Abstract:
Purpose
The aim of this study is to study the possible outcome of hiring sub contractual
employees / labors by the local textile companies which are producing goods for the
international buyers over the violations reported in the social compliance audit relating to
minimum wage rate not paid and the overtime premium not paid.
Methodology/sample
This is a quantitative research.A sample of 40 (N=40) Textile and Garment factories is
selected. A total of 120 Social Compliance Audit reports based on panel data (Nov.,
2011-Jan., 2013) either conducted directly by buyers or by a third party of 40 textile and
garment factories in Pakistan is analyzed. Only those audit reports will be picked having
the violations of Minimum Wage and Overtime Premium not paid to check and verity its
relationship with hired subcontracted piece rate workers.
Findings
Based on the regression and correlation testing it is concluded that there is a significant
relation of hiring of sub contractual employees to the risk of violation of minimum wage
rate not paid and the violation of the overtime premium not paid. Thus the more the local
textile companies which are engaged in the production of goods for the international
buyers hire sub contractual employees which are not on the direct payroll of the textile
companies the more is the risk for not meeting the minimum wage rates and also for not
giving them the overtime payment.
Practical Implication
The findings and results will assist to identify the severity of relationship between the
impact of hiring subcontracted piece rate workers and failing to receive minimum wages
and overtime payment violations in the SC audit report conducted by the foreign buyers.
The findings can also be generalized in other industry. Government will also be able to
take step and develop policy to discourage subcontracting piece rate workers and make
proper legislation to address the existing issues in Social Compliance.
