Proposal D3: Ensure prices are sufficient to pay a living wage.

Undertake an independent review of prices paid to suppliers in supplier factories to determine whether prices paid to suppliers are sufficient to allow compliance with international labour standards and provide for an expected wage for workers that meets workers’ basic needs.

Why?

The question of whether prices paid by buyers to suppliers are sufficient to allow suppliers to meet labour standards in company codes of conduct (including living wage standards) needs further study.

The price question is closely linked to the question of productivity. If suppliers are more productive, buyers argue, they can pay higher wages without increasing prices. Suppliers, on the other hand, argue that prices are too low to allow wage increases even with improvements in productivity.

Buyers and suppliers should collaborate in commissioning an independent study on prices paid to suppliers, to which they would provide (on a confidential basis) pricing data and other information that would assist in determining whether prices paid to suppliers are sufficient to allow factory management to comply with company and MSI codes of conduct and to provide for sufficient wages and other compensation that meet basic needs.

Responses

adidas

“adidas Group will not participate in research which requires the disclosure of confidential price data.”

Full response

“adidas Group will not participate in research which requires the disclosure of confidential price data.”

Lotto

No response given.

Mizuno

“As we have a corporate policy that we regard price data as confidential, we will not undertake such review.”

Full response

“As we have a corporate policy that we regard price data as confidential, we will not undertake such review.”

New Balance

New Balance does not appear to respond to the question posed to it.

Full response

“New Balance already does this as part of our factory selection process.”

Nike

Nike is willing to engage stakeholders “to discuss if there is another way to achieve this objective (e.g. identifying ways to train trade unions on product costing),” however the company believes a third-party review may be unfeasible.

Full response

"We are willing to engage with stakeholders to discuss if there is another way to achieve this objective (e.g. identifying ways to train trade unions on product costing). We believe that a third-party review of prices paid to suppliers could be subject to significant challenges which could make the attainment of this objective unfeasible."

Pentland

Pentland believes some suppliers may not divulge pricing information though it is working with its main suppliers to make wages more transparent. The company will not commit to a third-party review of prices paid to suppliers.

Full response

"Although many partners are willing to share open pricing, it cannot be assumed. It is more possible with our long standing partners. Our position is weakened if other customers do not have codes of conduct or commission social audits as risk assessment rather than wanting to change workers’ lives. Our negotiations should include considerations of wages and we are working with our major suppliers to give more transparency of the wage component."

Puma

PUMA “does not see itself in a position to determine which wage level would be sufficient to provide a “living wage” in over 50 sourcing countries,” and will not commit to a third-party review of prices paid to suppliers.

Full response

"While PUMA does not see itself in a position to determine which wage level would be sufficient to provide a “living wage” in over 50 sourcing countries, many of our suppliers already pay on average wages which are well above the minimum wages set by national law. PUMA announced in its 2008 Annual Shareholders Meeting that we increased the prices paid out to strategic suppliers to cover inflationary pressures in some sourcing countries. In turn, some of our Strategic Partners have granted seniority pay in recognition for the workers’ length of service. Some have provided additional cost of living and other allowances and bonuses in recognition of the increased cost of living for workers. A number of these arrangements were accomplished through the enterprise-level collective bargaining process."

Asics

ASICS will not commit to determining whether the prices it pays to suppliers are sufficient to allow suppliers to pay wages that meet basic needs. The company says that factories determine wages independently and that ASICS does not pay workers directly.

Full response

Factory is independent firm and they decide the wage from their viewpoint of factory management. We do not pay directly to workers. Factory has a number of clients and we are just one of them. We think even they have various clients, their worker should be paid the same amount of payment if they work the same thing. It becomes common sense to assume that pricing is basically the negotiation issue between supplier and buyer. We do not organize any talks about wage standard including NGOs yet. Asics requests factory pay employees at least a) the minimum wage required by the applicable law or b) the prevailing industry wage, whichever is higher. In addition, we implement verification audit to factories. In case of the intervention by Commission for Industrial Relations will lead the evaluation that the factory management is lack of capability of management. We expect the wages talks should be reach to agreement in a sound collective bargaining from developed and harmonized labor relationship.

Response Key

The brand claims to implementing all components of this proposal or has agreed to implement them within Play Fair's proposed timeframe.

The brand is currently implementing or has agreed to implement some of the essential components of the proposal but has refused to implement, has overlooked, or has raised issues with one or more important components; or, the brand agrees to implement the proposal but not within Play Fair’s proposed timeframe.

The brand has refused to implement the essential components of the proposal.

The brand has misunderstood or failed to comment on the proposal; or the brand is considering the proposal, but has yet to make a decision.