10 Reasons Why Factories Don't Pay A Living Wage (And Why They Suck)

Inspired by Ecouterre's recent article '10 Biggest Excuses For Not Paying A Living Wage (And Why They Suck)' I've decided to try and explain what I have seen and heard since I arrived here in India. There is an understanding that it is the multinational companies who pay the garment workers, when in fact it is relatively small manufacturers employing between 400 and 1,000 workers at each plant. To understand the wage system then, we can't forget the middlemen. These owners of the manufacturing units are the people squeezed between powerful corporations and penniless workers and rising raw material costs with an expectation to be making big time money.

Here are my first four reasons why factories don't pay a living wage (and why they suck)...

The entrance to a garment factory fully equipped with security and 'No Child Labour' signs

1. When a buyer places an order, she does so on the basis of the price

The fashion industry has built a system in which buyers can demand free product development services from the manufacturer in return for the prospect of an order. Therefore the buyer will ask several manufacturers to develop the same pattern for the same style, in the end she chooses only one. In theory it enables the buyer to choose the manufacturer with the best eye for detail and quality of product. Practically it only comes down to price. If the products are pretty basic in design it's all about being the manufacturer in the run who dares to go 5 cents lower than the rest. For more complex products the buyer will choose the best design and use the offer from the other manufacturer to exert pressure on the manufacturer to go cheaper. If the manufacturer continuously puts his prices too high, he will not receive these offers in the future.

It may seem ridiculous that a few pennies make such a big difference for a company. It certainly doesn't for the customer to whom adding 40p to the price is not a big deal; £4.99 or £5.39. But considering an order for a million t-shirts this increase is suddenly £400,000. Clothing retailers are holding on to their margins with sharpened claws these days all the while customers are becoming more and more price sensitive and increasingly waits for the sale. Buying clothes at discount only gives one message to the retailer: "I want my products cheaper". It doesn't exactly say: "I want your margins to be lower".

2. The workers are lucky enough to have a job

The most common excuse for not paying a living wage is that workers are already being paid the lawful minimum wage, or that they are lucky enough to be off the streets. And it's true. Garment workers are better off than the poorest part of the Asian population, and the producers of garments for exports to the West are even better off than the majority of garment workers altogether.

But that doesn't mean the situation fine. If development goes in the direction that even the outsourced workforce are paid a better price, then maybe fabric suppliers can start demanding decent wages and so the chain will expand. In the end the drivers and servants will be able to make enough money for their families. The vegetable sellers and all the merchants are inclined to gain better sales too. The prospect of the garment sector to influence the entire economic development of the region is massive. Every little payment of a decent wage is a promise of a future with less people in poverty. And that's why they are not just lucky enough to have a job; workers can become mediators of positive change.

 Just one of the many rooms in a very unorganised factory

3. If workers are paid too much they will become lazy

This is the most ridiculous argument that I have heard. Fortunately I haven't directly heard it from a factory owner, but the argument circulates as an example of bad leadership at my college. Some of my lecturers who studied ways to improve the health of embroidery workers found that giving them a simple angular table would enable them to save their backs. In their study of quality control workers they found that a bar stool would be significantly better for their legs and backs. However, the managers they approached were against the changes because the workers would become lazy. To date embroidery workers are still hunched over their work and quality control assistants are trying to rest their legs by standing on one leg at a time. This exemplifies what middle managers think of their workers; lazy and inefficient. It doesn't exemplify reality.

4. The wages are the only price factors that a factory owner can regulate

In the endless race to the bottom of prices (Reason 1) the buyers have decision power over so much that only the wages are left for the manufacturer to decide. When visiting a large manufacturer recently we asked what the most frustrating part of dealing with buyers was, and the answer was this: buyers sometime have the most ridiculous expectations of quality and embellishment levels combined with price offers that hardly pay for the lining. It's not possible for the manufacturer to cut low on the quality of fabrics as they have to be approved in several procedures - the trims and accessories too.

The only levitation left is investment of new machinery and wages. There are limits to both, but it's easy to see that a broken sewing machine works less than even a hungry worker.

Stay tuned on Twitter for the next 6 reasons of why factories don't pay a living wage...