Sweeping Minimum Wage Violations in Karnataka, India

To:WRC Affiliate Universities and Colleges
From:Scott Nova and Ben Hensler
Date:October 14, 2021
Re:Sweeping Minimum Wage Violations in Karnataka, India

The WRC has identified a case of systemic wage theft in India, involving at least one significant university licensee—Columbia Sportswear—and many other leading apparel brands. We are engaging with brands to seek corrective action, and we want affiliate universities to be aware.

Here Are the Essentials

  • For many months, more than 1,000 garment factories in Bangalore, and across the state of Karnataka, have violated minimum wage laws by refusing to pay workers a mandatory cost-of-living increase known as the “variable dearness allowance” (“VDA”).
  • Hundreds of thousands of workers are affected, and the arrears total more than $48 million to date—one of the most sweeping minimum wage violations we have ever seen.
  • Since the purpose of the VDA is to address increases in the cost-of-living, this wage theft results—in real terms—in a reduction in garment workers’ already low pay.
  • Implicated brands include Columbia Sportswear (for collegiate apparel), adidas (for non-collegiate) H&M, Levi’s, Target, VF, and Walmart, among others. 
  • Columbia Sportswear took no steps to address the prolonged violations at its collegiate factories prior to being contacted by the WRC. After being contacted on September 2, Columbia declined to act. However, yesterday, Columbia Sportswear advised the WRC that it has now changed its position and will direct its suppliers to pay workers what they are owed.  We will discuss specifics with Columbia Sportswear, including the need for a near-term deadline for its suppliers.
  • We expect commitments soon from two other major brands; however, most brands have so far refused to take action. We are hopeful that the expected new commitments, and Columbia Sportswear’s, will create incentive for more brands to act.

The WRC will work with Columbia Sportswear on the implementation of its new commitment, and we will continue to press all brands sourcing from Karnataka to act. We will keep you posted concerning Columbia Sportswear’s follow-through and our broader effort to achieve full implementation of the lawful wage increase and back pay for all 400,000 affected workers.

Below, is additional background information on the situation, which you may find of interest. 

Please let us know if you have any questions.

Additional Information

Karnataka’s High Court ruled that employers must pay the increase without delay

Factory owners have tried to justify failing to pay the mandatory wage increase, which went into effect in April of 2020, by citing a June 2020 notice issued by the Karnataka’s Labour Department (at factory owners’ behest) purportedly postponing the increase from taking effect.

However, in September 2020, the state’s High Court declared the postponement per se illegal and ruled that factories were obligated to immediately pay all arrears and pay the proper wage going forward. Thus, since September 2020, the garment factories’ obligations have been perfectly clear. In July of this year, the Court reaffirmed employers’ obligation to pay without delay. Yet more than a thousand factories continue to deprive workers of these legally mandated wage payments. And brands have allowed it.

It is not the first time Karnataka suppliers have defied wage laws

  • In 2018, Columbia Sportswear’s collegiate supplier Shahi Exports (a top Indian garment manufacturer) pressured state authorities to withdraw a previously announced minimum wage increase, leading to worker protests that Shahi’s management answered with brutal violence until the WRC intervened.
  • In 2009 and 2010, Shahi and numerous other Karnataka factory owners refused to comply with a minimum wage increase, lobbying authorities to implausibly declare that another previously announced increase was a “clerical error”. Then, as now, brands initially failed to act, until the WRC intervened. That intervention, and the efforts of unions and labor rights organizations in India, resulted in $6 million in back pay and $7 million in wage increases for 110,000 workers.

Brands’ actions in Karnataka contradict their living wage policies

Over the past decade many of the apparel brands implicated in the minimum wage violations in Karnataka have publicly pledged that the workers who make their products will (at some unspecified future date) receive a living wage. As you know, actual progress toward this goal has been scant. It is thus rather stunning that brands claiming to adhere to a living wage standard are failing even to ensure payment of the minimum wage in this key locale in their supply chains—and, as a result, are allowing suppliers to move workers further away from a living wage.