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H&M: Bangladesh must raise garment worker pay

5 Sep 2012, 10:29

Published: 05 Sep 2012 10:29 GMT+02:00

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During a visit to Dhaka, H&M chief executive Karl-Johan Persson inspected a factory where workers make clothes for the company on wages starting at $37 a month -- a figure that often triggers violent strikes.

"We want the workers to be treated in a good way. Being a responsible company, we see low wages in the industry is a major point that is close to our heart and a major concern," Persson told reporters on Tuesday evening.

"We demand that the Bangladeshi government increase minimum wages and consider yearly wage reviews for the workers," he said after visiting a plant and meeting Prime Minister Sheikh Hasina.

Bangladesh garment exports were worth $19 billion last year, or 80 percent of total national shipments, and the sector is the mainstay of the country's economy, employing 40 percent of its industrial workforce.

The export business relies on low labour costs but is plagued by frequent unrest over demands for better wages, which are set by the government after consultations with factory owners and trade unions.

In June, more than 300 factories that make clothes for brands including H&M, Wal-Mart and Gap were shut down for over a week as tens of thousands of workers rioted over low wages, complaining of rising rent and food costs.

At least 100 people were injured in the clashes and dozens of plants were damaged.

Factory owners rejected the demands, saying the minimum wage had risen 80 percent in two years and that further increases would threaten their survival.

H&M bought apparel worth $1.5 billion from Dhaka last year, making the company the biggest European buyer of Bangladeshi goods, according to a local exporters group.

Asked whether H&M could insist on higher pay, Persson said that the company wanted "a long-term relationship with the suppliers... but we want the workers to get fair wages as well".

According to the Clean Clothes Campaign, a Brussels-based textile rights group, a Bangladeshi worker needs about $130 to cover monthly living expenses due to rapid inflation.

Story continues below…

Minimum wages were first introduced in Bangladesh in 1994. Since then they were reviewed twice in 2006 and 2010 after deadly protests.

Many workers live in communal dormitories and save up money to take back to their families and home villages.

AFP/The Local

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Your comments about this article

10:45 September 5, 2012 by Abe L
Why would he say something ignorant like this. H&M is only popular because it's cheap and when you start increasing the costs for the supply chain such as by raising manufacturing staff's pay then your product becomes more expensive and demand will be lower. That will negatively affect your business, including everyone that works and depends on it in your home country.
11:26 September 5, 2012 by witsltd
@Abe L

That was not ignorant at all.

You seem to consider the supply chain to be very short, considering a direct link between H&M and the workers. There are middle men and government of Bangladesh benefitting from this deal.

By resisting to raise the minimum wage, Bangladesh government is protecting their interests and others close to them.

I applaud H&Ms demand and hopefully the wages are raised and H&M will be able to retain their margins by negotiating with intermediaries and Bangladesh government.
14:56 September 5, 2012 by CJ from Sunshine Desserts
Bearing in mind the nature of the garment industry I doubt whether anyone, anywhere who works in front of a sewing machine gets paid a decent wage, irrespective if its in Saville Row or India, Indonesia, Hong Kong, Italy. The tragedy of modern garments is that they are made to be thrown away after 6 months, even designer label stuff looks worn out after 6 washes.....mind you my kilt has lasted 21 years...of course`I´ve never washed it ! :-)
15:28 September 5, 2012 by ri.rimon
@ Abe L

do you have any idea about supply chain or manufacturing garments in bangladesh? as of the base line salary is 37USD per month, how much do you pay to buy 1 shirt from H&M? How much a worker gets actually from that money? perhaps some cents. As a human, as a responsible business person he urged those should get paid for the manufacturing, not the government or so called buyer agency.

therefore, products will not be more expensive if their salary would be increased, rather poor them can lead at least a decent life.
22:08 September 5, 2012 by rouzi
'In June, more than 300 factories that make clothes for brands including H&M, Wal-Mart and Gap were shut down for over a week as tens of thousands of workers rioted over low wages, complaining of rising rent and food costs.'

Clearly, the reason is that H&M afraid worker may stop working totally and therefore it will damage H&M profit. H&M can somehow compensate for increased price of production by little increase on every piece of cloth it sells. Companies always try to prevent profit margin to drop. Indeed in the market the price of H&M garments remain still cheaper than competitors as wages in all factories will increase not only H&M. Perhaps the situation in Bangladesh is worse than that is reflecting here. Otherwise, the low wages is not a new phenomenon and in many garments producer countries the situation is similar. Governments always keep silent in these cases because as the profit margin of companies increase, the payable tax also increases. The question is why H&M did not demand it previously and does not demand it for other countries. I am sure if you ask them they say we did not know about that.
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