45 Pages Posted: 6 Feb 2013
Date Written: February 5, 2013
This paper focuses on a specific feature of buying behaviour in the UK fashion retail industry: the negotiation of a manufacturing price (cut-make-trim, CMT, cost) with suppliers that does not separately itemize labour cost. This practice, tacitly supported by both buyers and suppliers, is examined against the backdrop of ongoing wage defaulting and import price deflation in the global apparel industry. While wage non-compliance cannot be explained solely by this buying practice, since other commercial practices and factors may have an equal if not greater impact on a supplier’s liquidity/ability to pay on time and in full, the case is nevertheless made that an absence of labour costing must inevitably have an effect on the capacity of a factory to deliver an order at a negotiated price and to meet compliance benchmarks at the same time. The paper attempts to construct a formula for sustainable labour pricing at the buyer end using industrial engineering principles that appear to have been lost in the truncation of buying firms caused by international sourcing. The methodology, which can be used to calculate a living wage, has implications for international buying practice and for organized labour in the international global apparel industry and has the potential to accelerate a trend already underway in the sector towards greater consolidation and collaboration between buyers and suppliers in the manufacture of apparel.
Keywords: Buying practices, living wage, labour costing, efficiency, standard minute values, freedom of association
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