Working conditions in the leather industry in Pakistan, Bangladesh and India are very harsh. At the same time, western brands refuse to provide information about working conditions in their supply chain. Among them is industry giant Wortmann with its Tamaris brand. Simultaneously, Wortman places great emphasis on social responsibility in their marketing. We want to know under what conditions leather and shoes are produced and what the company is doing to respect human rights. Join us and send Wortman an e-mail.
During the third UN South Asia Forum on Business and Human Rights, Together for Decent Leather is hosting the side session ‘Solutions to address labour rights challenges workers in the leather-based garment supply chain’. The session will take place on Friday, 25 March from 11:30 to 13:00 am GMT +6. During the session, the consortium will reveal first insights from newly conducted research on working conditions of leather workers in Bangladesh, Pakistan and India, who is responsible for solving the problems and what should be done.
In a panel setting, Mahmudul Hasan Khan (Bangladesh Labour Foundation), Farhat Parveen (NOW Communities Pakistan) and Pradeepan Ravi (Cividep India) will speak about vulnerable leather workers in their countries. What are the specific obstacles for homeworkers, women workers and tannery workers face? How to improve their living and working conditions? SOMO will share its preliminary insights from research on transparency of international brands producing leather garments and footwear and explain how advanced supply chain transparency is key to enhancing the social conditions for leather workers.
> Go to the webpage where the session will be hosted
Last year, in July 2021, the Tamil Nadu government notified the revision of minimum wages for workers employed in the state’s footwear manufacturing industry. This latest revision, although late by two years, assumes significance as it was announced at a time when workers in the sector were facing enormous hardships. While the state government revised the minimum wages, the key question is whether it is justifiable for the industry to continue to pay workers using minimum wages as the basis when they are still recovering from the debilitating effects of the pandemic?
Revised wages – does it make a difference?
As per the revised rates notified in July 2021, the minimum basic wage rate for an unskilled worker in Ambur is fixed at INR ₹4,843 per month. This is a 24 per cent increase from the basic wage rates fixed for this category of workers in 2014. Similarly, basic wage rates for other categories of workers in the footwear sector have also been increased proportionally. In addition to the increase in basic wage rates, all categories of workers are also eligible to receive a variable Dearness Allowance (DA) which is linked to the Consumer Price Index (CPI). At the outset this increment comes across as a progressive step towards increasing the wage standard for the industry, and any increment is a succour in these pandemic-ridden times. Nevertheless, it is pertinent to look at this wage revision in view of the current economic model.
The pandemic has made visible workers’ vulnerabilities in global supply chains like never before. Several studies have pointed out that low-wage workers do not have any savings to tide over crisis periods and they resort to borrowing money to make ends meet. One of the main reasons for this is the poverty wages that workers receive. It does not allow them to save for crisis periods. Since 2019, the rate of retail inflation in India has been rising consistently. In the last two years the average rate of inflation has been above six per cent. The price of essential commodities such as cereals, pulses, vegetables, fruits, meat and cooking gas has gone up. In light of this economic situation, the revision in minimum wages is nothing more than an eyewash that simply allows workers to sustain their hand-to-mouth existence.
Industry fixation with minimum wages
Low wages are one of the main features of employment in India’s leather and footwear sector. The main reason is that the industry prefers to use minimum wages as the basis for wage payment. Whereas in the footwear sector, a majority of workers are women who are not organised. Their lack of power to bargain makes it impossible to negotiate better wages with employers. This has resulted in stagnation of the wage rate for several years, leaving workers at the mercy of minimum wage rates set by governments.
The Minimum Wage Advisory Board set up by the state government decides the basic minimum wage rates. It follows a set of rigid criteria pronounced in the Minimum Wages Act, 1948. In practice, however, its process has been critiqued for not being completely transparent and for not having enough consultations with workers or their representatives. The very fact that revised wages were announced after a two-year delay, and without any measures to compensate workers for back wages points to this.
While suppliers stick to paying only minimum wages, the shortcomings of this are not completely unknown to international brands who source from footwear units in Tamil Nadu. International brands rely on social audits to ensure compliance with social standards in their supplier factories. These audits use minimum standards prescribed by local laws as indicators of compliance. The result is that such an exercise reinforces minimum wage as the standard wage for supplier factories. Although international standards encourage brands to pay living wages in their supply chains, they have not made any visible efforts to move in this direction.
Paying living wages is the way to go
We know from studies that the purchasing and other business practices of brands, and the standards they adopt to monitor their supply chains have a direct bearing on working conditions in factories. Therefore, shouldn’t living wages be the basis of labour costing in manufacturing contracts, instead of minimum wages? Unless brands address this question, it is very unlikely that suppliers will make real efforts towards paying wages above the minimum floor wage. While there are various efforts by civil society actors to push brands to review their purchasing practices, what is really required are statutory interventions mandating them to pay living wages to workers. The proposed EU-level mandatory Human Rights and Environmental Due Diligence (mHREDD) legislation has a huge opportunity to address this gap. If this law is successful in making it mandatory for brands to ensure payment of living wages, it would pave way for addressing many other connected supply chain-related risks to human rights. In addition, the legislation should also obligate brands to implement effective grievance mechanisms for workers, and ensure that freedom of association is respected. Providing an enabling environment where workers have the opportunity to bargain collectively for better wages will also contribute towards improved working conditions. Finally, a robust and ongoing system to conduct human rights due diligence in supply chains involving all relevant stakeholders would go a long way in mitigating social risks and maximising social outcomes.
This blog is written by Pradeepan Ravi from Cividep
Over the past eight months, the government of Sindh province in Pakistan, employers, and labour rights organisations have been entangled in a fierce battle over minimum wage levels. Sindh province is an important hub for the production of garments for international brands, including leather-based apparel. Garment and leather workers risk coming out on the losing end of this highly politicised battle.
On 9 July 2021, the Sindh provincial government announced a new monthly legal minimum wage for unskilled workers of 25,000 Pakistani Rupees (approx. € 127 as per the exchange rate of 1 March 2021). This constituted a wage increase of no less than 43 per cent compared to the previous legal minimum wage of Rs 17,500, set in 2018. Workers’ organisations had campaigned for an increase of up to Rs 30,0000 per month, to compensate for prevailing poverty wages, high inflation, and the financial distress caused by the Covid19 crisis which caused many workers to lose out on months of wages. Still, the increase announced in July 2021 was welcomed.
Employers putting up a fight
Employers in the garment industry, however, said they cannot meet the costs involved with the new minimum wage. They filed a case against this decision with the Sindh High Court claiming that proper procedures had not been followed. Employers argued that the Sindh Wage Board had recommended Rs 19,000 as minimum monthly wage and that Rs 25,000 is too much. A majority of factory owners are effectively refusing to pay the increased wage. They even threaten to relocate production from Sindh to Punjab province, where the minimum wage would be lower. Workers interviewed by NOW Communities, a Pakistani worker rights organisation that is part of Together for Decent Leather, confirm this picture.
Ongoing legal battle
The Sindh High Court upheld the provincial government’s July 2021 minimum wage decision, declaring that the Rs 25,000 wage was to be implemented retroactively from 1 July 2021. The High Court said that the provincial government was indeed competent to fix, announce and declare the minimum wage. At the same time, the High Court advised the Sindh government to improve current minimum wage procedures.
Employers did not give in. Under the flag of the Federation of Pakistan Chambers of Commerce, an appeal was lodged at the Supreme Court, which in an interim verdict overturned the decision by the High Court. The Supreme Court maintained that the Sindh government had not followed procedures correctly.
In January 2022, the Supreme Court issued its final verdict, directing the Sindh government and the Wage Board to reach an agreement on the minimum wage in the province by consensus within two months. In the meantime, as per the Supreme Court rule, employers in Sindh are obliged to pay Rs19,000 as monthly minimum wage for unskilled workers, based on an 8-hour working day, with at least one week of holidays per year, with effect from July 2021. For the Sindh government to implement this part of the Supreme Court’s decision, however, a written verdict needs to be issued, which the Supreme Court so far has failed to do.
What garment brands sourcing from Pakistan should do
At the international level, Clean Clothes Campaign (CCC) is calling on garment brands that source from Sindh – including H&M, C&A, ALDI Fruit of the Loom, Bestseller, Levi’s, Gap, and Mango – to facilitate the payment of a Rs 25,000 minimum wage by means of responsible purchasing practises and paying a fair price. All workers, regardless of their contract status, should be able to enjoy this wage level. CCC argues this pricing should extend to all orders being produced since 9 July 2021, the date when the minimum wage increase was first announced by the Sindh Provincial government. CCC furthermore asks brands to publicly commit to this good practice. As labour costs only constitute 3-5 per cent of the total production costs, brands should be able to cover such wage increase, while brands’ lack of action will undermine this vital step and increase workers’ vulnerability to poverty and debt.