses all companies active in the textile, garment, leather and footwear sector who are placing products on the EU market.
Approach to due diligence
The approach to due diligence the EC is proposing is not in line with the OECD guidelines and the United Nations Guiding Principles on Business and Human Rights (UNGPs). The proposal limits the supply chain to established business relations and sets limitations on the number of risks to be included. In this case, the garment sector would only have to focus on so-called ‘severe’ risks, while it is not clarified what those risks would entail. Our ECI calls for risk-based due diligence with respect to living wages, freedom of association and collective bargaining and precarious contracting arrangements in their operations and business relationships encompassing both direct and indirect suppliers.
Stakeholder engagement
In the European Commission proposal, consultation with stakeholders is encouraged 'where relevant' but it is not made compulsory. We believe that engagement with stakeholders is key in all steps of the due diligence process. Therefore, in our proposal consultation with industry stakeholders particularly with workers and their representatives; with whom an action plan on living wages must be negotiated as part of a collective bargaining agreement, is obligatory.
Grievance mechanisms
The mechanism for complaints as proposed by the European Commission has weaknesses, especially for those that are affected, for which the mechanism is meant. Our ECI proposal overcomes this by requiring an early warning system in order to rectify harms before they escalate. It explicitly states that the mechanism should be easily accessible and independent and that the details of it are publicly available.
The ripple effect of living wages
Living wages in the garment sector would help companies to mitigate several other risks of human rights violations. A living wage enables workers to fulfil their basic needs such as food, shelter, nutrition, health, housing and education. Workers are less likely to have to work excessive overtime or become bonded labourers. Also, they would be able to send their children to school and decrease the risk of child labour.
We believe the realisation of living wages in the garment industry needs comprehensive legislation.
Be part of this journey by using your citizen rights and signing our European Citizen Initiative which will be launched in the coming weeks. To keep updated, subscribe to our newsletter and follow @goodclothesfairpay on Instagram.