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H&M’s unique fair living wage strategy shows progress

H&M’s unique fair living wage strategy, launched in 2013, is showing progress on many fronts. This update describes our goals and achievements as well as work in progress and challenges.

STOCKHOLM, Sweden, 2015-9-1 — /EPR Retail News/ — By testing and up-scaling the Fair Wage Method*, significant steps are taken towards creating improved pay structures at strategic suppliers – an important goal in the strategy. In addition, a variety of ongoing collaborations, with brands as well as with other stakeholders, push the development forward within industrial relations, social dialogue and skill development. The work to further improve our purchasing practices is also showing progress. These are all equally important aspects in the long-term work towards fair living wages.

Scaling up the Fair Wage Method
Based on the learnings from the testing of the Fair Wage Method in a few role model factories, H&M is now scaling up the method to more markets and suppliers. The initial test results are very promising and H&M looks forward to continue the work. The Fair Wage Method – focusing on a well-functioning dialogue between the employer and the employee – will be rolled out to all strategic suppliers by 2018, the first 68 of them already this year. The implementation of the method will contribute to sustainable pay structures, more regular wage adjustments and enhanced communication and social dialogue between the management and workers’ representatives.

Brands working together
Recognising the benefits of a coordinated and holistic approach, retailers and brands have come together to develop a joint set of Enabling Principles outlining a shared approach towards living wages.

H&M recognizes that industry collaboration is crucial to achieve lasting change and is therefore one of the participating companies. Within the enabling principles, H&M is also working together with stakeholders such as IndustriALL Global Union. The collaboration will address the following issues:

  • Purchasing practises
  • Productivity and skills
  • Freedom of association and collective bargaining
  • Government outreach.

Improved purchasing practices
H&M is updating its purchasing practices to support the suppliers in implementing fair living wages. The overall goal is to make it easier for the suppliers to plan their capacity and thereby reducing production peaks and overtime. Our purchasing practices should always provide reasonable lead times, fair pricing, timely payments and transparent communication.

Collaboration projects are showing progress
Several other collaborations, closely linked to the fair living wage strategy, are making progress.

Skill Development Project     
The cooperation between H&M, the ILO and SIDA on training and skills development in Bangladesh is showing promising results. The project was initiated by H&M in 2013 and aims at creating a link between actual skills and the wage level which is important for the wage development. Today, training has been completed both at the Centre of Excellence and at one factory and an additional 11 factories are waiting to start training.

Social Dialogue Program
The progress for H&M’s Social Dialogue Program in Bangladesh continues – which is essential in the scaling up work of the Fair Wage Method. It aims at ensuring that the workforce have democratically elected and effective worker participatory committees which, upon the employees own choice, can lead to the establishment of trade unions able to negotiate in areas such as wages. The goal is that 100 percent of all factories in Bangladesh that produce for H&M will be covered by the program during 2018. Status today is:

  • 88 participating factories.
  • 43 factories have elected Participation Committees.
  • 580 elected Participation Committee worker representatives have received training.
  • 108,303 workers are represented by Participation Committee worker representatives.

Industrial Relation project
Within the Industrial Relation project in Cambodia, H&M works together with the ILO, SIDA and the Swedish trade union IF Metall to strengthen the industrial relations in the textile industry. The goal is to make it possible for workers and employers to negotiate about rights and obligations collectively and to resolve conflicts peacefully and in good faith through established processes. Status today is:

  • 12 participating factories so far – but with an aim to cover one third of the supplier factories that work with H&M by 2016.
  • All participating factories and their trade union representatives have signed a Memorandum of Understanding on improving industrial relations as well as an agreement to eliminate unfair labour practices.
  • 791 trade union representatives and 530 factory managers have completed industrial relations training provided by IF Metall.
  • 744 trade union members and 95 GMAC members have participated in awareness-raising of the Memorandum of Understanding on industrial relations.

Tailor-made projects in Myanmar and Ethiopia
Right now H&M is finalizing the plans for the coming industrial relations projects in Myanmar and Ethiopia. The knowledge gained from the equivalent project in Cambodia is included, but adjusted to fit the unique environment context in Myanmar and Ethiopia.


Contact information:
Phone: +46 8 796 53 00

* The Fair Wage Network has developed a comprehensive concept to define and assess a fair wage, based on twelve key dimensions. The Fair Wage approach helps the supplier and the workers to reach a living wage. It helps the workers to have their wages regularly and fairly adjusted according to price increases and performance.

EPR Retail News