Stitching a decent Wage across boarders
Wednesday, 07 October 2009 12:27
ASIA FLOOR WAGE: WHAT'S IT ALL ABOUT?
The problem
One of the root causes of poverty wages in the industry is the power of global buyers to constantly relocate production in search of ever lower prices and better terms of trade. This power is used to exert a downward pressure on wages and conditions – labour being one of the few 'production costs' or 'inputs' that can be squeezed.
The solution
The basic idea of the Asia Floor Wage is to put a 'floor' under this, thereby preventing this competition from forcing wages below poverty levels and making sure gains are more equitably shared along the supply chain. The Asia Floor Wage alliance have formulated a unified, regional demand for a minimum living wage which is decent and fair and which can be standardised and compared between countries. This regional collective bargaining strategy will unite workers and their allies from different Asian countries behind one wage demand.
The goal is to attain this standardised minimum living wage for workers across Asia through negotiations between garment industry employers and workers’ representative organisations, and with the mediation and support of governments, inter-governmental organisations and social movements.
To find out more, read THIS REPORT produced by the Asia Floor Wage international secretariat.
How was it worked out?
The Asia Floor Wage concept and all the decisions were led by workers and unions from garment producing countries. The Asia Floor Wage Alliance, a large coalition of unions and labour organisations spread across Asia, supported by trade unions, labour NGOs, anti-sweatshop movements, and scholars from Europe and the USA, worked on the formula. Together they agreed:
The Asia floor wage should provide enough for food costs and non food costs of a standard family of 2 adults and 2 children.
That a basket of food is based on a standard calorific intake of 3000 calories per adult, 1500 per child.
The ratio between food costs and of other non food costs such as clothing, housing and utilities, healthcare, social security, education, and savings should be 50% food 50% non food.
The wage should be earned during each country’s legal maximum working week, though not above 48 hours.
The alliance then went through a process of: working out a living wage figure for each country based, comparing these figures between countries using purchasing power parity dollars, agreeing an average regional figure (475 PPP$) and converting this back into local currencies.
Below are the living wage figures arrived at by this process:
Bangladesh: 10,754 taka (minimum wage = 1,662)
China: 1,638.75 yuan (minimum wage = 687)
India: 6,968.25 rupees (minimum wage = 4,238)
Indonesia: 1868,650 rupiah (minimum wage = 972,604)
Sri Lanka: 16,705.75 rupees (minimum wage = 5,046)
Thailand: 7,566.75 baht (minimum wage = 4,368)
What are we calling for?
Labour Behind the Label, as part of the Asia Floor Wage alliance are calling for a widespread and systematic change to the way garment worker's wages are calculated and paid. This change will not only include action on the part of singular brands and retailers, but collaboration together with other brands, and action taken by national governments and industry to raise minimum wage levels.
What does the AFW want from brands and retailers?
We intend to support alliance members overseas in their bargaining with suppliers to receive a living wage, by lobbying companies from the UK end. Initially, the campaign is asking brands to do three things:
1. Sign up to the AFW
Brands and retailers should sign up to the AFW by committing to paying, as a minimum, the AFW. Companies can take the AFW of 475$PPP as a concrete benchmark for a living wage in Bangladesh, Cambodia, China, India, Indonesia, Thailand and Sri-Lanka.
2. Enter into dialogue with the AFW alliance
The campaign asks companies (after they have committed to the AFW) to enter into dialogue with (local) AFW alliance partners in order to develop concrete steps towards implementing the AFW. The AFW secretariat will be able to direct global buyers towards local alliance members.
3. Adjust pricing policies
Brands and retailers exercise a lot of influence over the way that production is organised. They set prices and determine how production takes place. Global buyers need to absorb the cost of increased wages by paying higher prices to suppliers. Since wages represent only a small percentage of the retail price – normally 0.5 - 1.5 per cent – the AFW Alliance believes that the supply chain has the capacity to absorb such wage increases without too much difficulty.
