Could living wages avert race to bottom?

brett mathews | 22nd May 2018

DHAKA – A twelve-month survey of 223 Bangladesh garment factory owners coupled with research on raw materials prices found that, since Rana Plaza, the price paid by lead firms to supplier factories has declined by 13 per cent.

Yes, you read that correctly. At a time when we might have expected brands and retailers to cut Bangladeshi factories some slack as they looked to upgrade their factories to meet the safety requirements of the Bangladesh Accord, and other safety initiatives, they continued to squeeze them as hard as ever.

“The cause of this decline cannot be linked to the price of cotton or exchange rate fluctuations … rather it is related to a retailer and brand pricing squeeze on supplier factories, whose profit margins decreased by 13.3 per cent from 2011 to 2016,” says the study.

Written by Mark Anner, centre director at the Penn State Centre for Global Workers Rights, the study says broader CSR gains since Rana Plaza have been, “severely limited in regard to wages, overtime hours and work intensity in part due to the sourcing practices of the brands and retailers that sit at the top of global supply chains.”

In interview with Apparel Insider, Anner says the most effective way to address this race to the bottom in terms of wages is for brands to “commit to paying a living wage, as they should.”

That would be across the board, in all garment sourcing countries, a move which could help mitigate the race to the bottom on wages we continue to see – from Bangladesh to Ethiopia, Myanmar to Cambodia.

We believe Anner may well be right. Indeed, this excellent piece of research confirms to us that apparel sourcing practices continue to be completely out of kilter with ethical and sustainable supply chains – despite continued brand rhetoric to the contrary.

Something needs to change.

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