"Brands can have a bigger impact on working conditions by collaborating on social issues"

An interview with Stephanie Schrage from the University of Hamburg about her research on sustainability in the textile industry.

photo-1524292332709-b33366a7f165-1

What is your background and how did you come to focus your research on the textile and footwear industry?

I got my bachelor’s degree in media management and worked in advertising for 5 years for big, global clients. After that time I wanted to do something different and moved to Geneva to work with a disarmament NGO. I got to work for a good cause, but it was quite different from before as we didn't have a huge budget and were fundraising all the time. That was when I decided that, as corporations have all the power and money in the world, they also have a responsibility to solve the problems of the world. So, I got a master’s degree in international business and sustainability and started my PhD in business ethics at the University of Hamburg. While many industries face social and environmental issues, I focused my research on the textile and footwear industries as they are among the industries that have gained the most attention when it comes to sustainability.

"There are many interesting developments within the textile industry, where brands collaborate and find solutions around self-regulation in order to close governance gaps."

Campaigns by NGOs like the Clean Clothes Campaign and Greenpeace have placed a lot of pressure on brands, pushing them to find solutions for a more sustainable business conduct. The textile industry has globalized without a paralleled globalization of the governing institutions. We have global supply chains, but no democratically elected world government regulating them. That way, especially in producing developing countries, governance gaps have emerged. For example, in most producing countries in Asia and Africa, legal minimum wages are below international poverty lines.

There are many interesting developments within the textile industry, where brands collaborate and find solutions around self-regulation in order to close such governance gaps. They come up with supplier codes of conducts, collaborate with NGOs and trade unions, and even with the competitors as part of multi-stakeholder initiatives like the German Textile Alliance, the Bangladesh Accord on Fire and Building Safety, the ACT initiative or the Fair Wear Foundation. This is what makes the textile and footwear industry so interesting. Other industries can learn from these developments.

photo-1476683874822-744764a2438f

You visited shoe factories in China as part of your research project this year. What was your motivation behind the field trip?

I visited Chinese shoe factories in order to estimate living wages for Chinese workers, and understand the status quo. China produces 95% of shoes worldwide, most of them in the coastal province of Fujian. This is where I went to visit four factories. I interviewed factory managers and workers, and learned about their costs of living and how much they get paid. I had done a lot of theoretical work on the topic of the living wage. A living wage is the wage right above the poverty line that lets workers and their families lead a good life and have security for the future. Recently, many brands of the textile and footwear industry have committed to paying a living wage. For instance, H&M, Primark, and Tchibo. I wanted to see what the wage conditions are really like on the ground, do some calculations, and give recommendations to brands that want to increase the wages in their supply chains.

What findings have fascinated or surprised you the most so far?

I found China to be a curious case. Legal minimum wages are still very low, even below the poverty line. However, given the recent rapid development of the Chinese economy, wages have been increasing by 5-10% every year. By now, workers get paid about three to four times the legal minimum wage. At the end of the month, they actually do get paid a living wage. Yet, to earn this living wage, they work 10 to 12 hours every day, 7 days a week. They only take days off once a year for Chinese New Year. They migrate to different provinces on the other side of the country to find work that pays a higher wage. They leave their children with the grandparents in their home provinces and only see them very rarely.

Most of Chinese footwear workers get paid a by piece rate, meaning their pay depends on the number of pairs of shoes they produce. We can see that they voluntarily work as long and as much as they will have to, in order to earn a living wage. As soon as their wages are beyond this living wage threshold, workers start taking more free time. This means that wages per piece need to be significantly increased in order to decrease workers’ overtime.

What influence to brands have over the wages of factory workers?

The problem is that, in general, brands do not own the factories that manufacture their products. That means they do not have any legal responsibility or control over the wages and working conditions in these factories. Often they are not the only brand that produces in a factory, so they cannot dictate standards. To improve wages they need to collaborate with other brands, and many have started doing that. One very interesting initiative is the ACT initiative. ACT stands for Action, Collaboration, Transformation. Members include H&M, C&A, Inditex (Zara etc.), Tchibo, Esprit, Bestseller (Vero Moda, Jack and Jones etc.), and Primark. As part of ACT, brands try to improve their own buying processes to better align them with their factories’ capacities. They offer training, and jointly bargain with producing country governments, like the Cambodian government, to get them to increase the legal minimum wage to a living wage level. As part of such initiatives, brands actually do have a good chance to improve workers’ wages – even if they do not legally own the factories.

You have also been looking at the capability approach, could you explain what this means?

The capability approach was developed by the Indian economist Amartya Sen, who got the Nobel Prize in economics for his work. The capability approach is a way of defining poverty in a non-numeric way, based on people’s capabilities. An example: a person, who is 50 years old, has as much money as a 20-year-old student. The 50-year-old considers him- or herself poor, while the student does not. The capability approach suggests that poverty is a highly subjective construct and it is very hard to determine how much money an individual needs in order to not consider themselves poor. While the 50-year-old doesn’t foresee any improvement in their financial situation in the next years, the student knows that their financial troubles are only short-term and that through their studies they will gain the capabilities to make more money in the future. That way, the capability approach suggests that only the individuals themselves can determine their own poverty thresholds.

In my research on the living wage, I consider the ideas of the capability approach. Some brands in the textile industry have been arguing that they cannot implement living wages for workers in their supply chains, because there is still too much debate over the living wage calculation formula and nobody knows how high a living wage actually has to be. The findings of the capability approach can help here. To solve this issue, we will have to find mechanisms that let workers define and negotiate their own living wage thresholds. The ACT initiative in collaboration with the global union IndustriALL is starting to take steps in that direction.

Stephanie Schrage's main research interests are living wages, the textile industry and the capability approach.