Discussing Fair Wages in China

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.

Visit www.fair-wage.org for more information, and learn more about the Fair Wage Approach.


Apple Joins FLA

The Fair Labor Association today announced that Apple will join the FLA as a Participating Company, effective immediately. The FLA will independently assess facilities in Apple’s supply chain and report detailed findings on the FLA website. Apple becomes the first technology company to join the Association as a Participating Company.

FLA Participating Companies agree to uphold the FLA Workplace Code of Conduct throughout their supply chains and commit to the FLA’s Principles of Fair Labor and Responsible Sourcing. In 2011, the FLA worked with Apple to assess the impact of Apple’s training programs which help raise awareness of labor rights and standards among workers in its supply chain. Like all new affiliates, Apple will align its compliance program with FLA obligations within the next two years.

“We found that Apple takes supplier responsibility seriously and we look forward to their participation in the Fair Labor Association,” said Auret van Heerden, FLA’s President and CEO. “We welcome Apple’s commitment to greater transparency and independent oversight, and we hope its participation will set a new standard for the electronics industry.”

Read more.


FLA Hosts Training on Wage Issues in China

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.