H&M group fair living wage summit

The fashion industry is one of the main creators of jobs and opportunities for workers in emerging markets. As an industry, we have a joint responsibility to ensure that these are fair jobs, leading to better lives for the people and communities involved. However, ensuring that wages are fairly distributed, regularly revised and meeting workers’ needs is a challenge in many markets.

That’s why, in Berlin in November 2013, we set out an ambitious strategy to achieve fair living wages for workers in our global supply chain. And that is why we now – five years later – are bringing together brands, academics, NGOs, trade unions, partners, representatives and investors to discuss and reflect on progress, challenges and the next steps.

“By collaborating with others who are just as committed to this crucial topic as we are, we’re convinced that our industry can take big leaps forward.”

Jenny Fagerlin, Global Social Sustainability Manager H&M group

Independent evaluation

Reaching our first milestone in our fair living wage strategy, we are now reflecting on the first five years of our work and deciding on future steps. As part of this, the Ethical Trading Initiative, ETI, has conducted an independent evaluation of our strategy. It will be presented at the Fair Living Wage Summit and we are proud that our dedication to this topic is recognized by the ETI. Since we are testing new ways of working, we are in a continuous dialogue with industry stakeholders and experts – both to ensure our efforts are on target and to work out how the industry should jointly address these industry-wide challenges.

2013–2018

Our strategy is about creating processes to make fair negotiations possible and finding collaborations on industry level that would allow the whole industry to transform. The work we do at factory level goes hand in hand with our support of industry solutions; they are highly dependent on each other.

At factory level, we are pleased to have reached and exceeded the two time-bound goals we presented in 2013:

1) to empower garment workers by ensuring that they are represented by democratically elected representatives,

2) to implement improved wage management systems to ensure that suppliers have transparent and fair systems in place and that garment workers are aware of how their wages are set and can be increased.

We have reached 930,000 garment workers* with the work we do at factory level.

During these five years, we have also improved our purchasing practices to avoid last-minute changes and ensure that labour costs are excluded from price negotiations with suppliers, thus labour costs are blocked and not part of negotiations. This ensures that garment workers’ wages are not negatively affected by price negotiations on products. We ask our suppliers through surveys how we can improve, and today 93% of our suppliers perceive us as a fair business partner.

We have also founded collaborations with the possibility to transform the industry. ACT is one such example whereby 20 brands and the global union IndustriALL work to achieve industry-wide collective bargaining agreements supported by responsible purchasing practices. It’s a true game-changer for the industry, bringing sustainable improvements for all garment workers – no matter which factory they work in or which brands they produce goods for. These agreements will be negotiated by those directly concerned – trade unions and employers – and will replace the minimum wage mechanism that has proven to be inadequate in raising wages to a living wage level. By signing ACT’s Memorandum of Understanding on responsible purchasing practices, we commit to staying in countries that engage in a process of continuous wage growth through a collective bargaining agreement. We also promise to account for wage increases in our purchasing prices. Neither countries nor suppliers should face a risk of losing business or competitiveness due to wage increases.

Other collaborations that bring sustainable improvements for garment workers are our Memorandum of Understanding with the ILO, as well as the Global Framework Agreement with IndustriALL and the Swedish trade union IF Metall.

Wage levels

Even if we are already witnessing progress when it comes to wage levels, significant wage increases are entirely dependent on that the work being done at individual factories is accompanied by industry solutions, such as industry-wide collective bargaining agreements. In this way, the ACT initiative marks a major turning point. This collaboration makes it possible to move beyond factory walls in order to change the ways wages are set for all garment workers within countries. ACT will make it possible and realistic to create a level playing field as well as enable big leaps forward when it comes to wages.

The average wage** at supplier factories producing for H&M group is between 24% (Cambodia) to 93% (China) higher than the minimum wage level. Also, the wage level*** at the 500 factories that are improving their wage management systems is between 2% (Turkey) to 11% (Indonesia) higher than the factories not yet enrolled in these programmes. Please see detailed information on wage levels here.

Next steps

Now the work continues. Our commitment to achieve progress towards fair living wages is stronger than ever. What we have learnt from our experiences, we will bring with us in our future work. Together with our partners, we will have the possibility to go beyond factory level and create systemic change for all garment workers across the industry.

Every garment worker should earn a wage that is sufficient to live on. It should satisfy the basic needs of workers and their families as well as provide some discretionary income. It should be earned under legal normal working hours and be revised annually and negotiated regularly.

This is our definition of a fair living wage. It is a fundamental human right.

* Garment workers employed at factories that are improving their wage management system or implementing democratically elected worker representation, or both.

** Excluding overtime.

*** Including overtime.