Living Wages | Anker Methodology

Getting paid a living wage should be a fundamental right and now, it’s time to start fighting for one! 

 

Most people, brands and organizations have a tough time correctly defining a living wage or more importantly, how to calculate one. While the term itself would seem pretty easy to define, being able to root it in concrete principles with real world costs is more difficult. 

Big Business

When discussing living wages, I think a great place to start is with the large brands/corporations that actually run most of the fashion supply chain. For at least the last 5 years, these brands/corporations have been switching to a model of representation and collective bargaining. The process is pretty straightforward:

 

Obtain worker representatives for all factories.

These representatives are made up of actual blue collar workers, not management. They elected by their peers and are the spokespeople for their factory when it comes to wage/benefit negotiations with brands. These representatives are given the right/ability to seek out trade unions or other organizations to help negotiate on their behalf. 

 

Broadly speaking, it sounds great. The big brands have even teamed and formed a foundation called ACT. ACT is simply a platform for the process and has signed up members to join the cause. Full transparency, Soluna Collective has never been a member of ACT but, we do believe in the basic principles outlined. Give the workers a say and living wages get paid. Although, we do have a few problems with it. 

 

  1. The brands made it. Because of this, it feels like an end game strategy rather than a progression. I feel that this hurts innovation in the space and limits new ideas. The big brands are seeking reliability not fluctuation.

  2. One of the founding members, H&M, writes “This means merchandisers can and will negotiate the price of a garment with our suppliers around all component costs except one: labour.” Which means, H&M is still able to bargain with factories over material costs like cotton, buttons, thread, etc... For us, this seems a little nearsighted. Sure you solved the problem with the top-tier supplier (eg. sewing factory) but what about the cotton makers? Will the same ACT principles apply to them? If so, then price negotiations should be pretty minimal. 

  3. A living wage is still not defined. Theoretically, labor unions and workers should be able to calculate their living wage but in reality, as you will see, it's not easy.

  4. What happens if an ACT member doesn’t like the price adjustments by the factory? Do they eventually move factories for ones that are cheaper?


 

The standards

Let’s also quickly analyze the major sustainable fashion certifications as they should be the industry leaders. This will give us a good barometer on the sustainable fashion industry at large. 

 

For the Global Organic Textiles Standard (GOTS), they discuss living wages as a “Living Wage Gap”. They define it as “Wages and benefits paid for a standard working week meet, at a minimum, national legal standards or industry benchmark standards, whichever is higher. In any event wages should always be enough to meet basic needs and to provide some discretionary income.” Broadly speaking the definition feels right. The problem is: What does basic needs even mean and how do you calculate one? Furthermore, GOTS leaves the interpretation to “Certified Entities” instead of a set guidelines to follow. By being vague and not having a defined set of guidelines can lead to inaccuracies across suppliers and countries. 

 

The World Fair Trade Organization (WFTO) goes a bit further by defining a living wage as “Elements of a decent standard of living include food, water, housing, education, health care, transport, clothing, and other essential needs, including provision for unexpected events.” As you can see, the WFTO is now starting to create an outline of what a living wage entails. Although, we still don’t know how to calculate one. For example, how much food does someone need to live and where do you draw that data from?

 

The Ethical Trade Initiative (ETI) is probably the leader among the sustainable fashion certifications but still leaves us with unanswered questions. My problem with them arises around the broad definition of their “Base Code” when comparing it to the further reading of their “guidance”. The Base Code describes living wages almost identically to GOTS. However, the guidance actually starts to generate an outline on how to calculate “basic needs” and even talks about the Anker Methodology (shown later). The problem for me is with the terminology “at a minimum, national legal standards or industry benchmark standards”. Why include this? We all know that most national legal standards are not living wages. It just seems a little backward looking.  

 

I want to stress, this is not to say that the sustainable fashion certifications are wrong, this is simply pushing them to be better. These sustainable fashion certifications have been and will be extremely important to the fashion space. However, if we truly believe that people should be paid a living wage, then it’s time to move past broad language in the sustainable fashion space and start putting together evidence based principles. Because we need to be paying the people who make our products a living wage and we need to do it now!

 

Anker Methodology

Developed by the dynamic duo Martha and Richard Anker and brought to life by the Global Living Wage Coalition (GLWC), the Anker Methodology is in the process of revolutionizing the way we think about living wages.  

 

To start off, the members of the GLWC include Fair Trade International, Good Weave International, Rainforest Alliance and Social Accountability International (SAI). All powerhouses in their own rights and all organizations that have been fighting for systemic change for quite some time!

 

As of now, our general idea of a living wage is:  basic needs plus a surcharge (discretionary income). The problem is, we don’t know the items in these categories or how to calculate them. 

 

Does basic needs include clothing? How much should be included?

How do you calculate housing? Is it the house you live in now - no matter the condition?

How do children play a role in that calculation? 

What makes a nutritious meal?

How about recreation?  

This is what the Anker Methodology answers and they give us a formula!

Please note, the Tiruppur study was conducted in August of 2016. They have since revised the living wage in accordance with inflation and changes to governmental policy. The last revision came in August 2019 and the living wage was 15,570 rupees. 

 

Conclusion

It was tough to poke holes in Tiruppur study or the Anker Methodology at large. For me, the Methodology covers so many of the questions I had and even provided answers to some I didn’t think of. A few of my initial problems; a living wage is calculated using a regular work week which in India is 48 hours. This is tough to combat as this is national law but that's a lot of hours. My second problem is more of a concern about implementation of these numbers by brands. Yes, these calculations are great but when implemented at the factories, we need the continuation of the principles laid out by ACT to flourish. This allows workers to negotiate other parts of their agreement and not have a flat rate set out by the Anker Methodology. Because in the end, the Methodology is a starting point, not the end result. Being paid a living wage is the right and everything else is for the people!

This article is obviously written by a brand but we truly believe in the Anker Methodology and we have been working very hard to make sure that we adhere to it as well! For more on our journey of providing our largest supplier living wages, please check out this article. 

Cost of food

 

"Food costs are estimated based on: (i) a low cost nutritious diet that meets World Health Organization (WHO) recommendations on calories, macronutrients, and micronutrients and is consistent with local food preferences and a country’s development level; and (ii) local food prices for the types, qualities, and quantities of foods that workers typically buy based on new data collection that involves workers and key informants. This approach to the model diet uses a more stringent nutrition standard than the typical approach at present, which ensures only a sufficient number of calories. By collecting local food prices with worker input, realistic food prices are obtained that mimic workers’ food shopping habits and preferences."

 

Not only does the Anker Methodology take into account a well balanced nutritional diet that meets the WHO standards, it also works with local agencies to better understand local food preferences. The diet even includes worker inputs - which is huge!  For example, in the Tiruppur study, they interviewed 52 workers from three different factories to obtain a variety of expenses and purchasing habits, including food. Primary data was collected at local food markets to determine the cost of common items. 

 

Once the “model diet” is created, all they needed to do was total up the costs. The costs for Tiruppur study included a family of 4, (2 adults and 2 children) and as mentioned, costs were obtained from a combination of primary (food markets) and secondary data. Since children receive free school lunches in India, that cost was taken out of the final total. They added 18% to the final total for “miscellaneous food costs” such as “salt, spices and condiments (4 percent), wasted and/or spoiled food (3 percent), and ensure a minimum variety of food items (11 percent)”. Now that’s a good start!!

 

Housing 

 

"Housing costs are estimated using international (UN-HABITAT) and national standards for decency (e.g. dwellings located outside slums and unsafe areas that have permanent walls, roofs that do not leak, and adequate ventilation; amenities such as electricity, water, and sanitary toilet facilities; and sufficient living space so parents can sleep separately from children). The cost of acceptable housing is based on visits to local housing with workers."

You can read the reports for a more in-depth analysis, but for this article, I will speak about the additional measures mentioned in the Tiruppur report. 

 

In the Tiruppur report, the walls and floor needed to be made of brick or cement, and the roof needed to be made of concrete or red tile. The house also needed a usable living space of at least 388 square feet (36 square meters). This was inline with Tamil Nadu Housing Board for low income group households. The most shocking part of the report was that only “1 out of the 22 worker houses we visited met our healthy housing standard and that house was owned.” - and of those studied - “The typical size of a worker’s housing is 160 square feet (15 square meters) which is less than half of the minimum decency standard set by Government for low income families in Tamil Nadu”. 

Side note: I am sure so many of these workers have been deemed to be making a living wage by brands and/or certifications - including our own. 

 

In the end, the lack of suitable housing from the studied group made it tough to calculate accurate rent prices. Furthermore, most places in the area did not meet those requirements either. The researchers obtained housing prices (that were up to standard) from surrounding areas. 

 

Essential Needs + Unforeseen Events

 

"Lastly for practical reasons, cost of other essential needs is estimated using an extrapolation method based on secondary household expenditure data. This is then “post checked” to make sure that sufficient funds are included for health care, education, and transportation. This guards against the extrapolation method replicating poor living conditions as it is based on currently observed expenditure according to available household expenditure data."


 

Essential needs is also described as Non-Food and Non-Housing (NFNH). A better list of these include “clothing and footwear; furniture and household equipment; health care; education; recreation and culture; telephones; personal care”. Again, refer to the reports to better understand exactly how this is broken up but it looks good to me. The Tiruppur study added a 5% margin for unforeseen emergencies.