It would cost 20 cents more per T-shirt to pay an Indian worker a living wage

It would cost 20 cents more per T-shirt to pay an Indian worker a living wage
A farmer harvests cotton in Maharashtra, India. Credit: Shutterstock

If we really care about protecting the people who make the things we wear and use, we need to raise wages for workers in supply chains to above the poverty line. Our research shows that this only requires a 20 cent increase in the Australian retail price for a T-shirt made in India.

This small increase can lift wages by up to 225% in India, closing the living wage gap for the most vulnerable workers in the , such as farmers. The living wage gap is the difference between a living wage and current wages.

The living wage is the income required for a decent standard of living for a and their family. It lifts the worker above the and is defined by the costs to meet basic needs such as food and shelter. It also limits the number of working hours per week required to meet these needs.

A living wage has long been advocated as a way to support vulnerable and exploited workers. About 42% of all workers globally are in insecure jobs and have no social protections, 29% remain in moderate to extreme poverty and about 25 million people are in slavery.

Many of the goods we now buy are part of global supply chains. Since the 1980s the production of labour-intensive products such as textiles and footwear has shifted to countries with low-cost labour.

Cost-cutting often impacts those with the weakest bargaining position, such as cotton farmers - cotton have been on a downward trend over the past decade. Without realising it, our demand for low prices can cause vulnerable workers in other countries to work for less than a living wage.

It would cost 20 cents more per T-shirt to pay an Indian worker a living wage
The small cost to address poverty and climate change for producing a T-shirt in India. Credit: Murray Hall

Our research calculated the living wage gaps in India, broken down by region, gender, skill and type of employment. For instance, female workers on cotton farms in Gujarat earn 207% below the living wage. Casual female workers in Haryana have a living wage gap of about 34%.

It would take on average a 15 cent price increase on T-shirts in Australia to close the living wage gap for cotton workers in India. Adding another five cents would close the living wage gap for Indian textile workers, and also account for the increase in agent fees, which are a percentage of the production costs.

The living wage gap may be larger or smaller on particular farms or factories, but a 20 cent increase on average would be sufficient to lift all Indian workers in the garment supply out of poverty.

How we can raise the living wage

The cost to close the living wage gap in developing countries is small because wages for workers in these countries make up only a fraction of the retail price charged in countries like Australia.

Our work shows it costs about A$5.30 to produce a T-shirt in a country like India and ship it to Australia. The remaining costs embedded in a A$25 T-shirt come from warehousing, distribution and retail costs within Australia itself.

It would cost 20 cents more per T-shirt to pay an Indian worker a living wage

As a result, a 20 cent increase represents a less than 1% increase in the Australian retail price. It would cost only another 40 cents to cover the cost of greenhouse gas abatement. This means an ethically made T-shirt would only cost 2.5% more than current prices.

A roadblock to implementing living wages is simply knowing the source of materials. Only about 7% of fashion companies in Australia know where all of their cotton comes from. Unless an Australian retailer specifies the source of cotton, the decision is made by the overseas textile contractor, often based on price.

Another challenge is that we need an accepted method for calculating and auditing the payment of living wages in the supply chain. The retailer needs to know how much the cotton farmer should be paid and have a system to check it has been done.

Over the past four years consumer pressure has pushed fashion companies to understand their supply chains and to consider paying living wages, but there is still a long way to go.

In 2012 a group of the world's largest ethical trade organisations formed the Global Living Wage Coalition.

This organisation has developed a manual for measuring the living wage and requiring? living wages to be paid to their producers. The producers are audited along the supply chain and in return can advertise their compliance with ethical standards. Shoppers will soon be able to look for a label - similar to the Fairtrade symbol - to know that living have been paid throughout the supply chain.

The famous economist John Maynard Keynes argued that consumers are not entitled to a discount at the expense of the basic needs of workers. In fact, we only need to pay a small amount more to provide a living wage and make a big difference to the world's poorest workers.


Explore further

A fair wage for global garment industry workers?

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Citation: It would cost 20 cents more per T-shirt to pay an Indian worker a living wage (2017, December 8) retrieved 21 July 2019 from https://phys.org/news/2017-12-cents-t-shirt-indian-worker-wage.html
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Dec 08, 2017
we need to raise wages for workers in supply chains to above the poverty line


Umm, sounds like the "we" in this statement refers to the Indian government implementing a minimum wage. What do "we" as consumers have to do with wages in India? Should I tell the cashier that I want to pay .20 more to give people a livable wage?

Dec 08, 2017
Do you know how corrupt India is? You think that money would actually get to them? Typical child-like mentality.

Dec 08, 2017
Buyers do have the ability to demand that raw materials be bought from sources where people are paid adequately. There's some companies that do this (e.g. Fairphone). There's no reason why this shouldn't work for cotton, too (and I would not mind paying the extra cents or Euro for a T-shirt).

Dec 09, 2017
Do you know how corrupt India is? You think that money would actually get to them? Typical child-like mentality.


Do you think you have the right to butt into other sovereign countries' business and govenrment? If so, does it work backwards, and why not?

If they are corrupt, that's a problem that they need to solve by themselves - not by the age old "we are spreading democracy" method that only serves to install more corruption.

Dec 09, 2017
I'm curious why this rank advocacy is found in a science website. Pay a 'living' wage? Didn't know that all the poor Indians were dying. This isn't just soft science, this is the vaporware of soft science, masquerading as some self righteous grad student has an issue with the economics of another country. I've been reading phys.org for a number of years, and this is the first time I actually been annoyed by an article that I had to log in and respond.

Dec 09, 2017
So they would just make them elsewhere for 20 cents less. Unless there is one global govt. I think it's about time.

Dec 09, 2017
@Silverlock: Oh did something upset you? You can't handle your fragile ideology being threatened with rigorous debate? Go to your safe space and read some Ayn Rand while the grown-up discuss ways of making life better for everyone.

KBK
Dec 09, 2017
The $0.20 translates to about a $1.5-2.00 increase in retail prices. I'd not mind paying....but there is near zero chance that any of the monies would ever make it to the person I'd be paying the extra for.

some asshat at the middle or the beginning would put it in their pocket and pretend they are paying the workers.

It could be done but extreme force applied daily, wit out remorse, constraint, nor a moment of wandering attention would be allowed.

All attention and pressure in all ways have to be paid and placed upon the matter, forever.

All potential avenues for fraud (and a few more you cannot currently imagine)....would have to be watched and under scrutiny, forever, for as long as the situation exists.

Humans are greedy little psycho bastards when lots of money is on the table, and they will not ever rest in this psychosis, and drive --as long as they breathe. This goes on everywhere in every way you can imagine.

So, sure, pay them. Good luck with that.

Dec 10, 2017
@silerlock - i find it quite useful to know that workers along the supply chain being paid a living age would not increase costs very much. There are lots of methods to increase wages, not all of which involve governmental changes.

Dec 12, 2017
If "a living wage" in india is what it required for a worker AND their family to be above poverty, then 20 cents would be middle class for a single person.

In the U.S. "a living wage" only represents what a single person needs to not be in poverty; the poverty level for a family of 4 in the U>S is $34,000 dollars/year, and $50,ooo still qualifies for foodstamps (brink of poverty).

Moreover, that is at the national averaging, most jobs in U.S. therefore must also be paying poverty wages, more impoverished than what us companies pay in india. Example: If us living wage is $10 per hour, that is 20,000 per year, but that is for single person-sooo- living wage to be as fair as what this article says is a living wage in india, would need to be $25 per hour, that is 50,000/year.

I just love reading about how poor other people are based on their dollar income, while I can't leave my house without encountering people poorer in my own city--even though they work overtime.

Dec 16, 2017
I just love reading about how poor other people are based on their dollar income, while I can't leave my house without encountering people poorer in my own city--even though they work overtime.


You're talking about relative poverty instead of absolute poverty. The relative poverty limit is typically set at 60% of the median income, whereas the poverty of the workers in India is absolute poverty where people are unable to afford any two of the basic necessities or access to: adequate food, clean water, sanitation facilities, health care, proper shelter (not overcrowded mud-huts), education, information (press, media), legal and other public services.

20 cents more puts workers in India over the absolute poverty limit.

A living wage in the US is defined by the relative poverty limit, which makes it an unreachable goal, as when the poor people earn more the poverty threshold rises automatically.

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