Beyond Minimum Wage to Living Wage: Battling inequality in Tea and Garment Sectors in South Asia

SAAPE, in collaboration with LDC Watch, Rural Reconstruction Nepal (RRN), Labour Education Foundation (LEF), Textile Garments Workers Federation, Dabindu Collective, and Tea Producers Peasant Association Nepal, organised a panel discussion titled “Beyond Minimum Wage to Living Wage: Battling Inequality in the Tea and Garment Sectors in South Asia” in Kathmandu, Nepal, on 17 February 2024 during WSF 2024 in Kathmandu, Nepal. The event aimed to address wage and social protection issues in the tea and garment sectors at the World Social Forum. The panel explored strategies for socially and economically safeguarding workers by moving beyond minimum wage standards and embracing the concept of a living wage, particularly in the context of the post-pandemic world.

Insights from the Panel Discussion

Mohan Mani, a researcher from India, highlighted that while minimum wage laws are expected to apply universally, they are particularly emphasised in large supply chain sectors. These sectors exhibit a significant hierarchical structure, with workers in the South Asian garment industry, for instance, typically earning around USD 5 per day, a sharp contrast to the higher daily minimum wages observed in North America. The globalised nature of production is underscored by the fact that around 98% of garments sold in the US are manufactured elsewhere. Meanwhile, there is dominance of top-tier players in determining pricing within these chains, despite manufacturers in the developing world facing tight profit margins. Minimum wage serves as a regulatory benchmark, decentralizing bargaining power from employers to the state. However, the efficacy of this mechanism is hindered by the absence of structured negotiations at the employer level, leading to minimal impact despite occasional wage rate increases.

In the private sector, voluntary codes of conduct exist, but enforcement mechanisms often rely on advocacy campaigns, resulting in limited formal pressure on major brands. It is crucial to understand that wage issues extend beyond individual concerns, reflecting broader industry dynamics intertwined with the global economy, particularly in industries with extensive network of value chains. The presence of unregulated sweatshops further complicates wage standard enforcement. As discussions on regulation within larger value chains progress, it is essential to recognise the industry’s inherent ties to the global economy. While bargaining shifts to the government sphere concerning minimum wage, negotiations within the private sector remain largely unaffected.

Abida Ali, an activist from Pakistan, emphasised that the garment industry operates as a buyer- driven sector, where major brands hold significant power in setting prices. Despite being labelled as manufacturers, these brands lack physical factories yet exert meticulous control over production processes. In Pakistan, the garment industry ranks as the second-largest manufacturer, making a substantial contribution to the national GDP (8.5%) and holding a 2% share of the global market. However, this growth is overshadowed by numerous challenges, including excessive working hours and tragic incidents such as the Ali factory fire, which claimed the lives of 285 workers.

A primary challenge faced by workers in this buyer-driven industry is the low level of unionization. The fast-paced nature of fashion trends exacerbates this pressure, as workers are expected to produce continuously while receiving inadequate wages. Efforts to address these disparities have been initiated by civil society networks such as the Asia Floor Wage Alliance, advocating for a living wage of PKR 66,000, significantly higher than the current minimum wage of PKR 25,000. Calls for fair minimum wage standards are crucial in this context. Traditional approaches such as corporate social responsibility (CSR) and voluntary codes have proven ineffective in ensuring workers’ rights. Therefore, there is an urgent need to demand regulatory measures, enforcement mechanisms, and increased accountability from employers.

Chamila Thusari, an activist from Sri Lanka, pointed out that the national minimum wage in Sri Lanka is set at LKR 16,000. However, wages in the garment sector typically exceed this national minimum. About seven years ago, the textile industry established a sectoral minimum monthly wage of LKR 15,500, which was higher than the national minimum wage at that time, which stood at LKR 13,500. This year, Dabindu Collective, alongside trade unions, intends to reinitiate the campaign for a sectoral wage specific to the garment sector. Trade unions have advocated for raising the minimum wage to LKR 26,000, while employers have agreed to an increase to LKR 21,000. However, real wages for Sri Lankan garment workers, have notably declined over the past two years due to hyperinflation resulting from the recent economic crisis. Low wages often force workers into longer working hours and precarious employment, increasing the risk of gender-based violence and harassment. In this regard, Dabindu Collective advocates for holding brands accountable for the appalling living conditions endured by workers.

MD Abul Hossain, representing the Garment Textile Workers’ Association, emphasised the organisation’s role in advocating for the rights of garment workers, making it the second-largest producer globally. Last November, the government announced a minimum monthly wage ranging from BDT 12,500 to BDT 15,000 (equivalent to USD 110 to USD 133). However, trade unions are pushing for a higher wage of BDT 23,000 (approximately USD 200), citing the challenges workers face in sustaining their livelihoods. Despite the law stipulating wage revisions every five years, rapid inflation rates within this timeframe render the current wage insufficient. Hossain stated that the workers’ association is launching the Asia Floor Wage movement, targeting the renowned brands like H&M, Nike, and Walmart, with the objective of establishing fair wages for garment workers.

Prabaharan Sivagnanam, a researcher from Sri Lanka, highlighted that sector-specific wage boards determine the minimum wage, which is adjusted according to the cost-of-living index. Currently, the minimum wage stands at LKR 16,000 (approximately USD 50 per month). Smallholder farmers mainly contribute to tea plantations in Sri Lanka – around 75% of the country’s tea production. The outgrower model was introduced in Sri Lanka in 2005 towards greater decentralisation and informalisation of plantation manufacturing and plantation enterprise. However, the outgrower model does not involve the transfer of land ownership.

Santa Kumar Rai from the General Federation of Nepalese Trade Unions (GEFONT) pointed out that the majority of tea plantation workers are seasonal labourers who typically lack written employment contracts. Consequently, they are not officially recognised by their employers, nor are they registered at the municipal level. This lack of formal recognition makes it impossible for seasonal labourers to participate in the social security fund, as mandated by the Contribution- based Social Security Act 2017, due to their inability to provide proof of employment.

Similarly, Razekuzzman Ratan from the Samajtantrik Sramik Front, shed light on various issues within the tea industry in Bangladesh. The land allocated for tea gardens is a national property; however, 99% of it leased with minimal development tax. Among approximately 140,000 workers in the industry, 103,000 are registered, while 36,000 are not. More than 70,000 female workers contribute to the workforce, with a total of 500,000 family members dependent on tea work. The workforce comprises 18 ethnic groups distinct from Bengali (the dominant group), facing historical isolation and discrimination. Currently, only one trade union is legally recognised. Following a 90-day struggle in 2023, plantation workers in Bangladesh could secure a daily minimum wage of BDT 170 (equivalent to 1.5 USD) per day, an increase by BDT 50.

Ratan stresses that wages should be based on equitable value. For example, it takes four kilogrammes of green leaves to produce one kilogramme of tea, auctioned at around BDT 200 per kilogram, while the market rate is BDT 500. With housing and rations included, workers are provided with less than BDT 250 per day. After factoring in management costs, it might barely reach BDT 300 per day. This way, owners’ profit over BDT 500 per day from the workers’ labour. In addition, according to labour laws, every worker should receive an appointment letter, which is not always the case in Bangladesh. There are ongoing issues regarding gratuity payments, and the pension amount is meagre, with workers receiving only USD 2 per week.

Advocating for a minimum wage of at least BDT 600, Ratan also emphasised provisions for maternity care, health benefits, and sanitation facilities. Proposing a convergence of tea plantation workers in South Asia to strengthen regional solidarity, Ratan suggested restructuring wages to recognise workers’ value and advocated for a cooperative model where production is controlled by workers, while marketing is managed by companies.

Kiran Kalindi from Progressive Plantation Workers’ Union (PPWU), India stated that minimum wage revisions typically occur every three years in India under the Plantation Labour Act 1951. However, it has been many years that there has not been any formal notification mechanism for minimum wage adjustments; instead, interim wages are implemented by the government under the guise of “relief.” The PPWU refused to sign agreements for any nominal wage increase without the minimum wage declaration. Despite a Kolkata High Court directive to declare a minimum wage by March 29th, no action has been taken. However, workers’ awareness and determination have grown, prompting them to scrutinize and negotiate every government notice. Additionally, there is a push for tea plantation workers to be included in the Employees’ State Insurance (ESI) scheme under new labour codes.

In addition, wages are often tied to productivity (for instance, clauses like pro rata increase/deduction based on the quantity of plucked tea leaves), creating a system where incentives for increased production are disproportionately countered by deductions for lower yields. On a positive note, successful advocacy efforts for workers’ homestead rights have led to the allocation of five decimal lands to workers, providing them with a degree of independence and security.

The discussions concluded with recommendations, including the enforcement of minimum wage laws, with governments ensuring strict adherence and regular revisions to accommodate inflation and cost-of-living. Industry accountability is paramount, necessitating that brands and employers are held responsible for fair wages and working conditions, facilitated by regulatory measures and transparent supply chains. Additionally, strengthening trade unions and farmer/worker cooperatives is vital to strengthen bargaining power and advocate for living wages, fair price and social protection measures. Legislative reforms should prioritise addressing structural inequalities, promoting land ownership for workers, and fostering cooperative models within the tea and garment sectors. These recommendations were incorporated into the civil society statement released during the Square of Statement in the closing day of the World Social Forum.

Skip to content