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SECTION 1 2 3 WHAT CAN BE DONE THE HIGH ROAD: ANOTHER WAY IS POSSIBLE Turning the tide on poverty wages Some countries are bucking the trend in the race to the bottom on wages, decent work and labour rights. Brazil’s minimum wage rose by nearly 50 percent in real terms between 1995 and 2011, in parallel with a decline in poverty and inequality (Figure 11). FIGURE 11: Inequality levels in Brazil during the period in which the minimum wage rose by 50 percent 341 0.62 Income inequality (as Gini coefficient) 0.6 0.58 0.56 0.54 0.52 0.5 0.48 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Income inequality (as Gini coefficient) Since taking office in 2007, the Ecuadorean government, led by Rafael Correa, has pursued a policy of increasing the national minimum wage faster than the cost of living. 342 Ecuador joined the World Banana Forum to improve conditions in this key export industry. 343 Profitable companies were already required by law to share a proportion of profits with their employees, but new regulations also required them to demonstrate that they pay a living wage; that is a wage ‘covering at least the basic needs of the worker and their family and corresponds to the cost of the basic family basket of goods divided by the (average number) of wage earners per household.’ 344 A decade ago, many workers earned less than half this amount. In China, where the government has followed a deliberate strategy of raising wages since the 2008 recession, spending by workers is forecast to double over the next four years to £3.5tn, increasing demand for imported and locally made goods alike. 345 78
SECTION 1 2 3 WHAT CAN BE DONE Some MNCs have taken voluntary steps towards improving the lot of their workers. Unilever, International Procurement and Logistics (IPL) and the Ethical Tea Partnership have acknowledged the labour issues identified by Oxfam in recent joint studies and are implementing plans to address them. 346 H&M has published a ‘road map to a living wage’, starting with three factories in Bangladesh and Cambodia, which produce 100 percent for the company. 347 In the UK, 800 companies have been accredited as living wage employers, including Nestlé, KPMG and HSBC. 348 In another hopeful sign, Bangladesh’s Accord on Fire and Building Safety now has more than 180 corporate members, and has brought brands, industry, government and trade unions around the same table for meaningful dialogue on worker organizing in factories, as well as on getting to grips with safety standards. CASE STUDY ‘HIGHER ROAD’ EMPLOYERS THAT POINT THE WAY In the Dominican Republic, the US company Knights Apparel established a living wage factory to supply ethical clothing to the student market. 350 Maritza Vargas, president of the Altagracia Project Union, describes the impact that having a living wage had on her life: ‘I can now access nutritious food and I never have to worry that I can’t feed my family. I have been able to send my daughter to university and keep my son in high school – this was always my dream … We now find we are treated with respect in the workplace – this is completely different to our experience in the other factory.’ “ It is clear that good jobs help families and societies to progress more quickly. Our experience at Tesco is that this also makes sense from a business perspective; the best supplier partners for the long-term are those that invest in their people: they tend to be the most productive, most reliable and make the best quality products. GILES BOLTON GROUP DIRECTOR, RESPONSIBLE SOURCING, TESCO PLC, AUGUST 2014 349 “ There have been benefits for local shops and trades people too, as a result of workers’ increased spending power. This change came about due to pressure from consumers and, while an encouraging example, it is unfortunately not typical of the companies which work in the Dominican Republic. 351 Kenya’s cut flower sector was the target of civil society campaigns in the 2000s. Since then the workers who process these high-value, delicate products have seen real improvements in some areas. Their wages are still far from being a living wage, 352 but the most skilled workers, 75 percent of whom are women, report improvements in health and safety, a reduction in sexual harassment and more secure contracts compared with 10 years ago. A majority of workers surveyed for the report agreed that ‘it is easier to progress from temporary to permanent employment than when I started work.’ 353 Factors aiding this include the implementation of codes, such as the Ethical Trading Initiative Base Code, product certification (Kenya Flower Council, Fairtrade), more professional human resource management, the establishment of gender committees and improved legislation. 354 In neighbouring Uganda, conditions in the industry have improved even more (though from a lower base), helped by greater worker organization. 355 79
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The widening gap between rich and p
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