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04/08/2010: The Asia Floor Wage campaign and the garment industry in Bangladesh

Since the end of 2009, an international campaign named the Asia Floor Wage (AFW) has been launched by a large number of NGOs and trade unions in Asia, Europe and the US and aims at increasing the wages for garment workers in Asia.

We believe the AFW campaign raises an important and complex issue. Minimum wages are set by national government and determine the wage that covers workers´ basic needs. The BSCI Code of Conduct stipulates that supplier companies shall pay the minimum wage. However, in the framework of BSCI’s development approach, the BSCI also encourages supplier companies to go above the legal obligations by providing their employees with a higher so-called living wage.

Our experience teaches us that in many developing countries, the payment of the minimum wage is already a challenge and in some countries, the minimum wage has been set too low to cover basic needs. In this respect, we continuously try to influence the government of supplying countries to implement and/ or raise the minimum wages.

At the end of 2009 and in 2010, we had several discussions with our members and stakeholders – government, business, trade unions and NGO representatives. The topic of wages has been put on the agenda of Round Tables of stakeholders in Bangladesh (3 March), India (18 March), China (23 March), Turkey (17 June) and Bangladesh (8 August). The issue of wages has also been discussed in our Stakeholder Board and in the German Round Table for Codes of Conduct (19 May) . In this context, we see the increase in the minimum wage decided by the government of Bangladesh as a first step in the right direction. We deem important to revise it regularly as of now, thus avoiding long periods without increase.

We believe that the Asia Floor Wage follows a laudable aim and the proposed calculation of a “living wage” is a good starting point for discussions but it fails to explain how to implement it in practice and how to tackle a couple of key challenges.

- The implementation of a floor wage as proposed by AFW would be a major problem for keeping companies’ competitiveness – either for the factory, or the retailers, or even countries compared with others. This is notably true for Bangladesh, which is competing for orders with China, Vietnam and India and where the garment industry stands for 75% of the country’s export, employing 2,5 million workers in more than 5000 factories.

If factories would pay a living wage, products would become more costly. How can it be ensured that the factory, the sector or even the supplier country as a whole doesn’t lose its competitiveness? The AFW doesn’t provide an answer to this important point.

- If buyers would pay more for the products, how would it be ensured that the workers really get a higher pay? The AFW does not provide input on this question, and the point is not raised.

- The calculation of prices of products is highly complex and varies depending on individual parameters of supply chains. This means that reality is not as simple that if buyers paid a certain amount more for a product, this would ensure a living wage for workers.

In this context, the topic of living wages should not be a campaigning issue against companies but should rather be addressed at the company level through a strong CSR-program such as the BSCI and at the political level by raising it with EU institutions, the UN and ILO, G20, ASEAN and national governments.

Read our position paper http://www.bsci-eu.org/dl.php?id=10517
28/06/2010: Read the latest BSCI Echo 07/12/2009: The BSCI receives the 2008 DNWE award for business ethics


 
 

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