The Apparel Export Promotion Council (AEPC) has opposed a labour ministry proposal to set the minimum wage to be paid to contract labourers at Rs 10,000 per month, saying any such move would drive up the costs for the labour-intensive sector and drag down garment exports by 10%, or Rs 11,000 crore, a year.
The proposed amendment to the Contract Labour (Regulation and Abolition) Central Rules, 1971 by the labour ministry could raise wages by even 90% in states like Odisha and Rajasthan and 30% in most other states, AEPC says. If implemented, the proposal will result in a decline in employment. AEPC vice-chairman HKL Magu said: “The industry witnesses peak time during October-February, while orders decline by around 30% in other seasons. With this increase, the industry will not be able to exercise this flexibility in engagement of labour to meet its peak time requirements and loose to its competitors in Bangladesh and China, who already have a cost advantage.”
The apparel companies will have to effectively pay Rs 14,100 to a contract labourer, if the consequent increase in PF (12%), ESI (4.75%) and Bonus (8.33%) and the service tax is factored in, he added. He argued that the labour ministry is arbitrary, as wages are fixed according to the work performed and on the basis of skills of a labourer.
The apparel sector recorded an export turnover of R1,11,235.5 crore in 2015-16, recording a 1% rise year-on-year despite a massive contraction in the country’s overall exports during the year. The apparel sector provides employment to over 45 million people directly and 60 million people indirectly.
Opposition
The Apparel Export Promotion Council (AEPC) has opposed a labour ministry proposal to set the minimum wage to be paid to contract labourers at R10,000 per month, saying any such move would drive up the costs for the labour-intensive sector and drag down garment exports by 10%, or R11,000 crore, a year
n If implemented, the proposal will result in a decline in employment, according to AEPC
