Responded to survey: Yes.

MSI involvement: yes, Ethical Trading Initiative [what's this?]

Grade 2: Acknowledges that minimum and industry benchmark wages are not sufficient standards, but no real efforts to apply living wage. [what's this?]

Summary

Sainsbury’s has started a wage project in Bangladesh and is working with a group of brands in 110 factories in Bangladesh to improve systems and worker-management dialogue. This is an improvement on last year but it still has a long way to go.

Position on living wages

‘Sainsbury’s agree that living wage must be an inherent and inextricable element of their Ethical Trading framework and advocate this through our Code of Conduct for suppliers... This is true for all sectors of employees including Homeworkers and subcontractors.’

Living wage benchmarks> None given.

Position on freedom of association

‘We recognise that Trade Unions are the gold standard for collective bargaining, however, in countries where that is not legally possible there is strength and value in workers’ committees as this can still ensure dialogue and lead to mature systems of industrial relations.’

Work so far on living wages

Sainsbury’s started a wage project in one factory in Bangladesh in 2009. This project looked at productivity, HR, wages and communication. The factory saw profit increases of $120,000 ‘of which all has or will be going into increased wages for workers’. This was achieved via an incentive bonus scheme that boosted productivity. According to Sainsbury’s, wages increased by 80%, although no concrete figures were given to show whether this applied to the lowest paid workers or the extent to which this included overtime work.

Plans on living wages

Working with Arcadia, M&S, Mothercare, Tesco, New Look and Impactt, Sainsbury’s is taking part in a DFID sponsored programme called ‘Benefits for Business and Workers’ targeting 110 factories in Bangladesh.

The project aims to enable managers ‘to build an understanding of the needs and aspirations of workers’ as well as to build ‘skills in production quality and human resources management.’ It further aims to enable ‘workers to communicate their views’ and support ‘the negotiation of improved wage packages meeting workers’ stated needs.’ This is to be done through a combination of production management; factory efficiency improvements; human resources management systems improvements; and worker management communication systems.

Other significant information

Sainsbury’s have created a data tracking system to ‘increase the visibility’ of its supply base. Some training for buyers in purchasing practices has also been carried out.

Our comments

After years of merely citing attendance at ETI working groups, it is good to see Sainsbury’s taking proactive steps to start its own work on wages and participate in measurable collaborative projects with other retailers. The ‘Benefits for Business and Workers’ project is a good place for it to learn from other retailers and take part in a project that could have a real impact.

Sainbury’s is still at the beginning of the road that other brands have been on for a while. With no clear work on freedom of association, pricing, work with other civil society groups, or a route map for impacting wages across its supply base, it has some catching up to do.

Although its one and only wage project in Bangladesh appears to have led to impressive wage increases of 80%, this could easily be accounted for by the increase in minimum wage, which also took place in November 2010 and increased wages by a reported 81%. Productivity improvements may have enabled its supplier to absorb these wage increases, but it’s unclear the extent to which workers will be seeing the benefit.

Sainsbury’s must be careful to apply its own definition to freedom of association and only use workers’ committees where genuine freedom of association is outlawed. Its assertion that workers’ committees can provide mature systems of industrial relations is misleading – this phase applies to workers who have the collective power to bargain and negotiate on working terms and conditions both inside the workplace and in regional and national wage negotiations. This does not apply to workers’ committees, which are usually very limited in scope.

A pilot project in China was mentioned in its 2009 submission, but this does not seem to have materialised.