Update on Minimum Wage Violations in Bangalore (India)

To:Primary Contacts, WRC Affiliate Colleges and Universities
From:Ben Hensler and Scott Nova
Date:April 28, 2010
Re:Update on Minimum Wage Violations in Bangalore (India)

Please click here to see an update on the preliminary report issued by the WRC on March 5, 2010 regarding widespread noncompliance with minimum wage laws by apparel factories in Bangalore, India. Unfortunately, the conduct of garment factories in Bangalore since we issued our preliminary report has only heightened our concerns regarding the industry’s approach to compliance with Indian labor law and codes of conduct.

As we stated in our earlier report, on March 4, 2010, the WRC sent a memo to collegiate licensees and other major apparel brands noting that Bangalore’s apparel industry has been refusing to implement an increase in the legal minimum wage for garment workers which had been issued by the state government of Karnataka (where Bangalore is located) in March 2009. We pointed out that the new minimum wage had been legally binding since that date and that, under both buyer and university codes of conduct, the roughly 125,000 affected workers must be compensated for all back wages owed as a result – with estimated arrears of over $10 million.

The response of most (but not all) buyers contacted by the WRC was encouraging: Many, including collegiate licensees Cutter and Buck and Adidas, expressed that they concurred with the WRC’s findings and would be requesting that their suppliers implement the March 2009 increase in the minimum wage and pay back wages to affected workers. 

The response of the Bangalore garment industry, however, was disturbing. Rather than actually comply with the minimum wage law and pay their workers the income they have been illegally denied for over a year, garment manufacturers, instead, continued to pursue a political lobbying effort to have the wage increase repealed. As the WRC already had pointed out, this effort by factory owners was highly inappropriate: the March 2009 increase was the first hike in basic wage levels in the apparel sector since 2001, and the cost of living in Bangalore had risen during this period by more than 60%.

As has been publicized previously, the factory owners’ lobbying efforts were partially successful. On March 30, 2010, the Karnataka labor department announced that the minimum wage for the lowest-paid classifications of worker, at 126.97 rupees (USD 2.75) per day, had been set too high in March 2009 as a result of a “clerical mistake,” and was to be adjusted downward to 122.26 rupees per day, thus repealing a portion of the March 2009 increase. 

This retroactive (though partial) repeal of a minimum wage increase is something the WRC has never encountered previously, in India or elsewhere, and seems clearly to violate the spirit (and quite possibly the letter) of Indian labor law. As explained in our update, the method used to recalculate the minimum wage clearly demonstrates that the government is acting not to correct a “clerical error,” but to change its wage policy in a manner highly detrimental to the industry’s lowest-paid workers.

But even if this retroactive lowering of the minimum wage was a lawful act – and its legality is being challenged in court – the repeal is, at most, partial. The WRC estimates that garment manufacturers still owe these workers, at minimum, nearly eight million dollars in back wages. Yet at least one major garment manufacturer already has seized upon this partial repeal to claim that it no longer owes any back wages to its workers – a claim that is flatly contradicted by its own records. 

The message these events send to both garment workers and manufacturers, in Bangalore and elsewhere, is a deeply troubling one: Employers can, for nearly a year, openly cheat their workers by simply refusing to comply with minimum wage laws. Then, so long as the employers are politically influential enough to procure an administrative “fix” from local governments, they can obtain retrospective absolution for their past law-breaking.

The WRC continues to ask apparel brands and retailers to take meaningful measures to address the apparent legal and political impunity with which the Bangalore garment industry avoids its obligations to its poorest workers – not the least of which would be to require their suppliers to pay the sizeable wage arrears owed to these employees.

Scott Nova 
Worker Rights Consortium 
5 Thomas Circle NW 
Washington DC 20005 
ph  202 387 4884 
fax 202 387 3292 
[email protected]