Harnessing the power of gratuities and mobile payments to improve workers’ livelihoods at apparel factories worldwide
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Each garment produced for a partner brand at the supplier factory anywhere in the world is assigned a unique QR code. The QR code corresponds to a production lot that identifies the workers that participated in its production and their phone or digital account numbers. These codes are printed on tip4good tags attached to all garments produced on that work order. Upon purchase, the user scans that QR code with her mobile phone and effects the gratuity payment. This transfers the gratuity to the account associated with the QR code. Users are notified when their gratuity is paid out. Only workers whose digital account/phone numbers appear on the original work order list associated to the QR will receive their pro-rata share of the gratuity accumulated in the respective account.
We encourage engagement and repeated generoristy by offering the option of becoming tip4good members by registering and downloading our mobile app. This allows members to enroll in our rewards program and earn points based on their frequency and amounts of gratuity payments, no matter which participating brand the garment was produced for. Points can be exchanged for a range of enticing rewards and confer status which can be displayed on the member’s social media.
The question answers itself. Brands don’t pay the factory workers more because, most of the time, the brands aren’t the ones that actually pay the factory workers. Brands almost never own factories. The brands pay the supplier (or a broker or a supplier outsources production to another supplier, etc.) and the supplier/factory must compete with other suppliers all over the world in order to win the brands’ business. This means it must produce the quality of garment the fashion brand requests at the lowest price per unit possible. The supplier pays the factory workers. So the supplier will have to pay the workers enough to comply with the country’s minimum wages and provide incentive for the worker to remain working, while at the same time ensuring their unit costs remain low enough to maintain their business with the brands.
Gratuities are accumulated at a clearinghouse based on their respective QR code. That QR code account contains pertinent information such as the wage level, worker headcount associated with the account, other costs, as well as the disbursement threshold (i.e. 10% of workers’ monthly wage). Using a smart contract, the account disburses automatically once payment conditions are met and reaches the account numbers of the workers associated with that QR through digital wallets on their mobile phones or other applicable fully digital means.
That will depend on the respective brand. We do not need to have factory traceability in order for tip4good to function. Brands may provide it to us if they choose to and they may allow us to provide it to our users. We certainly encourage transparency in the production chain, but it is not our fundamental organizational mission and it is not required for us to function or account for our remit of activities. Our mission is to permit consumers to thank the factory workers who assembled their garment by providing them with additional funds in the form of a gratuity in a fully reliable, transparent, and traceable manner. However, we are committed to do everything we can to support partner organizations working to achieve absolute apparel industry supply chain transparency.
tip4good is completely optional. It is only paid if the consumer wishes to pay it. For example, if there are two identical competing garments from different brands and one has tip4good and the other does not, then their prices will also be the same. tip4good does not affect the price of the item. FairTrade involves paying a premium. Normally that premium is paid by the customer in the form of a higher price (or someone else down in the value chain voluntarily reducing their margin) for a product marketed as a FairTrade item.
We expect the brands and/or factories to contribute with the cost of printing the tags and placing them on the garments. The rest will be taken care of by tip4good. If the brands and their suppliers are willing to participate in the program but are not willing to assume the expenses, these will be covered by donations or deductions from the gratuities received.
There’s a big difference between how much workers get paid and the other problems affecting the garment industry. Issues such as inadequate fire safety, air quality, and factories’ structural integrity concern physical objects that can be resolved with money. Harassment, child labor, forced overtime, freedom to unionize, etc. require legislation. Governments should be lobbied to provide it, along with oversight and enforcement. Garment workers’ wages, however, are nothing but the price of unskilled labor. They are involuntarily set by supply and demand for this labor. But, unlike purchasing fire extinguishers, no amount of spending will resolve low factory wages, as the global supply of unskilled labor comprises billions of people. Governments should be lobbied to set minimum wages at the “Living Wage” level. But if this minimum wage is set too high there is no way to prevent brands and suppliers from moving to other jurisdictions with laxer standards and lower wages. Coaxing stakeholders to set artificially manipulated wages means higher costs for the supplier and/or less margin for the brand—and must take into account the additional complications that nearly all factories supply several brands simultaneously and outsourcing and counterfeiting are rife. Brands compete in an increasingly cost-conscious fashion market and their shareholders are understandably partial to profitability. We would prefer a fashion industry in which all brands sacrifice margins in favor of ethical sourcing with generous wages and compete on this basis. However due to the enormous size of this industry, this type of systematic change is proving painfully gradual. In the meantime garment workers could use more income. We have a foolproof way to get it to them that doesn’t depend on all this stuff and plenty of evidence that consumers are keen to help out.
Mere months ago it became technologically feasible for brands to allow their customers to do their part to contribute directly to the wellbeing of poor factory workers with absolute transparency and traceability. Customers who are concerned about this will choose to participate by thanking them with gratuities. Those who aren’t interested won’t participate and won’t be affected in any way. Brands receive a turnkey CSR program that they need not administer. It permits them to allow their customers to directly transfer some of the surplus value they receive in the form of competitive prices and good craftsmanship back to the workers who need these resources. Direct income transfers via digital payments platforms such as tip4good hold the potential to positively impact the future of humanity by helping millions to lift themselves out of poverty. Consumers nowadays are justifiably eager to contribute. Brands benefit by providing their customers with yet another way to do good for the world by purchasing their merchandise. This enhances market share and brand equity, especially among emerging segments with rising purchasing power that are increasingly concerned about the sustainability of global society, such as Millenials and ethically oriented consumers. Participation in our matching gift program even gives the brand a hassle-free opportunity to put its charitable foundation funds to good use and will no doubt reward it with a stellar reputation as a global corporate citizen while multiplying the benefits of the tip4good program.
tip4good should improve the image of fashion brands that choose to participate. Sustainability and ethical sourcing are issues that are setting consumer trends and increasingly near and dear to the hearts of Millenials and other emerging customer segments. Brands that espouse such values by permitting their customers to thank the factory workers by paying gratuities display impeccable ethics and magnanimity, especially if they include a matching gift program. Moreover, sustainably oriented customers will be very happy to have this option—and their numbers are rising substantially. This should increase the brand’s market share without sacrificing any profitability.
You would only pay a gratuity if you feel the desire to thank the factory workers who made your garment by contributing a monetary gift to improve their livelihoods and derive gratification from doing so. Most of these workers are unskilled and do not earn enough to meet the basic needs of their family. 80% of them are women. tip4good provides an enhanced gratification to the person that gives it. When a person buys an item she gets gratification from that item. If the person gives a gratuity to the worker, she obtains an additional gratification that is different and separate from the one she originally received from purchasing the garment. If you do not wish to thank the workers, nothing happens. No one is required to pay the gratuity. It is not an obligation or something you are expected to do. tip4good will never be compulsory.