H&M CEO, PM in tête-à-tête

Sean Teehan and Daniel de Carteret, The Phnom Penh Post, Mon, 4 November 2013

The CEO of clothing giant H&M pushed Prime Minister Hun Sen to introduce annual garment worker wage reviews during a rare face-to-face meeting with the premier last month.

H&M was the target of media uproar in Sweden last year over the treatment of workers employed to make garments for it in some 30 or more Cambodian factories.

Karl-Johan Persson took over as H&M CEO in 2009 and last month stressed the urgency of introducing annual wage reviews and establishing functioning industrial relations during talks with Hun Sen, an H&M statement released last week states.

“We believe that the Cambodian government should conduct an annual review of the minimum wage, taking into consideration national inflation and the consumer price index,” the statement says. “Stable markets, in which people are treated with respect, and where the workers are properly compensated by their employers, are of the utmost importance.”


The minimum wage for garment workers in Cambodia was raised to $75 a month earlier this year.

But that salary has been widely decried by Cambodia’s unions in the garment industry, which employs some 450,000 people, and opposition party pledges to raise it to $150 have been widely identified as an important factor in the massive boost it received in this year’s election.

Persson and Helena Helmersson, the brand’s corporate sustainability head, also met with labour unions and garment industry representatives, the H&M statement says.

“Basically, they’re interested in improving the investor scheme in Cambodia, and basically we’ve been reiterating … that there are reforms needed,” Dave Welsh, country director for the Solidarity Center/ACILS, said of their meeting on October 24.

“It was a very positive meeting, and it’s very rare that a global CEO of a major garment factory would be that engaged.”

Hun Sen’s personal spokesman Eang Sophalleth and officials from the Ministry of Labour could not be reached for comment yesterday.

H&M last year publicly disclosed that about a quarter of its Cambodian suppliers were sites of mass worker fainting and/or large-scale strikes since 2010. Activists in Europe last year began organising "faint-in" demonstrations, during which they staged mock mass faintings inside branches of the store.

With about 400 garment processing factories in total in the Kingdom, H&M – which made more than $2.6 billion in profits last year – holds more clout than brands that patronise fewer Cambodian garment processors, Welsh said.

Free or subsidised lunch programs would go far towards raising garment workers’ living standards, an idea to which Persson seemed open, Welsh said.

“The most positive things we’re hearing from the brands is [related to] the food program,” Welsh said. “It’s turning into less of a lip-service thing.”

After his union’s meeting with Perrson, Kong Athit, vice-president of the Coalition of Cambodian Apparel Workers Democratic Union (C.CAWDU), said he was surprised to see high-level brand executives seeming to take such an interest in frequent strikes that plague the industry here.

“They were concerned about conflicts and also were concerned about the working conditions,” said Athit, whose union represents thousands of employees at SL Garment Processing (Cambodia) Ltd, where a large-scale strike began almost three months ago.

Strikes, Athit added, could be avoided if factories and brands better supported negotiations between unionised workers and management.

“At the moment, we don’t have that kind of concrete collective bargaining to follow,” Athit said. “[Brands] should be a part of this collective bargaining.”

Although H&M has a history of buying from factories with poor human rights records, Moeun Tola, head of the labour program at the Community Legal Education Center, said in an email that the brand should continue its pursuit of workers’ rights.

“They should use their trade dialogue power to make things happen based in their supply chain,” Tola said.

“If they are faithful with their consumers of implementing their corporate social responsibility … brands would have more leverage.”

But Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia, said that despite H&M’s well-intentioned visit, tackling problems like low wages could only be done by brands footing the bill.

“I’m glad that this call came from the buyers, because ultimately it [wage rises] would have to come from the pocket of the buyers,” Loo said.

Concerns that an increase in wages could slash brands’ profits and send clothing prices soaring were misguided, Welsh of ACILS said.

“In the West, the notion still is that consumers won’t pay more for their T-shirt, and that’s pretty facile. Increasing the price of a T-shirt wouldn’t do anything but add to the companies’ coffer,” Welsh said, doubting that clothing brands would use price hikes on customers to better compensate Cambodian workers.

“Some of them are posting upwards of $10 billion off a few factories.”

Raising minimum wages and funding other programs to meet garment workers’ basic necessities will likely affect the bottom lines of the brands that buy from Cambodian factories, Welsh said.

But at a certain point, executives need to define where they stand morally.

“Will this have an impact on profit margins? Probably,” Welsh said. “But you have to ask, ‘How committed are you to workers rights?’”