A decade ago, global fashion companies set out to raise the pay of workers who make the clothes they sell to a living wage. It hasn’t happened.
In Bangladesh, the nearly 600,000 people making clothes for Swedish giant H&M—one of the biggest retailers in this space to start talking about paying living wages—earned an average of $119 a month in the first half of 2023, excluding overtime, the latest available data shows. That is well below the $194 living-wage figure for the suburbs of Dhaka, the capital, where clothing factories are clustered, according to the Global Living Wage Coalition, a research and advocacy group whose benchmarks are widely used in the industry.
At those income levels, workers say they have no savings. Often, they borrow from relatives to cover medical expenses or meet unforeseen emergencies. Some months, they even buy food on credit. Frustration over low wages boiled over in October when workers in Bangladesh set factories ablaze and smashed machines in protest.
Western fashion companies say they want wages to rise, but can’t wave a wand and make it happen. They generally don’t own the factories where their products are made and don’t determine pay for workers. They say they don’t want to go down the road of imposing specific wage levels on supplier factories.
Instead, they have tried other solutions. H&M, for instance, brought Swedish study circles to Bangladesh to train workers in negotiation, experimented with model factories and pushed for more transparent pay structures for workers.
Advocates for higher wages say it was clear from the start these methods wouldn’t move the needle. What will work, they say, is setting a higher wage level supplier factories must meet and a clear schedule for phasing in those higher wages.
“It’s entirely feasible to do this, it will just cost more money,” said Scott Nova, executive director of the Worker Rights Consortium, a labor-monitoring group based in Washington, D.C. For the companies, “this has never been about raising wages, this has always been about kicking the can down the road on an issue that carries a lot of reputational risk.”
H&M said it agrees wages are too low in many sourcing markets, but that setting wage levels for suppliers is a “shortsighted tactic that undermines the role of workers, unions, employers’ organizations and governments.” They, and others like Zara-owner Inditex, stress the importance of workers negotiating higher pay for themselves via collective-bargaining agreements, where labor unions hammer out higher wages with employers.
But in many of the places Western brands buy from, such as China, Vietnam and Bangladesh, independent unions are either banned or repressed. A review of Inditex disclosures shows just 3% of its supplier factories in Asia have collective-bargaining agreements.
A spokesperson for Inditex says it promotes collective bargaining and worker participation as the most efficient mechanism to facilitate living wages, and declined to comment on why only a small share of its factories in Asia have collective-bargaining agreements.
Part of the problem is low wages are core to fast fashion. It is no coincidence that Bangladesh, the world’s second-largest exporter of clothes, is also the place where workers who make clothes earn among the lowest wages of industrial workers anywhere. To sell shorts and shirts cheaply—and increasingly, compete with so-called ultrafast fashion brands like China-founded Shein, known for their rock-bottom prices—clothing giants pressure their suppliers to keep costs down.
Insisting on higher wages would mean paying more for the clothes and potentially putting themselves at a competitive disadvantage if other companies aren’t making similar moves.
Garment-worker pay has gone up in certain manufacturing powerhouses such as Vietnam and China where competition to recruit factory labor is fierce. But in some of the world’s largest and most populous clothing-export hubs like Indonesia, India and Bangladesh, it remains very low.
After dayslong protests last year, Bangladesh increased the monthly minimum wage to around $113—more than 55% higher than it was, but half of what workers were demanding. The U.S. government in November called on Bangladesh to revisit the minimum-wage decision.
German shoemaker Puma said in its 2022 annual report that its factories in Pakistan and Bangladesh—accounting for roughly an eighth of its total products—don’t pay a living wage. Even California-based Patagonia, known for its progressive ethos, says that of the 29 factories it bought clothing from, only 10 paid a living wage in 2022.
Puma said it is important to approach wage matters as a collective effort “as it is not a challenge a single brand can address alone.” A Patagonia official said it still has more work to do, but that the company remained committed to supporting its partners around the world toward living wages.
In 2013, H&M took a big leap and committed to push for a living wage for workers. “A larger share of the value should end up in the pockets of the workers, and the process is far too slow,” Helena Helmersson, H&M’s chief executive, said in 2013. She was H&M’s global head of sustainability at the time.
Among the steps it took was a pilot project to promote social dialogue, according to emails H&M sent to worker advocates that were seen by The Wall Street Journal. Bangladeshi workers were trained in what H&M called a mix of Swedish study circles and Japanese improvement circles to impart negotiation skills.
The Swedish labor movement has long used study circles to teach fellow workers about organizing. Armed with similar training, H&M said Bangladeshi workers could form democratically elected committees that would be free to form trade unions that could push up wages.
Today, more than 90% of the factories H&M sources from in Bangladesh have elected worker representatives. Worker committees don’t negotiate pay, however, and few of them have turned into unions. Only a fifth of H&M’s supplier factories in Bangladesh—a country where labor organizing is repressed—have trade unions.
An H&M spokesman acknowledged that there was a declining unionization trend in the countries the company sources from and said that was worrying “given the fact it has been outlined as one key factor in improving wages.”
In addition to its efforts to promote worker voices, H&M also began gathering and publishing data on worker wages, and pushed for workplace management systems at factories to improve pay fairness and transparency.
The overall effect on wages has been minimal. An academic paper published in the Journal of Accounting Research in 2023 found that factories subject to H&M’s interventions saw wage increases after three years that were 5% higher than at factories where these efforts weren’t made.
An H&M spokesman said “this data shows the impact of one brands’ efforts while there are other brands sharing factories with us, hence the importance of collaboration to achieve systematic and sustainable change.”
Greg Distelhorst, an associate professor at the University of Toronto who co-wrote the paper, said the size of the gain was “modest, not revolutionary.”
“I think it’s a good thing that H&M implemented these wage programs, and I would be pleased if more companies followed their lead,” he said in an email. “At the same time, I think we should have realistic expectations for what such programs can accomplish.”
Write to Jon Emont at firstname.lastname@example.org