Garment exporters seek productivity-linked wages, file suit before Labour Commission

Our Economic Bureau

New Delhi, June 3: WITH productivity rates being among the lowest in the region, garment exporters have filed a case before the Labour Commission for productivity-linked wages in the sector.

In the statistics provided to the Commission, the Garment Exporters Association (Gea) has pointed out that though the per hour cost of labour in India was only 10 per cent lower than that in China, efficiency was lower by 35 per cent. The relative cost per hour worked out to $0.73 against $0.43 in China.
In other words, the Indian industry is 40 per cent more expensive than the Chinese garment sector. In the context of increased globalisation and consequently intensified competition, only efficiency along with quality can ensure survival, it has contended.

Wages should, therefore, be linked with productivity, especially since productivity in the Indian garment industry compared poorly with that of neighbouring countries like China, Sri Lanka and Bangladesh.

In these countries, each operator produces 20-22 shirts a day, whereas in India the corresponding figure is not even 10. This low productivity makes Indian garment comparatively much costlier, it says.
Moreover, Gea felt, work stoppages and strikes ought to be banned in the garment exporting factories, on the lines of similar provisions in the Sri Lanka, Bangladesh and some other Asian countries.

India’s share in the global garment trade was barely 2.86 per cent, while Hong Kong accounted for 24.05 per cent and China 16.17 per cent. With the abolition of the quota regime very soon, India’s percentage share would go down further if immediate steps were not taken to improve quality, productivity and competitiveness, it added.

It also mentioned the fact that the garment industry was the largest net foreign exchange earner for the country. Last year, exports touched $5.5 billion, equivalent to 14 per cent of the total export earnings.
Calling for more "realistic and equitable" labour laws that are fair to both the management and labour, it has urged that wages be so structured that efficient workers were rewarded and inefficient ones penalised. Periodical revision of laws to make them more in tune with the times was also a dire need, it averred.

It sought delinking of wages from the consumer price index. Since the increase in dearness allowance was linked to inflation and unrelated to productivity, the wage cost per unit of production kept escalating. This adversely affected the garment sector where price-sensitive demand patterns restricted the scope for cost-plus pricing.

Also, under the present provisions of the Factories Act, prior permission of a factory inspector was required for working overtime. With adherence to delivery schedules being the key to success in overseas markets, sometimes garment exporters have to work overtime at short notice.