Concern over minimum wages for garment workers

By: | Published: May 12, 2016 6:04 AM

The knitwear/readymade garment sector is already facing a tough proposition in the global market due to lower competitiveness in certain areas such as bank interest, infrastructure, transaction cost, and power cost including labour wages

The knitwear/readymade garment sector is already facing a tough proposition in the global market due to lower competitiveness in certain areas such as bank interest, infrastructure, transaction cost, and power cost including labour wagesThe knitwear/readymade garment sector is already facing a tough proposition in the global market due to lower competitiveness in certain areas such as bank interest, infrastructure, transaction cost, and power cost including labour wages

Tiruppur Exporters’ Association (TEA), representing the largest knitwear/readymade garment units hub in India, has expressed serious concerns over the Union government’s proposal to fix the minimum wages for contract workers at Rs 10,000 and urged the textiles ministry to take up the matter with the labour ministry to stop the proposal, which would hit the industry.

The knitwear/readymade garment sector is already facing a tough proposition in the global market due to lower competitiveness in certain areas such as bank interest, infrastructure, transaction cost, and power cost including labour wages, said A Sakthivel, president, TEA.

In his letter to Union textiles secretary Rashmi Verma, Sakthivel said, “It is to be noted that when the total garment exports from our country has recorded $17 billion in 2015-16 fiscal (R1,11,236 crore), countries like Bangladesh and Vietnam, which are not having raw material base, had surpassed our exports and clocked $25 billion and $27 billion, respectively, in exports. It is also to be noted that Vietnam has already signed an FTA with EU, which will come into effect from the year 2017 and one of the member countries signed Trans Pacific Partnership Agreement. Likewise, being a least developed country, Bangladesh is enjoying duty free status in EU and Canada,” Sakthivel pointed out.

“We wish to point out that the garments sector has been regularly entering wage agreements with trade unions. At this juncture, with the fixing of R10,000 as minimum wages, this sector will further become uncompetitive and derail the exports movement,” he emphasised.

“We apprehend that we could not sustain in the international market, losing jobs to lakhs and lakhs of workers. When we are already struggling to sustain in the global market, this new proposal of minimum wages of R10,000 per worker will hit the industry hard. Since the industry is already paying higher wages to workers, the Union textiles ministry should take up the matter with the labour ministry to remove the controversial minimum wages notification in the best interest of the industry and people employed with them,” Sakthivel stated.

He said that Tiruppur, a knitwear hub, is exporting knitwear garments to more than 100 countries and in 2015-16, it recorded R23,050 crore in exports as against R21,000 crore achieved in 2014-5 and is currently providing employment to 600,000 workers directly, out of which 70% are women.

At the all-India level, the share of Tiruppur has gone up from R12,500 crore in 2011-12 to R23,050 crore in 2015-16 i.e. from 19.1% to 20.72%.

In his letter, Sakthivel urged the textiles secretary to expedite a free trade agreement (FTA) with the EU, as the latter accounts for a chunk of the total exports from India. Of the total exports of $17 billion, EU accounted for $6.29 billion. India is still having the potential to enhance exports to EU once the level playing field is provided to the sector.

“It is to be noted that currently, our main competing country Bangladesh, with a least-developed country status, is now enjoying the duty-free market in the EU and has exported goods worth $15 billion in 2014-5 to the EU market alone, more than double of our garment exports. It is also to be noted that the Bangladesh total garment exports was $26 billion in 2014-15. We are confident that we could dent the market share of Bangladesh once a free trade agreement is implemented with an additional advantage of being compliances-oriented factories in our end,” Sakthivel pointed out. Once the FTA is through, India can generate 30 lakh jobs additionally, he added.

Similarly, the Centre should also look into an early comprehensive economic partnership agreement (CEPA) with Canada as well a comprehensive economic cooperation agreement (CECA) with Australia, as both are considered to be important markets for the Indian garment industry and have huge potential to grow further.

Seeking Relief
* Tiruppur Exporters’ Association (TEA) has expressed serious concerns over the Centre’s proposal to fix the minimum wages for contract garment workers at R10,000 and has urged the textiles ministry to take up the matter with the labour ministry to stop the proposal
* The knitwear/readymade garment sector is facing a tough proposition in the global market due to lower competitiveness in certain areas such as bank interest, infrastructure, transaction cost, and power cost including labour wages, according to TEA

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