H&M exec talks Cambodia vision

Fri, 7 February 2014, Phnom Penh Post,

Daniel de Carteret

With the local garment industry still reeling from the deaths of at least four workers in January, and the possibility of future strikes over minimum wages looming on the horizon, brands sourcing from the country are coming under increased scrutiny. Swedish clothes-maker H&M is one of the most prominent companies buying garments from Cambodia. In an exclusive interview this week, the Post’s Daniel de Carteret talks to H&M’s social sustainability manager, Anna Gedda, about minimum wages, industrial relations and how far the company can use its influence to effect change.

H&M Social Sustainability Manager, Anna Gedda. Photo Supplied

Can you describe your position at H&M?

Me and my team are responsible for all the social questions, all the social issues related to H&M. That covers human rights, social development in all the regional markets and in all producing markets.

Have you had much to do with Cambodia? Are you out here very often?

Yes, I think that’s part of the role, to be honest. The way we are organized is that we have a global department here in Sweden; I have a team of 44 working together with me, and I think we have about five people working on the ground in Cambodia. So, of course we are in very close contact with them on a daily basis and they update us on what is happening, and we report to them from our side as well. I think that is the strength of the approach that we have. We have such a strong local presence.

H&M has talked about providing a fair living wage by 2018, can you elaborate on the plan?

The vision that we have is that a fair living wage should be paid by all our suppliers. It is very much a collaboration between us and our suppliers. What we mean with a “fair living wage” is that it is a wage that covers basic needs. Not only the actual amount, but also how this amount is established is very important.

Wouldn’t there be a real challenge economically to adjust a wage in just one or two factories?

To begin with, we believe that by driving this wage setting, it’s going to create a lot of positive benefits for the factories. You will have less worker turnover, better chances of maintaining skilled workers, you will have no absenteeism, you will have higher quality and higher productivity, and so on. So this is not necessarily going to create higher costs. We also think this is something, which is beneficial to both the factory and also the buyer.

Do you think that other buyers will follow?

Well, we are very much aware that although we are big buyers in countries like Cambodia and Bangladesh, we cannot change the industry alone. Working with wages will of course require collaboration; the suppliers that we work with, industrial organizations, trade unions and not least the governments. So our whole plan is based on the fact that everyone has their roles to play and they will collaborate around these issues.

Can you tell me about H&M's model factory program in Southeast Asia?

So when it comes to the one we have in Cambodia, I don’t have much news, unfortunately. We started implementing the fair wage last autumn. But in general, the model factory program that we have is really our way of demonstrating that sustainability goes well, for a good business performance. And what we want to do is change factors in different areas such as wages, and sort of demonstrate that. And, of course, we’re working with a limited number of factories. Wage is the first area that we are working on, and we are of course looking to go to other areas, such as environmental issues and quality as well.

This is just one factory in Cambodia, and two factories in Bangladesh?

Yes, that’s correct.

From your brand’s perspective, what sparks violence in the garment sector?

The situation in Cambodia is very complex, and we understand that there are a lot of underlying reasons as to what happened as well. But one of those things that we know, of course, is that there is a problem with the current wage setting mechanism, and that needs to be addressed. And there is generally a lack of industrial relations in the country. We can really see, from our experience, that industrial relations are so important, especially for social issues to function well in the textile industry.

Is there any danger of H&M ever pulling out of Cambodia?

We don’t see that as a good strategy or solution at all. Cambodia is an important market for us, and we are looking long term at that production market for H&M. And we think what we can do as a buyer is really to show our support for the industry and that we are there to stay. But in order for us to be able to stay we also want to see that improvements are happening when it comes to industrial relations and so forth.

Is it important that your consumers know where the products are being produced, or how?

Yes, definitely. We can see in the surveys that we do with the consumers, we know that working conditions in production markets is one of the top prioritised issues. So this is a very important issue for us. And we think that is why it is important for us to be very transparent about what is happening and what we are doing.

If there is a raise in the minimum wage –who pays for it?

We do not see that pay increases should be passed on to the consumers. We are willing to pay for these changes to happen, and we see that this is going to happen and that it is going to be in collaboration with the suppliers. We think this is really going to be beneficial to us, as a buyer, and to the supplier and to the employer in terms of increased production. We definitely see this as an investment.

Can you talk about the way H&M interacts with the government?

I think when it comes to advocating for certain issues, we as a brand need to be careful, that we are not seen to be using our influence in a wrong way. But when it comes to wages, for instance, we have been to Bangladesh, for instance, and met with the prime minister there, and this October we went to Cambodia and met with the Cambodian prime minister there. And I think the discussions we’ve had were very constructive.

This interview has been edited for length and clarity.