What is Fair Compensation?
Fruit of the Loom, Inc. believes every worker has a right to compensation for a regular work week that is sufficient to meet the worker’s basic needs and provide some discretionary income. We believe overtime shouldn’t be required to accomplish this.
We are committed to enabling the factory workers in our supply chain to receive fair compensation. We support collective bargaining as one of the effective methods of ensuring fair compensation (see our Code of Conduct for more information). Globally, 31% of our supply chain is covered by collective bargaining (including, but not limited to, unions). This includes 132 of our 400 suppliers and our own facilities.
Collaboration with the Fair Labor Association
Our fair compensation program has been developed in collaboration with like-minded organizations, such as the Fair Labor Association (FLA). We conduct wage analyses in strategic countries and facilities using the FLA’s Fair Compensation Dashboard and toolkit. These tools allow for facility wage data to be compared against local living costs based on various studies to better assess whether wages are indeed fair.
In 2020, we worked with in-country teams of 12 owned locations representing 85% of our global production in five different countries. We collected data for the top four occupations using uniform metrics and standards. Data collected included worker demographics, working hours and net wage, including cash benefits and in-kind benefits and incentives, leave pay and overtime payment information. There were union and non-union locations included in the data collection. The information was then uploaded to the FLA’s Dashboard to compare against different wage benchmarks, providing multiple views to understand how each component of pay affects compensation. This simplifies measuring progress toward a specific living wage benchmark and facilitates the data comparison between factories in the same country.
Improving the Benchmark Data
The validity of our benchmarking assessment often depends on the availability and quality of the living wage benchmarks by country. Of the benchmarks available, we identified Global Living Wage Coalition’s work as the desired benchmark; however, in some of the key markets we operate in, those benchmarks do not exist yet.
In addition to the Global Living Wage Coalition benchmarks, we are collecting data available through monitoring conducted by amfori, which we joined in 2020. amfori’s monitoring is unique at present as it includes actual wage and living expense data at the facility level. This provides a unique level of insight to help assess and provide an additional wage benchmark specific to that location. We believe this additional information will enhance our process.
Creating a Blueprint to make Fair Compensation Progress
The Fair Compensation Blueprint is our company’s action plan to address worker wage gaps and report progress toward fair compensation. It was developed using the FLA’s blueprint guidance and includes our criteria and goals for the future. The blueprint identifies countries where we have the most significant footprint, countries with minimum wage challenges, and countries with a history of compensation and working hour violations as our focus for the next selection of locations to collect wage data. The nexus of these criteria helps us set our goals.
In 2021, we will collect data for our owned facilities in Haiti and Australia. This will complete the benchmarking of our owned locations. In 2022, we will continue to operationalize our Blueprint by collecting wage data for our strategic locations in Vietnam and Bangladesh. These are the countries identified as meeting all the criteria documented in our blueprint. We will also update the data for all owned locations to inform, demonstrate, and report progress.
We will use our Code of Conduct compliance and sustainability process to monitor countries where we do not have a significant footprint. If we identify any compensation and working hours opportunities, we will remediate and ensure management systems and policies provide sustainable solutions. As we move forward with our blueprint, we will continue to engage with our internal and external stakeholders to identify priority areas of focus and to pilot opportunities to drive change.
Fair Compensation Remediation in 2020
We monitor compensation as a critical indicator in our social compliance auditing of our suppliers (for more information see Respectful & Inclusive workplaces). During our social compliance monitoring in 2020, we discovered compensation findings in seven facilities. These seven facilities were required to remediate the identified issues and verify corrective actions. All seven facilities will have an on-site follow-up assessment during 2021. We believe remediation is an important part of our approach to achieving our goals of Fair Compensation in our global supply chain.