Thursday, December 12, 2013

H&M may raise prices to pay workers

Daniel de Carteret and May Kunmakara
The Phnom Penh Post, 11 December 2013

Clothing giant H&M is considering raising retail prices and passing the buck onto the consumer to help pay higher wages to garment workers in poor countries.

There won’t be any price increases in the short-term, but it “might be a possibility” in the future, Helena Helmersson, head of sustainability at the Swedish clothing maker, told Agence France-Presse on Monday in Stockholm, where the company was meeting with advocacy groups.

Ken Loo, Garment Manufacturers Association in Cambodia secretary-general, welcomed the announcement as a “natural response” from one of Cambodia’s most prominent sourcing brands.

“Someone has to absorb this price hike, so either it has to come out of the pocket of the retailers or the brands or the consumers have to pay more. In most likelihood, it would be a combination of the two,” he said.

Loo cautioned, however, against turning a complex supply chain into a formula of higher consumer prices equaling higher salaries for workers.

“It is not a transparent thing where ‘X’ dollars goes in ‘X’ dollars goes out,” he added. Loo said factories could not simply charge more to cover wages because they would lose business to buyers chasing their own margins.

Dave Welsh, country director for labour rights group Solidarity Center/ACILS, was less optimistic about the proposal, given that huge corporate profits have rarely trickled down to workers.

“There is already enough in the pot, in my mind, to say that brands can certainly engage in a serious way given the current prices,” he said.

H&M’s Helmersson said the company would use its clout with suppliers and governments to improve working conditions and lobby for minimum wages to be raised.

“We can set goals to make sure the right pay structures are in place with our suppliers,” she said.

The talk about raising garment wages, which are at a monthly base of $75 in Cambodia, would be the latest in H&M’s attempt to position itself as a do-gooder among global brands.

In October, H&M CEO Karl-Johan Persson met with Prime Minister Hun Sen to push for annual garment worker reviews and functioning industrial relations.

In November, H&M told the Post they had teamed up with some of their best suppliers to create “model factories” in Cambodia, though the locations haven’t been disclosed and little has been revealed about what makes them a model for others to emulate.

“Our aim is to work together with them and develop standards for our industry in many areas, such as quality and sustainability, both environmental and social aspect,” Elin Hallerby, H&M press officer, said in a November 13 email.

As H&M is a major buyer for Cambodia, Ath Thorn, president of the Cambodian Apparel Workers’ Democratic Union, welcomed the clothing giant’s possible price hike.

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