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Report: Why Retailers Paying a Minimum Wage are Still Not Compliant

The living wage conversation is one that’s been ongoing, but many apparel industry workers still aren’t earning one.

A new report, “Fashion Focus: The Fundamental Right to a Living Wage,” by The Circle, an NGO founded by singer, songwriter Annie Lennox, says that fact has everything to do with a failure on the sector’s part.

According to the report’s first foreword, Jessica Simor, who leads The Lawyers Circle (a collective within The Circle) on this living wage research, said paying garment workers isn’t an insurmountable problem like say, climate change, given that it hasn’t proved that difficult to solve in the Western World.

“Despite numerous conversations with individuals who related the seemingly unsolvable systemic issues involved, it is ultimately nothing more than a failure of will in the face of the promise of larger profits,” Simor said. “In the globalized fast fashion industry, human labor is being bought and sold as if it were a mere commodity.”

The race to the bottom is worse than you think

The International Labor Organization said in 2014 that forced labor in the private economy generates as much as $150 billion in illegal profits every year, and more than 40 percent of the world’s population lives on less than $2.50 a day.

“In an increasingly globalized world, companies source goods from factories where people work in conditions and for wages that would be illegal, and likely criminal, in the main market places for those goods,” The Circle’s report noted.

Fashion purchasing habits have changed considerably in the last 20 years, and the introduction of fast fashion has had a lot to do with it. Global expansion of the garment industry since the phasing out of quotas played its role too. The problem now, however, is the unequal distribution of power.

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“Transnational fashion corporations hold most of the cards. They can quickly move their production to the lowest wage states,” according to the report. “Meanwhile, the economies of producer countries have become highly dependent on the sector. In short, a mobility of capital and immobility of labor has created a so-called race to the bottom.”

Much ado, but little progress

Efforts surrounding a move toward paying workers a living wage, one that would at least cover their basic needs, haven’t been few, but they’ve been isolated, and many have been more talk than action.

“Living wage commitments by brands often contain a temporal disclaimer, implying that they are something that will be achieved ‘eventually,’ ‘in the future’ or when various benchmarks or agreements have been reached or worked out; a lack of consensus on how to calculate or what actually constitutes a living wage is often cited as a reason for these delays,” according to the report.

The other problem is that many apparel companies proudly claim to pay a country’s national minimum wage, often knowing full well how far off that rate is from what’s considered a living wage.

“Any company that claims it satisfies human rights and international labor standards by paying the minimum wage in a country where that wage comes nowhere close to a living wage has necessarily therefore failed in its duties to ensure such compliance. Put simply, it is aware of its non-compliance,” according to the report.

Findings from the report show that of the 14 major garment manufacturing countries examined, the lowest minimum wage is just 6 percent of what would be considered a living wage in Cambodia, and at best, in Portugal, the minimum wage is just 57 percent of what a living wage would be.

Report: Why Retailers Paying Minimum Wage are Still Not Compliant
Image: courtesy The Circle

What will it take to end the race to the bottom?

As long as companies are competing for cheap labor, countries aren’t incentivized to ensure proper labor standards or adequate wages, according to the report, because those countries know they risk losing out to countries that will do the same thing for a cheaper price.

So to get out of the unfortunate cycle that is the race to the bottom, companies have to be obliged to ensure workers in the factories that supply to them are paid a living wage in order for countries to be incentivized to ensure and enforce it.

“In the near future, some enforcement/control mechanism is needed to ensure that producers/retailers who choose to use labour in countries where the minimum wage is in no sense a living wage take all reasonable steps to ensure that the workers who produce the goods that they sell are paid a living wage. While self-regulation should be enough, in reality it has manifestly proved ineffective,” the report noted.