The devastating cost of your Kmart obsession
IN RECENT years, Kmart has risen to become Australia's favourite shopping destination.
With unbelievable bargains on offer, from fashionable $9 blouses to trendy $8 canvas sneakers, it's not hard to see why.
But experts warn those cheap prices come at a terrible cost for the thousands of factory workers who make Kmart's products in Third World countries such as Bangladesh.
The Council of Textiles and Fashion Industries estimates that 92 per cent of all clothing sold in Australia is made overseas.
"Bangladesh is the second-largest country for the production of clothing made for Australian stores and it's growing rapidly," says Joy Kyriacou, Oxfam's manager of Fair Economics Advocacy.
"In Bangladesh, the legal minimum wage is only 30 per cent of what's required to live a decent life. In Australian terms, these workers are earning 39 cents an hour."
Kmart says Bangladesh is now a major part of its supply chain and it spends about $180 million a year with apparel factories based there.
The retailer has made significant progress in ensuring the ethics of sourcing practices, from publishing factory locations to auditing safety.
But Ms Kyriacou said the company, owned by corporate giant Wesfarmers, is not doing enough to provide a living wage for its overseas workers.
"There's a big difference between a legal minimum wage in the countries where companies like Kmart are (sourcing products), and an actual living wage."
WHAT IS A LIVING WAGE?
Advocacy groups calculate the amount of money workers need to earn to live a decent life in a specific region, Ms Kyriacou explained.
That figure is what's referred to as a "living wage".
Kmart proudly promotes its commitment to paying minimum wage, but the handful of change a Bangladeshi worker gets for producing their clothes doesn't remotely make ends meet.
"The living wage is a simple concept - it's the amount that allows these workers to afford the basics of life, such as decent housing, clean water, enough food that's nutritious, and health and education for themselves and their kids," she said.
"No company in Australia is paying a living wage or really tackling this important issue, and that includes Kmart."
When Australians buy an item of foreign-sourced clothing, just 4 per cent of the cost on average goes to those who made it. In Bangladesh, that figure is as low as 2 per cent.
It means workers who staff the factories - mostly women - live in poverty in crowded, dangerous and unhygienic slums.
"The working day is extremely long and these women will work 14 hours or more, six days a week," Ms Kyriacou said.
"We've spoken to a number of women who live in quite crowded houses in slums, usually without running water. One woman lived in a tiny room with two others and she couldn't afford a bed so she slept on the concrete floor.
"They're not paid enough, they're getting into debt, they're doing long hours at a factory and then coming home to a place that doesn't provide a decent standard of living."
Carolyn Kitto, founder of Stop The Traffik, said authorities in these countries were reluctant to raise the minimum wage out of fear of becoming "less competitive".
"These countries rely heavily on this income - it's a huge part of their economic survival," Ms Kitto said.
"There is an oversupply of labour in Bangladesh, so there's no problem getting people to do jobs in factories, and so it enables wages to stay very low."
Kmart said it sourced items from countries with "underdeveloped labour laws and industrial relations systems".
"Unfortunately, in many countries there are inadequate protections of workers' rights and wages that do not meet workers' basic needs. This includes some countries from which we source," a spokesperson said.
But change was not something "retailers and brands can do working alone", the spokesperson added.
CHANGE IS CHEAP
Oxfam commissioned research by Deloitte Access Economics to determine how much it would cost Australian companies to pay a living wage to offshore workers.
"They found it would only increase the cost of a piece of clothing sold in Australia by 1 per cent," Ms Kyriacou said. "That's all. We don't think that's too much to ask.
"If you ask the average Australian whether they'd pay a couple of cents more to ensure the person who made their clothes could earn a living wage, I think most people would say yes."
Ms Kitto believes consumers are largely confused about the difference between a minimum wage and a living wage.
"I think it's incredibly confusing for people. In Australia, you can actually exist on a minimum wage. You can't in Bangladesh. This is where the language needs to change when we're talking about ethical supply."
On April 24, 2013, an eight-storey commercial building in Rana Plaza in Dhaka collapsed, killing 1100 people and injuring 2000 more. It was home to many garment factories.
While several Australian retail companies including Kmart, Target, Big W and Cotton On source materials from Bangladesh, news.com.au is not suggesting that any of their goods were manufactured at Rana Plaza.
But the tragedy, considered the world's worst industrial disaster, sparked encouraging changes in regards to safety standards and audits.
It also prompted companies around the world to be more transparent about the factories they engaged to make their products.
"Transparency is hugely important and Kmart is proud to be one of the first retailers in Australia and New Zealand to publish the location of its supplier factories," a company spokesman said.
"In addition, striving for continuous improvement in ethical sourcing standards in partnership with our supplier factories, is an important element of ensuring respect for human rights."
ACTION HAS BEEN SLOW
Groups campaigning for a living wage admit that making progress is complex, given that supply chains often span several countries.
For Australian companies like Kmart, a national and global conversation is required about how best to drive change, advocates say.
"Australian brands, even the really big ones, might go into these factories with some very big contracts, but relative to some of the huge US and European countries, it's still not very much," Ms Kitto said.
"So their ability to drive change is hard. It's complex but it means we need to think about some creative and different models that protect workers, protect Australian businesses and allows us to work together to bring about change."
Oxfam said it was yet to see a "full and credible commitment" from Kmart - or any other brand - on the living wage issue.
"We don't expect companies to pay a living wage overnight - that would be near impossible," Ms Kyriacou said.
"But what we're calling for is companies to make a public commitment to paying a living wage, and commit to developing a road map to work out exactly how to do it. And we want them to set out some pretty clear time frames and milestones."
Kmart said its involvement with the Action Collaboration Transformation initiative, a collaboration of brands and unions worldwide, was a step towards achieving a living wage.
But it believes the best course forward is working to lift the minimum wage in countries like Bangladesh - not setting deadlines that are difficult to meet.
"We believe that effective national minimum wage setting mechanisms, and industry-wide collective bargaining supported by responsible purchasing practices, offers the most sustainable pathway to a living wage."
KMART'S EFFORTS ON ETHICS
Kmart said its human rights efforts were an ongoing process "and there is much more to do".
"Achieving long-term, systemic change requires collaboration between retailers, brands suppliers, trade unions, governments and other actors and we are committed to playing our part," a spokesman said.
Oxfam lobbies a number of major outlets to improve their ethical standards when it comes to offshore manufacturing. It said that Kmart has been perhaps the most receptive.
"Of all the companies Oxfam has been working with over the years, Kmart has taken a number of very positive steps," Ms Kyriacou said.
"We think it's good, but still there isn't a clear public commitment to working towards living wages. I would argue there's no valid reason for delaying this."
Ms Kitto agreed, saying the brand's efforts have been admirable - up to a point.
"Kmart has been working really hard on their supply chains. They haven't addressed the living wage question though."
The Ethical Fashion Guide is an annual ranking of every Australian company's performance in the area of sustainable and fair practices in overseas manufacturing. This year, Kmart received an overall rating of B+, but a D+ for worker empowerment initiatives.
The advocacy group Good On You also commended Kmart for its improvements in ethical supply, including devising a Supplier Code of Conduct.
"While these are definitely positives, Kmart has minimal worker empowerment initiatives and received a low-to-medium score in relation to implementing a living wage," it said.
"Overall, Kmart has a long way to go to ensure workers are treated fairly."
"Low wages and long working hours have been found to play a key role in parents' decisions to take their children out of school and let them work in various jobs," Good On You said.
Wesfarmers established the Department Stores' Ethical Sourcing Program for its Kmart and Target operations. It enforces minimum requirements and expectations for suppliers, and conducts regular and "rigorous" audits.
"We are committed to conducting business with the highest standards of integrity, in accordance with our international obligations and in compliance with all applicable laws," it said.
"We work with suppliers who share and follow our high standards of conduct in whichever country they operate."