Insights on Reaching a Living Wage
An analysis by the Fair Labor Association (FLA) finds that factory workers in Vietnam work excessive overtime, beyond what is acceptable by international standards, to close the significant gap between what they earn and what they need to provide for themselves and their families.
The findings in FLA’s new report, Toward Fair Compensation in Vietnam: Insights on Reaching a Living Wage, reflect data collected over three years representing 13,000 workers across 38 FLA-affiliated factories in Vietnam. The report’s key findings:
- Workers who earn a salary on par with living wage estimates do so only through excessive hours and days of work without rest, in violation of international health and safety standards. It is common for workers in facilities with rest day violations to work more than 50 hours of overtime a month.
- Although the average worker in FLA-affiliated factories in Vietnam earns more than double the legal minimum wage, a worker would need a pay increase of almost 25 percent to reach the lowest consensus living wage estimate, as benchmarked by the Global Living Wage Coalition.
- Under Vietnam’s proposed 5.3 percent minimum wage increase for 2019, minimum wages would remain less than half (48.2 percent) of the Global Living Wage Coalition benchmark.
To address the issues identified by FLA, and mitigate the health and safety concerns of excessive overtime which can leave workers exhausted, injured, or worse, the report recommends:
- The government should increase the minimum wage to a level that ensures a worker will earn enough to pay for basic human needs and have some discretionary resources to spur factory compliance.
- Governments, unions, and brands should promote the adoption of industry-wide initiatives, such as ACT (Action, Collaboration, Transformation), that bring together government, unions and apparel brands to push for positive change on wages.
- Brands should: 1) Avoid using harsh negotiating tactics with suppliers that lead to razor thin margins, which often drive involuntary or excessive overtime; and 2) Review their costing policies to be sure that they are taking fair compensation into account.
- Brands and suppliers must work together to plan their production cycles to allow for a regular work week, without assuming or expecting that employees will work overtime.