STeP by OEKO-TEX® case study gives guidance on supporting decent pay in certified facilities, by Alva-Louisa Rose

The Covid 19 pandemic had a major impact on working conditions in the global fashion industry. Among other things; workers had to adjust to negative social and financial impacts of the crisis. Many have fallen into debt, suffered wage-theft and struggled to make ends meet. According to the Universal Declaration of Human Rights a life in dignity is a basic human right. However, this fundamental right is often disrespected by the fashion industry’s low minimum wage rates trapping their workforce in in-work poverty. A dignified life requires a decent wage, which is regularly referred to as the living wage. The problem is so pressing, that this year’s Fashion Revolution campaign also sets a focus on this topic.

The Global Living Wage Coalition defines the living wage as “remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transportation, clothing, and other essential needs including provision for unexpected events.”

Despite the strong consensus about the need for higher wages and better working conditions, labour laws lack enforcement and therefore do not protect workers. As global supply chains are extremely complex and one single brand is likely to produce in over a thousand facilities in different countries, it is often complicated to determine who is responsible for social wrongs.

The research project Guidance for Voluntary Sustainability Standards on Supporting Decent Pay in Certified Facilities – A STeP by OEKO-TEX® Case Study on Living Wages in the Textile and Apparel Industry' clarifies the concept of the living wage and provides an overview of its significance for future development in the context of the global textile and apparel industry. With the use of a literature review and interviews with Auditors, information on the certification and auditing process of STeP by OEKO-TEX® was collected and analysed. The auditors represented the audit locations Bangladesh, Bulgaria, China, Germany, India, Pakistan, Romania, Sri Lanka and Turkey.

The study has confirmed that minimum wages do not prevent in-work poverty but contribute to the dramatic conditions of wage labour in global textile and apparel supply chains. It has established the need for a shift towards the provision of living wages, which are linked to global lasting peace and fundamentally contribute to future development. The literature has shown that Anker Living Wage Benchmarks or Anker Reference Values provide credible estimates. These approaches are fully transparent and provide internationally comparable benchmarks. This refutes the statement of brands and governments, that a missing definition or methodology prevents living wage implementation. It has also been discussed that the living wage is beneficial both to workers and businesses alike. When living wages are provided, evidence suggests improvements in the physical and mental health of workers, productivity levels, worker commitment, contributions to social sustainability and enhancements to business reputation and market competition. Moreover, living wages decrease labour unrest and absenteeism due to illness.

The purpose of the study was to provide guidance for voluntary sustainability standards on how to support living wages in textile facilities. The study has found that certification is a valuable and fully integrated tool for monitoring supply chains, however, it comes with limitations. Voluntary sustainability standards aim to fill the regulatory gap caused by the absence of binding policies or lack of enforcement strategies for international business, but they cannot replace the need for legislation. Auditing has been identified as a key procedure in certification schemes. However, audits should only be seen as a starting point that can provide an incentive; whether a facility acts accordingly is not entirely in the auditors’ hands. It is therefore important to keep in mind that, even though the study has shown that auditors can support living wages in textile factories, this is not a stand-alone solution. The results of the study indicate that in order to support living wages in the textile and apparel industry, voluntary sustainability standards must adjust their requirements and guidelines, as auditors can only act within such frameworks. Adjustments and additions should also involve subject knowledge enhancement for auditors and facilities, aim for active worker participation and initiate buyer engagement. Regarding the latter, the study has found that facilities rely on financial decisions made by buyers, and thus can only truly commit to living wages if their buyers are also willing to commit. The findings of this study in the context of STeP by OEKO-TEX® offer a number of practical implementations, which OEKO-TEX® has planned to implement.

1. Communication and Awareness-Raising

A key priority should be to boost the knowledge of the STeP by OEKO-TEX® auditors. Therefore OEKO-TEX® is planning to enhance the topic of living wage calculation into their internal Auditor Training. The idea is to allow auditors to have more detailed communications on the matter of living wages with workers and facilities’ management and prepare for a successful investigation.

2. Investigation

The questionnaire and initial audit of STeP by OEKO-TEX® will be adjusted to acknowledge the importance of living wage implementation. OEKO-TEX® will evaluate to what extent it makes sense to integrate the payment of living wages as an exclusion criterion. The motivation of the textile facilities should be maintained to integrate living wages in a stages approach. The implementation of targeted interview questions that focus on the appropriateness of their pay will be part as of 2022. These findings can then be reported to the management. This may allow for more understanding of the workers’ standard of living. After an investigation, the auditor should decide whether a facility needs further input on living wages and provide the management with adequate resources if necessary.

3. Buyer Engagement

A lack of engagement from buyers may prevent the provision of a living wages, therefore approaching brands that cooperate with production facilities should be considered an important part of living wage implementation. Ensuring appropriate salary systems and support for workers should be a priority for buyers, testing institutes could start a discourse between the relevant parties.

4. Evaluation Survey

Evaluation surveys could be beneficial to review the effectiveness of the 4-step Implementation Strategy. If successful, the surveys may also motivate further facilities and additional buyers to transition to living wages and prove to be a great marketing tool for the facilities to document and display their progress.

Despite these promising results, questions remain. This study has identified a need for both legal regulations and enforcement strategies to protect workers’ rights and ensure adequate salaries. Policies have immense influence on the business practises and improvement actions taken by facilities and brands. Hence, great power to tackle in-work poverty lies with governments. Contrary to this, the research has also shown the complexity and interdependency of global supply chain responsibility. Thus, positive systemic change in textile and apparel industry requires industry-wide collaboration. Factors that drive industry-wide collaboration in the textile and apparel industry should therefore be addressed in further research projects. Yet, considerably more research is needed to determine further Anker Living Wage Benchmarks as addition to the existing Anker Reference Values – voluntary sustainability standards could engage with the Global Living Wage Coalition to support such studies.

Link to the full research paper and all references: Click here