Global Conference
Bargaining for a Living Wage
June 17-18 2012
Copenhagen, Denmark
Background paper prepared by the ITGLWF with the assistance of Doug Miller
Introduction
In 2008, on the World Day for Decent Work, the ITGLWF officially launched its global campaign “Bargaining for a Living Wage” which sought to achieve the payment of a living wage, based on the solid implementation of the rights to freedom of association and collective bargaining thus creating a platform from which unions could bargain for a living wage.
The campaign, backed by an extensive leadership training programme supported by the Friedrich Ebert Foundation and ILO, to which the ITGLWF owes a debt of gratitude, has helped to highlight the plight of the millions of workers worldwide who work excessive hours for poverty pay to produce goods for global multinationals.
These activities have produced positive, yet limited, results. There can be little doubt that the living wage as a concept is now firmly on the bargaining agenda of national minimum wage determinations and company and factory level wage discussions. Moreover multinational companies have come under increased pressure to pay a living wage. The campaign has also helped trade unions to secure increases in wages and to think more strategically as to how they achieve a living wage for workers.
Despite these positive developments exploitative working conditions continue to be the norm in the textile, garment and leather sectors. Our workers are amongst the lowest paid in the world’s manufacturing industry, many live in an absolute poverty whilst others teeter above it. Apart from an on-going decline in real wages caused by massive inflationary increases on basic necessities such as food and energy, and continual downward pressure by multinational buyers on factory prices, workers continue to bear the brunt of the negative economic and social impacts of globalisation. Unlike textiles and footwear, clothing is a particularly foot-loose industry production can instantly shift from one country to another taking advantage of beneficial trade agreements, low and non-existent labour rights standards and a range of financial incentives provided by host governments.
All of these factors are helping to accelerate the so-called ‘race to the bottom’. Only a coordinated global effort to reverse the decline in wages and working conditions can prevent the perpetual exploitation of the world’s working poor and the violations of the human rights, as well as the rights of the unions which they form. This is why we must re-double our efforts to organise workers and shame governments, employers and multinational buyers who pay lip service to the principles of freedom of association and collective bargaining.
This paper offers up a reflection on our campaign to date and is the first step in the process in identifying the challenges, clarifying our objectives and developing a more effective strategic approachto take into the new Global Union Federation, IndustriALL.
Klaus Priegnitz
General Secretary, ITGLWF
Executive Summary
Since 2007 the ITGLWF has engaged in a global campaign “Bargaining for a Living Wage” with the support of Friedrich Ebert Stiftung (FES) and the International Labour Organisation (ILO). That work has focused on helping affiliates to build effective campaign structures based on mobilisation and sensitisation of workers to the concept of the living wage and developing the capacity of trade union officials to organise, bargain and campaign to achieve a living wage. The campaign has also included a demand that merchandisers and retailers factor the payment of a living wage to all workers into their price negotiations.
Historically there has always been a wage crisis for workers in the textiles, garment and leathersectors. This crisis consists of four main elements: chronic undervaluation of labour in the global supply chains of the sector, poverty wages as measured by minimum wages which fail to cover basic needs and provide an element left for discretionary expenditure; wage theft in the form of a failure to pay the minimum wage, and an intensification of work pace and overtime.
Chronic low pay is the result ofwilful disregard on the part of employers of the value of (specifically women’s) labour. Base wages in the garment sector rarely exceed the statutory minimum wage; instead of representing a minimum floor below which no worker can all, they have become a ceiling above which few workers can go.
Minimum wages are generally not adjusted for inflation on a regular basisand are usually totally inadequate to meet basic needs. The global rise infood prices has made the situation even more desperate. In fact, wages inthe textile, clothing and footwear industries for a standard working weekare frequently below the UN threshold for absolute poverty. In manycountries the minimum wage would need to be doubled, tripled and in some cases quadrupled in orderto meet basic needs.
Wage theft otherwise described as the failure to pay wages on time and in full is endemic in both the buying and supplying countries. Survey evidence reveals approximately 50% of suppliers noncompliant in this most basic element of the employment relationship.
Because of unrealistic pricing and an absence of capacity planning on the part of the buying multinationals and their suppliers , production targets have become unrealistic, resulting in an intensification of work as measured by excessive and often unpaid overtime, and an increased pace of work.
While many brands and almost all the multi-stakeholder initiatives (with theexception of the FLA) have included living wage provisions in their codesof conduct, there is no internationally accepted definition of a living wage.Nor has amethodology been specified for calculating a living wage. The discussion on a living wage is in danger of becoming side tracked by focusing on creating scientific living wage formulas rather than on creating mature systems of industrial relations without which payment of a living wage is not achievable.
Therefore ITGLWF believes that efforts should be focused on creating both the environment and capacity for workers in each country decide themselves how much they need in order to provide for themselves and their families. Therefore,it is essential that trade unions take the initiative and establish, country by country, just what a living wageshould be.
This should be based on the basket of needs approach, including staple foods,housing, transport, education, medical costs etc. and including 10% for discretionary expenses or savings.
In reality, paying a living wage in low-wage producing countries would only add a few cents to the retail price of a garment. Not uncommonly, the ‘factory gate’ price (including fabric and trim, factory overheads and profits as well as labour costs) amounts to about 20% of the retail price. The actual labour costs themselves are minimal. Thus, whether they are producing jeans in Bangladesh or sweatshirts in Honduras, it is not unusual to find workers earning less than half of one percent of a garment’s retail price. In other words, workers are earningas little as 25 cents for every US$ 50 garment they produce.
Whilst commitments from, and the actions of, multinational brands and retailers are key to achieving a living wage they cannot achieve a living wage on their own. They can only factor in a living wage in the price they pay for each consignment of fabric and components, apparel or footwear. Without strong effective unions, bargaining collectively for a living wage, there is no guarantee that increased prices paid by companies will filter down to the workers. However, it is essential that multinationals pay a price which means that a living wage can be paid within their supply chain. The right of workers to organise andbargain collectively and greater transparency and information disclosure are thus key demands in moving forward.
Bargaining for a Living Wage Campaign 2008 – 2012
In 4 short years the ITGLWF’s campaign has helped bring about significant wage increases for thousands of workers in its sectors and helped to fundamentally alter the discourse on wages by placing the living wage firmly on the agenda both within the union movement and amongst external stakeholders such as employers, government, the ILO and multinational companies.
The ITGLWF’scampaign has focused on four core pillars of action:
- Campaigning for the rights to Freedom of Association and Collective Bargaining to be respected
- Educating affiliates on the concept and components of the Living Wage Campaign
- Creating public awareness of the wages of workers in our sectors and the campaign to achieve a living wage
- Engaging with Governments, Employers, the ILO and multinational companies to promote the living wage and its application.
Below we take a closer look at some of the key characteristics of the campaign to date, as well as a closer look at some of the issues that need to be addressed in future work. The aim of this section is to stimulate discussion and debate and help conference participants to engage in a more informed discussion on the future design of the bargaining for a living wage campaign.
A Global Campaign: The issue of a living wage is a global one and thus requires a global response. This response needs to be trade union led, it must engage with employers and multinational companies that are active across international borders and with many different governments and international agencies such as the ILO.The ITGLWF’s “Bargaining for a Living Wage” campaign is the only truly global campaign and is therefore, uniquely placed to lead and deliver aliving wage for workers in its sectors. The structures of aGUFwith affiliates in over 100 countries worldwide has already gone some way to the creation of a global movement of unions organising and bargaining for a living wage.
Capacity Building: The campaign hasdeveloped a series of campaign tools, delivered capacity building activities at local, national and regional levels. These have not only helped create a body of over 700 trade unionists equipped with the skills and knowledge to campaign for a living wage, but has also contributed invaluable experience that will be vital in shaping the next phase of the campaign. The central thrust of the ITGLWF’s campaign has been to build the capacity of unions to organise and bargain based on the principle that stronger unions equal decent work including payment of a living wage. Therefore, the work of the new union building team will be central to the campaign achieving its objectives through the development of stronger unions. This work could also incorporatetraining and knowledge development around issuessuch as the pricing structures within the supply chain;the wider purchasing practices as well as the more nuanced aspects of the campaign such as develop specialist living wage coordinators and trainers.
Communication:The use of effective communication both within the campaign and to external stakeholders is another important facet of the campaign. There has not been a formal communication strategy developed for the campaign and there are weaknesses in the exchange of information between the GUF and its affiliates. This means that internal communications may fail to capture all of the activities conducted by affiliates and information from their campaigns. Similarly the GUF’s affiliates may not have a regular insight into the efforts of the secretariat to engage with multinationals, governments, and the ILO to promote payment of a living wage. Where effective communication and information exchange does exist it is focused on a relatively small number of affiliates and countries.
When focusing on external communication and the ability to inform consumer opinion the campaign has sought to targetthe brand image. This is because it is a relatively high profile, soft target as multinational companies have spent years developing a brand image on which much of their revenue is based. Therefore these same companies have unwittingly created big and valuable targets for campaigns to focus upon. In the anti-sweatshop movement of the 1990s GAP and Nike were successfully targeted by many unions and social activists bringing about differing levels of change and reaction. Applying the same approach of targeting high profile brands through consumer awareness campaigns could potentially bring about positive reactions especially considering that the living wage introduces in very simple terms questions relating to the ethical and moral behaviour of multi billion dollar companies and the poverty wages paid to workers in their supply chains. By creating a wave of negative consumer sentiment can in some instances bring about a significant improvement for workers in the supply chain as companies seek to mitigate potential declines in value and sales.
Coordinating Structure:The campaign is coordinated at the Global level by the secretariat of the GUF. It has involved a combination of the policy and projects staff but has at times lacked clear responsibilities and allocation of duties leading to adevelopmentin an almost ad hoc manner. Whilst coordinators and committees have been established in some areas, in most countries and regions there is an absence of an integrated multi tier union structures to coordinate and drive forward the campaign. Where effective structures have been established for example in the Philippines the campaign has been significantly strengthened. Better coordination will also remove the risk of duplication of actions and unions becoming involved in multiple different movements attempting to achieve a singular aim by differing methods. It is therefore important that clear union structures with accompanying duties are developed so as to build an effective campaign.
Employers and Multinational Companies: The ability of trade unions to succeed in bargaining for a living wage with employers relies on organising, negotiating and exercising other forms of leverage. Unions will need to explore how they can become more effective organisers and how they can mobilise workers around the issue of a living wage. The support for unions to develop effective bargaining skills will also be crucial as already mentioned, but it will also be important for the campaign for unions to feed into the ongoing review of the methods being used by the campaign to highlight the ways in which unions have succeeded and why they have failed. Whilst this has been a feature of the campaign to date, it would benefit from standardised ways in which to collate and share information. For example one issue that could be explored is how better to share information between unions organising in the supply chain of a particular multinational company for example bring together affiliates who have organised H&M suppliers both in a particular country or particular group of countries to share information and develop coordinated strategies. Similarly another way in which to build on the international reach of the Global Union is to bring together affiliates organising in particular key supplier companies such as Yue Yuen factories or Sintex SCI. A further way would be to put pressure on the companies both suppliers and multinational brands by targeting governments, consumers in their HQ countries by building linkages between ITGLWF affiliates in producing and HQ levels. This could be used to highlight the exploitation of workers of Korean companies producing garments in Haiti or Bangladesh or by British companies in Sri Lanka and Tunisia etc.
The ITGLWF has already focused on wages paid within the particular supply chains of multinationals in recent reports in 2011 and 2012 on the sportswear industry of which the later report was promoted through the Play Fair campaign. The GUF has sought to use these reports to engage with Multinationals Companies and pressure them into engaging with their own suppliers on the living wage and promoted dialogue by holding multistakeholder discussions. This process has resulted in positive results for example the Protocol on Freedom of Association in Indonesia that provides a platform for unions to bargain for a living wage.
IndustriALL: The creation of a new Global Union Federation brings with it the opportunity to strengthen many aspects of the campaign. Not only can the former ITGLWF affiliates share the lessons of their work with IndustriALL affiliates the campaign can also expand to other relevant sectors such as electronics and mining. The campaign would undoubtedly benefit from an increase in the number of unions from over 200 in the ITGLWF to approximately 800 in IndustriALL who represent 50 million workers across the globe. This will give the campaign enormous reach and provide even greater leverage to promote and achieve a living wage. The campaign will also benefit from the resources and knowledge that IndustriALL will also present.
Organising and Bargaining:The ability to organise workers often comes down to demonstrating the relevance of trade unions and how they directly benefit an individual worker. There is few, if any, more tangible ways of showing how a union benefits a worker than by increasing the amount of money they are paid every day, week or month. Therefore, the campaign presents a major opportunity for unions to mobilise demonstrate in the clearest possible terms the benefit of being an active member of a trade union and therefore helping unions to organise more workers resulting in greater collective bargaining strength. The creation of effective, coordinated organising campaigns is therefore central to the success of the living wage campaign. The ability of unions to deliver these may in some cases require support from union building staff at the global and regional level.