New Look has been working with Impactt on a series of projects developing innovative solutions for sustainably improving working conditions in the supply chain. The projects demonstrate that improving working conditions can result in more productive and profitable factories, as well as happier and better-rewarded workers.

We are currently working with New Look, one of its key suppliers and a factory in Delhi to understand how it could pull off this win:win of better business and better jobs.

Our initial assessment found a situation which is typical in the Delhi export garment industry – casual and contract workers working long hours, with few rest days, low pay, and very high levels of absenteeism and worker turnover.  Workers were not particularly loyal to the factory and had no real incentive to work productively or stay for the long-term.  Unsurprisingly, the team also found low levels of productivity and efficiency.

Together, the improvement team identified the need to work side by side with the factory and support it to:

• Reduce its reliance on casual workers
• Offer permanent jobs to contract workers and provide access to social security and provident fund
• Improve communication between management and workers
• Offer incentives to workers to encourage more efficiency and productivity
• Improve management’s capacity to plan production and to work efficiently and productively

This work involves two workstreams:

• Workstream One: regularising employment terms
• Workstream Two: incentivising workers to improve productivity

We are pleased to publish a more detailed case study on this productivity incentives work on our website. We hope you find it inspiring and look forward to your comments.

In the afternoon, there were a series of practical, issue-based workshops covering topics such as communication strategies, migrant labour, industrial relations, purchasing practices and living wages. The workshops provided an opportunity for delegates to share best practice and discuss common challenges within each of these areas.

The final session of the day involved a panel discussion on the future of ethical trade. The panel consisted of Phil Wrigley (Executive Chairman of New Look), Frances O’Grady (Deputy General Secretary, TUC), Jane Nyambura (Regional Manager, Africa Now), Gareth Thomas MP (Minister of State for Trade and Development), Steve Homer (Bios Partners) and was chaired by James Harding, editor of The Times.

One of the themes explored by the panel was that ethical trade is not the ‘luxury’ of an economic boom, but indeed is an integral part of business strategy. Therefore, like everything else, ethical trade will be affected by the current financial crisis in some ways, but should certainly not lose its place on the economic agenda.

Some important questions were raised by the audience relating to whether the government was doing enough, whether countries investing in human rights improvements would be economically rewarded by the international community and how brands could be more transparent about the complex issues in their supply chains. Whilst questions like these evoked stimulating debate, the answers in some cases left something to be desired. It also made one wonder whether some workers should have indeed been sitting on the panel as well.

On the whole, the conference was the perfect opportunity to assess where we are and to reflect on the fact that a lot more has to be done, if we want to make a significant difference to the lives of millions of workers worldwide.

Impactt would like to sincerely congratulate the ETI on its journey so far and on hosting an excellent conference last week. However, the true success of the conference will of course be determined by how the attendees implement the learnings gained to drive more worker-centric change in their supply chains.

This year’s report focuses on retailers’ efforts on Living Wages. This is a crucial area for ethical trade and labour standards, particularly in the era of the credit crunch, rising oil prices and high rates of inflation. As the report states: “As economic storm clouds gather … those same storm clouds bring with them major food price inflation for garment workers, who deserve better from the retailers whose profits they sustain.” Retailers’ efforts on living wages are indicative of the sophistication of retailer’s broader approach to ethical trade.

The report is challenging and sets the bar high. LBL and their partners have been calling for urgent increases in wages. They note: “In 2008, companies seem to be hearing the argument, and have begun to experiment with projects that aim to increase wages, rather than getting hung up on definitions.”

LBL identify four pillars of an effective living wage project. These are:

• A collaborative multi-stakeholder approach
• The involvement of worker organising particularly through trade unions
• Examining commercial factors throughout the whole supply chain
• A clear route map for implementing living wages for all workers

The report notes that only the ETI’s Living Wage project fulfils all of these criteria, but progress has been slow, and the project is yet to get off the ground.  Other projects have focused on improving productivity to increase wages.  However, LBL thinks that these projects are not enough, for the following reasons:

• Productivity improvements put workers who work long hours in high pressure environments under even more pressure.
• There is no guarantee that the benefits of productivity improvements will be passed on to workers in the form of higher wages
• Increased productivity may well lead to fewer jobs, or to different jobs
• Productivity improvements set the bar too low and mean that retailers take the eye off the ball of living wages.

We at Impactt don’t entirely agree with Labour behind the Label about this, as we have commented before.

However, it is clear from the report that not enough is being done to make a positive difference to the wages in workers’ pockets.  In LBL’s view, the vast majority of high street retailers have not achieved much progress in working towards a living wage for workers in their supply chains.  LBL says ‘one cheer’ for Sainsbury’s,  Asda, Primark, Arcadia and Tesco, and ‘two cheers’ for M&S, Gap, Monsoon Accessorize, New Look and Next.  But no retailer gets the full complement of ‘three cheers’.

Reading through the report it is hard not to conclude that even those retailers that have been singled out for praise by LBL are finding it hard to deliver real pay increases in workers’ pockets.  The exception is New Look who, in the words of the report, is the furthest advanced in work to increase wages, with a project that appears to have genuinely improved wages and working conditions, involved worker organising, and encompassed a (limited) examination of purchasing practices, all along with a genuine plan to roll this learning out across its supply base.”  We say, three cheers for New Look.

The report notes in its introduction the vast differences between the wages of company directors and executives and those of the workers at the other end of the supply chain. It states that two years ago Sir Phillip Green claimed a £1.2 billion dividend, enough to double the salaries of Cambodia’s entire garment workforce for 8 years.

Let’s Clean up Fashion 2007 analyses how many companies have been targetted for exposes in the last year. It argues convincingly that these exposes are not just troublesome cases, but are the result of endemic cases in the industry. It concludes that whilst some companies are now admitting there is a problem with wages in the sector, only a few have done anything about it and of those very few are engaging with the problems systematically.

Gap, New Look and Next however, comes out rather well. The report stated “Gap’s strength has been in building positive relationships with trade unions and NGOs, dealing quickly and effectively with problems in factories when they emerge, and taking a lead on building cross-sector work.” Labour behind the Label states that New Look are “one of the companies most open to our concerns.” They are encouraged by New Look’s work attempting to come to grips with a living wage in Bangladesh and their approach to using local groups for monitoring and verification. In Labour behind the Label’s view “Next seems to have started to take up our challenge of moving beyond pilot projects to a more systematic approach, at least in terms of the living wage.” Well done Gap, New Look and Next.