Supply Chain Innovation

Beyond Minimum Wages in Corporate Codes of Conduct

Publication date: 
Friday, October 2, 2015

At the beginning of September, FLA Vice President of Programs Jason Judd participated in the "Squaring Higher Wages and Competitiveness" conference in Ankara, co-hosted by the Just Jobs Network and the International Monetary Fund (IMF).  In preparation for this conference, the FLA prepared a chapter of material describing its latest work on fair compensation, which was distributed to all conference participants, as part of the publication "Global Wage Debates: Politics or Economics?".

The FLA chapter cites recent reports on the insufficiency of minimum wages in many countries in Asia, Eastern Europe, and Central America, including the FLA's own SCI reporting in 2012 and 2013 that found a maority of workers—across all countries and sectors—reporting an inability to meet their basic needs in a regular work week.  After reporting further on the FLA's findings of legal pay violations during the 2014 SCI assessment cycle, the chapter then explains how FLA affiliates are committing to take on this issue under the FLA Fair Compensation Work Plan adopted in February 2015.

The chapter reads, in part: "As a first principle, the FLA’s plan emphasizes the gravity of legal pay violations in supply chains, comparing them to fire safety or child labor violations that require swift and immediate remediation."

Beyond calling for the remediation of legal pay violations [like non-payment of minimum wage, unpaid overtime, unpaid social benefits, or falsification of payroll records], the Fair Compensation Work Plan prepares affiliated companies for assessments that flag the parts of the supply chain—from individual suppliers to key sourcing countries—where companies need to work with unions, workers, and governments to close the gap between prevailing wages and fair compensation. The plan begins with a global stock-taking of the landscape for workers’ wages in 2015, followed by a period of original FLA research to help brands and suppliers understand best practices for closing the gap between actual earnings and fair compensation. By 2017, the FLA will set out clear goals for member companies to meet in their own detailed plans, focusing first on countries where the gap between pay and fair compensation is the widest."

Find the complete FLA chapter below, and the entire Just Jobs Network publication here.