China: Garment exporters baulk at Asian living wage plans

Date: October 13, 2009
Source: Just-Style
Author: Dominique Patton

Paying textile workers a salary equivalent to US$475 the amount called for by the Asia Floor Wage Alliance  is not feasible, say Chinese garment exporters. The campaigners want to persuade US and European retailers to raise the wages paid to Asian factory workers to a "living wage".

Their calculations are based on the World Bank's Purchasing Power Parity, which was used to work out the wage needed to allow workers to purchase the same set of goods and services that a US consumer can get for $475.

In industrial cities like Shenzhen, the monthly wage earned by most workers is around CNY1,000 - whereas the Asia Floor Wage would come in at CNY1,639 - which is 2.4 times higher than current minimum wage levels in China.

"I cannot imagine this salary for workers," said James Fu, general manager at Fujian Green Garments co, a children's clothes manufacturer.

His firm pays between CNY800 and CNY1,000 per month, a "normal" rate for Fujian province. Gross profit margins on baby clothes can be as low as 5%, he said. "For kids clothes this wage is not possible."

Edward Kang, chief executive of Ever-glory, said workers at his Nanjing factory earn about US$250 per month for a 6-day week, working 9-10-hour days.

"We already outsource much of our large volume, low-value products to factories in Vietnam and Cambodia. I don't see how we could implement this wage," said Kang.

He expects minimum wages to increase a further 5-10% in the next two years.

However, representatives from the AFW campaign have stressed to just-style that the responsibility for absorbing the cost of higher wages lies with buyers paying higher prices to suppliers.