Thank you for visiting FLA’s blog. Our blog is now located at www.fairlabor.org/blog.
Representatives of major brands, the Chinese Government, and the Fair Labor Association (FLA) gathered in Beijing on January 8 to discuss a new book examining wage trends at the global level. The book, Fair Wages – Strengthening Corporate Social Responsibility, sheds light on wage inequalities and unfairness facing workers around the world. It was authored by Dr. Daniel Vaughan-Whitehead, professor of corporate social responsibility at Sciences Po in Paris, who is responsible for wage practices at the International Labour Organization (ILO).
The book launch was chaired by Mr. Zhang Junfeng, Deputy Director of the Institute of International Labor and Social Security in Beijing, and brought in the perspectives of brands, suppliers, and Chinese trade unions. H&M, an FLA Participating Company, and Chengfeng, an FLA Participating Supplier, spoke about the need to support fair wages. Participants called for transparency from factories and buyers on wage expectations and costs, support from the local government, and the need to set long-term objectives in wage policies. Auret van Heerden, President and CEO of the FLA, opened the event by introducing three key concepts: responsibility, sustainability and fair wages for a fair society. These ideas were echoed throughout the day as participants discussed the way forward toward more equitable wages in factories in China.
Professor Daniel Vaughan-Whitehead highlighted some key issues, which sparked an engaging discussion between the speakers and the audience:
- The reasons behind, and the trend of, growing wage disparity, with the gap between the rich and the poor becoming only more polarized in most economies.
- The growing debate around the legal minimum wage – what does it mean as compared to living wage, and what is the appropriate level for minimum wage?
- Pay systems, and the benefits of mixed payment systems rather than the typical piece-rate system employed in most factories worldwide.
- Insufficient overtime payment and lack of transparency in reporting hours worked.
On January 3 and 4, 2012, FLA hosted a training session in Shenzhen, China, for accredited monitoring organizations and others wishing to learn more about the Fair Wage Approach developed by Daniel Vaughn-Whitehead of the ILO. During the training, attendees debated the piece rate payment system that is widely used in Chinese factories. This system pays employees per garment produced and is often implemented because it seems transparent and easily understood by both workers and managers. However, this approach can result in long working hours due to the incentive to produce a high quantity of goods. It also fails to build loyalty in the workforce and can lead to a poorer-quality product.
Some attendees suggested a mixed-pay system that could combine the piece rate system with performance incentives. These incentives could be quality-based, skills-based or even attitude-based, rewarding an employee for contributing to a positive working environment. This mixed approach, they said, could help keep the compensation system simple to understand and manage, while incentivizing workers to invest in their skills, the workplace atmosphere, and quality of the goods they produced.
Learn more about FLA’s approach to wage issues in supply chains.
On October 12, 2011, the Institute for Global Labour & Human Rights released a report titled, “Dressing Babies in Sweatshop Clothing: Dallas Cowboys, Ohio State and a Creepy Business.” The report alleged a number of noncompliances at the Style Avenue factory in El Salvador, including harassment or abuse and forced overtime. Two collegiate licensees registered with the FLA – Outerstuff and College Kids – were sourcing from the factory at the time of this report. Outerstuff and College Kids commissioned FLA-accredited monitoring organization, GMIES, to investigate the allegations. GMIES has completed its investigation and prepared a report, which is now available on our website. During the investigation, GMIES identified noncompliances and additional risks of noncompliance, including:
- violations of the exercise of workers’ freedom of association;
- harassment of workers;
- hours of work that exceeded the local norm;
- high temperatures in the workplace;
- water that did not meet the Salvadoran potability standard and was not apt for human consumption;
- delays in payment of contributions to the Social Security and Pension Funds Carriers system; and
- failure to grant paid vacations.
Read the full report and remediation plan here.
Outerstuff and College Kids collaborated with GMIES and the FLA on a remediation plan, which Style Avenue management has agreed to implement immediately. The remediation plan focuses on creating sustainable improvement at the factory, and the FLA will monitor progress over the next six months. At that time, FLA will conduct an independent verification of the implementation of the remediation plan and publish a report.
This case is a good example of stakeholders working together to quickly address issues and protect workers. Stay tuned for more information.