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ACT living wage initiative brands adopt joint due diligence framework on purchasing practices

Source: ACT

In September 2019, brands who are members of the ACT living wage initiative adopted a joint due diligence framework to ensure their purchasing practices facilitate the payment of a living wage, as set out in the ACT Memorandum of Understanding.

According to ACT, this marks the first time that international brands have collectively agreed to be held accountable by a global union federation for changing their purchasing practices. ACT has adopted global commitments of all member brands to change their purchasing practices in five areas that it has identified - based on consultations with suppliers, trade unions and experts - as essential for providing suppliers with the economic space to pay for negotiated wage increases and improvement of working conditions.

This includes the adoption of a labour costing protocol for ensuring that all direct and indirect labour costs are included in costing calculations for negotiating the purchasing price. The protocol specifies, among other things, that brands will conduct labour costings in line with predicted wage increases as soon as the information becomes available, and that when other cost inputs such as the cost of fabric, energy costs, and the size of order remain equal, wage increases will be covered through higher purchasing prices.

IndustriALL says that the ACT accountability and monitoring framework offers a tool for brands to meet international due diligence requirements and become industry leaders on responsible purchasing practices. 

Relevant articles are linked below, including an analysis by Asia Floor Wage Alliance (AFWA) of the ACT, which offers AFWA's assessment of the limitations of the initiative in truly delivering on its aim of achieving living wages.

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Article
14 October 2019

ACT adopts joint due diligence framework to ensure responsible brand purchasing practices & living wage

Author: Action Collaboration Transformation

"ACT members adopt accountability & monitoring framework on purchasing practices", September 2019

In September 2019, ACT adopted a joint due diligence framework for member brands to ensure that their purchasing practices facilitate the payment of a living wage as set out in the ACT Memorandum of Understanding. It is the first time in the history of the global garment and footwear sector that international brands have collectively agreed to be held accountable by a Global Union Federation for changing their purchasing practices...

...The Accountability and Monitoring framework...is based on 4 pillars:

  1. Common achievement indicators that apply to all ACT member brands
  2. An internal Purchasing Practices Self-Assessment (PPSA) by brands
  3. An anonymous survey among suppliers (Purchasing Practices Assessment/PPA)
  4. A confidential communication channel to raise complaints and/or concerns for suppliers and other stakeholders

This includes the adoption of the ACT labour costing protocol...for ensuring that all direct and indirect labour costs are included in costing calculations...

Read the full post here

Download the full document here

Article
14 October 2019

IndustriALL says ACT accountability & monitoring framework offers tool for brands to meet intl. due diligence requirements

Author: IndustriALL

"ACT brands adopt accountability on purchasing practices", 14 October 2019

... Based on comprehensive consultations with suppliers, trade unions and experts, ACT has adopted global commitments of all member brands to change their purchasing practices...

IndustriALL assistant general secretary Jenny Holdcroft says that the ACT accountability and monitoring framework offers a tool for brands to meet international due diligence requirements and become industry leaders on responsible purchasing practices. 

"And it is the basis for providing suppliers with the confidence to enter into sectoral bargaining agreements with trade unions that will improve pay and working conditions. Experience has shown that without such assurances, suppliers will never agree to take on additional costs. We now call on all other brands in the garment industry to join ACT and make the same commitment to supporting the social and economic upgrading of the industry.”

Read the full post here

Article
13 October 2019

Analysis of ACT

Author: Asia Floor Wage Alliance

June 2019

...The ACT MOU lacks clarity on wages – minimum wages, living wages, and statutory wage. It has no quantifiable definition of living wage and claims, without substantiation, that incremental and continuous growth in minimum wage or nationally bargained wage will lead to living wage.

ACT insists on national-level solutions for what is a global supply chain problem. It claims to take wage out of competition but in fact, it does just the opposite. By refusing to acknowledge the regional nature of competition and FOB price as the node of competition, it essentially distracts and diverts from the core issue.

ACT keeps brands out of the ambit of enforceable binding agreements by claiming that brands will support once the national actors sign the binding agreements. This is a “national process” being forced by brands on self-selected pilot countries without any binding action on their part.

The danger runs deeper. Brand signatories use ACT to claim that they are involved in paying living wage when in fact, they are only involved in national processes for incremental increase in minimum wage or bargained wage which are inadequate in delivering living wage within a global supply chain context.

ACT can provide incremental minimum wage increase or bargained wage but its claim to provide for living wage is not consistent with the mechanism and strategy provided in the ACT. However in the current scenario ACT is being used as an alibi for brands to exempt themselves from genuine living wage delivery processes.

Read the full post here

Article
13 October 2019

Signatory brands to ACT living wage initiative adopt joint due diligence framework on purchasing practices

Author: Beth Wright, just-style

"ACT brands adopt accountability on purchasing practices", 15 October 2019

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Brands who are members of... ACT living wage initiative have adopted a joint due diligence framework to ensure their purchasing practices facilitate the payment of a living wage. 

According to ACT, this marks the first time in the history of the global and garment footwear sector that international brands have collectively agreed to be held accountable by a global union federation for changing their purchasing practices...

Key elements of ACT labour costing protocol... include that:

  • Brands will conduct labour costings in line with predicted wage increases... and... incorporate this into purchasing prices
  • When other cost inputs (e.g. cost of fabric, energy costs, size of order) remain equal, wage increases will be covered through higher purchasing prices
  • Suppliers will not be expected to cover rising wage costs through unreasonable efficiency gains or reduced margins...

Read the full post here