PUMA also decided to implement such strategy on the ground notably by carrying out a number of Fair Wage assessment exercises among its main suppliers. This series of exercises follows a series of fair wage assessment and remediation exercises carried out first in 2012-13 and in 2018-2019. This exercise was renewed in 2021 among strategic suppliers in Bangladesh and Cambodia and extended to Indonesia, with some of them being certified as ‘Fair Wage employers’. If progressively extended to other main suppliers and more markets, this Fair Wage assessment and certification exercise could progressively cover PUMA’s entire supply chain, and somehow ensure within it sustainability on wages and human resources practices.
A commitment to Fair wage as part of human rights and sustainability principles
PUMA has made public commitments in different wage areas, first to pay a living wage ‘to cover worker’s basic needs plus some discretionary income’, and then also to report on progress towards achieving this aim. Puma also retained the full payment of minimum wage as a zero-tolerance condition to be ensured in all its suppliers.
Provisions around payment of overtime hours and social insurance are also clearly articulated in the PUMA Code of Conduct which also mentions Freedom of association and presents the main principles of its nondiscrimination policy.
PUMA tries to apply such principles to suppliers’ reality through its programme of internal audits and monitoring of its supply chain, and through external audits carried out by the Fair Labor Association.
PUMA also follows the main requirements of FLA’s code of conduct. Beyond the audits, the FWN Fair Wage assessments are a complementary way to help suppliers identify and put in place concrete possible improvements.
The FWN database on the living wage also allows a permanent monitoring of wage levels at suppliers and of their capacity to reach at least the living wage benchmarks.
Fair wage assessments progressively extended to cover the whole puma suppy chain
Improving wages of factory workers in its supply chain in Asia represents a core issue on PUMA’s way to ensure sustainable workplace improvement, started already in the early 2010s when it asked the Fair Wage Network to conduct Fair Wage assessments in five countries and covering 28 factories.
On the basis of this assessment work that was carried out in 2012-2013, the FWN developed individual roadmaps for each supplier, and then conducted in-depth case studies in three Indonesian factories, engaging directly with the management and the workers for more than one year through technical assistance, training sessions and concrete solutions on how to generate wage improvements. The project succeeded to improve wage-fixing mechanisms and pay systems, at developing a closer link between wages and workers’ skills and performance, and also at putting in place a better wage-adjustment process notably to price increases through proper collective bargaining on wages issues.
In 2018-2019, a new series of fair wage assessments were carried out in Bangladesh and Cambodia, first to better know their performance on the 12 Fair Wage dimensions, and then to identify possible areas where some remediation would be required. The exercise took place in a pilot sample of 7 suppliers in different regions of Bangladesh, with 655 workers being interviewed. The remediation process carried out in the previous years proved to be successful since a few of them successfully reached the necessary scoring to be certified by the FWN.
New fair wage assessment exercise in 2021-2022
More recently, in 2021, PUMA asked the FWN to reconduct Fair Wage assessments among the same key suppliers in Bangladesh and Cambodia, and also extended this exercise to three of its key suppliers in Indonesia.
According to survey results, the average wage among the surveyed factories under coverage was generally higher than market rates although some of them were found to have difficulties to reach a living wage threshold, a context that may have been influenced by the economic and financial effects of the Covid-19 crisis. This aspect will need to be monitored on a regular basis. It was also positive that a number of factories had continued to strengthen some institutional elements such as wage grids and schemes relating pay to performance.
At the same time, similar developments were not always reported on social dialogue, with workers’ representatives not always involved in wage discussions, and with collective agreements being rarely signed at factory level, something that gives PUMA valuable information for follow-up and remediation.
Overall, workers’ satisfaction about wages and working conditions was found to be relatively good, with almost all workers being either ‘fully’ or ‘partly’ satisfied about their wages and working conditions, with also encouraging results on retention and turnover rates.
Propensity of workers to stay at least one more year was rather high. The performance of four factories -including on the living wage front- were particularly outstanding so that they were granted the Fair Wage certification. The other remaining factories were invited to engage in a remediation process for improving their performance in the wage areas that were found to be less strong -notably on the number of working hours on which PUMA will conduct management training for all its Tier 1 suppliers in 2022.
More assessments of this type will be carried out in 2022 -notably to more suppliers in Bangladesh, Cambodia, and Indonesia but also in Vietnam – to progressively help a higher number of PUMA suppliers to progressively move towards fairer wage levels and practices in the entire supply chain.