ETI NGO Caucus – implementing the Living Wage Implementing the Living Wage ETI NGO vision of the way forward

ETI NGO Caucus – implementing the Living Wage Minimum wages & living wages in some countries Source: Miller, Doug and Peter Williams (2009) 'What Price a Living Wage: Implementation Issues in the Quest for Decent Wages in the Apparel Sector,' Global Social Policy 9(1):

ETI NGO Caucus – implementing the Living Wage Approaches A.One-country approach B.Sharing Productivity gains C.Purchasing practices

ETI NGO Caucus – implementing the Living Wage A: One-country approach Brands identify common suppliers Negotiate pay scales with unions/workers Transitional negotiations over increases in product price if necessary Preferential status for participating suppliers (normal competition maintained)

ETI NGO Caucus – implementing the Living Wage B: Sharing Productivity gains Brand support to ‘model supplier’ Efficiency gains ring-fenced to benefit workers New Look (case study): –Factory: production planning, HR systems, incentive scheme, welfare, worker consultation –New Look: Forecasting (information and confirmed future orders), resources Wages raised (towards LW) while hours reduced

ETI NGO Caucus – implementing the Living Wage Industry- wide culture of long hours and low pay The Problem Sustainabl e funding of higher wages for fewer working hours Aim Robust HR framework Worker consultation Production incentive scheme Improved IE and production planning Welfare: provident fund and improved free nutrition The project: in-factory

ETI NGO Caucus – implementing the Living Wage Where are we on the journey? Year 1Year 2Year 3 Improved HR Worker consultation Workers committee IE and planning Production bonus Trial lines Improved welfare Improved purchasing Roll-out incentives Improve target setting Formalise training facilities Tackle overtime blips Improve critical path Improve purchasing

ETI NGO Caucus – implementing the Living Wage Making a difference to workers? Grade 7 (lowest paid) workers % change y-o-y OT hours % change y-o-y Take-home pay February 08-57%-6% May 08-36%+15% July 08-46%+24% July Grade 7 average take-home pay 2940 Taka Cost of improved lunch 675 Taka Value of package3615 Taka

ETI NGO Caucus – implementing the Living Wage Worker turnover

ETI NGO Caucus – implementing the Living Wage C: Purchasing practices – 4 point plan 1.Ensure informal workers paid Minimum Wage+ –Impact on lowest paid workers (likely to be women) –Attenuate pressures for informalisation 2.Identify Living Wage benchmarks and monitor actual wages against benchmark(s) –Audit basic pay of lowest paid (women) workers 3.Ensure workers at suppliers can negotiate 4.Make wages a key factor in selection of suppliers

ETI NGO Caucus – implementing the Living Wage Challenges Living Wage benchmarks Informalisation Product cost Sharing risk with employer

ETI NGO Caucus – implementing the Living Wage Facing the challenges I Living Wage benchmarks Informalisation Product cost Sharing risk with employer …Stop arguing about how high the moon and raise wages! Must involve workers/ unions (& NGOs) Share information SAI,companies,NGOs Use all available benchmarks … JO-IN Wages Ladder

ETI NGO Caucus – implementing the Living Wage JO-IN Wages Ladder F2 F1 F4 F3 Wage level 3 Wage level 2 Wage level 1 Prevailing Minimum Wage level YTL 700 YTL 650 YTL 600 YTL 550 YTL 500 YTL

ETI NGO Caucus – implementing the Living Wage Facing the challenges II Living Wage benchmarks Informalisation Product cost Sharing risk with employer …because raising wages raises pressure for informal work Start by ensuring informal workers paid at least MW –informal workers prevalent eg Turkey Ecuador –Impact on women workers –ETI Homeworker Guidelines etc

ETI NGO Caucus – implementing the Living Wage Facing the challenges III Living Wage benchmarks Informalisation Product cost Sharing risk with employer Labour small % of cost, modest impact Total Product Cost Efficiencies –manufacturer –in-house (eg sampling)

ETI NGO Caucus – implementing the Living Wage Facing the challenges IV Living Wage benchmarks Informalisation Product cost Sharing risk with employer Risk for supplier must be matched by ethical sourcing policy –Preferred supplier status –Wages central to selection of supplier

ETI NGO Caucus – implementing the Living Wage Any questions?

ETI NGO Caucus – implementing the Living Wage Impact on price – hypothetical case Source: What Price a Living Wage, Miller and Williams, Journal of Global Social Policy (2009)