H&M Group commits to digital wage payments in Bangladesh
Swedish fashion retailer H&M Group has committed to digitalising all its supplier payment systems in Bangladesh by 2020, following its participation in a summit addressing the need for the industry to move away from cash wages.
The Bangladesh Digital Wages summit held in Dhaka yesterday (20 November) was co-organised by the Business for Social Responsibility (BSR) and Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The topic on the table was the aim to transition to an all-digital payment method, a move widely expected to improve economic growth and empower garment workers.
"Through digitizing wages, we are pledging to further promote financial benefits, such as cashback, reward points and merchant discounts, to increase the value of wages," said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Industries Minister Nurul Majid Mahmud Humayun added the move would improve the lives of garment workers and in turn improve the country's economic growth.
H&M agreed a transition towards a digital wage payment system could empower workers by improving their access to financial services, savings, credit and insurance, which would lead to additional economic opportunities and independence for garment workers – and said all its supplier factories will have digital payment systems by 2020.
"Digitisation will bring more people in Bangladesh into the formal economy. It would enable the textile workers to receive their salary and other payments through a personal bank account, mobile money or payment card solution, instead of cash-based systems," explained Kiran Gokathoti, sustainability manager Bangladesh, H&M Group.
"Both textile workers and employers will benefit from this transition; creating a faster, safer and more transparent wage payment. It also has the potential to empower women, who represent the majority of the garment workforce in Bangladesh, as digital payment systems will increase their possibility to control their own income, and in this way strengthen their economic independence."
The move towards paying garment workers in Bangladesh digitally instead of with cash kicked off earlier this year with plans for a vendor-neutral "digital wallet" platform for wage transactions.
Levi Strauss & Co, Marks & Spencer, and VF Corporation have also partnered with Mastercard on a global effort to pay garment factory workers digitally with the group coordinating pilots in Egypt and Cambodia.