The Haryana government’s recent decision to hike minimum wages of factory workers has turned to be a bane for several industries in Gurgaon that are on a cost-cutting spree.
In the wake of the economic slowdown, labour-intensive industrial units, especially the apparel manufacturing and exports sector, have resorted to massive retrenchment to fight the competition in the global market. Industries have started firing factory workers, a trend that is likely to gain momentum with the increase in the wage slab.
On September 25, Haryana chief minister Manohar Lal Khattar increased the minimum wages of unskilled labourers from Rs 5,900 per month to Rs 7,600. The wages of skilled labourers was increased from Rs 6,536 per month to Rs 9,699. This revised slab became effective from November 1.
Gurgaon, home to about 50 apparel export units with about three lakh labourers, is the biggest labour intensive industry superseding the automotive industry. The city has about 2,000 industrial units in small, medium and large segments with major presence of apparel and automotive units. About 5 lakh workers are employed in these segments.
“We have reduced our workforce by about 1,000 in Gurgaon this month after the minimum wages were hiked. We have a total of about 15,000 workers in different units here. Wages make for 30% of the total cost of production. The hike has left us uncompetitive in the global market even against the small countries like Bangladesh, which is manufacturing and exporting three times the Indian volume. The wage structure in Bangladesh is almost half the India,” said AK Jain, assistant vice-president (commercial), Orient Craft Limited. Orient Craft is one of the biggest apparel manufacture and exporter in India with about 12 factories in Gurgaon.
Jain, who is also the former vice-chairman of Apparel Exports Promotion Council (SEZ and EOU), said the government has hiked the minimum wages under political pressure.
On the other hand, labour unions have alleged that industrial units had started to lay off workers following the hike, forcing them to work on contract. “We have received reports that many manufacturing units have started to lay off workers to avoid paying them the hiked wages. These units are forcing them to resume work but only as contractual workers. We are planning to protest against this,” said Nawraj Dahal, secretary of the All India Trade Union Congress’ Gurgaon chapter (AITUC).
The Haryana labour department has refuted the allegation of labour retrenchment. “So far, we have not received any such complaint. Even if a worker is employed by a contractor, the latter will have to pay him/her as per the revised wage structure announced by Haryana government,” said a senior official of the state labour department.