Overall increasing cost, reducing Government incentives, strengthening rupee, favourable international policies of competing countries, delayed FTA with Europe, blockage of working capital due to delay of refunds and continuously increasing minimum wages…. These are only a few of the many issues being faced by Indian apparel exporters. In this alarming scenario, how would one expect the industry to react on the issue of living wages, which is nearly double or even more than double of the current minimum wages?
Whatever the challenges are, the issue of living wage can’t be ignored for long and dialogue on the same must continue, as it is a highly complicated issue with many different dimensions. And though few brands are positively moving further in this direction, many concerns remain. The sensitivity of the topic is obvious from the fact that even as many stakeholders of the industry, such as exporters, brands, sustainability organizations, trade bodies, labour unions, international NGOs and academicians share their views on this issue, no one wants to go public as yet on their views. So, on special request, no views, or names are being shared.
Continuous dialogue regarding living wage is very important also because apart from few exceptional cases, so far nothing concrete has taken place. Veterans of the industry are happy that the few efforts being made to open windows for change could encourage others to follow. “The issue of living wages is much debated globally, brands are increasingly committing themselves to support living wages for workers. I am glad that we have had a great interest and participation from stakeholders in the session at this year’s CRB India and Sustainability Standards Conference in November. We wanted to make a beginning and this beginning may lead us to set up a multi-stakeholder forum on the topic in the apparel and textiles sector,” says Dr. Bimal Arora, Chairperson, Centre for Responsible Business (CRB) and Faculty at Aston Business School, UK.
In India, two brands – Continental Clothing, UK and Mini Rodini, a Swedish childrenswear brand, are working with two Indian exporters and paying living wages to the workers. Going forward, these brands have plans to expand the concept. All the stakeholders emphasize that before taking the plunge for living wages, many issues need to be addressed. Firstly, supply chain has to ensure that everyone is getting minimum wage, as a chunk of the workers are yet to get proper minimum wage. Next, it has to be seen that once the workers get minimum wage, they also receive allied benefits which is their right, like paid leaves and basic social security, etc. “First ensure minimum wage, then pursue fair wage and after that, we should work on living wage,” argued one brand representative.
Industry says…
Can one have such discussion in China or can buyers push Vietnam for living wages? This is unrealistic.
Whatever the reforms are, they should not just focus or be limited to export-oriented factories; domestic market is even bigger and more needful for such initiatives.
By shifting focus to living wage, industry has to take care that the need of the hour, which is employment generation, is not compromised on… To give better wages to few, there is no logic in killing job opportunities for many others. Government has a huge target in this regard but if the industry has to pay living wage, who would like to hire more workers… and the thrust will definitely be on automation or outsourcing.
The segment against the implementation of living wage, at least for now, has highlighted that it is proven over time that whenever wage increases, employment decreases and factories either shift to areas where wages are low or move towards automation to cut down on the number of workers. According to the view of this segment, priority of the nation as of now is job creation, minimum wage being already too high. It was argued that the best direction for now is to compensate wages with welfare schemes for workers. “As the conditions stand today, one’s top priority is to survive, be it employer or the employee, but if living wages come into picture, owners will have to do some adjustments which are not viable,” added a senior person representing the trade body.
Global Production Network (GPN Studies), Delhi has come up with an interesting draft on achieving living wages in the apparel sector in India. In its research, it found that the share of India’s wages in US retail price of various apparels is 1.88 per cent to 2.74 per cent. It has also mentioned that for various apparels, Indian FOB price ranges from US $ 5.50 to US $ 11 while US retail price for the same varies from US $ 20 to US $ 34.
One of the prominent trade bodies of Delhi-NCR based apparel exporters candidly said that its members require promise of full capacity orders for three years and from at least three brands, and then only they are willing to support the concept of living wage. “It is not possible to follow living wage by an assurance of just one buyer and orders for few months. Once a worker is paid higher, he will not work on lesser wage ever,” said an export house representative. He further added that if Europe removes duties from India, scope for living wage will increase naturally.
The lack of mutual trust across the brands, vendors and all other stakeholders of the industry is a major hurdle in this regard. A brand representative mentioned that the brands are working in silos even though they have more or less similar objectives and processes. “All of us need to share, exchange whatever information or knowledge one has to create a platform for transparent discussions,” he emphasized.
One of the interesting aspects that needs immediate attention is ‘consumer awareness’. It is important that the customer knows what amount of his payment is going as wage; the supply chain needs to ensure this transparency so that consumers will be motivated and willing to pay more. The other aspect of this concern is more practical. “As customers, we always prefer cheap and best. We wait for sales and shop more during sales. Are we as customers ready to pay living wage?” questioned an industry expert.
One of the best wage systems is a negotiated wage set by businesses and workers together through collective bargaining. But given the low level of unionization in garment industry in India, unlike in other major garment producing countries, productive dialogue between workers and factories is far too rare.
Price has to increase
“Nothing is possible on this issue until and unless price is not increased. If you are not willing to increase price, don’t think about living wage,” said a representative from an international NGO. He further insisted, “Why don’t the top management from brands leave their huge bonuses and pay the gap between the minimum wage and living wage to the garment exporters?”
The segment in favour of living wage shared their logic and said that wage has almost increased by 50 per cent in Cambodia but industry is surviving there. With better efficiencies and negotiations with the buyers, factories can make money and can pay living wage. It was insisted that all stakeholders down the supply chain need to be dedicated and accountable for living wage, then only it will be executed. The common argument that surfaced was “If living wage is being paid to the workers, their children need not work, productivity will be more, absenteeism will be less and factory will require less workers.”
Good beginning…
With few examples, it has been proved that living wage is very much possible but it needs strong attention of all stakeholders of the supply chain, especially commitment from brands. Continental Clothing, UK and Mini Rodini had a good beginning in this regard. Both the brands are working with few Indian exporters and are paying living wage too. Continental Clothing, UK mentions on the label for the customer that ‘x’ amount out of the total price of the product is paid to the worker.
Mini Rodini mentions in its sustainability report that it sources 16.5 per cent of its total sourcing from India (4 suppliers, 5 factories), the brand doesn’t charge anything extra from consumers and pays to the factory out of its margin. Even workers are not being informed that they are getting extra wage as part of living wage exercise; they are given this amount in the form of incentives for being more productive and efficient. “The goal is to implement a system of contributing with our share of living wages at all our sewing units until 2020,” says the Brand.
Bharat Tex Special Report 2026 
