Opinion

How the Fair Labor Association Promotes a Living Wage For Workers

Michael Posner

By Michael Posner

By Michael Posner

In today’s globalized economy, large companies increasingly outsource production to factories they neither own nor operate. Outsourcing can dramatically reduce the costs of production, while also benefiting low-wage workers, many of whom migrate from farms to cities in search of a predictable income and better quality of life. Over the last 40 years, this model has helped lift billions of people out of extreme poverty, especially in East and South Asia.

But too many workers doing outsourced manufacturing do not earn a living wage and struggle to make ends meet. In its “What She Makes Campaign,”  Oxfam Canada found that the minimum wage for garment workers in Bangladesh, Vietnam, China, and Cambodia is between 46 and 74 percent of what workers need in order to achieve a decent standard of living for themselves and their families. In many developing countries, diminished sales and outright order cancellations caused by the Covid-19 pandemic resulted in wages declining after years of steady progress. In Bangladesh, for example, where the average wage of garment workers increased significantly during the 2010s, pay fell by 289 Bangladesh taka (USD $3.4), or about 3% in 2020. In Vietnam, the situation is even worse, with average wages down 388,896 Vietnamese dong (USD$16.85), or about 7% in 2020.

Especially in the wake of the pandemic, all global brands and retailers need to do more to address gross deficiencies in wages and other forms of compensation for the workers in their supply chains who are crucial to their financial success. This requires major corporations to take a hard look at what factory workers are earning and find ways to increase their pay. I chair the board of the Fair Labor Association, an organization that has brought together more than 50 apparel and athletic footwear companies like adidas, Patagonia, Hanes, Nike, and Uniqlo with human rights and labor groups and universities, to promote workers’ rights and improve working conditions in factories.

Read the full Forbes article.
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Michael Posner is a Professor of Business and Society and Director of the NYU Stern Center for Business and Human Rights.