For Bengaluru’s garment hub workers, the minimum wage is actually the maximum wage

Come April 1, and as garment worker Manjula K had bitterly predicted, the joke was on her.

That was the date when she and 95 other workers from Bengaluru-based apparel maker Amruta Creations Pvt Ltd were told they could expect cheques giving them five months of unpaid wages.

“Instead, the owner sent a letter to the Labour Department asking for an extension – for the eighth time,” Manjula said in Kannada. Cutting vegetables for Sunday lunch, she dropped her voice and added, “I may apply for a cleaning job in a nearby mall.”

That is the kind of job Manjula had sworn never to do.

“I thought garment factories were about international brands, so it would be respectable,” she said. “But I’m done with them, their work pressure, and their reluctance to pay a decent wage to women.”

Employment behemoth

The Indian garment sector directly employs more than 24 lakh people – industry estimates say 45 lakh, only second to agriculture. Almost three-quarters of these are young women from rural backgrounds, often first-generation industrial workers. They are the backbone of an industry that contributes 11% to India’s exports, and over 5% to the gross domestic product. Driven by a strong domestic market, the sector has been expanding, and the Union government’s Make in India programme has identified garments and textiles as a priority area to encourage investment.

And yet, garment companies pay the majority of its workers – tailors, helpers, store managers, packers, trimmers and button fixers – only minimum wages.

In Tamil Nadu’s Tiruppur, the largest knitwear production cluster in the country, knitted garment companies pay the state stipulated minimum wage of Rs 9,600 a month, and woven garment units Rs 11,000. In Delhi, another major garment hub, units paid Rs 9,742 until March, when the state government announced a 36% hike, raising the minimum wage to Rs 13,350 a month. Units in Bengaluru, the biggest region for readymade apparel production and export in India, with over 1,200 factories employing more than five lakh workers, pay Rs 7,474 a month, including dearness allowance.

“When I moved to Bangalore from my village in Tumkur, I thought I will save and send money home to my ailing parents,” said Jayalakshmi R, 24, who has been with apparel manufacturer Gokaldas Images for five years. “But I learnt a new kind of mathematics after coming to garments.”

On average, Jayalakshmi earns Rs 8,000 a month, including monthly incentives or overtime pay. Her husband Shivamurthy does the acid wash for denim jeans in Fibres and Fabrics International Pvt Ltd, making around Rs 9,000 a month. Their rent for a single room and kitchen is Rs 3,000. “For a room with an attached toilet, it is Rs 3,500,” said Jayalakshmi.

The couple’s monthly expenses – groceries, milk, electricity, water, and cable TV – add up to Rs 6,000. Jayalakshmi tries to invest Rs 1,000 per month in a chit fund.

“Right now, I can send Rs 5,000 to the village, but I’m scared to plan children,” she said. “How will this income be enough?”

Her neighbour, 42-year-old Uma K, entered the garment industry eight years ago when she lost her husband to cancer. Despite having twice Jayalakshmi’s experience, Uma also earns only Rs 8,000. When asked how she manages to raise two school-going children, she laughed wryly. “What are moneylenders for?” she said.

Uma has little social protection and job security. A year ago, for a throat surgery, she tried to use the employees’ state insurance that would have entitled her to avail up to Rs 60,000 after furnishing medical bills. But when she was on medical leave, her employer fired her. “Without insurance, I had to spend much more in a private hospital,” said Uma, who now works with Sonal Apparel Pvt Ltd. “That was the moment I realised the significance of good pay and worker benefits.”

Static wages, gender bias

For years, research has shown that a Rs 7,500 monthly wage is far short of what is needed for a worker to sustain a family, build some savings, provide transport and afford quality health care and education.

“The adage in the garment sector is minimum wage is the maximum wage,” said Anita Cheria, whose OpenSpace gives strategic advice to Garments Labour Union, a women-led trade union based in Bengaluru. “At the most, the pay has been keeping up with inflation, but has hardly risen in real terms.”

Said Mohan Mani, a researcher at the Centre for Labour Studies at the National Law School, Bengaluru: “There is no justification for a globalised industry not even being able to pay wages above poverty level.”

Cheria explained that even in a sector that largely depends on hard-working women between the age of 18 to 40, Jayalakshmi’s or Uma’s monthly pay is unlikely to increase with experience or skill.

There is a distinct gender dimension to wage compliance. The International Labour Union found that non-compliance rates regarding minimum wage in India’s garment sector was 74% for women, and 45% for men.

A 2009 survey of wages by Cividep, a Bengaluru-based non-governmental organisation that works on labour rights and corporate accountability, found many industry experts who argued that “wages to women are a supplementary wage for the family”. Therefore, they did not need to be paid living wage, calculated at Rs 18,000 a month for India.”

What this approach does is to systematically devalue female labour.

Keeping wages low

The Minimum Wages Act mandates a revision of wages by state governments every five years. But each time state governments revise the minimum wage, manufacturers challenge it by asserting that it would make the sector uncompetitive. In Karnataka, in 2009, apparel producers challenged a hike in the minimum wage, from Rs 2644.20 to Rs 3,302, which the Labour Department then undid, citing “a clerical mistake”. It was only when the Garment and Textile Workers Union approached the Karnataka High Court that the revocation was struck down.

Today, Bengaluru’s apparel manufacturers are appealing against a hike in the monthly minimum wage to about Rs 10,000 a month, which is applicable from April 1. In Tamil Nadu, last July, the monthly minimum wages for tailors were revised upwards after 12 years, from Rs 7,500 to about Rs 10,000, but again, garment unit owners protested.

Meanwhile, an International Labour Organisation research note last year found that over half the garment sector in India pays less than legal minimum wage, worse than Pakistan, Cambodia, Thailand and Vietnam.

Many companies attempt to knock down labour costs through practices like seasonal contracting, rotation of workforce by constant firing and hiring, using cheaper migrant labour, shifting units to rural areas, forcing unpaid leave on workers during lean periods and enforcing overtime when there are orders.

For instance, instead of overtime, or OT, which is voluntary, has fixed hours according to the law, and attracts double the hourly wage, most workers in Bengaluru refer to their employers enforcing “OC” – compulsory, unpaid or single wage work, and with no maximum hours. Refusing to do it could mean losing one’s job.

Little regulation

“The women workers don’t have much bargaining power,” said Gopinath Parakuni, founder of Cividep. “They are poor, non-unionised, and often the sole breadwinners for their families. So, each of these changes means they lose jobs, or are short-changed of pay.”

There is little regulation on the part of the state – nine manufacturers admitted to this reporter that they paid monthly bribes to labour inspectors to “cause no trouble”. One medium-scale manufacturer in Bengaluru put a figure to it – Rs 70,000 in cash.

Jessy Lawrence, proprietor of Lawrence Clothing Pvt Ltd in RT Nagar, Bengaluru, who runs four apparel units with a total of 2,000 workers, said that as a woman herself, she understood the “pain of the poor women workers running families at just 7,500 rupees a month,” but insisted that if she had to pay more, her units would have to be shut down.

“The purchasing price we get from buyers are less, because the market and prices have been stagnant for the past three years,” said Lawrence. Details like margins and purchase price are closely guarded by manufacturers, making the supply chain extremely opaque. Most studies on the industry depend on rough verbal estimates from factory owners.

In the global assembly line, as power has shifted from producers to traders and retailers, brands now set the terms. A senior official at the Labour Department said that multinational brands largely offer “narrow margins” to manufacturers, who then fight to keep service conditions low.

“In absolute terms, wages of over 100 employees is a large payout for a small- or medium- scale apparel maker,” said Lawrence.

Lawrence said labour was 30% of her monthly expenditure. Another Tiruppur-based senior entrepreneur, who produces for Levi’s, put wages at 20% in his export units.

But the World Trade Organisation offers the clinching number. It estimates that in the supply chain, labour is only 1% to 3% of the market price of a T-shirt or skirt. So researcher Mani calls the manufacturers’ argument about not being able to afford labour is “untenable”. “There is ample room to increase wages if the system wants it.”

To further reduce wages, apparel manufacturers blame rising labour costs for eroding India’s competitiveness in the global market. As one Bangalore exporter put it, “it is leading companies to ruin”.

Growing industry

But the garment industry in India is in fact growing in size and production. While exports did decline by 2.1% from 2014-’15 to 2015-’16, and there are concerns that Vietnam and Bangladesh have surpassed India’s apparel exports, Chandrima Chatterjee, advisor at the Apparel Export Promotion Council said that there has been no exceptional shutting down or downturn in the industry.

“This is an industry with a low entry and exit barrier,” she said. “Every year, many small units close and others open. Bangladesh and Vietnam overtook us in 2012 because they built scale over the years, and have more competitive costing, which is not only about wages.”

From April 2016 to January 2017, exports grew by 4.5%.

When pressed, big exporters like Shahi Exports and Gokaldas Exports, small entrepreneurs and manufacturer lobbies alike admitted to various other significant factors influencing their bottom line, like increasing real estate prices, a recession-linked decrease in orders from brands in Europe and the US, heavy import duties on manmade fabric, unreimbursed duties, unimplemented subsidies, and even demonetisation.

MC Dinesh, president of the Federation for Karnataka Chambers of Commerce and Industry, said that “power, taxes, land and labour weigh equally on the garment industry” and producers lobby with governments to reduce costs on all fronts.

And yet, the narrative pitching labour cost as the undoing of garment units is popular, and directly impacts government policies.

Last year, the Union government’s special package of Rs 6,000 crores for the textile and apparel industry – which was publicised as leading to an increase of Rs 1,93,407 crores ($30 billion) in exports, as well as the creation of one crore jobs over the next three years – introduced “flexible labour norms to increase productivity”.

Workers unions across India have condemned the changes in labour norms as “anti-worker”. One of the changes makes Provident Fund optional for employees earning less than Rs 15,000 a month, which comprises the majority of workers in this garment hub. For those eligible for Provident Fund, the government will pay the 12% employer’s contribution for the next three years. The package also introduced what is referred to as “fixed term employment”, or a time-bound contract. Worker unions fear that fixed term employment could lead companies to entirely do away with permanent contracts and long-term responsibility, leaving workers without a job and medical insurance. Fixed term employees would also not be eligible for benefits like bonus and gratuity that accrue from seniority and regularity.

A senior official at the Labour Department in Karnataka said that emerging economies like India always respond to the threat that brands would move to countries offering cheaper labour. “We keep wages low to attract investment,” said the official. “Today, strong competition between states is also playing a part.” Like many experts, he believes that without collective bargaining by workers, and consumer pressure on international brands for ethical business practices, companies will continue to pinch from the labourer. “The pockets of good practices that exist in India are thanks to brands who want consumer goodwill,” he said. “They, in turn, enforce better conditions at their supplier’s factories.”

Jessy Lawrence demonstrated that she has room to manoeuvre, even with uneven margins. A domestic apparel brand she manufactures for, sells ladies shirts at Rs 699. It offers her a margin of Rs 63 a shirt although her cost is Rs 110. “If wages increase, my cost is Rs 130,” she said. When asked how she manages to stay afloat then, Lawrence smiled. “By planning better,” she said. “By balancing orders from a few other brands that give me good margins.”

Chitra Ramdas, the organisation development in-charge from Shahi Exports, one of India’s biggest garment exporters with 54 units producing for brands like Gap, H&M, Kohls, and Columbia, said that the company’s focus on compliance and scale helped it grow 30% during the recession. For Hanif Sattar who runs Basics Life, a men’s fashion brand in Chennai, innovative design is the way to command premium prices.

Chandrima Chatterjee of the Apparel Export Promotion Council welcomed the textile package’s labour flexibility. “But the technology subsidy and tax incentives in the package, like rebate on state levies, reimbursement of taxes already paid, and reduction of import duties are still pending implementation,” she said.

There are thus other avenues to cut costs, but labour remains at the centre of garment economics, globally and in India. While profits accumulate on top, losses are pushed down the line till the last rung: the worker.

In the past three years, even as workers demand better wages and benefits, garment companies have been developing novel workarounds. Among these is a distinct focus on rural India – by bringing migrant workers to the city factory and, alternatively, taking more factories to the village.

This is the second part of a four-part series on Bangalore’s garment workers. Read the other parts here, here and here.