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QUEENSLAND – A 20 cent increase in the price of a T-shirt – less than 1 per cent of its retail price – would be enough to help pay Indian textile workers a living wage, claims new research. The research shows it would also only cost only another 40 cents to cover the cost of greenhouse gas abatement, meaning an ethically made T-shirt would only cost 2.5 per cent more than current prices.

The Australian research claims a 20-cent increase in the retail price for a T-shirt made in India would increase wages of textile workers by up to 225 per cent in India, closing the living wage gap for the most vulnerable workers in the supply chain, such as cotton farmers.

The research calculated living wage gaps in India, broken down by region, gender, skill and type of employment. For instance, it calculated that female workers on cotton farms in Gujarat earn 207 per cent below the living wage, while casual female workers in Haryana have a living wage gap of about 34 percent.

Says the research: “It would take on average a 15-cent price increase on T-shirts 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 chain out of poverty.

“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 US$5.30 to produce a T-shirt in a country like India and ship it to Australia. The remaining costs embedded in a US$25 T-shirt come from warehousing, distribution and retail costs within Australia itself.”

Editor’s comment: We welcome this research, which supports other similar pieces of work which show that wages for garment workers represent just a tiny proportion of overall costs. Therefore, it is not – in theory – particularly challenging from a financial point of view to increase such wages.

The problem, however, is that these arguments are all hypothetical. We know, for instance, that many T-Shirts retail for way less than US$25, especially in the fast fashion sector. We also know that if the average price of a T-Shirt did increase, any resulting financial benefit would not be passed on to the most vulnerable part of the supply chain – ie garment workers. It would be eaten up by brands and passed along to shareholders in the form of increased dividends.

The research was undertaken by The Fashion Law, an independent source of objective fashion law and business analysis, and written by Murray Ross Hall, The University of Queensland and Thomas Wiedmann, UNSW.

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