Wage Agreement that is not honored in Tirupur

There are three wage notifications by the State(Central and State Government) and a collective wage agreement between unions representing workers and the employer associations. The lack of coherence between various agencies including the State, Judiciary and the unions has enabled the industry to pay the minimum of these agreements keeping the wage low for workers. This raises the need for unions, who have traditionally relied on collective wage agreement in organized sector based on collective strength of workers, to also place importance on legal minimum wages especially in the context of the emerging national demand of Rs 18000 as minimum wage.

Plethora of wage notifications and legal confusions

Among all the major garment hubs in India, wages for workers in Tamil Nadu is one of the lowest.

With very low levels of unionization, the industry and the state have managed to keep the wages low for several decades due to apathy and bureaucracy in defining the minimum wage for various sectors within the industry, as well as a vast difference between the minimum wages between sectors.

As per the Minimum Wages Act, enacted for protection of workers in 1948, the state government must notify minimum wages for each industry specified in its schedule. The legislation provides the government an option to declare a wage through a notification, to which unions and employers may respond with their objections or suggestion, or to form a tripartite sub- committee which will recommend a wage that the government may then declare as the wage.

In case of the garment industry in Tamil Nadu, particularly in Tirupur where much of the industry is located, there have always been separate collective bargaining agreements between unions and the Tirupur Exporters Associations (garment and knitwear) and South India Hosiery Manufacturer’s Association (http://www.thehindu.com/news/national/tamil-nadu/Common-wage-pact-for-knitwear-workers-likely/article13975807.ece).

The most recent wage agreement came in April this year after several negotiations.8 trade unions including AITUC, CITU, LPF, INTUC, HMS, BMS and MLF signed a bilateral agreement with the employers association for both spinning mills workers and hosiery workers.

This four-year agreement covers eleven categories of occupation with wages ranging between 211Rs per day (Rs 5486 per month) for folding and tying to Rs 345 per day(Rs8970 per month) for tailoring (See below for the complete list). The wage agreement proposes 18% increment for the first year and 5% increment each for next three years. (http://www.financialexpress.com/market/commodities/tirupur-garment-units-sign-wage-pact-with-unions/233018/). This wage agreement is applicable to both local and export units in hosiery sector.

According to Comrade Sekar, General Secretary of Banyan Factory Labour Union(affiliated to AITUC), while the wage for tailors is implemented as per the collective agreement, it is not the case for unskilled workers who are likely being paid below the wage agreement. Given that trade unions, have only organized 10-15% of the Tirupur garment sector workforce, union representatives say that they are unable to enforce the wage agreement.

Meanwhile, the Labour Department has notified a minimum wage for hosiery sector in January 2016, for the second time after 40 years since sector was brought under the Minimum Wage Act. Comparing this figure to the one in the agreement shows wages for tailors as per the agreement is more than double that of the minimum wages specified in the notification (Rs, 4248). In the case of unskilled operations like helpers too, while the agreement stipulates a monthly wage of Rs.5486, the minimum wage is significantly lower, ranging from Rs.1998 to Rs.1848. Not surprisingly, this wage notification has been welcomed by the industry, which according to union representatives is lower than the real wages in Tirupur (http://www.covaimail.in/2016/02/24/minimum-wages-for-hosiery-industry-tn-government/).

In case of the Tailoring Industry, employers have been successful in stalling the wages for more than 30 years. Here, the minimum wages have been revised in 1983, 1991, 2004 and now, after almost a decade in 2014, (G.O No 59, revised the wages providing an increase of almost Rs.3000. Employers once again resorted to their modus operandi to stall the implementation of the minimum wage by applying for stay orders on the grounds that they were not consulted. .

Garment and Fashion Workers Union, which was formed to work with predominantly women workers in garment industries in Chennai and surrounding areas took up the challenge of vacating these stay orders and for notification of minimum wage. After a two year legal battle, on 13 July 2016, the High Court passed a judgment upholding the 2014 minimum wage notification for garment sector. Once again, a comparison of the figures shows us that the wages for skilled workers such as tailor as per the agreement is about Rs 500  what is specified in the 2014 notification whereas the wages for unskilled worker in agreement is lesser by more than Rs 2700 than the 2014 notification. Thus the agreement undercuts the notification for unskilled workers*.

Within two weeks, when a clarification was sought about the applicability of the order to hosiery sector, another order was passed in high court, which said that the 2014 minimum wage is applicable to only tailoring industry. Earlier, the manufacturers have also taken a high court order (March 17, 2016) which upholds the 2016 notification for hosiery sector over 2014 notification for garment sector.

Union activists say that separate notifications for hosiery and tailoring are arbitrary as the production technologies that are used in both is the same as other and more often than not, same infrastructure is used for production of both. In addition, the 2014 notification covers export garment sector which would include Tirupur manufacturing units. There seems to be no justifiable reason for the difference in the wages between the hosiery and the tailoring industry.

Monthly Wages (Includes Variable Dearness Allowance)

Tailoring Industry notification ( TN G.O (2D) No. 59 Dated 10.10.2014)

Hosiery Industry Notification (G.O (2D) No 5, Dated 27.01.2016)

Tirupur Bilateral wage agreement (2016)


Rs 8170 – Rs 8340

Rs 7109

Rs 8970


Rs 8340 – Rs 8490

Rs 7109

Rs 8970


Rs 7957 – Rs 8063

Rs 7109

Rs 8970


Rs 7957

Rs 7109

Rs 8970


Rs 8340 – Rs 8490

Rs 5309

Rs 6864


Rs 7957

Rs 5009

Rs 6604

Hand folding

Rs 7957

Rs 4859

Rs 6526

Fold and tie assistance

Rs 7957

Rs 4709

Rs 5486


Rs 7957

Not defined

Not defined

All other categories

Rs 7957

Not defined

Not defined

Comrade Sujata Mody of GAFWU has said that the Labour Department is planning to challenge the recent directive from the High Court which has excluded hosiery sector from the 2014 notification. According to her, the Labour Department has clarified that the wage notification for hosiery sector is only for domestic production and export units are to be covered under 2014 notification.

Sujata Mody has said that the Labour Department would like the unions to implead on the court directive. Comrade Sekar of AITUC has said that given the tradition of collective wage agreement and an ongoing relationship with the management, the likelihood of the left unions to fight this legally is low (Need to talk to unions to see what their latest stand is). The employers seem to have used both the collective wage agreement and the minimum wage notification to keep the wages in their favor. For instance, in a case related to minimum wage, one of the industry bodies argued for collective wage agreement (http://www.thehindubusinessline.com/todays-paper/tp-economy/tn-move-to-bring-textile-workers-under-minimum-wages-act-hits-snag/article1652517.ece) over minimum wage. Yet, in 2016, the textile industries have ensured that the recent minimum wage is upheld.

Finally there is the recent notification by Central Government of Rs 350 as minimum wage for non agricultural workers on the eve of September 2nd strike. (http://labour.gov.in/sites/default/files/MW_notification.pdf). While this wage has to be notified yet, this places the minimum wage for unskilled workers at Rs 9100 and for skilled workers much higher.

Garment Industry as test bed for labour reforms

As seen in tea plantations, where the union strengths are weakened, tripartite negotiations involving unions does not translate to an effective wage bargain and have pushed the workers into starvation wages (http://tnlabour.in/featured/3938). And even a strong wage bargaining capacity does not preclude the necessity for a legal minimum wage. It was the strong demand via national strike for a minimum wage of Rs 18000 that has pushed the Central Government to propose the minimum wage of Rs 350 for non agricultural workers as legal minimum wage.

The Textile Industry has become the test bed for labour reforms by NDA Government. Already, the Central Government has announced two measures, fixed term employment which allows contractualization in these sectors and for relaxation of PF norms which denies the textile workers, an important social security protection. The workforce in Tirupur is already moving from permanent employment(time based) to contractual employment(piece rate), thus aiding the process of contractualization. These and the lack of proper minimum wages pushes the already precarious workforce into worse condition which needs to be countered by the unions.

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*Errata fixed. Earlier it said ‘Once again, a comparison of the figures shows us that the wages for skilled workers as per the agreement is almost Rs. 3000 higher than what is specified in the notification. (Rs. 5511 for tailors) whereas only Rs.300 more in case of helpers. (Rs.5128)’.

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