Reaching Living Wage for Garment Workers
Significant increases in net wages – ranging from 29 percent to 57 percent over a three-year period are documented in an FLA report. The increases allowed factory workers in China and Vietnam to earn a living wage without working overtime.
Factory workers in the supply chains of three FLA affiliates earned increased wages during the regular workweek as factories reduced excessive overtime – a persistent issue in apparel factories around the world and a common violation of the FLA standard on Hours of Work.
Net wage increases ranged from 29 percent to 57 percent, exceeding the rate of inflation.
Productivity bonuses and other incentives led to increases that ranged from 89 percent to 330 percent during the regular work week.
The report presents practical approaches to achieving a living wage through better purchasing practices by buyers and better planning by factory management. Case studies in the report identify the root causes of excessive overtime and describe how buyers, suppliers, and workers collaborated to improve wages and reduce overtime.
Changes at the factory level included workforce engagement to ensure worker feedback was included as factories implemented new systems. The new approaches replaced outdated and insufficient piece-rate systems, allowing workers to earn higher base wages and diversified bonuses that rewarded quality and efficiency. The changes resulted in reduced overtime and wage increases during the regular workweek, exceeding the applicable Global Living Wage Coalition estimates.
For example, in China, New Era and its contract factory in Jiangsu began to talk more regularly about production capacity and upcoming orders. The factory adopted a higher base wage (replacing an hourly wage) and invested in new machinery to simplify production. Within two years, workers’ monthly net wages increased 57 percent.
In Vietnam, the Maxport Limited production facility in Nam Dinh changed its production planning schedule to assume a shorter workweek, built in time to account for unanticipated delays, and set stricter purchasing guidelines for its customers. Over a five-year period, the average increase in real wages was 39 percent.