H&M’s steps towards fair living wages

H&M’s unique fair living wage strategy, launched in 2013, is showing progress on many fronts, H&M has reported in an update for the first half of 2015, describing their goals and achievements as well as work in progress and challenges.

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.

In Myanmar H&M is now finalizing the plans for the coming industrial relations projects, with knowledge gained from Cambodia is included.

“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 on-going 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 experiences 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.”

Several other collaborations, closely linked to the fair living wage strategy, are making progress.
Industrial Relation project in Cambodia
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.

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