Fair and square
With the fashion industry’s complex global supply chain and factories located in low-wage countries, ensuring production workers receive decent pay is not easy. But four brands — Nudie Jeans, Mini Rodini, Armedangels and Kings of Indigo — pooled their efforts to meet this challenge.
There is a short but impactful video online called “The Industry We Want” in which a group of women, all heads of sustainability at their respective brands, describe an initiative called the Living Wage Project. Taking turns delivering segments of the simple but powerful message, the speakers say: “The industry we want is an industry defined by environmental and social justice, transparency, and actual living wages. Our vision of the industry is collaboration: collaborating with other brands, partners, workers, NGOs and unions. We four Fair Wear brands are working together to implement living wages at a shared partner in Turkey. There are various challenges we face, but let’s join forces and make it happen.”
What is impressive about this video is the collective of Northern European brands it features: Nudie Jeans, Mini Rodini, Kings of Indigo and Armedangels. These names in denim have taken on a long-overlooked problem: the world’s garment workers are too often badly underpaid.
“We all have to be [part of] the change we want to see in the world,” Cassandra Rhodin, founder and creative director of Mini Rodini, based in Stockholm, tells Inside Denim. “If we don’t want to continue with the slavery, pollution and the overconsumption that is a race to the end of everything we love, we need to look at new business models and make it work. Supporting living wages will actually sustain businesses in the long run.”
Meeting workers’ basic needs
A living wage is the minimum amount of pay workers need to meet their basic needs. But this simple description masks complex issues. A living wage varies from country to country and region to region depending on geographic-specific factors such as cost of food, housing, transportation, healthcare, clothing and other necessities. Whether or not a government mandates a national minimum wage, there is often a significant disparity between wages being paid and true living wages. Research from 2019 by Labour Behind the Label, an ethical fashion advocacy group, found that the legal minimum wage in Sri Lanka was about 13% of what would be a living wage there, and in Georgia the minimum wage was just 10% of a living wage. These gaps tend to widen with time, as the cost of living can rise faster than typical income.
The four brands behind the Living Wage Project at the time of writing were working together to help close those gaps specifically for the production workers at Mergü Tekstil factory in Izmir, Turkey. “We had a unique situation where four like-minded brands and the supplier itself were interested in addressing the issue of living wages,” says Armedangels social impact manager Julia Kirschner. “So we joined forces to find a solution. The set-up for this project was done collaboratively with all brands. We did all the calls, discussions, calculations and benchmarking together as a team.”
Independently, the brands had already taken measures towards paying living wages to their suppliers; Nudie Jeans, in Gothenburg, and Mini Rodini have done so in India for many years, and Cologne-based Armedangels’ ‘true costing’ methodology ensures that all suppliers pay 20% above minimum wage. Everyone brought their expertise and experience into this project, says Ms Kirschner, and together they were able to “build a reliable and resilient system that can be used for other supply chain partners and for any other brand sourcing at Mergü.”
The Fair Wear Foundation, a non-profit that works to improve conditions for workers in garment factories, stresses that international supply chains are complex and raise many practical questions before and after a brand, a factory and workers have agreed on a living wage benchmark. But one key starting point is that pricing must be determined from the bottom up.
Top down or bottom up
The top-down approach, the common method today, establishes a product’s price based on what a consumer is prepared to pay for it. From that starting point, everyone takes their cut: retailer, brand, shipping company, and factory, leaving little for workers and materials suppliers.
A bottom-up approach would start from the fair cost of materials and worker wages and build from there. So, at the heart of paying a living wage is calculating the fair cost of material and wages, and then establishing a reliable system for making sure payments make it to their intended recipients.
Ms Kirschner credits Fair Wear’s methodology of calculating labour/minute costs as being quite helpful in simplifying calculations. This approach, as described by Fair Wear, ‘uses payroll data to calculate how much it would cost each year to raise wages to a living wage. This total annual cost is measured against data about the time (in minutes) required to make each garment to calculate a brand’s share of higher labour costs.
While payment and invoicing are carried out separately by each brand, working out the logistics as a team was key to getting the programme off the ground. “Even if it's an ‘every brand for themselves’ situation when it comes to prices, [we know] our shared contribution will make a great impact for the employees of the supplier,” says Kevin Gelsi, sustainability coordinator for Nudie Jeans. “The quality and optimisation of the programme are more likely to thrive if several brands are working according to the same methodology and standards.”
The Living Wage Project brands bridge the gap by issuing bonus payments to supplement workers’ wages. In 2021, the group paid a combined total of €50,000 in bonus payments to the production workers at Mergü, and in 2022 nearly €72,000. It is felt that collaborating means each brand has more leverage and more potential impact than if they were acting alone.
But none of this is easy. “[There are] bureaucratic challenges, inflation, challenges in setting up a robust structure that is workable for management, as well as a fair distribution,” says Ms Rhodin. “However, the least we can do is to continue our commitment and also work to inspire and set an example for other brands in the industry.”
The importance of trust
Fair Wear says trust between brand and supplier is essential for a living wages arrangement to work. The brands behind this partnership with Mergü couldn’t agree more. “Having a healthy relationship with our suppliers is of fundamental value to us. It affects how we run our business and ultimately our level of sustainability as a producing brand,” says Mr Gelsi. “When we choose to partner with suppliers, it’s also important to us that we share perceptions of what sustainable development means, in order to strive towards the same goals and do so collaboratively.” Living wage projects might vary from one supplier to another, he adds, “but to have an open dialogue and the joint willingness of exploring and developing, are the first steps.”
This dialogue is vital in part because of the unpredictability in what constitutes a living wage. Not only does it vary from one region to another, but in each area there will be fluctuation due to forces that are beyond a supplier or brand’s control. “Talking about living wages and setting a benchmark in Turkey is extremely difficult at the moment, because it is so volatile due to very high inflation,” says Ms Kirschner. “The reality of the lower paid workers is becoming harder and harder, making the project even more important.”
What started as a pilot project is now what Mr Gelsi describes as an “implemented living wage programme”. He says, “We’ve had positive results and feedback from both Mergü and the partner brands. The structure is in place and we will continue to work accordingly with regular follow-ups as long as the programme fulfils its purpose.”
The project is unique in its structure, according to Ms Kirschner, because “we as brands openly work together towards our shared goal of supporting the suppliers and their workers”. Stockholm-based Toteme has now joined the project, and others have expressed interest. “This is what we have hoped for,” she says. “The more, the better!”
A worthwhile challenge
For Kings of Indigo, this partnership represented the first supplier with whom the brand was implementing a living wage. “It was a quite new topic, and we still have a lot to learn,” says Ms Bosboom. “The current economic times with inflation and energy prices make it difficult to find a stable and achievable method for all parties involved.”
However, companies contemplating a system for paying a living wage to the workers up the supply chain should not be intimidated. “Just start,” says Ms Bosboom. “One supplier at a time, or maybe even one collection at a time. Communicate and work closely together with your suppliers.” The impact, she says, will be worth the effort. “The most rewarding part was to see how willing everyone was to participate and how grateful the workers at the factory were. They are directly benefiting from the bonus that we as brands pay.”
And, as Mr Gelsi of Nudie says, no brand can solve the problem of unfair wages alone — and nor should they try. “It's not meant to be just one single brand at each supplier taking the full cost of paying living wages. The structure we have in place is based on our production share, which at the end of the day means we pay our share of living wages. This still leaves a gap for the other purchasing brands to take their responsibility.”
He acknowledges it is difficult to “find a functional system based on wage situation and the actual cost of living mapping” but that “this is where the close dialogue and relationship with the suppliers become crucial, to gain that insight and get started”. He recommends that interested businesses reach out to organisations with experience, whether there are other brands or NGOs, and “make sure your partner suppliers are engaged”.
Even in moments when fluctuations of the global economy make it difficult to pay workers fairly in another part of the world, Ms Kirschner is spurred on by the success they have had so far. “The most important lesson we learned in this project: it can get very complex sometimes. The second lesson: you need to listen to the reality of your supplier. Third lesson: nothing is impossible,” she says. “We receive a lot of very positive feedback from workers, which encourages our work and shows us how essential living wages are”.
Living wages ensure workers’ basic needs can be met.
Photo: Mergü / Armedangels
