Living wages In global supply chains – How to achieve them!

Living wages In global supply chains – How to achieve them!

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When the Rana Plaza textile factory in Bangladesh burns down in April 2013, causing the death of 1,200 workers and injuring over 2,000 men and women, the bell starts to ring in the headquarters of international textile companies. The companies realize what NGOs, trade unions, and even governments have been demanding for many years: Things have to change profoundly in terms of due diligence mechanisms, human rights and safety at work – not only in the Western office buildings, but all the way down the global supply chains.

In autumn 2015, roughly two years after the Rana Plaza disaster, the General Assembly of the UN agreed on 17 “Sustainable Development Goals” (SDGs). Their implementation should help the world community build a better and more sustainable future based on the UN-Agenda 2030.

Although they enshrine a global approach and universal principles, the SDGs have first and foremost been designed with regard to the needs of emerging and developing economies. Or, in concrete terms: how can we improve the life of a single mother seamstress in Bangladesh who is obliged to get into debt in order to feed her children? This question clearly goes beyond the direct implications of the Rana Plaza incident. Safe working conditions are an important first step, but the debate on the implementation of the SDGs does not stop when it comes to the workers’ wages. Let’s have a closer look at this point: Which impact on the SDGs would it have if the Bangladeshi seamstresses and other workers at the low end of the global supply chain were paid fair wages?

Wage increases for those who live on the margins of subsistence can move a lot of factors: poverty reduction (SDG 1), fight against hunger and malnutrition (SDG 2), better access to medical services (SDG 3) and education (SDG 4), dignified work and economic growth for poor regions (SDG 8), reduced global inequalities (SDG 10), and eventually more sustainable consumer behavior (SDG 12). Thus, paying fair wages to the victims of globalized capitalism is not merely “charitable romantic philanthropy”, but can really contribute to the achievement of the UN’s sustainability goals.

The Best Wage Is A Negotiated One
Fair wages provide a decent living to their earners; therefore, they are commonly called ‘living wages’ in the terminology of labour law. That being said, the concrete definition of such wages often distracts from the actual problem: a wage must first and foremost guarantee a proper livelihood to the person that receives it. Hence, the decisive question is the following: how and by what means can the world community achieve this goal in practice?

National legislation turns out to have a quite limited effect when it comes to global supply chains: France used to be a forerunner in 2017 when the “Loi Vigilance” became one of the first national regulations on enforcing corporate due diligence along the supply chain. As the law incorporates several restrictive clauses, it only applies to 150-200 French companies. In addition, it puts the burden of proof on the victim – a further cause for its limited success in terms of human rights compliance.

For the international trade union movement and many other stakeholders, the answer lies in a strong social dialogue: the best wage is the result of negotiations. In this regard, the merits of living wages include strengthening the position of trade unions and collective bargaining. If it seems so ‘easy’ to implement living wages via collective bargaining, why is this not already taking place?

We Have The Choice: Advancing Together Or Stepping Back Individually
A series of obstacles has to be overcome to achieve living wages. In many countries with poverty wages the trade union movement is weak and the culture of effective social dialogue does not exist. The companies, for their part, fear a loss of competitiveness when engaging in wage negotiations, given the context of a harsh and merciless world market.

Given these difficulties, the various stakeholders have to stand together and drive forward joint actions so as to enforce fair wages and decent work all along the global supply chain. This idea is at the core of ACT (Action, Collaboration, Transformation), an international initiative bringing together companies, trade unions, NGOs, and governments to make the textile sector more sustainable and prepare it for future challenges. ACT is clearly taking the lead when it comes to living wages; nonetheless, the German “Textilbündnis” (textile alliance) and the Dutch “Covenant for Sustainable Garments and Textiles” also have identified this issue as being crucial for their industry.

Not A Sprint, But A Marathon
It is quite obvious that achieving living wages presents a tough and time-intensive task. Partners have to be gathered around one table to start discussions and, in the end, entire purchasing strategies of multinational companies have to be transformed. Hence, we must not expect results to be achieved overnight – the race for living wages is not a sprint, but a marathon. The stakeholders involved in the process have to show perseverance and tenacity. They are aware of the fears of the producing countries and suppliers they will lose their competitiveness if wages were to be considerably increased. Mitigating or even taking away these fears must be at the core of every living wage strategy.

Another important point is the relative weakness of trade unions in most of the producing countries, especially in East Asia and Africa. Broad alliances with industry-leading companies can be an efficient means to facilitate the emergence of trade unions and social dialogue through economic pressure. The market shares of these initiatives are significant: “Textilbündnis” has already reached about 50% the Dutch Covenant aims to attain 80% by 2020.

Introducing living wages is not a one-way street. It would be far from socially acceptable to let the multinationals fix the wages on their own – and legally determined minimum wages often fail to improve the situation in poor countries’ low-wage sectors either. In emerging and developing economies, minimum wages tend to be a mere political compromise in the context of tough global competition in the field of labour costs. Hence, it is very rare that these minima come close to what common definitions would call a living wage in the given country.

After all, one thing is for sure: if a decent wage cannot be found at the negotiating table, the Bangladeshi seamstresses will enforce them on the streets.

About Susanne Wixforth and Lukas Hochscheidt
Susanne Wixforth is Head of Unit in the German Trade Union Confederation (DGB), Europe and International Department, and former Senior Legal and Economic Adviser European Affairs in the Austrian Chamber of Labour (AK Vienna). Lukas Hochscheidt is a student in Politics and Social Sciences at Sciences Po Paris and Freie Universität Berlin. In the summer of 2018 he undertook an internship at the Department for International and European Trade Union Politics at the German Trade Union Confederation (DGB).

source: Social Europe

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