Requesting individual businesses to bear the ethical costs when competitors don’t is likely a Sisyphean task.
At ACT we use a collective bargaining approach in which employers and trade unions negotiate wages and working conditions at industry-level in their country, with brands incorporating the higher wage costs in their purchasing prices. This method needs to be progressively extended to a growing number of key sourcing countries to avoid relocations motivated by wage costs. As a result, the first countries to implement the new approach of coordinated wage setting will receive support through country specific commitments of ACT member companies that will be developed in consultation with the national actors.
In Cambodia, where the ACT process is most advanced, member companies have committed to increasing their sourcing over the next four years, with rising wage costs to be reflected in purchasing prices, just as forecasting and planning will be improved, and sourcing will be focussed on suppliers complying with the collective bargaining agreement. These unique commitments from twenty ACT member companies are conditional on a collective bargaining agreement at industry level that secures freedom of association and an annual wage increase above inflation plus productivity growth. A transparent monitoring process on commitments and a complaints and dispute resolution mechanism are currently being developed to build confidence and trust among all actors that the commitments will be implemented.
ACT member companies are committed to working together to change the way wages and working conditions are set in the global garment and textile sector and invite others to join. Structuring better wage systems within the fashion industry is a huge task, one that requires systemic change and calls for industry-wide, pre-competitive collaboration.
Global Fashion Agenda has reached out to industry leaders to get their perspective on the priorities in the CEO Agenda and how to get closer to solutions. The think pieces are a reflection of their personal or organisation’s approach to the issues and do not necessarily state or reflect the opinions and views of Global Fashion Agenda and its Strategic Partners.