Fair Pay
HUGO BOSS IS COMMITTED TO FAIR COMPENSATION IN THE SUPPLY CHAIN
Our Commitment
At HUGO BOSS, we are committed to fair compensation in the supply chain. We understand that fair compensation among our global partners is not only the basis for long-term trust and partnership, but is also a prerequisite for employees to live independent lives. For us, this also includes the payment of living wages by suppliers to their employees. For HUGO BOSS, this has been and will continue to be an essential aspect of a sustainable supply chain. That is why we are participating in the design of industry-wide standards and working together with other stakeholders on an individual compensation strategy for our suppliers' employees.
The work performance of a standard working week, as defined by respective national legislation and the Core Conventions of the International Labour Organization (ILO), shall be sufficiently remunerated by the supplier. The aim is to enable local employees and their families to have a decent standard of living. For HUGO BOSS, this means that the monetary means available must be sufficient to ensure the basic needs of food, water, housing, education, health care, transport and clothing for all members of the household. In addition, employees should have disposable income to build up reserves for unexpected events.
The Seven Guiding Principles of our Living Wage Strategy
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Long-term target
We aim to ensure fair compensation among our global partners. Paying fair wages is not only the basis for long-term trust and partnership but is also a prerequisite for employees to have a decent standard of living. We, therefore, aim to create the right conditions and scalable solutions towards fair compensation in our supply chain.
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Statutory Minimum Wage
Minimum wage is considered a baseline on the way to a living wage. We expect all suppliers to meet the nationally applicable statutory minimum wage as well as observe and comply with the national regulations for health and social welfare systems. In addition, we demand that suppliers respect the right of their employees to receive information on individual salaries (e.g. through detailed salary statements).
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Wage transparency in our supply chain
Corporate due diligence entails the knowledge of one’s own supply chain. In this context, and to support our target for achieving living wages for the employees of our partners, we strive for more transparency in our own supply chain. These efforts are based on wage data assessments and gap analyses of our finished goods suppliers, using recognized benchmarks for living wages. With a data and strategy driven approach, we define a step-by-step roadmap for living wages together with our suppliers, while also collaborating with other companies and organizations such as multi-stakeholder initiatives.
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Responsible Purchasing Practices
By further promoting responsible purchasing practices, we can have a decisive influence on improving wages at our suppliers’s side, because we would then be able to enable them to plan their production and working hours effectively and pay employees fairly. At HUGO BOSS, we are committed to assessing our purchasing practices through the ACT questionnaires, and to improve them continuously.
For us, responsible purchasing practices mean:
- long-term trust and partnerships including responsible exit from business relationships
- collaborative planning and forecasting
- respectful and continuous dialog with suppliers regarding handling of orders and associated payments
- training on responsible sourcing and buying
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Collective Bargaining
We recognize collective bargaining including the right of freedom of association and are committed to ensuring that these rights are granted to employees within our sphere of influence. Employees shall be free to negotiate in social dialogs tailor-made solutions and binding agreements on working conditions and wages. Wherever possible, the binding agreement is aimed to be on an industry level.
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Empowering & Capacity Building
For the management and workers of our suppliers and for our own employees we promote capacity building. In this context, we encourage our suppliers to participate in specific trainings, provided for example by Fear Wear Foundation. Besides, our purchasing department is encouraged to attend an e-learning program about responsible purchasing practices and fair and open cost calculation.
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Engagement & Partnership
As we consider fair compensation as a human right, we work with initiatives such as the Fair Labor Association (FLA) to further promote this right. Additionally, we are actively involved in the Partnership for Sustainable Textiles, for example, in initiatives and working groups centered on purchasing practices and living wage.
Our approach
We are aware that the statutory minimum wage that has been set in countries we source from may not be sufficient to provide workers with the above-mentioned decent standard of living. Since we recognize fair compensation as a human right – and have also embedded this in our Supplier Code of Conduct – we work with initiatives such as the Fair Labor Association (FLA) to further promote this right. As part of this membership, as well as the German Partnership for Sustainable Textiles, we are also committed, among other things, to promoting political and economic framework conditions that enable a systematic improvement in the wage situation for workers in specific countries.
In addition, we continuously address our suppliers' specific compensation practices. We collect wage data from our finished goods suppliers in particular and analyze any wage gaps, among other things. For this purpose, we apply the FLA Compensation Dashboard. The dashboard is used to compare the average wage of suppliers with recognized benchmarks for living wages, in which we refer, in particular, to the wages specified by the Global Living Wage Coalition. If these are not available for certain countries, we refer to other reference values recognized by the FLA and the German Partnership for Sustainable Textiles. Based on the identified wage gaps, targeted projects involving our suppliers can be implemented to reach a sustainable increase in wages. This is done in collaboration with a wide range of stakeholders, such as national and international NGOs, civil society organizations, and trade unions or local legislators. Our newly established task force, which will drive the issue of fair compensation in the supply chain internally and anchor it in the company, also plays an important role in our various measures.
Our targets
On a short term:
Progressive improvement of wages at select pilot suppliers until 2025. The goal of the pilot is to achieve a sustainable increase of wages towards living wage or at least the defined target wage.
On a long term:
Scalable solution towards fair compensation in our supply chain with a focus on finished goods suppliers by 2030.
Our latest achievements
Our concrete actions to achieve fair compensation in our global supply chain are aligned with our strategy and our targets.
- 2019:
As one of our first steps on our way to living wages, we have collected wage data from our strategic APAC (Asia Pacific) finished goods suppliers. We prioritized the analysis of high-volume partners and countries where there is a high risk of living wages not being paid to employees.
- 2021:
In the next step, we have collected wage data from our strategic EMEA (Europe, Middle East, Africa) and AMER (The Americas) suppliers.
By the end of 2021, we have collected wage data from more than 60 suppliers in 16 countries. Our analyses indicate, that workers earned, on an average, 75 percent of the living wage country reference value.
Besides that, we established a HUGO BOSS task force for promoting living wages.
We developed the HUGO BOSS living wage strategy with its 7 guiding principles.
We have conducted a survey on responsible purchasing practices through the ACT questionnaires, both internally and with our suppliers, and we have for example defined action plans for implementing internal training and developing metrics for responsible purchasing.
- 2022:
Based on the wage data collection and gap analysis, and to tackle the issue in a systematic and collaborative way, we developed a comprehensive plan of activities, tools and trainings, and engagement for a successful living wage pilot.
Our next steps
We are committed to continuously collect and analyze wage data from our finished goods suppliers with focus on the strategic partners.
- 2022 – 2025:
We are going to start pilot projects with four suppliers in Bangladesh, Vietnam, and Sri Lanka in collaboration with relevant multi-stakeholder and local organizations.
Our ambition is to go beyond ensuring the statutory minimum wage. We aim to have progressive and sustainable wage improvement at those production facilities.
The individual measure plan is driven by our strategy and the local situation, and includes an efficiency program, training programs, responsible purchasing practices, social dialog, and collective bargaining, among others.
Fair pay as part of our human resources work
HUGO BOSS understands that fair pay is an essential aspect of the core of human resources . Through a fair, transparent and competitive remuneration structure, we want to ensure equal opportunities and avoid discrimination, as well as increase the competitiveness of the company. Furthermore, we aim to strengthen the motivation of our employees and their loyalty to the company.
Since the beginning of 2021, all positions worldwide are being evaluated on the basis of standardized criteria and clustered into so-called ‘grades’. Job-specific qualifications and responsibilities form the basis of our grading system. This assessment enables compensation to be graded in line with market-based salary bands, irrespective of gender or other diversity characteristics. This principle is also set out in the HUGO BOSS Code of Conduct.
In individual cases, specific market conditions, experience (employment biography), and performance are also key factors that play a role in defining individual remuneration.
HUGO BOSS is committed to a continuous improvement process to ensure fair pay. For example, we will publish a global Fair Pay Commitment in 2022 and gradually introduce corresponding measures worldwide. As a fisrt measure, HUGO BOSS AG introduced Equal Pay metrics in its annual salary round in 2022. This enables managers to conciously decide on compensation based on transparency.
The compensation system at HUGO BOSS comprises fixed and variable salary components, bonuses above the standard pay scale, benefits in kind, and other benefits. It takes into account collective bargaining agreements and includes national and regional benchmarks.
We analyze gender-specific compensation differences among employees in comparable positions based on our grading system. This involves comparing the average annual compensation amounts of women and men, on a full-time basis within the individual grades. There is no correction for biographical factors that influence individual salaries.
In terms of employees in Europe (> 70% of all employees), the average salary of women overall, related to comparable positions is 0.5% lower than that of men (Status: November 2021).
We are continuously working on expanding our global compensation analyses, in particular to identify drivers of unequal pay like for instance biographical factors. It is of high priority for HUGO BOSS to further advance gender equality in remuneration and to minimize salary disparities.
For more information about fair compensation, see the Sustainability Report.