Can a Living Wage Improve Production?

Authored by Anna Kallschmidt

Some international clothing brands such as H&M, Continental Clothing and Mini Rodini have committed to paying workers a living wage. While the companies plan to expand their mission, critics argue that there are many barriers preventing organizations from implementing livable wages for supplier factories’ employees in developing countries. These obstacles include increasing the cost of products for customers, decreasing rates of employment, and increasing the replacement of workers with automation.

This dilemma is especially salient in the Indian garment export sector, where inequalities are so drastic that some workers have reported a month’s wages could not purchase a garment they created. Even so, the garment factor has proven vital to India’s economic growth. While research on living wages has grown in the United Kingdom, United States, and New Zealand, developing countries are drastically under researched. GLOW researcher Dr. Bimal Arora has proposed a study to examine the perspectives on living wages and the capabilities for them in this sector. 

Dr. Arora’s proposed study aims to address the relevant United Nations’ Sustainable Development Goals (SDG) numbers 1 and 8: 1. Ending poverty in all of its forms everywhere, 8. Promoting sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all people. Arguably, since the majority of these textile labor workers are female, SDG number 5 is also addressed, which is achieving gender equality for all women and girls.

However, Dr. Arora’s study will not only focus on examining international brands, developing country suppliers, and public policy and stakeholder perspectives on living wages. He will also investigate how improved employment practices can be implemented to create better-organized production systems, increased organizational commitment and productivity from workers, and opportunities for the development of higher-level skills. Research in these areas is vital in India because in addition to having 26% of workers living on minimum wage, Indian factories also have the lowest rate of productivity and reliability, on-time delivery, and quality, among other developing countries. This results in low-quality employment, which merits a high turnover of workers, costing the organizations recruitment costs, and solidifying the workers’ location in poverty traps.

Lastly, Dr. Arora will also research the links between wages and the prices of products offered by international brands to suppliers, in order to address the argument that paying workers a living wage would increase production costs. Dr. Arora intends to utilize Amartya Sen’s Capabilities Approach for this study. This framework posits that poverty is relative to the achievement of capabilities, such as the ability to live a life one believes is valuable and where capabilities are a matter of choice. Therefore, this study will measure a living wage in contextual, temporal, human, and social attributes, such as the ability to read and earn an education, live a healthy life with the capacity for movement, and the opportunity to engage both in civil and work life.

Dr. Arora is currently trying to raise funds for the study. Interested GLOW community members may contact him at to join the study in India, or for the more broad goal of comparative research in the garment and textiles sector and beyond. Additionally, Dr. Arora urges the GLOW community to start focusing in developing countries, as that will help generate new data and insights for theory building in this important area of research and policy.

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