The Swedish fast-fashion retailer recently revealed that it’s rolling out a better compensation package to 68 factories in China, Cambodia and Bangladesh this year, with a view to have all of its “strategic suppliers” on board by 2018.
As part of the plan, called the Fair Wage Method, H&M will update its purchasing practices to help put sustainable pay structures in place, advocate for regular wage adjustments and enhance communication between the management and workers’ representatives.
“A lot of the riots and unrest we have seen in countries like Cambodia and Bangladesh are connected to the issue of wages,” Anna Gedda, H&M’s head of sustainability, told Bloomberg. “If we can address the issue of wages and industrial relations, that will lead to more stable production prices.”
H&M piloted the program in two factories in Bangladesh and one in Cambodia last year and reported a drop in absenteeism and an increase in retention rates. The retailer is currently finalizing plans to expand the program to Myanmar and Ethiopia.
According to a statement, “The overall goal is to make it easier for the suppliers to plan their capacity and thereby reduce production peaks and overtime. Our purchasing practices should always provide reasonable lead times, fair pricing, timely payments and transparent communication.”