A new report calls into question a commonly accepted myth in the fashion industry. It’s widely believed that fashion companies need to markup the price of products if they want to pay their workers more. Historically, fast fashion giants have claimed that they’re in a bind; price-conscious shoppers will gravitate to whatever retailer charges the least. In a number of statements over the years, companies have said that their hands are tied in terms of offering a living wage to workers in the developing world.
An American firm called The Boston Consulting Group and Global Fashion Agenda have torn apart such claims in a new report called “Pulse,” which it put together and presented at this week’s Copenhagen Fashion Summit Conference in Denmark. The report discusses a wide range of topics from sustainability to fair labor practices. One portion purposes that instead of maintaining a high profit margin that depresses wages, they should instead take a fractionally smaller cut of the sale price.
Currently, the way that brands arrive at their retail price is by bundling together all of the costs of production, including labor, and multiplying it to calculate their markup. Typically a markup is roughly 50 percent higher than a product’s wholesale price. While an increased mark up is a legitimate concern for mega retailers and consumers, the report also found that 50 percent of garment workers in the developing world are not paid their country’s minimum wage.
The report takes a t-shirt made in India as a case study. It estimates the cost of labor for that shirt to be €1.35. After bundling together all of the costs and adding the markup, the shirt would likely retail for €25. Furthermore, the report calculates that if labor costs were doubled to €2.69, the shirt would sell for only about €7 more. The paper’s conclusion goes on to say that if retailers took a tiny cut out of their markup percentage, there would be no impact on the retail price at all.
While the wage increase might seem minute to Westerners, garment workers in the developing world are often men and women working to support their entire family and to expect them to be able to do so on less than a living wage seems ridiculous and downright inhumane. To vulnerable workers, a percentage increase in pay makes a world of a difference. Hopefully, the fashion industry will embrace fair labor practices going forward.
prev link: https://crfashionbook.com/fashion/a9867270/garment-workers-living-wage/
createdAt:Wed, 17 May 2017 16:51:02 +0000