Collective bargaining in action: India’s garment workers ask brands for wage increase

08 March 2022

The Karnataka Garment Workers’ Union (KOOGU) and Shahi Exports Pvt Ltd, India’s largest garment manufacturer, have been locked in collective bargaining negotiations since July 2021. Recently, this has taken a new turn: a demand for a monthly wage increase of 1,500 Indian rupees (U.S. $20) per worker. This amount is proposed by the union as a shared pay-out from the international brands that Shahi Export workers produce for: H&M, Decathlon, Carhartt, Abercrombie & Fitch, Columbia, Benetton and Tommy Hilfiger. 

According to Sebastian Devaraj, Honorary President and Chief Negotiator of KOOGU, 

This is a reasonable raise and would cost each of these seven brands only U.S. $3 per worker. For a worker's family in Bangalore, an increase of U.S. $20 in monthly wages means the difference between starvation and eating three basic meals a day. This is an absolutely necessary raise. 

He further noted that since 2019, there has been no wage increase for garment workers in India. 

The union representatives and Shahi Exports management resumed collective bargaining meetings in 2021 over workplace issues and wages for the manufacturer’s workforce, 80% of whom are women. The current round of negotiations started last July and resulted in a mutually agreed and signed set of ground rules for efficient collective bargaining meetings to be held on “good faith.” 

Shahi Exports cited in July that “very narrow” profit margins are a big factor preventing a meaningful wage increase, convincing KOOGU of the need to include brands in wage discussions. In September, the union wrote to brands that Shahi Export workers are producing for, inviting them to take part in the negotiations. H&M, Decathlon and Carhartt replied by saying the matter is strictly between the union and Shahi Exports, with H&M offering to set up a platform for dialogue between the union and Shahi management. 

On February 11 this year, KOOGU presented three demands to Shahi Exports management. First, the union demanded that the legally-mandated Variable Dearness Allowance (VDA) - which is an inflation-based yearly allowance set by the Indian government - be included in a future collective agreement, and that management clearly differentiate the VDA from a wage adjustment. Second, that management increase the basic wage for Shahi Export workers by Rs. 1,500 (U.S. $20) per month. And, third, that floor-level management staff must respect workers’ freedom of association and refrain from harassing union members conducting collective bargaining consultations among workers during their personal time.

On 28 February, Shahi Exports agreed in a collective bargaining session to two out of the three demands. It committed to officially distinguishing VDA payments through the company’s human resources department and declared that harassment is against company policy and that management will take “serious action” when such behaviour by their staff is reported by the union. KOOGU lauded the respect for union reports of violations as a sign of good faith from the company. 

However, management would not engage on the wage hike demand at the meeting, saying it involves different stakeholders at the industry level and that it is an issue difficult for Shahi Exports to tackle alone. The management negotiators further said that salary adjustments will be discussed within the industry and requested more time. 

On 16 February KOOGU had presented all seven brands the demand for them to jointly contribute to the Rs. 1,500 salary increase as well as ensuring the workers’ right to freedom of association and timely payment of legally-mandated wages. In the letter calling on the brands to step in the negotiation process, KOOGU wrote:

In order to make progress on salary negotiations, the inclusion of international brands sourcing from the supplier into the process is critical. A salary increase for the Indian workers manufacturing the products sold globally by the international brands is all but impossible without an increase in purchasing prices.

“If the brands’ purchase price is too low for Shahi Exports to allow a reasonable annual salary increase for its workers, as the management clearly declared at the bargaining table, then this is not just an issue between the union and factory management,” said Devaraj, adding that all brands for whom Shahi Export workers are producing should be part of computations on wage increases, and that the amounts should be added into their purchase ledgers.

“This would enable the supplier to increase workers’ salaries to a decent level and also help fulfil the brands’ well-publicised corporate social responsibility commitments and codes of conduct,” added Devaraj. 

A 2016 study by the International Trade Union Confederation (ITUC), the world’s largest global union, shows that 50 top corporations utilising international supply chains have a combined revenue of U.S. $3.4 trillion, or the equivalent of the GDP of 100 nations. This wealth is built on a “hidden workforce,” with 94 percent of a brand’s workforce spread out in chains of regional and global suppliers in developing countries, which in turn compete for orders and marginal profits on the backs of low-paid workers.

In India’s garment sector, the gap between the living wage - the minimum amount to subsist, based on the cost of basic necessities - and the nominal wage - what the worker actually receives - gets worse every year. According to the Delhi-based Society for Labour and Development, garment workers in India get approximately Rs. 10,000 to 12,000 (U.S. $133 to 160) per month. Meanwhile, the living wage in India in 2021 is Rs. 18,000 per month (U.S. $234), based on global macro models by industry think tank Trading Economics

Acknowledging the gap in the living wage and nominal wage, H&M vowed in November 2013 to pay what it called a “fair living wage” to the garment workers in its supply chain by 2018, a promise that never materialized and was later tagged as a publicity stunt by labour advocates. Had the promise been kept, Shahi Exports workers’ wages would have risen to more than Rs. 18,000 per month by 2021.  

But KOOGU estimates the average wage of workers in India’s garment sector, including those at Shahi Exports, to range between Rs. 8,000 - 12,000 per month, depending on skill level and longevity in the company.

Devaraj pointed out that the U.S. $3 per worker figure per brand may amount to even less if other brands supplied by Shahi Exports pitch in as well. “We know there are more brands partnered with Shahi Exports than we have information on,” he said. 

KOOGU’s General Secretary, Swamy T.S., agreed. “We understand Shahi Export management’s position that wage hikes should be discussed by the whole industry. But without the participation of brands, who are the final decision makers of purchasing prices, there won’t be any meaningful result regarding workers’ salary hikes, even if garment manufacturers in Karnataka or in all of India discuss amongst themselves,” he said.

“Alongside continued bargaining with the management, we will keep on asking the brands for whom Shahi Export workers are producing to step in and determine their fair share on our wage hike demand,” vowed Swamy. 

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