Responded to survey: yes

MSI involvement: Yes; Fair Labour Association (FLA).

Grade 1.0: Accepts the principle of a living wage, but applies legal minimum/industry benchmark. [what's this?]

Summary

H&M has a clear approach to addressing wages - that sustainable wage improvements should come from an increase in national or industry standards, or should be negotiated between workers and management. We agree in principle, but this will take some time, and H&M’s projects, which measure success based on achievement of minimum wages, do not show evidence of delivering a living wage for workers any time soon. 

Position on living wages

‘Our minimum requirement is that employers shall pay at least the statutory minimum wage, the prevailing industry wage or the wage negotiated in a collective agreement, whichever is higher... However we think that wages for standard working hours should meet the basic needs of workers. Therefore we see it as part of our responsibility to contribute to ensuring that above standards define wages that are enough to live from.’ 

Living wage benchmark

None given. 

Position on Freedom of Association

‘We agree with your statement that sustainable wages are best delivered through good industrial relations. We consider efforts to strengthen social dialogue that go beyond auditing as essential to promote freedom of association and collective bargaining... We believe and support that sustainable wage development is achieved by negotiations in good faith between employer and employees’ organisations.’ 

Work so far on living wages

China
‘In China our main focus has been on ensuring that workers receive correct wages and that wage systems become more transparent.’ Work in this area included labour rights seminars with 40 suppliers on legal duties; HR support for 46 factories; work on contracts and payslips; monthly factory reporting requirements; and target setting for factories working towards ‘sufficient wage systems’.

The results: ‘Our data shows that workers are now essentially getting the correct minimum wage per hour worked.’ 

Bangladesh
On Bangladesh, H&M said: ‘We see that statutory minimum wages, sector standards, and preferably collective agreements, are the only realistic systems to achieve sustainable development of wages across an industrial sector. We also believe that these systems must define wage levels that are enough to live on.’

Some evidence of lobbying of the Bangladeshi government to improve minimum wages was given.

Plans on living wages

H&M prepared the ground for an industrial relations pilot in Bangladesh this year. The project’s objective will be to ‘contribute to the development of industrial relations in the ready made garment sector in Bangladesh [and] … to inspire other brands to work in the same direction’. A wide variety of stakeholders were consulted including international and local union groups and NGOs.The pilot project is due to be launched in autumn, reaching 10–12,000 workers.

‘The project is aiming for elected workers to perform a dialogue with the employers. In the long run the aim is that they will perform more advanced negotiations through workers’ committees or if they choose so join a trade union.’

‘If the pilot, which will run for approx. 12-18 months is successful we will roll it out in a larger scale in our supply chain in Bangladesh.’

H&M also plans to carry out some research into the ‘fair wage concept’ approaches together with the Fair Labor Association and Daniel Vaughan-Whitehead of the ILO. The research will cover a high number of units covering several large production countries, and aims to consult on 12 wage proposals.

‘Our aim and ambition is to create a sustainable solution where factories support a regular wage negotiation with full transparency to their workers on how wages are calculated and what the wages are based on. We believe this will lead to a sustainable solution for all involved, creating better wages for workers and better stability for factories.’

A preliminary pilot in 6 units has already been carried out. 

Other significant information

Engagement with an FLA project to improve worker-management communication systems in China was mentioned.

Training videos on rights for workers in India and Bangladesh were produced and viewed by 115,000 workers and management. Training for workers’ committees in India to encourage more effective function were also delivered.

H&M have carried out some work on purchasing practices: commitment to long term relationships with suppliers; price transparency initiatives; training for suppliers; and training for buying and merchandising teams were all mentioned.

H&M participates in the ILO’s ‘Better Factories Cambodia’ scheme, and ILO ‘Better Work’ schemes in Indonesia and Vietnam. 

Our comments

In many ways we support H&M’s approach towards wage improvement. We agree fully that the most sustainable of wage improvement projects are delivered through government regulation and good industrial relations but, although there are some examples provided of work with trade unions both internationally and nationally, there is little systematic work being done to support freedom of association within H&M’s supply chain. There is some evidence that H&M has engaged with governments on the wages issue, but again this seems limited.

While good industrial relations and strong legislation remain far from the norm in the garment industry, brands and retailers must be more proactive in their work to improve wages. On this, H&M has set its goal posts too low. The majority of its work focuses on achieving legal compliance with minimum wages, and its code only requires compliance with these minimum standards – no aspiration to improve on this is given.

H&M provided some detail of a new project to research wage levels within factories, assess factories on different factors that contribute to wage levels currently paid, and provide data that can be used in wage bargaining. It is clear that this programme is at the very early stages and we wait to see how this ‘fair wage’ initiative will deliver increased wages. To this end we would urge H&M to complete the ‘research and assessment’ phase quickly in order to move on to actual improvements in wages.

Important to the credibility and success of such a programme will be the publishing of the different benchmarks being used to define a ‘living wage’ for each country. This must be based on a calculation of basic needs of workers in each region and not factory by factory. We are also keen to see how H&M plans to address the problems faced by workers when attempting to negotiate a fair wage with their employers.

A living wage will only really be achieved via a combination of retailer initiatives to work on price, buying practices and freedom of association, alongside efforts to lobby in-country governments and support mature industrial relations. The ‘retailer will’ side of this equation is missing from H&M’s submission.

A first step would be for H&M to settle on a definition of a ‘fair wage’ and enshrine this within its code, after which it needs to work towards plans to deliver this to workers.