Failure to lift 'exploitative' wages tests fashion firms’ commitment to human rights

Jul 25, 2023

A migrant worker sleeps among looms following a shutdown of textile factories in Mumbai, India, during the outbreak of the coronavirus. REUTERS/Francis Mascarenhas

August 2 - The garment industry in Bangladesh has changed since 1,134 people were killed when the Rana Plaza factory in Dhaka collapsed on April 24, 2013.

On the back of initiatives such as the Bangladesh Accord (now the International Accord), which brought together trade unions, brands and the government, the industry is much safer with stricter governance, ensuring that the label “Made In Bangladesh” is now viewed as a badge of honour.

Sadly, this is one of the few highs in the fashion industry’s attempt to address human rights and poor pay across its labyrinthine supply chains. Fashion has made no concerted effort to change, says Jenny Holdcroft, a deputy director at the Shift Project, an organisation that advises companies on implementing the United Nations Guiding Principles on Business and Human Rights.

Things reached a new low during COVID-19, she says: “The pandemic was a dark time for fashion brands.” Not only did they stop making orders, they also stopped paying for those they’d already placed, protecting their own profits rather than supporting suppliers. Brands have since been called out for cancelling orders at the last minute, too, and introducing draconian payment terms that have left factories floundering.

The glacial progress of change was further exposed last month, with the publication of the Fashion Transparency Index, which revealed that 99% of major fashion brands were still not disclosing the number of workers in their supply chain who were being paid a living wage. Published annually by industry activists the Fashion Revolution, the index analyses and ranks 250 of the world’s biggest fashion brands and retailers based on their public disclosure of human rights and environmental impacts.

A rescue worker stands in front of the rubble of the collapsed Rana Plaza building, in Savar, near Dhaka, April 26, 2013. REUTERS/Andrew Biraj

Just three companies – Gucci, OVS and Tom Tailor – reported on the number of workers in their supply chain receiving a living wage, which is generally defined as the minimum income necessary for a worker and their family to meet basic needs, including some discretionary income.

According to Statista, the monthly basic wage of garment workers in 2020-2021 globally was $200. Research carried out by Fashion International and partners across selected countries with substantial links to the textile industry shows that in most regions, workers are earning less than a living wage. Further research, published as the Industry We Want wage gap metric, estimates that the average gap between minimum wages and living wages in 28 key garment producing countries is 48.5%, a 3.5% increase on 2022.

There was further embarrassment for the industry when the Good Clothes, Fair Play campaign said that it had asked the latest AI technology to write a series of fake job adverts, based on real working conditions in the sector. The campaign group said that ChatGPT had refused to create the copy on the basis that the conditions it was being asked to describe were too exploitative.

There are few options open to workers who do look to pursue claims for compensation. Twenty workers’ unions from Asia are currently pursuing Nike for failure to comply with Organisation for Economic Co-operation and Development rules for responsible business, after the company cancelled orders in 2020. The unions argue that Nike breached OECD regulations by failing to help workers whose incomes had collapsed as a result of its operations.

Although not a legal case, the union hopes the potential reputational damage will force the company to act, especially given that the company’s own code of conduct states: “Acting with integrity is about more than reading a set of policies and checking a box. It’s about always acting ethically.”

Garment workers shout slogans as they block a road demanding their due wages during the COVID-19 lockdown in Dhaka, Bangladesh, April 15, 2020. REUTERS/Mohammad Ponir Hossain

Holdcroft believes greater industry collaboration is another way of addressing human rights abuses in the textile supply chain. In a previous role at IndustriALL Global Union, she helped to develop the Bangladesh Accord, which covers fire and building safety in the country’s textile factories.

More than 200 brands came together “pooling their resources and collective energies with a single focus and purpose … people do not die in garment factories in Bangladesh anymore”.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the value of Bangladeshi clothing exports has nearly doubled since the tragedy, as brands’ confidence in the country has grown. A similar accord has now been launched in Pakistan.

However, Holdcroft says it is disappointing that the response to other problems in the industry, such as long hours and low wages, “remains very fractured”, with too many brands concentrating on their own supply chains.

“Everybody knows that it is only structural reform that will make any difference; it's a total supply chain issue, it's not an issue of the individual supply chains … because they’re all completely enmeshed,” she says.

However, 19 brands have signed up to ACT on Living Wages, an agreement between trade unions and brands to drive higher wages across the sector. It recognises, says Holdroft, that “doing it factory-by-factory won’t work.” Next, Primark, Tesco, Inditex and H&M are among the signatories.

Employees work at a factory supplier of the H&M brand in Kandal province, Cambodia, in 2018. REUTERS/Samrang Pring

Payal Jain, head of sustainability at H&M, says joining ACT fitted in with an approach that is moving away from social auditing. She said H&M is now placing more emphasis on “local teams which are the eyes and ears on the ground … that constantly give us feedback.”

She agrees that industry, unions, suppliers and workers all need to work together: “When you walk into a garment factory there are multiple customers, so we alone as a brand cannot decide the wages.”

ACT operates in three countries, Turkey, Bangladesh and Cambodia, and is based on five principles. The key, says Jain, is that labour costs are ring-fenced and non-negotiable, and there is also a commitment to fair payment terms. H&M now ensures suppliers are paid within three days from the garment being shipped.

Other pillars include assurances around better planning and forecasting, staff training around purchasing practices and a commitment to a responsible exit when relationships with a supplier end.

However, H&M continues to use factories in Myanmar, which was also part of ACT until the country’s military government clamped down on trade unions. While other brands such as Marks & Spencer and Primark have since stopped working in the country, H&M is “constantly evaluating” the situation says Jain.

The Fashion Revolution report says workers’ ability to join together to negotiate with their employers remains the main channel available to achieving better wages and working conditions. But high volumes of fashion continue to be sourced from countries with the most stringent restrictions on workers organising. This includes Bangladesh, where just 3.5% to 4% of garment factories have a union presence, and Sri Lanka, where it stands at 5%, and unionised workers are increasingly being targeted and dismissed, Fashion Revolution says.

Workers conduct a safety assessment at a knitwear factory in Dhaka, Bangladesh, in the wake of the Rana Plaza disaster. REUTERS/Krista Mahr

And while 85% of major brands have policies supporting freedom of association, just 15% disclose the number of supplier factories with independent, democratically elected trade unions. And only three of 250 brands struck collective bargaining agreements that gave workers wages higher than those required by local law.

“Clearly isolated, voluntary efforts from brands to implement living wages in their supply chains are insufficient in addressing this seismic injustice,” Fashion Revolution said.

Maya Thomas-Davis from campaign group Labour Behind the Label says the new EU Corporate Sustainability Due Diligence Directive looks set to offer stronger enforcement around human rights in the supply chain, and provide a “reputational incentive” for brands not to be dragged through the courts.

Germany, Japan and the U.S. have all produced new corporate guidance on human rights in the last few years, and several brands, among them Primark and the White Company, are backing a call from the Corporate Justice Coalition for a new Business, Human Rights and Environment Act.

It took a huge tragedy before the sector acted in Bangladesh, and while the country’s garment workers now enjoy safer working conditions, around the world sweat shops proliferate, human rights violations go unreported and the fashion industry continues to generate vast profit.

As Thomas-Davis says: “Fashion has got a long way to go to ensure that the workers who actually produce all of the profit that these brands are enjoying are not the ones paying the price.”

This article is part of the August issue of Ethical Corporation magazine, which is about sustainability in the fashion industry. You can download the digital pdf of the magazine here

Mark Hillsdon is a Manchester-based freelance writer who writes on business and sustainability for The Ethical Corporation, The Guardian, and a range of nature-based titles.

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