European nonprofit Fair Action has found that the role of Nordic investors, who have investments in global textile retailing companies, were not enough to push the brands for ensuring living wages of garment workers in Bangladesh.
It recommended Nordic banks to adopt policies that required companies to ensure that workers in their supply chain were paid a living wage.
A recent study of the organisation found that none of the Swedish banks in with investments in Swedish fashion brands H&M, KappAhl, Lindex and MQ, who buy clothes from Bangladesh, were doing enough to push for living wages in the companies’ supply chains.
The report titled ‘Broke in Bangladesh: Nordic Banks and Living wages in the Garment Sector’ said 14 Nordic banks hold large portion of shares of the four fashion brands and as large owners they have a unique opportunity to influence the company’s goals and strategies concerning living wages.
According to the report the banks shares in H&M amounts to a value of over €1.4 billion.
It said that H&M committed to making sure that the company’s strategic suppliers should have pay structures in place to pay a fair living wage to 8.50 lakh workers by 2018 but the banks had not taken the opportunity to follow up on whether the promise had led to actual wage increases at H&M’s suppliers in countries such as Bangladesh.
Citing data of H&M the study said that the average wage in the company’s supplier factories in Bangladesh was still only €86 per month in 2018. This is just slightly above the World Bank’s poverty threshold.
According to a report from 2017, several workers at H&M’s Bangladeshi suppliers’ claim that their children need to work in order to supplement the family’s income.
Despite dependency on Bangladesh as a sourcing market, KappAhl was yet to set any clear goals or strategies concerning living wages, the study said.
It found that the average monthly wage at KappAhl’s Bangladeshi suppliers was €73.47 in 2018 which was just below the World Bank poverty line.
The average wage at Lindex Bangladeshi suppliers was €70 per month including some allowances, according to the company’s own data as of April 2018 and only two of its 29 suppliers have a collective bargaining agreement in place, the report showed.
It also said that the MQ had not published data on the development of average wages at suppliers, nor did they set any clear goals or strategies related to raising wages in its supply chain.
The Fair Action identified that low unionisation rate made it difficult for workers to demand better wages in Bangladesh.
The report, however, said that the legal minimum wage for RMG workers in Bangladesh was raised in December 2018 to Tk8,000 and the amount was barely above the World Bank’s poverty line.
It said that the women sewing for the Nordic fashion brands reported difficulties to afford food, health care and housing for themselves and their children.
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