The Industry We Want: What The Data Tells Us About The State Of The Garment Industry​

Panel Discussion

The panel discussion was moderated by Noor Naqschbandi, Director of The Sustainable Consumption Program at The German Association for International Cooperation (GIZ). The panelists were Deddy Mahadika, Engagement Manager of Southeast Asia and Oceania at Science Based Targets Initiative (SBTI), Evelyn Astor, Economic and Social Policy Advisor at International Trade Union Confederation (ITUC) and Board Member at Ethical Trading Initiative(ETI), and Anne Patricia Sutanto, VPD of Pan Brother.

Causes of Environmental, Social, and Commercial Issues in The Garment Industry

Anne emphasized the role of purchasing practices in making or breaking progress in the sector from her perspective as a representative of a production company. She pointed out a need for buyers to familiarize themselves with processes across the supply chain and to seek to understand the needs and challenges of each of its layers in tier 1,2, and 3. She wanted to see more conversations built around finding solutions to avoid the impact of disruptions, such as the pandemic, on the lower end of the industry.

Evelyn recognised her findings on living wages to be reflected in the TIWW metric. She identified five root causes of the living wage crisis across production countries:

1. The role of regulatory environment: many countries don’t have a predetermined standard for minimum living wage, and many that do, have it unrealistically low. Romania and Bulgaria’s living wage is a quarter of what workers need to provide for their families.
2. The Issue of Non-compliance: according to the International Labour Organization (ILO) a third of the garment sector in Pakistan, Thailand and Indonesia, and a half in India and The Philippines don’t comply with their national legal minimum wage standard.
3. Government Exemptions of Minimum Wage: some countries such as Guatemala allow suppliers to go below minimum wage by issuing exemptions.
4. Oppression of Freedom of Association and Collective Bargaining: violent attacks on these rights are increasing in many countries such as Myanmar. Access to these tools is crucial for workers to negotiate decent wages.
5. Purchasing Practices: buyers drive low wages by exploiting competition amongst suppliers and forcing them to take orders just at or even below cost of production.

Deddy had a more hopeful perspective as he reflected on the growth that conversations around climate change have seen in the past few years, while recognizing the major gaps to be filled in terms of companies taking action towards reducing their emissions. He pointed out the importance of quality data but emphasized that companies need to take immediate action and not wait for perfect data. He highlighted the dangers of climate change to the industry as it impacts production countries and the necessity for making a business case for environmental responsibility. Deddy believes that voluntary initiatives offer great support but also that mandatory regulations are needed.

Changes Needed to Achieve Progress

Anne, as a member of the National Apparel Federation in Indonesia, underlined the importance of transparent, solution-oriented, and collaborative communication. She added that open and positive communication has the capacity to improve productivity on all levels in the industry and that holistic resilience is good for everyone involved.

Evelyn focused on the need for trade agreements that contain specific expectations and criteria for social responsibility, unions, and wages. She noted the need to separate wages as itemized costs to make sure decent living is being paid, and that changes to orders don’t end up making the wages an adjustment variable. She brought forward the work of the trade agreement ACT that enables its members of major brands and trade unions to work together, and provides the framework for fair purchasing practices.

Deddy encouraged engagement with voices from production companies. He pointed out that although his work at SBTi relies heavily on the decarbonisation pathway from the Paris Agreement, a level of fairness is needed when addressing reduction of emissions in production countries. The global community need to consider regional differences in level of engagement, resources, and infrastructure. He urged stakeholders to develop contacts among local legislators, make sure they get the science right, and develop pathways with local experts.

The Role of Multi-Stakeholder Initiatives

Anne believes that measuring progress, informed by data and transparency, is essential for production companies to be able to take care of their people, and work in a clean and fair environment. She finished by stating that everyone bears responsibility in the pursuit of solutions.

Evelyn pressed that setting and enforcing evidence-based living wage is a regulatory task but that MSIs are complementary to regulations as they drive wages beyond what is currently legally required, and signal to policy makers that it is possible to raise the legal minimum. She also sees MSIs as a useful tool to potentially resolve industry disputes in an amicable way.

Deddy said that MSIs drive ambition for governments by pushing the agenda. He reiterated the urgency for companies to take action today without waiting for perfect data, by setting targets and tracking and disclosing progress. Measuring emissions will support building better data which will feed back into companies’ progress.

The webinar was closed by a contribution from Matthias Altmann, Sector Lead at OECD Centre for Responsible Business Conduct, who expressed his support for TIWW and the industry dashboard. He hoped that the data will encourage a move to mandatory due diligence. Matthias noted that the living wage issue feeds into other human rights transgressions such poor health and safety and child and forced labour, and that we need to take steps to prevent such harm. He expressed that OECD believes that companies’ slow progress and struggle to enable living wage is mainly because they don’t know how. OECD will be launching a handbook to address this issue later this year which will provide a guide for better purchasing practices and buyer-supplier collaborations.

There were more sessions and webinars to come under the OECD Forum on Due Diligence in the Garment and Footwear Sector in February 2023, recordings are available on their website.