Dive Brief:
- Fast-fashion retailer H&M will soon offer digitized payment to its supply chain garment workers, Devex reported last week. The change is expected to save factories 750 hours in staff time per month, plus 85% in monetary savings in 24 months, according to the Better Than Cash Alliance, a United Nations group formed to speed the shift from cash to digital payments.
- H&M is fashion's first member of the Better than Cash Alliance. Currently 1.6 million people are employed through its supply chain, 65% of which are women who, along with their employer, will now become more impervious to loss and theft.
- Though 80% of Bangladeshi factories still pay in cash, those that have transitioned to digital payments help guide women closer to Sustainable Development Goals by improving financial inclusion and supporting women’s economic independence. Coca-Cola and Grupo Bimbo, a Mexican baking products company, have also joined the 55 member Alliance.
Dive Insight:
In January, 2017, angry workers in a Myanmar H&M factory destroyed the production line and beat a manager in a dispute involving the firing of a local labor leader and unmet workers demands. The workers claimed they had not been reimbursed for overtime, despite H&M's insistence on having paid the bills. Whether the money ultimately landed in corrupt second tier suppliers' hands or worse, no records existed to prove either side's legitimacy.
Now, with digital pay, such explosive conflicts can begin to be mitigated. The pre-existing documentation on which digital pay is based will serve as a record of receipt, and will also prove valuable during audits confirming proper treatment of workers in Myanmar and other locations that are still struggling to establish proper human rights for workers.
Digital pay also empowers those used to a less sophisticated economy. The transfer of money directly into a bank allows not only for greater savings, but also teaches a technological skill that reduces time away from the production line by as much as 15 minutes, not to mention the reduction of the risk of theft.
