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Worker well-being in the fashion industry

By Eva Sirch

The fashion industry has played a crucial part in bringing employment to some of the poorest countries in the world, yet it has exceedingly failed to significantly improve workers‘ lives. Instead, the system has actively facilitated global supply chains that foster labour exploitation, trapping most garment workers into persistent poverty. Garment workers globally – of whom about 80 per cent are women – earn very low wages, and face high levels of stress due to job insecurity and unsafe and unhealthy workplace conditions, harassment, violence, discrimination and further human rights abuses e.g. suppressing their rights to join unions and collective bargaining. Apparel brands in wealthy countries have built their highly profitable business model on low wages, underdeveloped labour and environmental laws, and lack of enforcement. Regulative development is increasing globally, pressuring apparel companies into better human rights due diligence across their supply chain. However, the well-being of garment workers can only be genuinely enhanced if the root causes of labour exploitation are being addressed and responsible practices established.

Worker well-being is related to and influenced by different economic and social factors. Wages play a crucial role in overall well-being as they ensure financial stability for the worker and their family. The payment of living wages has been seen as a critical tool by scholars and NGOs to lift people out of poverty. Therefore, living wages should cover necessities, e.g. food for the family, rent, healthcare, clothing, transportation, education, and a small amount of savings to obtain a decent basic life. However, garment workers worldwide receive primarily the statutory minimum wage, which is 45 per cent below the average living wage estimate according to calculations by „The Industry We Want“ and the „Wageindicator Foundation“. It has proven to be particularly difficult to enforce real change on the ground as brands fail to translate their living wage commitments into tangible action effectively. Thus, only 2 percent of garment workers globally receive a living wage.

The ineffectiveness of delivering living wages can be explained by the fact that brands do not address those practices that lie directly within their control that could effectively lead to better wages. Economic and social well-being are strongly influenced by the business model and brands' purchasing practices. The fashion industry represents a buyer-driven value chain in which brands hold immense power over supply chains – thus, prices and lead times. It is prevalent that suppliers have to produce large orders in short times at the price point offered by competitors. These prices are often too low as they represent the brand's target margin and not the actual cost of production, making it particularly difficult to obtain fair pricing, even less to meet wage standards. Prices are primarily negotiated beforehand without considering market inflation, mounting price pressure, and other supply chain risks, e.g. material shortages. Suppliers mainly bear the financial burden of supply chain costs and sustainability compliance mandated by the buyer, e.g. audit duplication, certifications and higher prices. Furthermore, poor purchasing practices e.g. insufficient forecasting and a resulting price or sourcing squeeze can lead to high inefficiencies and impact workers' health: increased overtime, high worker turnover and psychological pressure are highly affecting social well-being. Suppliers might also be forced to outsource parts of their production to cheaper subcontractors to meet their orders, risking their partnership and further labour rights violations.

As long as value and profit are distributed only at the top of the supply chain, achieving sustainability goals, e.g. better labour standards and living wages, will be doubtful. Research, therefore, suggests living wage benchmarks are to be built into price negotiations beforehand. A fundamental shift in purchasing practices and the business model is needed to facilitate these changes. Overall, brands must move towards true partnerships that focus on regular, predictable ordering practices, fair pricing, and shared responsibility for social and environmental sustainability to enable suppliers to invest in human capital, worker empowerment and their local community, improving overall worker well-being.

At the same time, compliance with wage and labour standards must be verified more transparently throughout the supply chain. Voluntary initiatives and their reliance on social audits have been found to be an insufficient tool that fails to detect labour and human rights violations or lead to better practices on the ground. Furthermore, social audits neglect to examine how brands and specifically their purchasing practices are involved in the violations identified. Therefore, a fundamental reform of the auditing system is needed to ensure that root causes leading to violations can be depicted and payment of living wages enforced. This is particularly crucial as human rights due diligence is increasing, otherwise legislative development can not truly enable a system that fosters economic and social well-being and sustainable development.

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