Living wage & responsible purchasing

Our Challenge

As part of our commitment to respect human rights, we understand the importance of a fair wage to help protect human dignity and enhance quality of life. This is why we have committed to work with our partners to achieve a living wage for factory workers. A living wage is the minimum income necessary for a person to meet their basic needs as well as that of his/her family, including some discretionary income.

Kmart sources from many countries, such as Bangladesh, China, India and Indonesia, which have low wage levels by world standards, and where many workers do not currently earn a living wage. This is particularly true in the apparel industry in Bangladesh where Kmart sources a significant proportion of our apparel and where wages have been historically lower than most countries in the region. As a result, we understand that contributing to solutions that will sustainably improve wages over the long term is a priority human rights topic for business.

In 2015, we launched a research project to better understand the challenges and opportunities associated with achieving a living wage for factory workers,; as a first step in developing a long-term strategy. This research, including consultations with global brands, trade unions, NGOs, suppliers and employer associations, highlighted a number of factors impeding progress toward a living wage. These included:

Competition between brands and between suppliers across countries that creates downward pressure on prices and wages
Inconsistent purchasing practices by brands, such planning and forecasting and costing and negotiation, that creates inefficiencies for suppliers that ultimately impacts (among other factors) the ability to pay higher wages.
Restrictions on freedom of association that limits the ability of workers to organise and advocate for wage rises in some countries
A lack of minimum wage and collective bargaining laws and mechanisms in some countries impedes the ability of all parties to negotiate fair and sustainable wage increase.
Individual brand and factory initiatives had failed to lead to sustainable and scalable change in the industry.

A key finding of the research was the importance of partnerships. Sustainable improvements in wages cannot be achieved by individual brands and retailers working alone – they require active industry collaboration and partnerships with employers, trade unions and governments.

Our Approach

ACT and Industry-Wide Collective Bargaining

As a result of our research, in 2015 we joined 'Action, Collaboration, Transformation' (ACT), a collaboration between international brands and retailers, and IndustriALL Global Union, the international trade union federation. ACT aims to achieve a living wage in the garment and textile industry - in countries such as Bangladesh, Cambodia, and Turkey - by establishing industry-wide collective bargaining, supported by responsible purchasing practices.

Since joining ACT we have been working alongside its other members and with IndustriALL to assess the industrial relations and competitive context in key sourcing countries. These assessment have helped to identify the main factors impeding progress toward a living wage in each country, such as legal restraints on freedom of association and collective bargaining, and have formed the basis of ongoing country consultations with employer representatives and trade unions (along with government representatives), who are ultimately responsible for negotiating an industry agreement at a national level. Working in partnership, ACT aims to develop a clear roadmap toward industry-wide collective bargaining in each priority country.

ACT’s vision of industry-wide collective bargaining agreements and a living wage for garment and textile workers is a long-term journey with many challenges to overcome. But we are convinced this is the right path and the only sustainable solution. Industry-wide agreements will:

ensure that many workers benefit from higher wages, rather than a factory-by-factory approach; and
encourage employers to compete through innovation and quality, rather than low pay and conditions.

For more information on ACT’s country activities and progress, please visit ACT Global Purchasing Practices Commitments.

ACT Global Purchasing Practices Commitments

In December 2018, ACT publicly released its Global Purchasing Practices Commitments. The commitments are the result of three years of review and consultations aimed at developing a common set of changes and implementation measures on purchasing practices that will support the movement towards living wages in the garment, textile and footwear industry. In addition to our support for freedom of association and industry-wide collective bargaining agreements, the implementation of the ACT Global Purchasing Practices Commitments is a key part of our role within ACT, working in partnership with other retailers and brand members, and IndustiaALL Global Union.