Putting suppliers in the lead: Nudie Jeans

Putting the supplier in the lead

Nudie Jeans applies a unique strategy that puts the supplier in the lead and empowers them to define their approach to living wage, manage the living wage payments transparently and build their capacity for social dialogue. Moreover, they encourage their suppliers to engage with additional buyers besides Nudie Jeans to join in and do their part.

Nudie Jeans’ first living wage supplier

Armstrong Knitting Mills has been a trusted supplier to Nudie Jeans for a long time and they were a fitting first partner for Nudie Jeans’ living wage ambitions. Given this advanced approach, Nudie Jeans has supported by paying their full share of the living wage to workers at Armstrong since 2013. Their orders for basics, like t-shirts, are stable at Armstrong, and although they buy roughly three percent of the company’s total production, commitment and hard work has resulted in strong rewards for all involved.

Setting the benchmark, defining the gap

Armstrong Knitting Mills first set about calculating a local living wage for their production region Tirupur, India by conducting a survey among Armstrong’s workforce to establish the wage that would allow for a decent standard of living. Management and worker representatives at Armstrong and Nudie Jeans confirmed and compared this benchmark by assessing with other available benchmarks, like the national India benchmark available at the time from Asia Floor Wage, as well as the more recent full-fledged Anker Living wage benchmark.

Continuing to update and self-calculated the living wage benchmarks has been beneficial because it increases commitment and transparency by engaging a relatively large workforce of 1,500 workers in the process.

From the beginning, Armstrong calculated the cost of the living wage gap to easily communicate the additional value needed.  Today, to translate the gap into concrete living wage payments, Armstrong has started using the Fair Wear Foundation’s (FWF) labour minute costing tool. The tool allows suppliers to factor living wages into their price calculations and makes them comparable. Labor minute costing helps Armstrong communicate their original costs plus the living wage amount to Nudie Jeans, who then pays the total amount. This has helped Armstrong Knitting Mills make a stronger business case for living wage payments and get others involved. In addition to Nudie Jeans, they have worked with a second client to implement a similar program.

Delivering a living wage to workers

Initially, Armstrong distributed living wage bonuses in cash. The entire workforce, excluding management staff, were eligible to receive the bonus. Though this required a lot of administrative effort, it had the benefit of visibly demonstrating Nudie Jeans’ living wage efforts among workers.

Eventually, workers wanted a simpler and bonus process that was distributed more fairly. This resulted in workers who have been employed for more than 3 months receiving proportionally of the living wage bonus, and the distribution of the payments digitally from the factory’s account. Armstrong collects the living wage bonus they receive from Nudie Jeans and pays it out seasonally at times when workers need it most. Nudie Jeans, for their part, pays the product price and on top of that their share of the living wage. They deliberately leave it to the factory to manage the distribution .

Leading on living wage at the supplier level

The living wage strategy implemented at Armstrong Knitting Mills is not always possible to replicate with other suppliers. Nudie Jeans has discovered that not all suppliers have the same level of interest in living wage and each one operates in a different socio-economic or political context. Nudie Jeans adapts their living wage approach to different suppliers’ needs, primarily by ensuring the living wage efforts are supplier-led—from the creation of benchmarks to the distribution of value.

Worker representation

Nudie Jeans is committed to worker engagement and is in regular contact with Armstrong’s workers and management to make sure that the living wage bonus reaches its target. When the project first began, workers did not have any mechanism or training to make their voices heard. With Armstrong, Nudie Jeans helped establish a trusting relationship where grievances are communicated openly. By setting up worker committees and providing training, workers began engaging more. Nudie Jeans and Armstrong now see greater willingness to speak up, and an understanding that raising issues can and lead to solutions.

The importance of buyer collaboration

Every factory or supplier has a variety of clients with differing needs and ways of working. This makes it impossible for any one buyer to ensure a full living wage for the entire workforce. This is where buyer collaboration can help. Nudie Jeans makes a concerted effort to work together with other buyers to maximize their impact. In Turkey, they work with three Fair Wear Foundation member brands to align their efforts.

By focusing on collaboration with different buyers versus being the sole buyer at a factory, it enhances quality and development at the supplier through buyer competition. It also reduces the workload on sustainability staff by sharing responsibility.

Nudie Jeans shows how a company can leverage their position to drive change even if they only buy a small percentage of a supplier’s production. And for their supplier partners, like Armstrong, they benefit from training, research and a reputation as a good and sustainable employer.