Investigating fairness in global supply chains: applying an extension of the living wage to the Western European clothing supply chain

Simon Mair*, Angela Druckman, Tim Jackson

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Purpose: This paper explores the issue of fairness in global supply chains. Taking the Western European clothing supply chain as a case study, we demonstrate how applying a normative indicator in Social Life Cycle Assessment (SLCA) can contribute academic and practical insights into debates on fairness. To do so, we develop a new indicator that addresses some of the limitations of the living wage for SLCA. Methods: We extend the standard form of living wage available for developing countries to include income tax and social security contributions. We call this extension ‘living labour compensation’. Using publically available data, we estimate net living wages, gross living wages, and living labour compensation rates for Brazil, Russia, India, and China (BRIC) in 2005. We then integrate living labour compensation rates into an input-output framework, which we use to compare living labour compensation and actual labour compensation in the BRIC countries in the Western European clothing supply chain in 2005. Results and discussion: We find that in 2005, actual labour compensation in the Western European clothing supply chain was around half of the living labour compensation level, with the greatest difference being in the Agricultural sector. Therefore, we argue that BRIC pay in the Western European clothing supply chain was unfair. Furthermore, our living labour compensation estimates for BRIC in 2005 are ~ 35% higher than standard living wage estimates. Indeed, adding income taxes and employee social security contributions alone increases the living wage by ~ 10%. Consequently, we argue there is a risk that investigations based on living wages are not using a representative measure of fairness from the employee’s perspective and are substantially underestimating the cost of living wages from an employer’s perspective. Finally, we discuss implications for retailers and living wage advocacy groups. Conclusions: Living labour compensation extends the living wage, maintaining its strengths and addressing key weaknesses. It can be estimated for multiple countries from publically available data and can be applied in an input-output framework. Therefore, it is able to provide a normative assessment of fairness in complex global supply chains. Applying it to the Western European clothing supply chain, we were able to show that pay for workers in Brazil, Russia, India, and China is unfair, and draw substantive conclusions for practice.

Original languageEnglish
Pages (from-to)1862-1873
Number of pages12
JournalInternational Journal of Life Cycle Assessment
Volume23
Issue number9
Early online date30 Aug 2017
DOIs
Publication statusPublished - 1 Sept 2018

Bibliographical note

Funding Information:
Acknowledgements We would like to thank three anonymous reviewers for their insightful comments. This work was supported by a joint grant from the UK’s Economic and Social Research Council and Natural Environment Research Council, grant number ES/J500148/1, and the ESRC funded Centre for the Understanding of Sustainable Prosperity, grant number ES/M010163/1.

Publisher Copyright:
© 2017, The Author(s).

Keywords

  • Clothing
  • Fair wage
  • Fairness
  • Fashion
  • Input-output analysis
  • Living wage
  • Social impact
  • Social LCA

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