The COST of Ethic in Apparel - A non-reason
What of all that are buyers aware of, and how do they use it?
what price a living wage?
This is the second of the two questions for which the most insightful research with fairly hard data has been published by Prof. Doug Miller from Northumbria University in Newcastle. The two most relevant papers in this context are: ‘What price a living wage‘ and ‘Towards Sustainable Labour Costing in the Global Apparel Industry‘
The situation of the buyer end of the value chain:
Historically, labour cost in garment manufacture has been determined by multiplying- the estimated amount of time taken to complete a garment
- by either an individual, or a group of workers by the actual labour cost which is either the minimum wage or the prevailing wage (minimum wage plus additional wage elements existing at the factory in question) expressed as a minute value.
In brief, buyer and supplier only talk about ‘cost’ as a lumb sum, but never about its different components, and therefore not ever of the cost of the manual labour involved in making a garment. In this equation then, normally the fabric takes up the biggest relevance – after all the buyer can influence its quality directly – and labour falls under the table because in essence it is considered ‘factory overheads’.
What of all that are buyers aware of, and how do they use it?
what price a living wage?
The situation of the buyer end of the value chain:
Historically, labour cost in garment manufacture has been determined by multiplying- the estimated amount of time taken to complete a garment
- by either an individual, or a group of workers by the actual labour cost which is either the minimum wage or the prevailing wage (minimum wage plus additional wage elements existing at the factory in question) expressed as a minute value.
In brief, buyer and supplier only talk about ‘cost’ as a lumb sum, but never about its different components, and therefore not ever of the cost of the manual labour involved in making a garment. In this equation then, normally the fabric takes up the biggest relevance – after all the buyer can influence its quality directly – and labour falls under the table because in essence it is considered ‘factory overheads’.
As we have seen in the previous post, knowing though about the break down, and possibly more importantly about how efficient factories operates is where the opportunities for buyers lie.
For 2 reasons a) to understand where they can leverage their current network of suppliers, and b) to integrate living wages into how their suppliers’ workers are paid, without breaking any budget constraints pre-given by the brands.
It’s possible, but it certainly is hard work.
For 2 reasons a) to understand where they can leverage their current network of suppliers, and b) to integrate living wages into how their suppliers’ workers are paid, without breaking any budget constraints pre-given by the brands.
It’s possible, but it certainly is hard work.
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Source:
http://shirahime.ch/WhitePrincess/wp-content/uploads/2013/06/Breakdown-of-FOB-for-a-fairtrade-cotton-tshirt.jpg
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