Will H&M deliver on its promise to pay a living wage in 2018?



Clean Clothes Campaign
Four years ago today, H&M made a bold promise that, if kept, would mean a game changer for the industry. On 25 November 2013, the company vowed to pay what H&M calls a ‘fair living wage’ to the garment workers in its supply chain by 2018. On the fourth anniversary of H&M’s historic statement, with 2018 just around the corner, Clean Clothes Campaign and global partners are greatly anticipating the moment next year when every garment worker that stitches clothes for H&M will receive a living wage.
H&M actually paying garment workers a living wage would be a ground-breaking development, as up until today poverty wages remain the norm in the global garment industry, including throughout H&M’s supply chain. The wages garment workers, most of which are women, currently receive are miles away from what would constitute a living wage: a salary that would enable a worker to live a decent life, including a healthy diet for a worker and their family, proper housing, access to medical care, access to education and transportation and some discretionary income, to use in case of unforeseen events.
Over the past five years since declaring their living wage initiative, H&M has been notoriously opaque regarding their plans which has raised questions as to whether their promise was merely a publicity stunt to allay public concern about their fast fashion brand. Currently, average wages at H&M supplier factories in Bangladesh, Myanmar, Cambodia and India are only slightly above the national minimum wages. In Bangladesh, for example H&M claims that workers at its suppliers earn on average 87 USD per month, which is even below the World Bank poverty line of 88 USD per month. As a result of the low wages, workers and their children suffer from malnutrition. Estimates on what a living wage constitutes vary, but on average they indicate that wages in Bangladesh would need to triple in order to afford a healthy diet, proper housing, access to medical care and access to education for children. The dire situation of workers stitching clothes for H&M in Bangladesh became particularly clear in December 2016 when thousands of workers spontaneously hit the streets to protest for higher wages in the district of Ashulia, many of which worked for factories supplying H&M.
The low minimum wages in garment producing countries are set nationally by the government. However, these governments are slow in raising wages out of fear of losing garment orders critical to the national economy, leading to an international race to the bottom in garment workers’ wages. Ineke Zeldenrust, of Clean Clothes Campaign, explains: "Brands could influence these wages, by reassuring governments that raising minimum wages will not make them leave, investing in long term relationships with their suppliers and assuring them that they will continue to receive orders even if prices go up, and taking direct responsibility for wages through direct payments on top of their orders to their supplier factories, meant to raise wages to living wage standards. As the most important player for Bangladesh’s export, H&M can have considerable influence over these wages."

Shortly after achieving great fanfare for their remarkable living wage promise, H&M set out to reformulate this promise towards a less ambitious course. Instead of paying all the workers in its supply chain a living wage directly, H&M clarified they would only put ‘mechanisms’ in place which would enable payment of living wages to at least 80% of the workers its supply chain. The actual practical and measurable steps to achieve this goal have not been shared publicly nor has H&M been transparent about their wage pilot projects. This precludes workers and labour organizations from tracking progress of H&M’s living wage promise.

The goal that H&M set itself in 2013, to pay a living wage to 850,000 garment workers in their supply chain, while ambitious, is certainly possible and affordable for a company with the size, profit, and power as H&M. For example, the company’s chairman himself, Stefan Persson, could easily provide the H&M workers with a top up on their wages until the moment that H&M has sorted out the payment of a living wage. He is currently worth 19.9 billion dollars, which would be enough to pay all H&M garment workers in Bangladesh a full living wage for the next thirty years.

Ineke Zeldenrust states: "H&M certainly has the financial means to ‘walk the talk’, and has stated time and again they want to be a leader on these issues. We have looked at the numbers and if H&M were to reallocate just one year of its annual advertising budget towards wages, they could pay their Cambodian workers a living wage for 6.5 years."

H&M’s net profit in 2016 was over 2 billion USD (18,636 million SEK). It would cost H&M only 1.9% of this profit to pay all its workers in Cambodia the additional 78 USD every month they would need to meet a living wage standard.