The ease with which fashion buyers can jump from one production zone to another to drive down costs, experts say, is one of the key structural causes of poverty wages in garment-producing countries, and Annie Lennox—or at least a nonprofit the former Eurythmics singer-songwriter founded—wants it to stop.
A new report by The Circle, published in collaboration with ASN bank Tuesday, proposes new European Union (EU) legislation that would end the “injustice of poverty wages” suffered by millions of mostly female garment workers around the world, “build fairness” into their contracts and pave the way for a “living wage” that can sustain a basic standard of living.
The proposed EU regulation, according to Jessica Simor, a barrister at Matrix Chambers and author of the report, seeks to frustrate purchasing practices such as the abovementioned high “mobility of demand” by encouraging a gradual increase of statutory minimum wages in garment-producing countries so they are “no less than that necessary to sustain a basic decent life” after three years.
The current minimum wage in most nations, the report noted, not only comes “nowhere close” to being enough to support a decent life but it is also largely set at levels that “entrench poverty, prevent development and negate human dignity.” Most garment-producing countries, in fact, set minimum wage levels at less than 50 percent of what is necessary to meet subsistence needs, Simor added.
Because of the weak regulatory environment endemic to these regions, even the most limited of labor laws and regulations are often unenforced, the report said. More crucially, fashion buyers’ high mobility of demand means governments cannot increase minimum wages without the risk of ceding business—and therefore jobs—to lower-wage competitors.
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Low minimum wages, too, make it difficult, for brands and retailers, when contracting factories within those countries, to ensure that the workers who make their goods are paid a living wage, said Simor. This is proven by the fact that “nearly all” due-diligence statements from large retailers admit to only paying the legal minimum wage.
“Legislation is needed to address structural deficiencies in the market, which cannot be met merely by due-diligence statements or voluntary agreements,” Simor said. “If we are serious about protecting human rights and promoting sustainable development, then workers cannot continue to be paid wages that do nothing more than sustain poverty.
Remuneration, she added, must be “sufficient to ensure a basic decent life and allow for the prospect of change.”
The report suggests that the European Commission collaborate with the International Labour Organization to apply a formula to assess the point at which wages in garment-producing countries risk being too low to support a decent livelihood, i.e., an “at-risk wage point.” Such countries, it said, should be listed in an annex until they can exceed this threshold after a three-year “transition period.” Nations that cannot guarantee the right to collective bargaining should also be listed in the annex. Nothing about this approach is novel, the report said, since similar legislative techniques are already applied by the EU to imports such as timber and minerals from conflict zones or areas of environmental risk.
“The conceptual idea behind the proposal is to remove the fear of disinvestment and create a positive incentive on states to raise their statutory minimum wage, so reversing the ‘race to the bottom,’” Simor said. “Moreover, it is likely on its own to incentivize factories to increase wage levels, even absent state action on minimum wages.”
Where the proposed regulation applies, the report said, EU buyers could be subject to additional due-diligence obligations with respect to wages, including attesting to the fact that they’ve taken all “reasonable measures” to ensure that the workers who made their products were paid a living wage higher than the at-risk wage point. Potential fines and sanctions could apply.
“The consequence of the new regime should be to make companies engage actively in relation to wage levels paid to workers producing their goods,” Simor wrote. “That, in turn, would be likely to lead to factories paying above the statutory minimum wage (and the relevant ‘at risk wage point’ set out in the proposed regulation) in order to retain and attract business.”
A post-pandemic recovery
The pandemic, the report pointed out, has only thrown into relief the glaring inequities between buyers and the workers who manufacture their goods. Last spring’s spate of canceled orders has set off a domino cascade of exploitative contracts, lost wages and unemployment without severance, leaving workers in an “even weaker position” than they were before Covid-19 reared its head.
Raakhi Shah, CEO of The Circle, said all stakeholders “must all play our part in creating a fairer fashion world.”
“The global pandemic has seen an increased appetite for change, and we are heartened to see the initiatives currently progressing at the EU that indicate considerable political will to regulate for both environmental and social abuses in global supply chains,” Shah said. “As the EU plans its post-pandemic recovery and develops its due diligence proposals, we hope that this proposal will influence the approach, and lead to a universal commitment to reverse the current race to the bottom regarding wages in the garment industry’s global supply chains.”
Though Asia is home to 60 percent of the world’s garment workers, reformers in the European Commission would also do well turning their attention close to home, labor groups say.
The Circle’s report comes just a week after the Clean Clothes Campaign, the fashion industry’s largest consortium of labor-rights groups, introduced a cross-border base living wage benchmark for Central, East and Southeast Europe.
Based on the costs of living in 15 European garment production countries, including seven EU member states, the so-called Europe floor wage is a “concrete tool to show brands and governments what wage is needed to live on and it can be used by unions and labor NGOs to strengthen their bargaining power.” There’s plenty of scope for improvement: Most of the countries, including Albania, the Czech Republic and Ukraine, pay their garment workers just one-fifth of what they need to live on.
“If brands are serious about paying living wages to the workers in their supply chain in Central, East and Southeast Europe they should use this tool,” Mario Ivekovic, president of Novi Sindikat, a labor union in Croatia, said in a statement. “There is no excuse.”