The U.S.-based Fair Labor Association (FLA) recently recorded a significant increase in net wages, which increased from 29 percent to 57 percent over a three-year period.
This increase allows factory workers in China and Vietnam to make a living without working overtime.
As factories reduce additional overtime, factory workers in the supply chain of the three FLA affiliates can earn higher wages during regular working weeks.
FLA president and chief executive officer Sharon Waxman said, “A better quality of life for factory workers is within reach when buyers, suppliers, and workers collaborate to achieve a living wage in a regular workweek.”
According to the report, ‘Reaching Living Wage for Garment Workers’, presents practical approaches to achieving a living wage through better purchasing practices by buyers and better planning by factory management.
Case studies in the report identify the root causes of overtime as well as describe how buyers, suppliers and workers contribute to improving wages and reducing overtime.
Changes at the factory level were included to ensure worker participation so that factories could implement new systems.
At the same time the new approaches replace the old and inadequate peace-rate systems, allowing workers to earn higher wages and diversified bonuses, Which rewards quality and efficiency.
The change results in reduced overtime and increased wages during regular working weeks, exceeding the applicable Global Living Wage Coalition estimates.
For example, in China, New Era and its contract factory in Jiangsu began to talk more regularly about production capacity and upcoming orders. The factory adopted a higher base wage (replacing an hourly wage) and invested in new machinery to simplify production. Within two years, workers’ monthly net wages increased 57 per cent.
In Vietnam, the Maxport Limited production facility in Nam Dinh changed its production planning schedule to assume a shorter workweek, built in time to account for unanticipated delays, and set stricter purchasing guidelines for its customers.
Over a five-year period, the average increase in real wages was 39 per cent.
The report is part of the FLA Fair Compensation Strategy, which outlines a path toward living wages for workers in global supply chains.