Why the price tag doesn’t reflect the payslip
It’s easy to assume that the price you see on the tag always reflects the effort put into making a garment, but that’s not usually the case.
A single factory often produces clothing for several brands, and workers are paid the same amount to make a €200 garment as they are paid to make a €20 garment. That’s why increased prices in stores don’t necessarily lead to increased wages for factory workers.
H&M Group can offer sustainable fashion at affordable prices because we are a large company with a long history – we buy large volumes, have efficient logistics, our own designers, our own stores, strong market knowledge, long-term relationships with our suppliers, and no middlemen. Wages are just one of many factors when it comes to pricing products.
Even though we don’t pay textile workers ourselves, there are many things we can do to influence wage development, including developing our purchasing practices, educating workers on their rights, and helping suppliers implement fair wage management systems. (see our wage strategy). We can also use our size and influence to drive change within our industry and encourage other brands to be responsible purchasers.
Read more about our purchasing practices here.
One of the best ways to achieve substantial and long-lasting wage increases for all workers is through fair negotiations between empowered workers, trade unions and employers. This requires industry-wide collective bargaining agreements. These contracts between unions and employers set terms and conditions of employment such as working hours and wages.
Our strategy for improving wages in the supply chain places a strong focus on establishing well-functioning dialogue and democratically elected worker representation in factories. This gives workers better opportunities to make their voices heard and resolve any issues. And it is an essential precondition for collective bargaining agreements.
Democratically elected worker representation also helps prepare suppliers for maturing industrial relations, including trade unions and industry-wide collective bargaining agreements. Many of our supplier factories undergo a mindset shift when they initiate this kind of change, recognising the benefits of improved dialogue with their workers and worker representatives. In turn, this leads to an increase in the number of supplier factories with one or more trade unions. While this is a positive development that we will continue to support, more needs to be done by everyone involved.
All companies can make a difference by ensuring their purchasing practices allow the payment of agreed-upon wages and enable collective bargaining. Brands also need to advocate for governments to set the legal frameworks that ensure the right to freedom of association and enabling collective bargaining.
This is not an easy thing to achieve, especially considering trade union representation is low in many sourcing markets and industrial relation systems are often immature or even legally restricted. However, we believe this is the best way wages can increase in a sustainable way.
The Covid-19 pandemic has highlighted the need for better social security for garment industry workers. We are working with the ILO Call to Action, a coalition of more than 125 brands who have come together to mitigate the negative impacts of the pandemic and build a stronger industry for the long term. The initiative calls for action to protect garment workers’ income, health and employment. The coalition also sets urgent priorities and specific commitments to support employers to survive, and to work together to establish sustainable systems of social protection for a more just and resilient garment industry.
An International Working Group, convened by the ILO and coordinated by International Organization of Employers (IOE) and International Trade Union Confederation, has been working since April 2020 to deliver on the commitments and to support progress in priority countries, Bangladesh, Cambodia, Ethiopia, Haiti, Indonesia, Myanmar, and Pakistan. The Working Group includes brands and manufacturers, workers and employer organisations, and governments.
In addition, we’ve commissioned external research and met with industry stakeholders, such as the ILO and other brands, to explore solutions for building national social-security systems.
We have monitored the wages levels and number of workers in our supply chain since January 2020 to track the impact of the pandemic.