H&M Aims to Pay Living Wage for Garment Workers

‘Fast fashion’ clothing chain Hennes & Mauritz is the largest buyer of clothing that is made in Bangladesh

The largest buyer of made-in-Bangladesh clothes is trying to turn a pattern on its head: Cheap clothing shouldn’t come at the expense of a living wage.

Swedish bargain fashion giant Hennes & Mauritz HM-B.SK +0.54% AB on Monday unveiled a plan to ensure that workers making its clothing are paid wages that cover their cost of living.

H&M will begin assessing the gap between wages and the cost of living next year in factories in Bangladesh and Cambodia. Within five years, 750 of its most important suppliers, covering 60% of its goods, should be paying a fair living wage, H&M said.

“Textile workers should be able to live on their wage,” says Helena Helmersson, Global Head of Sustainability at H&M. “Wage revisions from the government are taking too long.”

H&M is working closely with two factories in Bangladesh and one in Cambodia to poll workers and managers about the cost of their basic needs. As a result of this research, the company will determine how much wages need to be adjusted.

H&M’s initiative shows that retailers are increasingly a step ahead of the governments of garment industry nations in efforts to improve working conditions. Following a spate of deadly disasters in Bangladesh, Cambodia and Pakistan, retailers have created safety pacts, launched widespread building inspections and endorsed the presence of unions. Though the retailers have committed to these changes, it is too early to see the results.

In the case of the minimum wage, Bangladesh is in the process of raising its rate from $38 a month to $67. But many contend that the increase isn’t steep enough and wage revision doesn’t occur frequently enough.

Ms. Helmersson said that 90% of workers sewing H&M clothes in Bangladesh already earn more than the minimum wage.

Low wages have sent retailers rushing into countries such as Bangladesh, Cambodia, China and Vietnam in recent years to tap into ever-cheaper sourcing. Yet retailers frequently face production delays because of wage protests.

Workers’ rights groups argue that low wages are a symptom of the low-cost environment that has led to factory accidents such as the April collapse of the Rana Plaza building in Bangladesh.

“We hold multinational [retailers] responsible for wages and working conditions,” says Anannya Bhattacharjee, the coordinator for the Asia Floor Wage Alliance, which lobbies for higher wages in the garment industry. Though most retailers don’t own the factories or directly employ the seamstresses, “workers are working for the multinationals.”

The gap between the minimum wage and the cost of living has widened in recent years, says Ms. Bhattacharjee. High inflation has sent the cost of living soaring in many Asian countries, but starting salaries often remain unchanged for several years. The newly proposed minimum wage in Bangladesh is only about a fifth of the $320 that Ms. Bhattacharjee says is necessary to afford sufficient food, housing and education for a family living off a garment worker’s salary.

H&M is also reworking its purchasing process to make it more transparent, giving the company better visibility and detail about its suppliers’ costs to produce H&M garments. The “true cost of labor” should be more evident, Ms. Helmersson said.

Though H&M could bear higher sourcing costs by paying higher wages, Ms. Helmersson insists it will pay off for the company. “Strikes and disruptions to production are costly for us,” she said. “The increase in productivity will be profitable to us in the long term.”

Consumers won’t be stuck holding the bill, Ms. Helmersson says. “Wages are only one part of sourcing costs,” she says. “We don’t think there will be any impact on prices.”

Source: The Wall Street Journal


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