Swedish clothing company H&M will expand its compensation program for Asian workers and make sure that their wages continue to increase to a fair level.
According to H&M, a higher wage for workers will not only lead to a better life, but to higher productivity and fewer tensions, which in turn will lead to fewer strikes and riots. The new system had already been tested in three factories in Cambodia and Bangladesh in 2014, leading to fewer absentees and higher factory loyalty.
More than 75 % of H&M's clothing comes from Asia, although production in Asia has become a lot more expensive for European companies as most Asian companies use the dollar as its regular currency. The strong position of that dollar has resulted in H&M's lowest quarterly profit in the past 9 years. Higher productivity would therefore benefit H&M.
Ever since the Dhaka Rana Plaza disaster in 2013, many clothing retailers face pressure to improve the working conditions in countries like Bangladesh, hubs for textile production.