20:29:25 local time VIET NAM
* ILO to help improve social insurance laws:
A project to improve the nation’s social insurance system was launched by the Ministry of Labour, Invalids and Social Affairs (MoLISA) and the International Labour Organisation (ILO) yesterday.
The project on Strengthening the performance of the social insurance system in Viet Nam through improved legislation and legal framework for social insurance supports the reform of the Social Insurance Law, which is expected to get the green light from the National Assembly next year.
“Revising and improving the Social Insurance Law is an urgent task,” said ILO Viet Nam Director Gyorgy Sziraczki. “It’s not only for today, but also for the future. The impact of demographics on our future social-protection system and job prospects should be taken into consideration.”
* Vietnam, EFTA hold FTA negotiations:
The fourth round of free trade agreement (FTA) negotiations between Vietnam and the European Free Trade Association (EFTA) was held in Oslo, Norway, from June 3-7.
More than 70 delegates from Vietnam and the four EFTA members (Switzerland, Norway, Liechtenstein, and Iceland), as well as the EFTA Secretariat took part in the event.
Talks were focused on opening the market for goods, especially farm products, services and investment. They reached consensus on a number of issues related to legal affairs and institution, trade services, trade facilitation, safeguard measures, and rules of origin.
According to the Vietnam Ministry of Industry and Trade, the negotiations were conducted in an atmosphere of openness and mutual understanding.
The two sides agreed to consult internally before the fifth round due to take place in Hanoi in August 2013.
Last year, EFTA signed a memorandum of understanding with Vietnam, recognising the country’s market economy status and agreeing to kick-start bilateral FTA negotiations.
During a visit to Vietnam in April 2013, Norwegian Minister of Trade and Industry Trond Giske voiced his government’s support for the signing of a FTA between Vietnam and EFTA, creating a legal framework for both sides to increase business cooperation and investment.
to read in BUSINESS IN BRIEF 18/6.
20:29:25 local time THAILAND
* Saha Group rolls back investment:
Baht volatility blamed, amid rise in cost of locally made goods
Major manufacturing and trading conglomerate Saha Group has slowed its investment this year because of the baht’s volatility, which sparked a surge in imports at the expense of locally made products.
Chairman Boonsithi Chokwatana said the group had shut down some plants that produced shoes and socks on a subcontract basis. However, the company has maintained its plan to invest in Myanmar.
He said purchasing power in Thailand this year was unlikely to register the same growth as last year, which was affected by government projects such as the first-car scheme. This year, along with the volatility of the baht, has seen a rise in the daily minimum wage to Bt300 nationwide. This, he claimed, had driven up the cost of living, prompting consumers to slow their spending.
Out of Saha’s total production, 20 per cent is for export.
read more. & read more.
21:29:25 local time INDONESIA
* Sritex in Talks With H&M as it Stands to Benefit From Bangladesh Disaster:
Sri Rejeki Isman, an Indonesian textile and garment company that recently went public, is in talks to produce garments for Swedish clothing company Hennes & Mauritz as it pulls some of its production from Bangladesh.
The Stockholm-based company, which will open its doors in Jakarta later this year, is among Bangladesh’s top buyers. After the collapse of the Rana Plaza factory killed more than 1,100 people in April, the company has reportedly been looking for different suppliers.
According to H&M’s annual report, clothing is sourced from 800 independent suppliers, mainly situated in Asia and Europe.
“We are still discussing the product line,” Iwan Lukminto, president director of Sri Rejeki (Sritex) said, but added that it was unlikely that H&M would move its entire capacity to Indonesia.
“They want to diversify their production locations, so its unlikely they will move all of their production into one place. We are just one company benefiting from this,” Iwan said. He hopes to secure the production agreement before the end of this year.
* Students, Labor Activists Protest Indonesia’s Fuel Price Hikes:
Jakarta Police shut down access to the Jakata-Tangerang toll road Monday morning as labor unions attempted to flood the capital in protest of Monday’s expected fuel price hikes.
The blockades brought traffic to a halt as police attempted to prevent large-scale protests in Central Jakarta, according to reports aired on Elshinta Radio.
The House of Representatives is expected to vote on the central government’s controversial fuel subsidy cuts, a move that would raise the price of subsidized fuel 44 percent to Rp 6,500 ($0.65) a liter. Thousands of protestors had already gathered in a demonstration outside of the House Monday afternoon, prompting police to blockade sections of the inner-city toll road and causing gridlock on westbound lanes.
19:29:25 local time BANGLADESH
* 15 hurt as seamstresses clash with cops in capital:
At least 15 apparels workers were injured as police charged batons and opened fires on demonstrating labourers on Tejgaon-Gulshan link road in the capital Monday morning, our staff correspondent reported.
The seamstresses staged demonstration to press home several of their demands including hike in their attendance allowance and tiffin bills.
The witnesses said at least 2 people sustained rubber bullet injuries; however, however, police denied the charge.
The Bangladesh Garment Manufacturers and Exporters Association said the workers of Utah apparels have not been joining works for the last 8 days. The Utah management had tried to negotiate with the workers in several meetings but failed. As a result they have closed the factory, BGMEA officials claim.
read more. & read more. & read more. & read more. & read more.
* 10-22 garment workers injured as police charge batons in Gazipur:
At least 10 garment workers were injured on Monday after police charged batons on them at Barobari area under Sadar upazila in Gazipur during an agitation, our Gazipur correspondent reported.
The workers blocked Dhaka-Mymensingh highway and demanded for raises in their attendance bonus and tiffin bills, our correspondent reported.
Witnesses and police said the workers of Uni-gear garment factory began a demonstration in their factory premises at about 7:30am.
read more. & read more. & read more. & read more. & read more. & read more.
& read more. & read more.
* 25- 32 injured as police, RMG workers clash at Tejgaon, Gazipur:
At least 32 people were injured as garment workers and the police clashed in Tejgaon Industrial Area in the city and Board Bazar in Gazipur on Monday.
Several hundred workers of a ready-made garment (RMG) factory at Tejgaon went on the rampage, demanding resumption of production in the apparel unit on the day.
Police baton charged the protesters and fired several dozens teargas shells and rubber bullets to disperse the unruly workers from the area leaving at least 10 workers injured.
The workers being infuriated by the sudden decision of shutdown by the factory management blockaded Gulshan-Tejgaon link road and disrupted traffic movement on the road for nearly two hours from 8:30am.
read more. & read more.
* 3 RMG workers receive bullet injury in capital:
At least three readymade garment workers received bullet-injury while seven other got hurt in a clash between workers and law-enforcers at city’s Gulshan Link Road on Monday.
The bullet injured victims – Sharmin, 22, Tania, 19, and Bidyut, 28 — were admitted to Dhaka Medical College Hospital, reports banglanews24.com.
The clash erupted shortly after hundreds of workers of Eouta Garments took to the streets around 8am protesting the shutdown of their factory without any notice.
Later, other factory workers joined the protest and blocked Gulshan Link Road when Eouta Graments workers threw bricks and pebbles at the other nearby factories.
Meanwhile, vehicular communications on Gulshan, Badda and Tejgaon roads were halted for two hours.
Later, police baton-charged, fired dozens of tear shells and rubber bullets to bring the situation under control leaving some 10 to 12 people injured, reports our correspondent.
Sources said workers of the factory had been demanding an increase in their salary and allowances.
read more. & read more.
* Fresh worker protests over unmet demands:
Hundreds of workers of Utah Fashions blocked Gulshan Link Road in Dhaka in the morning, protesting the shutdown of their factory with no prior notice.
Five workers were hurt and three were sent to Dhaka Medical College Hospital for treatment after police charged batons and fired rubber bullets to disperse the agitated workers.
“They vandalised the windowpanes of several nearby factories in the area,” said Moniruzzaman, officer-in-charge of Tejgaon Industrial Police.
Later, they were joined by workers of some other factories and together, they demonstrated in front of the Utah gate.
“As the crowds became rowdy, police fired around 30 rounds of rubber bullets,” said Biplob Kumar Sarker, a deputy commissioner of police.
Though the situation came under control around 9:30am, some workers blocked one side of the road in Tejgaon.
Later, Sarker assured the workers of a meeting with the garment authorities regarding the workers’ demands.
In Gazipur, workers of the Uni Gears garment factory began demonstrations at around 7:45am, demanding an attendance bonus hike and introduction of lunch bill.
* 50 more RMG workers fell sick in Gazipur:
Fifty more workers of three garment factories in Singboard area of Gazipur were hospitalized on Monday as they fell ill after drinking water supplied by factories’ authorities.
Sources at the factories said workers of three garment factories of East-West Groups, including Romania Fashion and Alvin Fashion, started feeling stomach pain and vomiting after drinking water from reserve tanks of the factories in the morning.
Later, the sick workers were admitted to Taherunnessa Hospital.
read more. & read more. & read more. & read more.
* EU concerned about Bangladesh labour market:
William Hanna, ambassador and the head of European Union (EU) delegation, said the EU is very much concerned about the labour market and working environment in Bangladesh.
“We should not only think about making money, also quality of products, as well as right to decent work environment for labours,” said the ambassador. He was speaking at the national launching ceremony of “Strengthening Women’s Collectives Project in Bangladesh, India and Nepal” organised by ActionAid and financed by the EU, at city’s Spectra Convention Centre on Monday.
Taking about women’s unpaid care works, he said we have to give value and pay for women’s contribution to household works.
* EPZs to enjoy no more exemption from provisions of labour law:
The government has backtracked on its earlier stance on exempting the factories inside the export processing zones (EPZs) from the purview of Bangladesh Labour Law 2006 to help retain the existing facilities under the Generalised System of Preferences (GSP) in the US market, sources said.
The EPZs are being run under the Bangladesh Export Processing Zones Authority Act 1980.
These special economic areas were given immunity from The Employment of Labour (Standing Order) Act 1965, The Industrial Relations Ordinance-1969, and The Factories Act-1965 under the section 8 of General Clauses Act 1987 since the EPZs are being run under the BEPZA Act.
These three laws exist in a harmonised manner under the labour law.
* Cabinet clears draft of TICFA with USA:
The cabinet today approved the draft of the much talked about Trade and Investment Cooperation Forum Agreement (TICFA) with the United States.
The approval was given in the weekly meeting of the cabinet held at cabinet room of Bangladesh Secretariat with Prime Minister Sheikh Hasina in the chair.
Briefing reporters after the meeting, cabinet secretary M Mosharraf Hossain said under the TICFA agreement, Bangladesh and USA will discuss regularly on the trade and investment issues to resolve the hurdles.
read more. & read more. & read more. & read more. & read more. & read more.
& read more. & read more.
* Ticfa to take off:
After more than a decade of talks, the government yesterday finally gave the go-ahead to the signing of a crucial deal that is expected to accelerate trade and investment with the US.
The draft Trade and Investment Cooperation Forum Agreement (Ticfa) that the cabinet yesterday approved says the two countries will foster an open and predictable environment for trade and investment.
Washington has welcomed the cabinet’s decision to approve the Ticfa while Dhaka is waiting for an opportune moment to sign the agreement either in the United States or in Bangladesh.
“We welcome the cabinet’s decision to approve the Ticfa and look forward to further discussions so that the agreement can be signed in the near future,” US embassy spokesperson Kelly McCarthy told The Daily Star yesterday.
The deal is expected to force Bangladesh to take a clear stance against corruption and promote fundamental labour rights laid out in the ILO declaration of 1998 and effectively enforce the local labour law.
The deal will also push Bangladesh towards enforcing intellectual property rights in line with the WTO rules.
Bangladesh will also open its service sector to US investors.
* Ticfa signing may impact US’ GSP stance: Analyst:
The decision to sign Ticfa treaty with the US may result in the superpower to reconsider its rigid stance on continuing Generalised System of Preferences (GSP) facilities for Bangladesh, said foreign affairs analyst Imtiaz Ahmed.
“But they (US) may attach some difficult conditions,” Ahmed, a professor of International Relations at Dhaka University, told The Daily Star in a phone interview on the government move to sign the Trade and Investment Cooperation Framework Agreement.
After months of haggling over four core factors — security, protection of investment, intellectual property rights and standard of labour, the Bangladesh cabinet, on Monday, approved the proposal to sign Ticfa.
* Ticfa attracts mixed reactions:
The government’s decision to sign the Trade and Investment Cooperation Forum Agreement (Ticfa) with the US attracted mixed responses from economists, trade experts and businessmen.
Yesterday’s move, tipped to enhance commercial ties with the superpower, comes less than two weeks before the verdict from the United States Trade Representative over continuation of the country’s Generalised System of Preferences is due.
“It is a timely move. It provides a positive signal to the US administration,” said Ahsan H Mansur, executive director of Policy Research Institute (PRI).
Although the GSP issue is not related with the Ticfa, it is diplomatically related. “It will unofficially help Bangladesh retain GSP privilege.”
Mansur, a former official of the International Monetary Fund, said a broad framework such as this to deal with bilateral trade and investment issues was necessary.
“I do not find anything negative in going ahead with it,” he said, adding that all South Asian nations bar Bhutan have such bilateral agreements with the US. “Even the Vietnam that had fought with the US for two decades has such a contract.”
* TICFA gets Cabinet nod- Saving GSP on card:
The Cabinet on Monday approved the draft of the ‘Trade and Investment Cooperation Framework Agreement’ (TICFA) at a regular weekly meeting to pave way of signing of the deal ending long stalemate on the subject.
Prime Minister Sheikh Hasina presided over the meeting at the Bangladesh secretariat at a time when the US president Barak Obama is reportedly scheduled to give a decision on whether or not to continue the GSP facility to Dhaka.
Any rescinding of the GSP will give bad signal to Bangladesh exports, specially its garments not only to the USA but also to the EU nations.
However, the official sources said there is no direct link between the TICFA and GSP to make it clear that the government is taking the decision free from any other considerations.
“The TICFA will bolster commercial ties with the United States (US),” experts said. After the meeting, Cabinet Secretary Md Mosharraf Hossain Bhuiyan told the journalists that the two countries agreed to sign TICFA with a view to boosting bilateral investments and trade.
* Full text of TICFA draft:
Following is the full text of the draft Trade and Investment Cooperation Forum Agreement (TICFA).
The Government of the United States of America and the Government of the People’s Republic of Bangladesh;
Desiring to enhance the bonds of friendship and spirit of cooperation, to expand trade, and to strengthen economic relations between the Parties;
Recognizing the importance of fostering an open and predictable environment for trade and investment;
Recognizing the benefits the Parties can derive from increased trade and investment, and that trade-distorting investment measures, investment constraining and protectionist trade measures can reduce these benefits;
Recognizing that both parties are signatories to the United Nations Convention Against Corruption, and the importance of promoting transparency and adhering to the Convention, particularly in matters related to trade and investment;
Recognizing the essential role of private investment, both domestic and foreign, in furthering growth, creating jobs, expanding trade, improving technology, and enhancing economic development;
read the full text here.
* Bangladesh disaster crushes owner’s ideal of clothes with a conscience:
When Spanish garment maker David Mayor arrived in Bangladesh a decade ago the fashion label he set up had the motto “clothing with a heart”.
In an industry notorious for harsh working conditions he said he wanted to show it was possible to run an ethical business in which workers were trained well and treated with respect.
The story of how that dream ended in the rubble of Rana Plaza, an eight-storey factory complex that collapsed in April killing 1,129 people in one of the world’s worst industrial accidents, is a cautionary tale for global retailers now scrambling to prevent another fatal accident in Bangladesh.
Rana Plaza was built on swampy ground, with substandard concrete. It was designed as a five-storey shopping centre, but the owner of the building, a local political leader, rented it out to factory owners and built three more floors.
read more. & read more. & read more.
* Jute cultivation acreage ‘marks 7pc rise’:
Jute cultivation acreage marked a rise by 7 percent this fiscal compared to that of the previous fiscal, said officials at the Department of Agricultural Extension (DAE) on Monday.
Deputy Director of DAE’s Field Service Wing (FSW) Rafiqul Hasan told UNB that the acreage under jute cultivation this year hit 7.5 lakh hectares, which is about 99 percent of the targeted acreage of 7.57 lakh hectares earlier fixed by the department.
This year’s jute acreage has touched the acreage mark of 7.5 lakh hectares which was also achieved two years back, he added.
* HC asks for list of Spectrum victims compensated:
The High Court on Monday asked respondents to submit information in two weeks about the compensation paid to the victims died or injured in Spectrum Sweater factory collapse eight years ago.
The HC also sought all relevant documents about the construction and design of the collapsed building.
The HC bench of Justice Mirza Hossain Haidar and Justice Muhammad Khurshid Alam Sarkar came up with the interim orders after hearing a rule issued earlier in response to a writ petition filed by several human rights and advocacy organisations, including Odhikar and Bangladesh Legal Aid and Services Trust.
Passing the orders, the HC fixed July 9 fro thee next hearing.
On April 11 in 2005, the factory building of Spectrum Sweater at Savar collapsed, leaving 62 RMG workers dead and a number of others injured.
The building owner was arrested immediately after the tragic incident.
to read. & read more. & read more.
* Dreams turn bitter for Bangladeshi garment workers:
Moushumi’s family now has one of the largest homes in their village — two bedrooms plus a living area with walls made of sturdy brick. Her father and brother will soon have a small business out front, selling furniture her dad will make. There will be money to pay for her younger sister to get married when it’s time.
It is the dream of nearly every Bangladeshi garment worker to earn enough money to build such a life back in their village. Yet for most it remains just that — wages are so low they can find themselves struggling to eat, let alone save.
And in the case of Moushumi’s family, the dream has been bitterly corrupted, made possible not by the opportunity the garment industry provided, but by the tragedy it inflicted.
Moushimi was just 18 when she was killed along with 111 others trapped behind the locked gates of the Tazreen garment factory when it burned last November. Her family renovated their home using the 600,000 takas ($7,700) they received in compensation.
A fortune in a poor village like Tekani in Bangladesh’s far northwest, it is one the family would gladly return tomorrow to have Moushumi back.
“Previously we didn’t have money but we had peace in our mind. We had a complete family,” said her mother, Hawa Begum. “The peace is no longer there.”
Since the fire and April’s collapse of the Rana Plaza factory building, which killed 1,129 people, Bangladesh’s garment industry has been under increased pressure from workers and activists to raise wages and improve working conditions.
The government agreed last month to set up a committee to look into raising the minimum wage of $38 a month. Rather than talking of luxuries like buying land, those advocating for higher salaries speak of getting enough calories. They say the current rate isn’t close to what workers need to pay their bills and eat properly.
THE SAVAR BUILDING COLLAPSE
* DNA tests may be delayed for money:
The DNA profiling of Rana Plaza victims and their relatives to determine the identities of unnamed bodies might be delayed as the authorities concerned are reluctant to provide the fee of Tk 50 lakh to the National Forensic DNA Profiling Laboratory.
Immediately after the deadly building collapse in Saver on April 24 which killed at least 1,131 people, mostly garment workers, the government asked the NFDPL to determine the identities of unnamed victims.
As per the government instruction, the NFDPL has so far collected samples from 320 bodies and 544 reference samples from relatives of the workers feared missing.
The lab expects that the total number of samples (bodies and relatives) might reach one thousand as the reference samples of the relatives of the missing victims have been increasing everyday and ………the lab estimated DNA profiling fee at Tk 50 lakh.
* 3 engineers remanded in custody:
A judicial magistrate’s court in Dhaka on Monday remanded three engineers in police custody for two days for interrogation in a criminal case for the collapse of Rana Plaza at Savar.
Senior judicial magistrate Toyebul Hasan, passed the order after the Criminal Investigation Department sought Savar municipal executive engineer, Imtemam Hossain, its assistant engineer Alam Miah, and a local engineer Abdur Razzak to be placed in custody for seven days for interrogation.
read more. & read more.
18:59:25 local time INDIA
* Tussle between traders and textile processors ends:
Bringing an end to a tussle going on in the textile market for the pick up of grey fabrics from the past one-and-a-half-month, transporters have agreed to accept the deliveries of grey fabrics bound to the textile dyeing and printing mills from Monday.
Sources said the delivery of grey fabrics was impacted following the tussle between the textile traders and the textile processors over the issues like parking, traffic jams and shortage of labourers from the past one-and-a-half-month.
* Coal price hike adds to the worry of textile processors:
The onset of monsoon season has set the alarm bells ringing for the coal-based textile dyeing and printing mills in Surat.
In the past few days, the coal suppliers in and around the city have increased the prices of coal by Rs 600 per tone.
Textile processors in the city said that their requirement of coal is met from the two coal mines located in Rajpardi and Tadkeshwar in Gujarat. But the coal mining activity has been affected due to heavy rains.
* Indian cotton arrivals dipping, says ICA:
The arrivals are dwindling in most of the States and season seems to be coming to a close. Approximately 3 Crore 19 lakh bales have arrived in the market as per trade sources. CCI seems to be the best source for good cotton especially in the Andhra Pradesh region at the moment at around Rs.41,000/-Spot per candy.
Most of the North Mills are procuring from Gujarat and Madhya Pradesh due to their proximity from these centres to save lorry freights while the South Mills are sourcing from CCI in Andhra Pradesh.
The Indian rupee has fallen to nearly Rs.59/- to a dollar thereby making import of cotton unfeasable and export of yarn an attractive proposition to the Textile Mills. Monsoon which is main deciding factor for Farming operations have begun on time and now spreads across the arable areas.
* Neglected by municipal corporation, cotton market a source of epidemic:
Shopping at Cotton Market can prove the most horrifying experience for sure. With mud puddles, slippery ground, filth, vegetable leftovers and open gutter lines, citizens would never like to visit this market area. Monsoon adds to the existing woes. “But we are used to it,” said vendor Rajendra Gour.
“There is no use in lodging complaints. Nagpur Municipal Corporation (NMC) just neglects us. We have led many protests in the past but in vain. The officials consider the market illegal and have no time to improve the infrastructure at Cotton Market,” said another vendor Kamala Maheshwari.
* 50% of global cotton exports made by three nations: Report:
18:59:25 local time SRI LANKA
* Social and economic cost of brain drain:
Labour markets have become increasingly global in recent decades, largely due to the influence of economic globalisation.
This has happened in spite of the fact that the national governments have not been too liberal in dealing with cross border migration of people. The proportion of the adult world population engaged in overseas employment continues to increase, contributing to lower unemployment rates in sending countries. The economic boom in the Middle East due to the increasing oil wealth there has attracted millions of unskilled as well as skilled workers on the basis of fixed term labour contracts. In some of the Middle East countries, migrant worker population exceeds the local population.
The developed western countries have also continued to attract labour, in particular highly – skilled workers from the developing world. This often is a big drain on the limited skilled human resources in these countries.
Economic globalisation has paved the way for a new global division of labour. On the one hand, countries with large pools of cheap labour such as China, India, Indonesia, Bangladesh and Vietnam in the Asian region have attracted FDI to establish labour intensive industries there. On the other hand, technologically more advanced countries in general have continued to diversify their economies into technology intensive industries, often requiring them to attract highly skilled-labour from the developing world.
Sri Lanka attracted FDI into the country since the late 1970s when the economic liberalisation policy of the post 1977 regime offered incentives to foreign investors to establish labour intensive industries in the newly established Free Trade Zones. There were many unemployed people in the country at the time and the labour was also very cheap. The average daily wage of an unskilled worker in the mid 1970’s was around 50 US cents. The expansion of the economy and the exodus of labour over the last several decades have reduced overall unemployment to about 5% of the labour force while the daily wage of an unskilled worker had risen at least hundred times, to about three US dollars. Even though the latter is a fraction of the wage of an unskilled worker in a developed country, it is still much higher than the comparable wages in other south Asian countries like Bangladesh and India.
In spite of increasing wages in the garments industry and the plantation sector, increasing cost of living compels both skilled and unskilled workers to look for employment outside Sri Lanka.
18:29:25 local time PAKISTAN
* A new era dawns: One tech solution helps Al Rahim Textile double its growth rate:
In a telling example of how technology can help turn a business’ fortunes around, Karachi-based Al Rahim Textile industries saw its revenues growth rate expand by 10 percentage points within the six months following an end-to-end implementation of Enterprise Resource Planning (ERP) software.
With double-digit growth in revenues over the past six months, the textile manufacturer and exporter looks set to recover the investment and double its exports in less than a year, Khawaja Mudassir – IT general manager at Al Rahim Group, the parent company of Al Rahim Textile – told The Express Tribune.
Thoroughly satisfied with his company’s experience with ERP software, Mudassir confidently stated that the textile industry can boost its export revenues by up to 20% through process automation, and recover that investment in six to eight months.
* Top 10 Excuses
…For not paying a Living Wage, and why they’re wrong:
Excuse 1: Paying a living wage is impossible because there is no consensus on how to calculate it
From the workers’ perspective, there is little sense in this argument.
The problem of low wages is obvious to workers and to many companies alike, yet because companies can’t agree on a figure, many refuse to start trying to raise wages. Although this dilemma has existed for years, little attempt has been made by companies to reach a consensus, and when multi-stakeholder initiatives have tried, negotiations have failed.
It isn’t the case that this consensus is impossible, its just that companies don’t want to find it.Furthermore, the Asia Floor Wage Alliance – an alliance of 80+ garment workers’ unions, worker representatives and NGOs from 6 Asian garment producing countries – did all the hard work and calculated a figure for a living wage for garment workers in 2009.
This was based on what was needed to buy a food basket for a worker and her dependent family, and the additional costs she would have to pay to survive. The buying power of this figure was suggested to companies as a solution to the dilemma. Many companies even said that it was an interesting idea, but to date no company has started to officially use this figure as a living wage benchmark.
Excuse 2: Consumers don’t want to pay more for their shirts
It is true that consumers have become used to paying only a very small amount for their clothing.
It is worth noting however that a garment workers’ wage is only 1-3% of the total cost of most garments. If a consumer is paying 8 euros for a shirt, the worker who made it is receiving only 24 cents at most.
To double this wage would only be another 24 cents. The consumer will barely notice this type of increase, and if a consumer won’t notice it, a company probably won’t notice it that much either.
These types of costs could be absorbed into company profit margins who make millions of euros per annum in profits.
Excuse 3: Governments, not companies, need to set reasonable minimum wages
While it’s true that minimum wages set by governments (often negotiated with business organisations, local business and trade unions) should ideally be reasonable, there is a clear reason why they aren’t.
Governments have to think about their international competitiveness, and are all too aware that multinational fashion buyers will move elsewhere if labour costs become too high.
The multinational fashion buyers hold the power in the situation, not the country governments. It’s down to the multinational companies who dominate garment supply chains to show that they are willing to absorb the small increases in production costs that might occur, in order to give governments the confidence to raise minimum wages in the first place.
Fashion brands will need to work both across their entire supply base in different countries, and with other brands buying from each country, to move the wage issue forward.
Excuse 4: Low-income countries would lose their competitive advantage if wages were higher
The first and most obvious point to make here is that labour costs represent such a small proportion of the cost breakdown of a garment that even doubling them would make only a small difference.
The labour costs in a typical piece of clothing make up 1-3% of its retail price.On top of this, it’s not just the cheap labour that entices production to other countries. China is popular in part because of its cheap workforce, but in part because its industry is very efficient and productive, and it can offer ‘back-linked industries’ right the way from cotton production to finished garment that most other countries cannot.
Wage increases have been shown to improve workforce morale and productivity, and to reduce absenteeism and employee turnover, so paying a living wage could even improve quality and flexibility, allowing enlightened suppliers to retain a competitive edge.
Excuse 5: Our company is helping boost employment in these developing countries. By sourcing here we are helping workers who wouldn’t otherwise have any work.
It’s true that, for many workers, getting a job at a garment or sportswear factory is better than some of the alternatives – that is why so many depend on them.
The fact that people are desperate isn’t an excuse to exploit them. Workers aren’t getting their fair share of the benefits they are creating for the big companies.
We welcome the fact that millions of people are earning a wage. However, this alone is not enough to lift them from poverty if employers can hire and fire at will, deny union rights, pay low wages that drive people to work inhumane hours just to survive, avoid paying sick leave and avoid observing maternity rights.
For many workers, these jobs carry devastating hidden costs, such as poor health, exhaustion and broken families, all of which are unacceptable and avoidable. Everyone wants and is entitled to a quality job that pays “just and favourable remuneration ensuring for himself and his [or her] family an existence worthy of human dignity.” (Universal Declaration of Human Rights, Article 23(3)).
Excuse 6: The cost of living is lower in garment producing countries so you can pay workers less.
Of course it’s true that the cost of living in many countries is much lower than in Europe – that’s why we don’t compare our wage levels with workers elsewhere. We do know from our partners around the world that the minimum wage in each country is never enough to provide a ‘living’ wage for workers and many garment workers don’t even get paid the minimum.
A report, “Heavy workload – small margins” (Future In Our hands, Norway, 2010) shows that garment workers in Bangladesh and India have to work approximately for three hours to be able to buy one kilo of rice. A garment workier in Cambodia have to work two hours to buy the same amount of rice while in China (Shenzhen) one hour’s work is enough. As a comparison a garment worker in Norway could buy 14 kilo of rice for one hour of work.
A living wage enables workers to meet their needs for nutritious food and clean water, shelter, clothes, education, health care and transport, as well as allowing for a discretionary income.
It should be enough to provide for the basic needs of workers and their families, to allow them to participate fully in society and live with dignity. It should take into account the cost of living, social security benefits and the relative standards of other groups.
This is what we believe each worker should be able to earn within a normal working week and this currently isn’t the case.
Excuse 7: Our company code of conduct says that we pay a fair wage
Putting a code of conduct on a website is not a guarantee that a fair wage is being paid. This is not to say that having this in a code of conduct cannot be useful. It can be used to hold companies to account and, if workers know about the code and what it contains they can use this to demand better wages.
The problem is that codes are only worthwhile when proper procedures are in place to implement, monitor and verify these standards.
Companies have to check whether the code is actually implemented and work with supplier factories to make sure that improvements are happening. It also isn’t enough to say that a ‘fair wage’ is paid.
Companies need to publicly state what ‘fair wage’ means, using real figures and methodology, and publish a plan for how they intend to achieve this amount.
Excuse 8: We cannot pay a higher price for goods due to the economic crisis
While we acknowledge that the economic crisis has had an impact on company profits, this is a very separate matter to the right to a living wage.
It is not the case that a living wage is an optional extra that companies can choose or not choose to pay – an added CSR initiative of sorts for when times are good. Workers need a living wage not as a favour, but as a necessity, whether it is the right time economically or not.
A living wage isn’t only the privilege of the rich. As it says in the universal declaration of human rights, everyone is entitled to a job that pays “just and favourable remuneration ensuring for himself and his [or her] family an existence worthy of human dignity.” (Universal Declaration of Human Rights, Article 23(3)).
Excuse 9: Higher wages in the garment industry will make low paid nurses and teachers leave their jobs to work at the garment factories, thereby ruining local education and welfare systems.
Although this appears to be the case at first, this argument underestimates the positive impact higher wages in manufacturing may have on public sector (and private sector) jobs.
With a rise in manufacturing salaries, local governments will receive a higher tax income, and will be able to offer competitive salaries for teachers and nurses. With more money circulating in local economies, and more tax paid by public sector workers also, the national treasury will be boosted.
A living wage in manufacturing could see local economies lifted across all sectors, and allow developing countries to progress. Currently the garment industry, although purporting to benefit developing country national treasuries, actually prohibits development, as all the benefit of offering cheap labour are siphoned off in profit to international shareholders and wages increase.
Excuse 10: Our shareholders do not support the payment of a Living Wage for workers
It is a sad fact that companies cannot make decisions based on human rights but have to find the business case for doing the right thing. This fact isn’t going to change. But that doesn’t make it impossible to convince shareholders of the necessity to take action.
Following a series of media exposes, Primark shareholders (ABF) agreed in Winter 2009 to appoint a CSR director onto the company board and employ a CSR team for the company to address labour rights. Companies like Marks & Spencer use ‘ethical practice’ as a selling point, and have increased profits through investment in CSR initiatives.
Furthermore, on the factory level, studies have shown that workers who are well nourished, work regular hours, and are paid well, work more productively and produce a better product. There are plenty of business cases for paying a living wage – with the right discussions with shareholders there is no reason that support cannot be built.