Asian Labour Builds a Global Movement for Living Wage: The Asia Floor wage

Anannya Bhattacharjee, 

International Coordinator, AFWA 

Garment workers in Asia, the majority of whom are women, currently earn around half of what they require to meet their own and their families’ basic needs, such as for food, water, education and health care. Living wage has been a key demand among labour activists in the garment industry for a long time. The demand has been made to the brands over a long period with very little progress beyond rhetorical support. Three main arguments have been put forward by reluctant brands. First, that there is no common definition of a living wage and no method of calculation; therefore, it is not possible to pay something that is not defined. Second, that any attempt to demand a living wage at a national level results in relocation across the border; and therefore is punitive to national economies. Third, that demand for a living wage is often driven by Northern activists without a collective demand from the global South.

 

The demand for an Asia Floor Wage (AFW) first began developing in 2006 through a collective consensus-building process among Asian labour organizations.  The wage levels of the garment workers in the major garment-producing Asian countries were not too dispersed all were nearer to the poverty level wage. This understanding provided the basis for establishing the idea of a regional labour bloc that would act as the “bargaining unit” in the global garment industrial framework.

The Asia Floor Wage Alliance has now developed a regional bargaining bloc. This is in response to capital that uses a regional strategy as opposed to a single country strategy since it is more efficient from a management perspective. A regional strategy for labour is necessary in an environment where capital strategizes regionally but keeps countries within that region divided through threats and promises. The AFW regional strategy overcomes the competitive divisions among Asian countries by a formulation that delivers living wage without compromising the competitive ranking of the countries.

Global sourcing companies pay approximately the same prices to their supplier factories in Asia: around 25 per cent of the retail price. These similarities allowed for a common floor wage formula to be developed and applied across Asian countries. Because garment workers’ wages make up a very small proportion of the final retail price for clothes – around 1 to 2 per cent – substantial wage rises could be achieved without increasing retail prices. The proposed demand is an AFW for Asian garment workers in conjunction with fair pricing that would make AFW possible. The AFW is formulated based on the paying capacity of the global industry whereas national wage definitions arise from an analysis of prevailing wages within the country.

The AFW process has developed into a global industrial collective bargaining framework for a wage increase for production workers within the garment global supply chain. In this regard, the AFW demand and process is historic. The AFW Alliance comprises trade unions, labour and human rights organizations, development NGOs, women’s rights groups and academics in over 15 countries across Asia, €ope and North America. Agreed after extensive discussion within the Asian labour movement, the AFW formula accounts for differing economic and political environments in each participating country, and will support garment workers’ demands for a living wage.

The AFW bargaining process targets the brands in order to ensure decent wages for workers in the industry. Brands and retailers’ financial power is built through the garment global supply chain and their sharing a negligible fraction of their profit could dramatically lift millions of workers and families out of poverty.

Brands force supplier companies to operate below production costs, causing wages to be adversely affected. In the global garment industry, global buyers (or brands and retailers) exercise maximum influence over the way that production is organized. They set prices and determine how production takes place. These practices immediately impact the capacity for suppliers to pay a living wage. Central to the demands of the AFW is, therefore, the need for a concerted effort by brands and retailers to address the issue of pricing, as an important first step towards the implementation of a living wage in the garment industry.

The AFW affirms the principle that the only way to enforcement is through unions. AFW implementation requires the existence of a union, and is not a substitution for unionization. In so far as the AFW is a collective bargaining strategy, the right to “effective recognition of collective bargaining” is essential, and efforts must be made to secure the necessary legal and institutional framework for this.

Country	Asia Floor Wage in local currency
Cambodia	1.630.045 KHR
India	18.727 INR
Indonesia	4.684.570 IDR
Sri Lanka	48.608 LKR
Bangladesh	29.442 BDT
China	3.847,00 CNY
Malaysia	1.643 MYR
Nepal	32.310 NPR
Pakistan	31.197 PKR
Philippines	20.247 PHP
Thailand	13.359 THB
Vietnam	8.949.153 VND

The AFW Alliance arrived at the AFW formula through data from need-based surveys in India, China, Bangladesh, Sri Lanka, and Indonesia. The AFW is based on widely accepted norms that are institutionalized in existing policies, laws, and practices in Asian countries and on Asian governmental figures and international research. The Asia Floor Wage is composed of two categories: food and non-food. Both categories are estimated without subtle internal differentiations, the goal being to provide a robust regional formula which can be further tailored by trade unions in different countries, based on their needs and context. The food component of the AFW is expressed through calories rather than food items to provide a common basis. The AFW Alliance has decided that the floor wage should not result in lowering standards in any country and therefore adopted the Indonesian norm of 3,000 calories as its standard.

Garment workers from Indonesia, India, Bangladesh and elsewhere spend a great deal – frequently around half – of their income just on food items. The AFW study of various countries, for working-class population, shows an average of 50 per cent of the income being spent on food. Therefore non-food costs are taken to be the other half of the income, leaving the details of what comprises non-food to be left to the trade unions in local contexts. The 1:1 ratio of food costs to non- food costs was thus calculated based on the ratio that currently exists for the working class of different garment-producing countries in Asia.

Living wage definitions normally include the notion that wages should support more people than just the individual worker. The AFW unions decided to base the AFW on a family. The AFW Alliance studied the family sizes in key Asian countries and came up with an approximate average figure. In order to account for childcare costs, the AFW makes it a single- income family. The AFW defines the formula to be based on three adult consumption units. As a child consumes less than an adult, a child is calculated as half of one consumption unit.

The AFW is a basic wage figure prior to benefits such as health care, pension and so on. The AFW defines the regular work week as a maximum of 48 hours prior to overtime. The currency through which the AFW is expressed is the imaginary currency of the World Bank, Purchasing Power Parity (PPP).  At the time of public launch in 2009, AFW was calculated to be 475 PPP$. Naturally, this benchmark figure needs to be regularly adjusted to account for the price rises in the cost of living. The AFW was revised to be 540 PPP$ for 2011. In 2015, it became 1021 PPP$.

Asian labour organizations in the AFW Alliance believe that the AFW must be implemented by the brands, as they possess the political and economic power in the global supply chain. They are the primary employers in the global subcontracting chain. The brands are responsible for generating the revenue through profit-sharing since they benefit immensely through wage arbitrage and through their position as primary employers of the global subcontracting chain.

Since the Asia Floor Wage was made public in 2009, it has gained recognition as a credible benchmark for living wage in the industry, in the garment labour movement, and in scholarly discussions.  The AFW has become a factor in national wage struggles and serves as a measure of the gap between living wage and national minimum wage.

The Alliance has established a core Asia-based labour solidarity across garment producing countries that support the struggle for a living wage and gives support to national struggles for higher minimum wage. The Alliance also extends to consumer countries in €ope and North America. The Alliance is a North-South coalition led by unions in the South, in this case Asia. The Alliance consists of unions and workers’ organisations as well as research, campaign and labour-support organisations. The diversity of the Alliance has been critical. In an industry that is not densely unionised, that is global, and that does not yet lend itself to translational regulation, the alliance members have played diverse roles and helped to build the campaign from different perspectives. The Alliance is a Southern initiative that has tried to address the key issues that were identified as impediments to unionisation. It is a combination of a transnational union network and a social alliance network for labour rights. These two axes reflect the broad alliance that is required to address the components of the global supply chain.

AFWA, in collaboration with the Permanent People’s Tribunal, organised a series of National People's Tribunals on Living Wage for Garment Workers in Asian Garment Industry (NPTs) between 2011 and 2015 in Sri Lanka, Cambodia, Indonesia, and India.

As part of the AFWA process, a bargaining group of Asian trade unions has emerged called the Asia Brand Bargaining Group (ABBG). ABBG consists of unions from India, Bangladesh, Sri Lanka, Indonesia and Cambodia and its goal is strategic unionization of suppliers of targeted brands, bargaining with brands as a regional bloc of unions for progressive realization of a living wage within a negotiated time frame, freedom of association, end to contract labour, and end to gender discrimination.