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H&M Speaks Out on Minimum-Wage Struggle

Workers embroiled in a minimum-wage dispute in the Pakistani province of Sindh have scored a minor victory, albeit one that still falls short of what was promised last year.

On Jan. 27, the South Asian nation’s Supreme Court gave the Sindh Wage Board two months to renegotiate the contested minimum wage, which factory owners in the garment-producing hub have refused to honor since it was raised from 17,500 Pakistani rupees ($99.86) to 25,000 rupees ($142.65) per month last June, insisting that it was “humanly impossible” to fulfill. Till then, a three-member bench helmed by Justice Umar Ata Bandial has directed the Sindh government to fix the minimum wage at 19,000 rupees ($108.42).

The decision arrived one month after the Supreme Court suspended the scheduled wage hike following a petition by trade groups such as the Federation of Pakis­tan Chambers of Commerce and Industry and the Employers Federation of Pakistan. The organizations had decided to escalate their appeal after the Sindh High Court upheld the original 43 percent increase in October.

Describing the situation as “wage theft on a huge scale,” labor campaigners have criticized fashion brands such as Bestseller, C&A, Gap, H&M and Levi Strauss for not speaking out about the matter. While the bump wouldn’t have lifted workers to a living wage, they say, it would have gone a long way to helping them keep their families housed and clothed, particularly amid the challenges arising from Covid-19 and ballooning inflation.

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“Many garment brands that are sourcing from Sindh province say in their codes of conduct that they want to work towards living wages or say they follow the country’s legislation and always pay at least the minimum wage,” Nasir Mansoor, general secretary of the National Trade Union Federation Pakistan, told Sourcing Journal. “This is a case where brands can show what their words are worth.”

All brands have to do meet their commitments to their workers is to ensure that their suppliers are following the law, he said.

“Instead, their supplier factories are trying to undermine this hard won-wage raise, [which] they can do so largely unchecked by the brands,” Mansoor added. “These brands for a major part set the prices for the garments they buy from these factories. They share responsibility for their suppliers’ behavior and must ensure that workers receive the 25,000 rupees they fought so hard for.”

H&M has “made it clear” to its suppliers in the province that they must pay the workers the legally mandated minimum wage, including all arrears. “As of now, all suppliers we work with in the Sindh province are paying the new minimum wage of 19,000 rupees,” a representative told Sourcing Journal. “We will continue to closely follow this.”

C&A said the retailer is “looking very closely” at developments in Sindh. “As with all our suppliers, we require the ones in Sindh to pay wages that meet or exceed the legal minimum wage per function/grade,” a spokesperson told Sourcing Journal. “In case of any additional agreement beyond that, we also require our suppliers to comply with the respective terms.”

Gap declined to make a statement, and the other brands did not respond to requests for comment.

The garment sector is the second-largest employer in Pakistan, accounting for 60 percent of the $25.3 billion in goods it exported over the past fiscal year, a historic high. But the nation’s annual inflation rate is also seeing an uptick, increasing to 13 percent in January, its highest point since early 2020. As a result, Pakistan’s poorest, who already spend most of their incomes on food, are struggling to keep up with the soaring prices.

“In Pakistan, the minimum-wage fixation procedure requires a clearer process, a standard evidence-based approach for determination of minimum wages, regular and consistent revisions of wages and proper implementation of the same,” Aabida Ali, Pakistan coordinator at the Asia Floor Wage Alliance, told Sourcing Journal. “As the inflation accelerates in Pakistan, more frequent adjustment in minimum wages must be automatically applied to ensure workers are able to meet basic needs.”

The nonprofit says a living wage for Pakistan would be closer to 47,627 rupees, or $271.77.

A minimum wage of 19,000 rupees will push workers already being crushed by the pandemic’s economic fallout into “deeper poverty, higher debt and poorer standards of living,” Ali said. “If we need to improve living standards for the vast majority of people in Pakistan, it is important that we move closer to the Asia Floor Wage Alliance’s living wage figures instead of leading a race to the bottom on minimum wages.”

A similar crisis is unfolding in the southern Indian state of Karnataka, where labor campaigners say they are witnessing the “worst case of wage theft” in memory. The enormity of the situation—the Worker Rights Consortium estimates that 400,000 workers are owed $55 million and counting—prompted the American Apparel & Footwear Association (AAFA) to step in.

In a series of letters, the trade group, which represents such brands as Adidas, Gap and Levi Strauss, called on the Clothing Manufacturers Association of India (CMAI) to pay all arrears in full “no later than March 2022,” almost two years after the Indian government raised the so-called variable dearness allowance (VDA), which is based on the rate of inflation, to 417 Indian rupees ($5.54) per month. The CMAI said it would pay an amount equivalent to the VDA beginning January, though it is waiting for a pending High Court verdict before making any further decisions.

Workers celebrated when Shahi Group, India’s largest garment manufacturer, recently agreed to pay more than 80,000 workers $10 million in owed wages dating back to last April. Ben Hensler, general counsel and deputy director for policy and research of the Worker Rights Consortium credited the “intensive engagement” of a large number of brands, most importantly Gap and Calvin Klein owner PVH Corp. AAFA’s letters to the garment manufacturers also became “increasingly more pointed as the factories’ failure to remedy the wage violation dragged on,” he told Sourcing Journal.

Buy no such intervention appears to be coming for Sindh’s workers. A spokesperson for the AAFA said the organization had “no specifics to share on this.”

“It is extremely disconcerting that AAFA would fail to stand for workers’ right to receive the new minimum wage in Sindh,” Christie Miedema, campaign and outreach coordinator at the Clean Clothes Campaign, told Sourcing Journal. “This stands in sharp contrast to AAFA supporting workers receiving the new minimum wage rate in Karnataka. It took AAFA 20 months to speak out about Karnataka. How many more months of injustice do workers in Sindh have to face before AAFA is ready to speak out?”