ACT was invited by the G20 Employment Working Group to present its approach towards industry wide collective bargaining and living wages in global supply chains to the employment working group meeting in Hamburg, Germany, 15-17 February 2017

STATEMENTS FROM ACT MEMBERS AT THE G20 EMPLOYMENT WORKING GROUP

Speaker: Frank Hoffer, Executive Director, ACT

“Thank you for the opportunity to present and discuss with you our approach towards living wages in global supply chains of the garment and textile industry. ACT stands for Action, Collaboration and Transformation. It is the first time in the history of the garment and textile industry that international brands, retailers and global trade unions have set up a joint foundation with the objective to transform the industry and achieve living wages in the apparel sector through collective bargaining.

The way the industry is currently organised limits the policy space for any country, any producer and any buyer to ensure the necessary change for better working conditions. There are too many cases where wages are too low, health and safety conditions too dangerous and working hours too long. As Prof Ruggie so eloquently explained today in the morning: This is not sustainable.

We experience today, in practice, the words of the ILO constitution: the failure of any nation, and let me add, any company, to adopt humane conditions of labour is an obstacle in the way of other nations and companies to improve the conditions in their own countries or factories.

Change requires a new form of collaboration between buyers, workers and suppliers to find solutions to overcome the constant competitive downward pressure on wages and working conditions.

As Deborah said considerable research has been done about living wage, while there are different methodologies and we do not have a commonly agreed standard, there can be no doubt that the current wage levels are considerably below any living wage standard.

Wage setting through industry wide collective bargaining is in our view the right instrument that can overcome the limitations of company based solutions. It is the way to improve the wages for an entire sector. Unproductive suppliers will no longer be able to stay in the market by relying on poor working conditions and low wages. At the same time, it can stimulate accelerated growth in productivity and industrial upgrading. Higher wages will also mean that a greater share of value added will stay in producing countries and contribute to the development of their internal markets.

Voluntary, but binding solutions negotiated by the actors in the industry have the greatest potential to reflect the needs and possibilities of the industry and are more likely to be implemented and enforced in practice.

ACT is a new process and some of the solutions will only be found in a common negotiation and consultation process, but we would like to explain briefly some of the practical steps we have already undertaken or envisaging for the near future: How we want to support national collective bargaining process; how internal business practices are being reviewed to support this; why business has decided to join this initiative and how government support could help this living wage initiative to succeed. And I would like to hand over to my colleagues from labour and industry in ACT for this.”

NATIONAL INDUSTRY-WIDE COLLECTIVE BARGAINING

Speaker: Jenny Holdcroft, Assistant General Secretary, IndustriALL

“In most major garment producing countries, garment workers’ wages are currently set through minimum wage fixing mechanisms. While they do establish a common floor, these mechanisms have proven to be inadequate to raising wages to anywhere near the level of a living wage. Importantly, minimum wage fixing is not able to address other factors that have a significant impact on wages, including working hours, the type of contract, non-wage benefits and productivity.

Industry-wide collective bargaining builds on minimum wage mechanisms by establishing wages and other conditions of employment that are appropriate for the industry and agreed by workers and manufacturers together. Industry-wide agreements make it more difficult for employers to escape their obligations. They effectively take labour costs out of competition by creating a level playing field that enables conditions to improve for all workers in an industry, regardless of which buyers are sourcing from particular factories.

Yet industry-wide collective bargaining is almost entirely absent from the garment industry.

All members of ACT have signed a Memorandum of Understanding committing themselves to the objective of setting living wages through industry-wide collective bargaining. ACT sees the implementation of industry bargaining as the most promising strategy to raise wages as well as improve working conditions and productivity in the garment industry.

There is strong evidence from the ILO on the benefits of industry-wide collective bargaining:

Ensuring that employers are not undercut by others with lower pay and conditions
Ensuring that many more workers are covered by a collective agreement, including migrants, contract workers and those employed in small firms
Reducing the need for, and costs of, labour enforcement by establishing a ‘common rule’
Creating efficiency, requiring fewer resources for employers and trade unions
Providing certainty to business for investment and growth.

There are good examples of these benefits being achieved through garment industry agreements in Jordan, Nigeria and South Africa, but it has not been done anywhere in Asia.

ACT will establish programs in key sourcing countries to initiate and support negotiation between national producers and trade unions towards industry-wide collective bargaining agreements. These will include a consultative process to build support among employers and unions, capacity-building to facilitate their participation in negotiations, and necessary technical support in conjunction with the ILO.

Recognising that international competition is a key concern of governments in setting wages for the industry, ACT will pursue the development of industry bargaining in parallel in countries that occupy a similar competitive position, for example in Cambodia, Myanmar and Vietnam.”

RESPONSIBLE PURCHASING PRACTICES

Speaker: Thomas Linemayr, CEO, Tchibo

“Ladies and Gentleman,
It is a pleasure to have the opportunity to represent the business perspective on the ACT on Living Wages process today.

Let me briefly introduce myself: my name is Thomas Linemayr and I am the CEO of the Hamburg Coffee and Consumer Goods brand and retailer Tchibo.

Tchibo has had a strong commitment towards sustainability for over 10 years. It is important for us that our products are made in a fair manner and we have several programmes to ensure that. But a few years into our sustainability work, we realized that there are topics which require a broader coalition of companies, NGOs, unions and governments to drive change.

A living wage for the workers who produce the products which we use and wear every day is such a topic. Being paid fairly should be a given, but the reality is, it is not and no initiative in the industry has been able to change this so far.

When we came together as companies in ACT to collectively work on the topic of living wage, we did so with the clear understanding that we, as businesses, have also contributed to the downward spiral on standards. Not necessarily intentionally, but as a consequence of the competitive and complex environment in which we have to operate.

So how do we address this, because it does need to be addressed?
As businesses we have come to the conclusion that we also have to look internally at own commercial practices and behaviour. This is a pillar of ACT – responsible purchasing practices.

This is not a new insight of course. The OECD, for example, in their Guidance on Due Diligence in the Garment and Footwear Sector, has highlighted the importance of companies undertaking due diligence upon their own internal systems. And when ACT members undertook consultation with their key strategic suppliers in our production markets, this was the message we received loud and clear. Yes, a genuine understanding and support of what we wanted to achieve in ACT, but also a message that if we are serious about this, then we as retailers, need to look at the way that we interact and do business.

Our strategy therefore has focused upon developing a shared understanding on what responsible purchasing practices are, and how we can bring them into our own businesses as ACT brands, and the wider industry as a whole. This is because only if a large part of the business community starts operating according to such principles, will the bar be raised, without jeopardizing the competitive edge of those moving forward more quickly.

ACT members have developed a tool to assess and benchmark their buying practices. This tool looks at issues as broad as strategic planning, sourcing, development, buying, and the underlying behaviours, values and principles within a business, all of which can impact a living wage. This tool will be used by ACT members across their businesses to define best practice, identify where improvements need to happen, identify the linkages between wages and business practice, and provide tools and training to support businesses to make improvements.

Through venturing in this direction we hope to build the necessary practices which will make the garment industry more fair and this is what we stand for as businesses and retailers in ACT.”

WHY ARE RETAILERS SIGNING UP TO THIS AND HOW CAN GOVERNMENTS SUPPORT THIS INITIATIVE?

Speaker: Paul Lister, Director of Legal Services and Company Secretary, Primark

“One of the questions we’re asked is why retailers sign up to ACT and I hope that everything you’ve heard so far today means we’ve already provided the answers to that question.

At Primark, we have always said that that individual efforts by retailers to address wages within their own supply chains are laudable and can demonstrate evidence of change at an individual enterprise level. We do these programmes ourselves, and they can be successful to a certain point, but to be really effective and meaningful, we need to change things across the entire industry. We can’t go one factory by one factory. We need to ensure that all workers in the garment supply chain have a living wage. Not just those who make goods for Primark, or any of the other ACT members, but all workers.

We have always said that the only way to do this is through the negotiated approach, one that puts workers at the centre, and enables and supports them to negotiate their own wages. Because only when workers are truly able to effect change themselves, will we have sustainable supply chains.

ACT is the only programme to do this. It’s the only one that brings together a clear mechanism, or instrument, of industry-wide collective bargaining, along with a commitment from retailers to conduct their own due diligence in relation to responsible purchasing practices.

There is no other existing initiative or programme that has this mandate, and it’s for that reason that Primark is a founding member of ACT, along with the other companies you see here today. We hope, as we move forward into the next phase of ACT to welcome other companies on board.

There is also a third pillar of ACT, which we touched on briefly at the beginning, which is supporting the industry in producer countries through the development of world class manufacturing standards, for example, through skills development, efficiencies, and capacity building.

Finally, in closing, I would like to mention the role of government. There is growing interest from consumers to buy products that meet environmental and social standards – we see this every day at Primark. And civil societies also play an important role in creating and maintaining that public awareness. But it is government that obviously has the greatest potential to support what we are doing here, and we see that role as pivotal. For example, governments can show public support for ACT; they can provide effective legal frameworks that respect freedom of association and promote collective bargaining; they can support the implementation of those frameworks; and they can integrate support for the ACT initiative in their development cooperation policies.”

G20 Ministerial Declaration

 

G20 Germany 2017 Labour and Employment Ministers Meeting

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