Supply Chain

H&M CEO Calls for Annual Wage Reviews in Bangladesh

H&M CEO Karl-Johan Persson recently called for the need for annual wage revisions in Bangladesh in line with local price inflation.The comments came during an October 14 meeting with the country's Minister of Commerce, Tofail Ahmed."We see that costs in society are negating many of the positive effects of increased wages. This is due to the absence of efficient systems of control leaving both workers and business owners in a difficult situation," Persson said.For several years, the retailer has worked towards establishing a fair living wage in Bangladesh — a key supplier country. H&M sources products from around 300 factories in the country, employing over 600,000 workers.

By Mike Hower | Published 10 years ago | About a 2 minute read

H&M CEO Karl-Johan Persson recently called for the need for annual wage revisions in Bangladesh in line with local price inflation.

The comments came during an October 14 meeting with the country's Minister of Commerce, Tofail Ahmed.

"We see that costs in society are negating many of the positive effects of increased wages. This is due to the absence of efficient systems of control leaving both workers and business owners in a difficult situation," Persson said.

For several years, the retailer has worked towards establishing a fair living wage in Bangladesh — a key supplier country. H&M sources products from around 300 factories in the country, employing over 600,000 workers.

Persson added that further actions are required to ensure the needs of workers, as well as the continued competitiveness of the Bangladeshi textile industry. A continued wage development through annual revisions based on cost price index is a great way to achieve this. H&M is also encouraging the government to address the issue of cost regulation on, such things as rent and basic commodities.

Persson also drew attention to the importance of establishing a structure for compensation in case of workplace accidents and greater government attention on the shortage of clean water, which could lead to major health issues as well as hurt the development of the Bangladeshi textile industry.

Following the catastrophic 2013 Savar building collapse in Bangladesh claimed more than a thousand lives, H&M publicly committed to supporting the Accord on Fire and Building Safety in Bangladesh, initiated by IndustryALL Global Union and UNI Global Union. Under the agreement, parties will be committed to the goal of a safe and sustainable Bangladeshi Ready Made Garment (RMG) industry that protects workers from fires, building collapses and other accidents that can be prevented with reasonable health and safety measures.

H&M hasn't limited its focus on fairer working conditions to Bangladesh. Last month, following a protest by thousands of workers in Cambodia asking for a near-doubling of the minimum wage for retailer workers there to US$177 (£110) a month, H&M and other major retailers including Primark, Inditex, Next, New Look, C&A and N Brown Group pledged to pay more for clothes produced there — the companies wrote a letter to the Cambodian deputy prime minister and the chairman of the local Garment Manufacturers Association to announce they were "ready to factor higher wages" into their pricing.

Mike Hower

Founder & Principal Consultant, Hower Impact

Mike Hower is the founder of Hower Impact — a boutique consultancy delivering best-in-class strategic communication advisory and support for corporate sustainability, ESG and climate tech.

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