Proposal D6: Take steps to improve workers’ wages.

Commit to achieving a living wage over time by:

• collaborating with other buyers (possibly through an MSI) to identify suppliers in which participating buyers collectively control more than 75% of production on a regular basis;

• facilitate the establishment of negotiating structures to enable factory management and trade union(s) to consolidate the living wage element into the existing pay structure at those factories;

• individually negotiate with factory management on measures needed to meet a living wage target proportional to each buyer’s share in production.

Why?

One of the arguments companies use against adopting living wage standards is that an individual buyer does not have the ability to ensure improvements in wages in a factory producing for a number of buyers. The influence of a single buyer is limited in such cases, companies argue, since their best efforts may not be matched by other buyers.

For this very reason, buyers must collaborate to improve wages.

Buyers could begin to implement a living wage standard by identifying supply factories in which they, individually and/or collectively, account for at least 75% of production. Although the 75% figure is arbitrary, buyers must at least account for a substantial majority of production. It’s also important that the brands present in the factory have a long-standing business relationship with the supplier and the factory, which will allow for more sustainable improvements and cooperation from the supplier and factory management.

Buyers could commit to a target for wages that substantially increases workers’ wages and other compensation over time. Then, as individual buyers, each company would negotiate with the supplier on measures needed to meet the targets, proportional to each buyer’s share in production.

In some cases, there may be changes to the way production is organized, or the use of different material inputs, that might allow for wage increases without increasing prices. In other cases, buyers may need to increase prices to achieve the necessary margins. However, in each case a collaborative effort with the goal of increasing worker wages would be undertaken.

Where trade unions are present in a factory, they must be involved in the process of negotiating measures to increase wages and other compensation.

Responses

adidas

adidas Group is concerned that collaboration with other buyers that attempts “to promote or foster certain wage conditions within a factory (other than a requirement to meet overtime premiums and minimum wages as established by local law or through the application of a CBA)” may run into anti-trust issues. The company has made no commitment to addressing this proposal.

Full response

"adidas Group is open to general collaboration with other buyers regarding workplace conditions and the fulfillment of labour rights and local legal compliance. However, where the purpose of such collaboration is to promote or foster certain wage conditions within a factory (other than a requirement to meet overtime premiums and minimum wages as established by local law or through the application of a CBA) then we are concerned that anti-trust considerations apply.

"Please see our earlier comments on living wage in response to recommendation D1."

Lotto

No response given.

Mizuno

Mizuno says that it “is difficult to unify the recognition of a living wage from a neutral standpoint,” and will not commit to achieving a living wage.

Full response

"We can collaborate with other buyers to improve working environment and conditions. However, it is difficult to unify the recognition of a living wage from a neutral standpoint."

New Balance

New Balance is willing to engage in multi-brand collaboration to address living wage issues, but he company does not address the other components of the proposal.

Full response

"Multi-brand collaboration is likely to be the best way to address living wage issues. New Balance would be willing to participate in such a program"

Nike

Nike will be conducting an assessment of overall worker well-being at a specific set of factories that will include wages, but the company will not commit to achieving a living wage.

Full response

"Nike is committed to evaluating overall worker well-being within a specific initial set of factories This assessment will include wages. We will report on our efforts to advance overall worker and community well-being, which may include increasing wages, and could also include improvements in other areas, such as addressing underlying obstacles to freedom of assocation, community development needs, etc."

Pentland

While Pentland expresses interest in collaborative efforts, it does not commit to this proposal, citing anti-trust concerns among others.

Full response

"The most successful initiatives in this area have been collaborative efforts with other brands and retailers working with local and international organisations and institutions. We must be careful however that co-operation does not lead to possible illegal activities such as collusion or anti-competitiveness."

Puma

Puma says it is actively looking at ways to improve worker welfare.

Full response

"We are currently following the discussion within the Fair Labor Association on the possibility of the inclusion of the living wage in the FLA Code of Conduct. However, because of the general lowered forecast of global demand for consumer goods next coupled together with the findings mentioned above, we believe that this is not the most appropriate time to strongly campaign for living wages. "In a decision by the U.S. Department of Justice on buyer collaboration to monitor compliance, parameters such as pricing, supply agreement terms and buyer-factory negotiations were identified as data that cannot be shared. Though PUMA is willing to share compliance information to third parties in the spirit of collaboration, these anti-trust limitations have to be considered prior to the sharing of commercial information that maybe accessed by competitors. We are actively looking at the wage ladder methodology developed under the Jo-In pilot project in Turkey to objectively identify the steps or rungs by which worker welfare can be improved. PUMA continues, however, to maintain that this ladder has to be benchmarked against the local industry and local best practices in order to be effective."

Asics

ASICS will not commit to achieving a living wage over time. The company does recognize the necessity of achieving a living wage and thinks consensus-building toward the adoption of the clear definition of living wage is essential for this. The company participates in discussions/forums to this end.

Full response

Asics recognize the necessity of achieving a living wage into wage system. To realize it, we think consensus-building toward the adoption of the clear definition of living wage is essential. Asics takes deep interest in discussion regarding a living wage. We make researches from our own point of view and actively participate the meeting. A living wage issue has a long history that is negotiated at the Asics labor bargaining continuously.We are participating the meeting with PFOC where a living wage becomes one of key issue. The talks with industry group such as WFSGI and/or with suppliers, a living wage is coming one of the key issue to be discussed.

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.