Average worker compensation found to be lower than the World Bank poverty line in Bangladesh
Today, the Fair Labor Association (FLA) released its first annual compensation report, publishing data on the earnings of workers in 124 mostly apparel and footwear factories assessed by the FLA in 2015. This first-of-its-kind collection and publication of wage data and analysis is part of a commitment by the FLA and its affiliates to improve compensation for workers in global supply chains.
For each factory where FLA assessors collected compensation data, the FLA has produced a chart depicting how much workers are earning, compared with other local benchmarks, such as the legal minimum wage, World Bank poverty levels, and cost-of-living figures developed by governments, unions, non-governmental organizations (NGOs) and others. Intended to place workers’ compensation in a local context, these “wage ladder” charts provide a snapshot of workers’ purchasing power at current compensation levels in each of the 21 countries where FLA assessors collected data.
At the four factories assessed in Bangladesh in 2015, the FLA found average compensation (including benefits and incentives, and excluding taxes, legal deductions, and overtime) fell below the World Bank poverty line for a three-adult-equivalent household. Compensation for workers in assessed facilities in Cambodia, the Dominican Republic, India, the Philippines, and Sri Lanka (and for migrant workers in Jordan) averaged above World Bank poverty lines, though the FLA found that purchasing power of compensation for these workers remained relatively weak in these countries. Average compensation was found to be highest relative to the World Bank poverty line in the 14 factories assessed in the United States.
“Companies that affiliate with the FLA affirm that workers have a right to fair compensation in every country where they source,” said Sharon Waxman, president of the FLA. “Historically, brands have found it challenging to determine how close they have come to achieving this commitment. The FLA’s annual compensation report will help focus attention on regions and facilities where workers’ purchasing power is shown to be weakest, and where action is needed most.”
The annual compensation report also shares the FLA’s 2015 findings of legal pay violations, with 20 percent of the factories assessed found to have miscalculated overtime pay, and six percent of factories found to have minimum wage violations. The FLA will continue to collect compensation data in its 2016 factory assessment cycle and in subsequent years, helping steadily to increase the awareness companies, unions, NGOs and other interested stakeholders have of the areas where workers are at the greatest risk for their wages being insufficient to provide for their needs in the local context.
This new initiative to publicize actual worker compensation levels expands the FLA’s public reporting on working conditions in factories. Since 2002, the FLA has assessed hundreds of factories around the world and reported on violations of the FLA Workplace Code of Conduct – including any instances of legal pay violations – along with company remediation efforts. By adding the reporting of compensation levels to its assessment methodology, the FLA has provided information that can be used by all stakeholders – governments, NGOs, consumers, unions, brands, and suppliers – who seek fair compensation for workers in global supply chains.
The Fair Labor Association combines the efforts of business, civil society organizations, and colleges and universities to promote and protect workers’ rights and improve working conditions globally through adherence to international standards. The FLA conducts independent monitoring and verification to ensure that the FLA’s workplace standards are upheld wherever FLA affiliates source their products, and to identify root causes of noncompliance with its code of conduct. Initially focused on apparel and footwear factories, the FLA has added major programs in agriculture and electronics. The FLA is headquartered in Washington, D.C., with other offices and staff around the world.