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SA8000 Basic Needs Wage & Overtime

Q & A with SAI Field Services Director, Doug DeRuisseau

Question: In China, the issue of voluntary overtime- where workers are eager to work overtime to earn more money to send back to their hometowns - can create a challenging cycle for both workers and factory managers. This is the case sometimes even when workers are paid more than the basic needs wage (BNW). To comply with China's strict overtime laws, factory managers could put on extra shifts, hiring more workers. However that means fewer overtime pay opportunities for existing employees, who may then seek other job opportunities. How would you address this predicament? Doug DeRuisseau: The problem is a familiar one and is driven by the drive to make money to support oneself and one's family. The threshold answer to the question lies in whether or not the worker is making sufficient money to support his/her family in a regular work week, before overtime, regardless of what the BNW calculation is. Most legal minimum wage levels around the world are too low, driven partly by intense globalization and the competition that it creates and also by inadequate social infrastructure, e.g. health care, unemployment insurance, pensions, education. That leads to the common quotation that 'a poor paying job is infinitely better than no job at all.' Companies can do certain things to manage the overtime problem such as adding shifts, subcontracting, process redesign, etc. But that doesn't address the fundamental problem: wages are too low. Therefore, some companies (and governments, such as Thailand) increase hours to boost take-home pay rather than increase the wages. Thailand increased the weekly allowable overtime hours to 36 for the exact purpose of providing more take-home pay without raising production costs. Thus, some workers use this as leverage with a company that offers fewer work hours (thus complying with credible decent work codes and standards), saying they will go somewhere else to get the overtime to increase their take-home pay. This is not the answer.

One business owner said to me that excessive overtime resulted in four things for his business, all of which are bad: 1) higher cost (premium overtime pay rate); 2) higher accident rates; 3) lower production; and 4) poorer quality. This is not a good strategy for any business. If the companies cannot (or will not) pay a higher base wage (and they are paying a lot more now if they are paying premium for overtime), the problem will not be solved in the long term. That is the simple answer. I truly believe that it is possible to pay people adequately and still remain competitive, because the company in more ways than one through increased loyalty, quality and productivity, plus lower staff turnover rates, overtime costs, and training costs. But one thing is for sure- workers do not love to work excessive hours for the sake of work. They do it in order to earn enough to live on or fear they will lose their jobs entirely if they do not demonstrate eagerness to work overtime. It is up to employers to find a better way-- a worthy and attainable goals. Indeed, many employers do it today. Doug DeRuisseau is one of the pioneers experts in the field of social auditing, and helped to create SA8000 as the world's first management-system based social compliance standard. Additionally, as SAI's first Lead Trainer, he has trained hundreds of social auditors around the world, and has performed numerous accreditation audits.