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.

• Wages for sportswear workers are still well below a local living wage.
• In some cases, workers are not even receiving the legal minimum wage, despite working 12-13 hours a day.

This very much echoes the results of Impactt’s report Progress not Perfection which found that workers were not receiving the legal minimum wage at 60% of the factories we visited.

The report critiques the activities of sportswear brands like Nike and adidas on introducing “lean” manufacturing systems as a way of improving wages and reducing working hours.  The problem is that managers are tempted to hang on to increased profits from efficiency gains, rather than handing them over to workers in the form of higher pay.  Purchasers are also keen to get a slice of the cake asking for better prices from more efficient factories.

We at Impactt agree that this is a big problem.  One of our productivity experts in China comments:

“The report tells the truth about lean manufacture.  Even if a factory makes massive improvements in efficiency, it does not guarantee that the managers will share the benefits with workers. Some well-managed factories only pay workers the legal minimum wages, not what we consider to be living wages.  We have some concerns about the outcomes of productivity improvement.  Sometimes it seems we are helping factories get more money through increasing their productivity, but we do not have the power to request managers share the benefits with workers.”  

In the battle to increase wages, productivity improvements are a necessary tool, but they are not alone sufficient to make a difference for workers.  Where workers are able to bargain collectively, workers themselves can speak up for their share of the benefits.  But in the vast majority of the world’s workplaces, workers do not have the power to do this.  Instead, we are forced to rely on the goodwill of management.  But where management is genuinely committed to providing a better deal for workers, productivity measures (together with training better managers and supervisors and the development of routes for workers to express their views) are vital in supporting better wages and reducing working hours.