Search
Menu

living wage: who pays for my t-shirt?

Decent working conditions and a salary you can live well on - a human right, yes. A matter of course? No. Many people around the world work under the most difficult conditions and still receive a wage that is not enough to live on.

Sewing machine - thread

The Living Wage: What exactly is it?

The term "living wage" means an income that, firstly, is earned in a normal working week (without excessive overtime) and, secondly, is high enough for a family to live on.

The Clean Clothes Campaign (CCC) is one of the most important non-governmental organisations campaigning for the rights of workers (mainly women) in the textile industry. According to their definition, "a living wage must cover the basic needs of a worker and her family and, in addition, leave a disposable income."(source)

The concrete amount differs depending on the country, but can be calculated. One method for the Asian region is the so-called "Asia Floor Wage" (AFW).

It assumes two adults and two children and calculates a wage that is so high that no more than 50% of the income must be used for food; 40% must be able to be used for other fixed costs such as housing, transport, clothing, children's education, but also doctor's visits and medication.

In addition, 10% of the salary should be left over: For leisure activities, contingencies and retirement provision.

A wage at this level should be a matter of course - and yet the legal minimum wage in many countries is well below the living wage. In Bangladesh, for example, the legal minimum is only 1/5 of the calculated Asia Floor Wage, in Cambodia about 1/3.

And this affects a great many people: While in Germany around 95% of all employees earn more than the legal minimum (as of 2019), the majority of textile workers worldwide actually only receive the minimum wage - some not even this.

Low wages: Only a problem of the textile industry?

The large difference between minimum and living wages is not a unique feature of the Asian textile industry: there are also many countries in Southern and Eastern Europe where the discrepancy is enormous. In most cases, the legal minimum wage is about 1/3 or even 1/4 of what would be appropriate. You can find concrete figures on this from 2018 here.
"Made in Europe" is therefore no guarantee for fair wages.

In its publication "Sustainability Requires Justice", the Südwind Institute also focuses on another type of income: Around the world, many people live from agriculture. They do not receive an hourly wage, but live from the yield of their harvest - for example coffee or tea, flowers or cocoa. If their income is too low, they are not the only ones affected: It is then also impossible for them to pay harvest workers a living wage.

The problem of the low minimum wage is often exacerbated by high inflation: increases in the statutory minimum wage happen so rarely or only to such a small extent in many countries that the effect is already cancelled out by the general price increase.

Why is the minimum wage not being raised?

Let's stay with the textile industry:
To answer this question, you have to understand how the fashion companies work. They do not produce their goods themselves, but commission them. Suppliers all over Asia compete for the large orders that secure an income.

Price negotiations between suppliers and fashion companies therefore do not take place on an equal footing: if a factory or a country becomes "too expensive", it is easy for companies like H&M or Zara to move to another region where wage levels are lower.

The Clean Clothes Campaign writes:

"The brand companies turn over millions every year and sit at the intersections of the value chains."

"Living Wages in the Global Fashion Industry", Clean Clothes Campaign

They can quickly move their production sites and choose between low-wage countries.

They dictate prices, order quantities and quality requirements without having to consider the impact of their purchasing strategies on the suppliers and the living conditions of the workers.

The prevailing business model pits country against country and suppliers against each other in a global race to the bottom.

Take Bangladesh, for example: Here, up to 20 million people live directly or indirectly from the textile industry, that is about 16 percent of the population. Even though the textile industry pays far too little, the country cannot do without this money. In the past 20 years, income from the textile industry has - despite everything - contributed significantly to reducing poverty and increasing life expectancy. Infant mortality has also fallen and more children are attending school.
This raises concerns about alienating fashion companies through higher minimum wages. 

Will my clothes be much more expensive then?

Currently, the labour cost of producing a garment is a very small percentage. The Fear Wear Foundation is one of the largest and most important initiatives to raise the wage level in the textile sector; according to its calculations, the wage costs are often only 2-3 per cent of the retail price. If the wage of the textile workers doubles or triples, the production of a garment theoretically costs only two or three euros more.

In fact, however, this calculation unfortunately does not work out: Because in the further process - transport, customs clearance, etc. - middlemen are involved who earn a flat rate on the price of the clothes:

"For example, if a garment leaves the factory for five euros, the middleman may add a flat 20 %. If the production price now rises to six euros, the margin of 20 % remains. The other participants in the trade stages as well as the tax authorities proceed in the same way.

This has fatal consequences for the workers in the factories. Instead of the calculated 2.94 euros, according to this model the price in retail trade would rise by around 15.50 euros."
(from: "Sustainability requires justice", Südwind-Institut, p. 19, Herv. by BewusstGrün).

Seamstress
The goal is fair wages. Implementation remains difficult.

Such an increase is not an option for the big fashion companies - they continue to haggle over every cent. A simple and quick solution is therefore difficult. A short-term option could be "payments outside the regular wage (e.g. regular, binding bonuses)" (ibid.) that do not contribute to the drastic price increase; in the medium term, supply chains and trade contracts must then be adjusted - the Fair Wear Foundation allows transition periods for this.

It is clear that for textile workers the actual situation is often abject poverty. There are therefore measures - such as at least moderate wage adjustments above the inflation rate - that must be taken immediately. Any transitional periods must therefore be limited in time - and in the end there must be a living wage for all workers .

The Clean Clothes Campaign has (again) investigated 45 large fashion companies in 2019; among them companies like adidas, C&A, Esprit, H&M or Primark. The sobering result of the study "Living Wages in the Global Fashion Industry":

(You can see the concrete company profiles in the study starting on page 32).

What can I look out for as a consumer?

Most of the power and responsibility clearly lies with the fashion companies and politicians. But we as consumers also have room for manoeuvre:

Beyond that, political engagementis worthwhile:

Infobox

The term "living wage" refers to an adequate income that is achieved without excessive overtime. However, in many countries, especially in the textile industry, textile workers are paid much less.

The statutory minimum wage is usually set far too low. It is not raised sufficiently out of concern that orders might migrate to countries with cheaper production costs.

If workers' wages are increased, this results in noticeable price increases. Large fashion companies are therefore reluctant to do so. According to a study by the CCC, hardly any companies are planning concrete measures to raise wage levels.

As consumers, we have the opportunity to influence our purchasing decisions (for example, by paying attention to labels); as citizens, we can also become politically active and support the petition on the Supply Chain Act.