The False Promise of Corporate Living Wage Commitments

In the face of mounting pressure from workers, unions, and civil society organizations who have documented widespread labor exploitation in global supply chains, apparel brands have adopted ambitious public commitments to provide living wages to the workers sewing their clothes. But according to a new study by researchers at the University of Sheffield, the world’s top clothing brands have failed to implement living wages in their factories. Instead, these major garment companies – household names such as H&M, Adidas, GAP, and Nike – have used the rhetoric of living wages to strengthen their public image, while remaining deeplyuncommitted to the rights of the 60 million workers involved in their supply chains.

The study, published by the Sheffield Political Economy Research Institute (SPERI), analyzes the commitments and practices of 20 leading garment companies, using publicly available data as well as the companies’ own responses to a standardized survey developed by the Clean Clothes Campaign. The results are clear: “there is little evidence,” the report reads, “that corporations have effectively defined, benchmarked, or enforced the payment of living wages.”

The reality of the global garment industry remains both highly profitable and highly exploitative. The current supply chain model of fast, high-turnover production – characterized by a “price squeeze,” with buyers constantly seeking to lower the price paid to suppliers, as well as a “lead time squeeze,” with buyers demanding ever-shorter turn-around times for orders – has a profound impact on labor conditions, even beyond wage levels.

Crucially, this model has cultivated a context in which suppliers have a financial incentive to retaliate against workers who attempt to organize, unionization being a powerful a vehicle through which labor can bargain for higher wages and better working conditions. Indeed, workers’ right to organize and bargain collectively and access to living wages are “inextricably linked,” write the authors of this report. They highlight brands’ failure to enforce the protection of workers’ associational rights as a key barrier for achieving living wages in the global garment industry.

Instead of altering their purchasing practices to make it possible for suppliers to pay living wages and reduce the commercial drivers of exploitation, many clothing brands have chosen to rely on external initiatives or social auditing schemes, which are, according to the Sheffield researchers, “widely known to be ineffective and open to abuse.” They cite the absence of enforceable standards, financial conflicts of interest, and the incentive for both auditors and suppliers to manipulate audit results as key problems with the social auditing model.

Another important flaw the documented by the researchers from SPERI lies in the voluntary nature of these corporate commitments, a critique which extends to the broader constellation of corporate social responsibility these living wage initiatives stem from. The living wage commitments analyzed in this report are neither binding, nor enforceable. Whether, and to what degree, a company follows through on its voluntary living wage promise is entirely up to the company itself. The absence of binding and enforceable commitments forecloses clear and certain access to living wages for workers and remedy when these wage levels are not met.

Despite the grim findings of this report, apparel brands’ failure to provide workers with a living wage is not inevitable. Standing in stark contrast to brands’ unfulfilled living wage promises, the Alta Gracia factory in the Dominican Republic is the only living wage factory in a major garment exporting country. Started in 2010 through a partnership between Knights Apparel and the WRC, Alta Gracia provides a living wage to its employees and is subject to constant, independent monitoring by the WRC. It also respects the rights of workers to freely associate and allows for a democratic union. Alta Gracia proves the possibility of a living wage factory and provides an important example of a successful factory held to high standards of accountability and an enforced living wage. Most importantly, it remains a powerful reminder that achieving a living wage requires structural changes to supply chains, instead of involuntary and unenforceable corporate promises.