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Implementing the Living Wage

VIEWS: 5 PAGES: 18

									Implementing the Living Wage

   ETI NGO vision of the way forward




      ETI NGO Caucus – implementing the Living Wage
       Minimum wages & living wages
             in some countries




Source: Miller, Doug and Peter Williams (2009) 'What Price a Living Wage: Implementation Issues in the
Quest for Decent Wages in the Apparel Sector,' Global Social Policy 9(1): 99-125.




                         ETI NGO Caucus – implementing the Living Wage
                 Approaches
A. One-country approach
B. Sharing Productivity gains
C. Purchasing practices




          ETI NGO Caucus – implementing the Living Wage
    A: One-country approach
• Brands identify common suppliers
• Negotiate pay scales with unions/workers
• Transitional negotiations over increases
  in product price if necessary
• Preferential status for participating
  suppliers (normal competition maintained)



          ETI NGO Caucus – implementing the Living Wage
  B: Sharing Productivity gains
• Brand support to ‘model supplier’
• Efficiency gains ring-fenced to benefit workers
• New Look (case study):
  – Factory: production planning, HR systems, incentive
    scheme, welfare, worker consultation
  – New Look: Forecasting (information and confirmed
    future orders), resources


• Wages raised (towards LW) while hours reduced

            ETI NGO Caucus – implementing the Living Wage
The project: in-factory
   The
                         Robust HR framework                    Aim
 Problem


                          Worker consultation

                                                              Sustainabl
 Industry-
                                                              e funding
   wide              Production incentive scheme
                                                               of higher
 culture of
                                                              wages for
long hours
                      Improved IE and production                 fewer
  and low
                              planning                         working
    pay
                                                                hours
                     Welfare: provident fund and
              ETI NGO Caucus – implementing the Living Wage
                        improved free nutrition
Where are we on the journey?
     Year 1                        Year 2                      Year 3



•Improved HR                  •Roll-out incentives
•Worker consultation          •Improve target
•Workers committee            setting
•IE and planning              •Formalise training
•Production bonus             facilities
•Trial lines                  •Tackle overtime
•Improved welfare             blips
•Improved                     •Improve critical path
purchasing                    •Improve purchasing

               ETI NGO Caucus – implementing the Living Wage
Making a difference to workers?
   Grade 7 (lowest             % change y-o-y            % change y-o-y
   paid) workers                 OT hours                Take-home pay
   February 08                        -57%                    -6%
   May 08                             -36%                   +15%
   July 08                            -46%                   +24%


        July Grade 7 average
                                                 2940 Taka
        take-home pay
        Cost of improved
                                                  675 Taka
        lunch
             Value of package                    3615 Taka

             ETI NGO Caucus – implementing the Living Wage
      Worker turnover
30%

25%

20%
                                                 % Echo factory
15%
                                                 Worldwide
10%                                              benchmark
5%                                               Bangladesh
                                                 sector
0%


      ETI NGO Caucus – implementing the Living Wage
         C: Purchasing practices
              – 4 point plan
1.   Ensure informal workers paid Minimum Wage+
     –   Impact on lowest paid workers (likely to be women)
     –   Attenuate pressures for informalisation
2.   Identify Living Wage benchmarks and monitor
     actual wages against benchmark(s)
     –   Audit basic pay of lowest paid (women) workers
3.   Ensure workers at suppliers can negotiate
4.   Make wages a key factor in selection of suppliers



                ETI NGO Caucus – implementing the Living Wage
                    Challenges
• Living Wage
  benchmarks
• Informalisation
• Product cost
• Sharing risk with
  employer




            ETI NGO Caucus – implementing the Living Wage
       Facing the challenges I
• Living Wage                         …Stop arguing about
  benchmarks                            how high the moon
• Informalisation                       and raise wages!
• Product cost                        • Must involve workers/
• Sharing risk with                     unions (& NGOs)
  employer                            • Share information
                                        SAI,companies,NGOs
                                      • Use all available
                                        benchmarks …
                                        JO-IN Wages Ladder
            ETI NGO Caucus – implementing the Living Wage
JO-IN Wages Ladder

Wage level 4                              750 YTL



Wage level 3        F2                    700 YTL

               F1
Wage level 2                      F4      650 YTL



Wage level 1                              600 YTL
                          F3

  Prevailing                              550 YTL



   Minimum                                500 YTL




     ETI NGO Caucus – implementing the Living Wage
        Facing the challenges II
•   Living Wage benchmarks              …because raising wages
•   Informalisation                       raises pressure for
•   Product cost                          informal work
•   Sharing risk with                   • Start by ensuring informal
    employer                              workers paid at least MW
                                             – informal workers prevalent
                                               eg Turkey Ecuador
                                             – Impact on women workers
                                             – ETI Homeworker
                                               Guidelines etc



              ETI NGO Caucus – implementing the Living Wage
      Facing the challenges III
• Living Wage                         • Labour small % of
  benchmarks                            cost, modest impact
• Informalisation                     • Total Product Cost
• Product cost                        • Efficiencies
• Sharing risk with                        – manufacturer
  employer                                 – in-house (eg sampling)




            ETI NGO Caucus – implementing the Living Wage
      Facing the challenges IV
• Living Wage                         • Risk for supplier must
  benchmarks                            be matched by ethical
• Informalisation                       sourcing policy
• Product cost                             – Preferred supplier
                                             status
• Sharing risk with                        – Wages central to
  employer                                   selection of supplier




            ETI NGO Caucus – implementing the Living Wage
Any questions?




           ETI NGO Caucus – implementing the Living Wage
Impact on price – hypothetical case




 Source: What Price a Living Wage, Miller and Williams, Journal of Global Social Policy (2009)



                                 ETI NGO Caucus – implementing the Living Wage

								
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