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H&M to encourage garment factories to pay workers digitally to empower women

By Nita Bhalla | March 14 2017

(Thomson Reuters Foundation) Swedish fashion retailer Hennes & Mauritz (H&M) pledged on Wednesday to encourage its supplier factories across the world to pay workers through mobile money and other digital methods to ensure transparency, curb exploitation and empower women.

The move by the global clothing brand comes after it became the first global fashion brand to join The Better Than Cash Alliance – a United Nations initiative aimed at promoting governments and companies to move to a digital economy.

“Digital payments are an efficient and scalable way to improve the lives of the employees of our suppliers,” Gustav Loven, social sustainability manager at H&M group, said in a statement.

“They offer a faster, safer and more transparent way to receive their salary, increase financial inclusion and support women’s economic independence,” he said.

Around 65 percent of garment workers employed along H&M group’s supply chain are women, many with limited access to financial services.

A digital payment system would also benefit garment factory owners, added Loven, as it would cut costs, increase security and provide more accurate wage data for employers.

The fashion industry has come under pressure to improve factory conditions and workers’ rights after 1,136 workers died in the collapse of the Rana Plaza factory in Bangladesh four years ago.

Many big brands, including H&M, have been criticised for failing to check conditions of workers in their supply chains — from poor health and safety standards and long working hours to low pay and bans on forming trade unions.

In May last year, the Asia Floor Wage Alliance (AFWA) found workers stitching clothes for H&M in factories in Delhi and Phnom Penh faced low wages, fixed-term contracts, forced overtime and loss of job if pregnant.

The company said at the time it was working to improve workers conditions in supplier factories after the AFWA, a coalition of trade unions and labour rights groups, accused it of failing on its commitments to clean up its supply chain.

H&M – which sources from factories in 25 countries and indirectly employs 1.6 million workers – said a digital payment system would boost financial inclusion by ensuring workers – especially women – had bank accounts.

Access to a bank account is key to women’s economic empowerment as it provides a safe place to save money and opens up a channel to credit which can be used for investing in education, property or in a business, gender experts say.

Topics

Corporate Governance

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