Factory tries to dodge inflation correction

published 26-05-2014 15:05, last modified 26-05-2014 15:05
Gokaldas Exports refused to pay an increased inflation correction fee to approximately 9,900 workers in six of their factories in Bangalore. The Clean Clothes Campaign and the Workers Rights Consortium contacted main buyers H&M and Adidas. They discussed the issue with Gokaldas, after which the so-called Dearness Allowance was paid to the workers, including back payment.
Factory tries to dodge inflation correction

Gokaldas workers. Credit: GATWU

“We would like to thank you all on behalf of all the workers of Gokaldas Exports for having supported us during the last couple of months in this struggle, and proving that global solidarity can force multinational corporations to stop labour rights violations in sourcing countries.” - Prathibha R, Garment and Textile Workers Union, India

The Indian government issued a new, increased, Dearness Allowance as of April 2013. The allowance is meant to cover the cost of living of a worker, and is based on the inflation rate. The Dearness Allowance is paid to workers irrespective of their skill category and wage.

Gokaldas Exports implemented the new increased wage for all workers at six of their factories. However, at the same time it reduced the housing and transportation benefits for workers whose wages were above the statutory minimum wage. This resulted in a de facto nullification of the Dearness Allowance increase.


H&M, Adidas get involved

The Garment and Textile Workers Union (GATWU), representing the workers, approached the factory management several times without receiving a reply. Consequently, the Clean Clothes Campaign and Workers Rights Consortium contacted the main buyers of the factory and urged them to use their leverage to demand that the Gokaldas management immediately pay all workers the increased Dearness Allowance (DA) from the date of its entry into force.

In September 2013 both H&M and Adidas reached an agreement with Gokaldas Export to ensure payment of a proper DA and back wages, starting in October. By December 2013 all amounts owed by the factory management had been paid to the workers.