Doubling Minimum Wages To Hit Exports, Jobs; AEPC Urges Government To Clarify

Apparel, Footwear, Fashion

Doubling Minimum Wages To Hit Exports, Jobs; AEPC Urges Government To Clarify

Minimum wages in the garment industry if doubled to Rs 18,000 per month will increase costs, hit exports and lead to job losses, a top exporters' body claimed today.

Apparel Export Promotion Council (AEPC) has written to the government to clear the air on the issue of minimum wages in the garment industry.

In a recent letter to the textile ministry, Apparel Export Promotion Council (AEPC) Chairman Ashok G Rajani stated that there is a lot of confusion surrounding minimum wages after clearance of the Wage Code Bill by the Cabinet.

The AEPC fears that if minimum wages are doubled to Rs 18,000 per month, it would increase production costs, hit exports as well as lead to job losses.

The government must come out with a suitable clarification on the issue to restore confidence among apparel exporters, since the has impacted the booking of export orders, Rajani’s letter stated, adding that the cost of wages in the garment export sector is around 30% of Freight on Board, which is the highest by any standard.

The letter mentioned that the apparel industry is already passing through a challenging phase due to a slowdown of the world economy and that any additional burden due to doubling of minimum wages from the present Rs 9,000 per month to Rs 18,000 would make garment manufacturing unviable and unsustainable.

The letter pointed out that around 70% of the workforce in the ready-made garment industry are women while other industries have female workforce participation of around 3% to 7% due to which fixing of minimum wages at Rs 18,000 per month would not only adversely affect exports, but also lead to a fall in employment generation.

Incidentally, the AEPC’s letter has been written after the union cabinet approved the new Wage Code Bill last month (July), which will ensure a minimum wage across all sectors by integrating four labour related laws.

The new minimum wage norms will be applicable to all workers irrespective of their pay. At present, minimum wages fixed by the centre and states are applicable to workers getting up to Rs 18,000 per month.