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Adidas Leads on Living Wages, But Fashion Still Has Far to Go

The garment industry is still grappling with the issue of a living wage, and it shows.

A year after a dozen Dutch financial institutions, managing a combined 2.5 trillion euros ($2.7 trillion) in funds, formed an “unprecedented coalition” to call for salaries that cover a worker’s basic living expenses, including food, clothing, housing health care and education, the wage landscape remains a mixed bag with no “one-size-fits-all” solution.

Though most of the 13 investee apparel brands reviewed by Platform Living Wage Financials’ garment and footwear working group made progress, according to its methodology, which it based on the Reporting Framework of the United Nations Guiding Principles on Business and Human Rights, only Adidas moved to the “leading” phase (30 points to 40 points) after scoring better on transparency than last year’s baseline.

Adidas, a report by the group noted, offered wage data and compared it with living-wage estimates, provided information on collective bargaining in supply chains and had the “most extensive information” on how its grievance and remediation mechanisms work.

Adidas also piloted an “employee credit cooperative” that allowed factory workers to earn extra income through dividends and profit sharing.

“More specifically, Adidas developed a standard-minute costing system with its supplier,” the authors of the report wrote. “This system creates further transparency in the company’s product cost for materials, labor and overhead.”

Companies in the “maturing” phase, meaning they scored between 20 points and 30 points, were Asos, Esprit, Gildan, H&M, Inditex (which owns Zara), KappaAhl, Marks & Spencer and Puma. The four companies in the “developing phase” (10 points to 20 points) were Asics, HanesBrands, Renner and VF Corp (which operates Timberland and The North Face).

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But Platform Living Wage Financials appears to be cautiously optimistic, pointing out that most company reports this year provided “more information” on the topic of a living wage, its definition and activities to mitigate and remedy any risks.

Most of the investee firms, it said, were willing to share what they were doing to promote living wages. They were also transparent about their limitations from producing in factories not their own, in developing countries, such as Bangladesh, Cambodia and Vietnam, where wage-setting mechanisms and social dialogue are still at a nascent stage.

But the group would like to see more ownership of the living wage by brands, particularly when it comes to sharing information from multi-stakeholder initiatives on their websites or annual reports. While many companies said they were working with multi-stakeholder initiatives to improve purchasing practices that can exacerbate exploitation, the investors are now urging companies to share more information about “how these activities…around purchasing practices are having a positive impact.”

Similarly the group sees a need to move from “effort-based reporting to impact-based reporting.”

“Indeed, we now see many companies reporting about the corporate processes they put in place to mitigate human rights, but few indicate whether or not these actions are having the desired effect,” the report’s authors wrote. “Making an impact requires a more analytical approach, whereby progress is monitored and actions adjusted where needed.”

Most of all, while Platform Living Wage Financials welcomed “inspiring” pilot projects, what’s necessary is more mainstream activity. “This means that companies see honoring living wages in supply chains as business as usual, making no exceptions in their production process,” it said.

Perhaps, the group suggested, understanding the business case for a living wage could help. Not only does a living wage create reliable relationships with suppliers but it also fosters a “happy and healthy workforce that is proud to work indirectly for a foreign brand.”

“Clothing is a basic need shared by people all over the world,” it said. “The narrow business case is obvious as people need clothes. And as consumer awareness for fair fashion is growing and pressures from stakeholders are deepening, the broader business case for a living wage is also becoming evident.”

Labour Behind the Label, a workers’ rights group based in England, casts a more gimlet view of the situation. This past July, it reported that “no major clothing brand” has been able to quantify that any workers making their garments in Asia, Africa, Central America or Eastern Europe are paid enough to escape poverty. Neither did any brand maintain a policy to only do business with suppliers that actively promoted freedom of association.

Last month, Nashville neighbors Able and Nisolo took a slightly different tack by asking fellow fashion brands to reveal the lowest wage they paid their workers. Able already uses a nutritional-label-style chart to juxtapose the living wage of a location with the lowest wage a worker actually receives.

“The dirty secret of the fashion industry is that the things we wear and enjoy are often made by people—mostly women—who can’t even afford to meet their basic needs,” Barrett Ward, founder and CEO of Able, said in 2018. “Our dream is that in 10 years or sooner, publishing wages will be as common as a nutritional facts label.”