Living Wage: Response from adidas

Summary: Despite being committed to a living wage through sourcing agreements with the London Games Organisers LOCOG, adidas continues to refuse to implement the payment of a living wage to workers producing Olympic sportswear, or any adidas goods.

adidas has recently changed its code to reflect changes to the Fair Labour Association’s (FLA) code, and has included guidance stating: Wages are essential for meeting the basic needs of employees and reasonable savings and expenditure. We seek business partners who progressively raise employee living standards through improved wage systems, benefits, welfare programmes and other services, which enhance quality of life.

adidas also told us: “The adidas Group has examined the question of fair wages in the past and has concluded that the best way to improve the general welfare of workers is to work with our business partners at the enterprise level, to promote wage-setting mechanisms which are transparent and have been developed with the direct input of workers. Ideally this occurs through negotiation or collective bargaining, or through alternative legal means, such as a workers council or welfare committee. We believe basic pay should be bench-marked at a level higher than the local minimum wage or the industry wage, and should acknowledge and reward workers for productivity gains.”

See here to read the full letter

Play Fair’s view:

Playfair welcome’s the inclusion of the aspiration for wages to meet basic needs of employees in adidas’ code. However, we feel that the stated method for getting there still doesn’t make a clear commitment to a living wage. adidas state that they seek to work with employers who raise living standards, but this doesn’t go far enough. A living wage must be a basic payment, before benefits, overtime or productivity bonuses. And the gap between a minimum and a living wage is large enough that the efforts that employers will seek to make will never breach this.

Playfair agrees that wage increases should be negotiated with workers at factory level and through collective bargaining – this is the ideal way for wage increases to happen. But this approach must be supported by efforts from Adidas to ensure wage increases are viable. This involves in the very least, brands like adidas giving a clear indication to suppliers of commitment to a living wage (though a code of conduct, contractual agreements, and publishing living wage benchmarks agreed in consultation with unions and workers). It must also work to ensure costs per product unit contain ring-fenced sums to cover a living wage. Adidas has shown no indication that work is being carried out on this. Furthermore, adidas’ stated approach can only work where freedom of association exists and collective bargaining is happening, which as far as we are aware is not typically the case across adidas’ supply chain – far from it. Adidas could change this by requiring its suppliers to take positive steps towards respecting the human right to freedom of association and collective bargaining. Finally, payment of a living wage, should not be linked to productivity gains or ‘leaner’ production. A living wage is a human right, not a reward for harder work.