Inditex, H&M Agree to Pay More for Clothes From Cambodia

Fashion brands, including Europe’s biggest clothing retailer Inditex SA (ITX) and Hennes & Mauritz AB (HMB), said they are willing to pay more for clothes made in Cambodia, backing a trade union campaign for higher wages.

The chains are among eight clothing retailers that include Next Plc (NXT) and Primark that have written to Deputy Prime Minister Keat Chhon and to the chairman of the Garment Manufacturers Association in Cambodia saying they are prepared to factor in higher wages in the price they pay for garments made in the country.

“Our purchasing practices will enable the payment of a fair living wage and increased wages will be reflected” in our prices, the retailers said in the letter. Raised prices will also take into account “productivity and efficiency gains and the development of the skills of workers, carried out in cooperation with unions at workplace level,” the group said.

The move follows a demonstration by thousands of Cambodian garment workers on Sept. 17 outside factories to demand an increase of the national minimum wage to $177 a month from $100 per month, according to a statement by the IndustriALL Global Union, which backed the action with other labor groups. Retailers in Europe and the U.S. have been under pressure to help raise wages and improve safety in low-cost garment producing countries after the collapse of a high-rise warren of plants in Bangladesh killed 1,127 workers last year.

Primark confirmed its involvement in the Cambodia initiative by e-mail and H&M published a statement on its website.

“H&M has been engaged in raising the minimum wage in the textile industry in Cambodia for several years,” the retailer said. “A collaborative approach is crucial and that is why we today, together with other brands, have sent a letter to the Cambodian government and to Garment Manufacturers Association in Cambodia to clarify our shared position.”

The government, the manufacturers group and unions met on Sept. 17 to discuss a new minimum wage and will meet again on Sept. 26. A decision is expected early next month, according to the IndustriALL Global Union.

To contact the reporter on this story: Gabi Thesing in London at [email protected]

To contact the editors responsible for this story: Celeste Perri at [email protected] Ben Livesey, John Lear

http://www.bloomberg.com/news/2014-09-19/inditex-h-m-agree-to-pay-more-for-clothes-from-cambodia.html