Health & Beauty | Gifts

Original article

Factory staff get less than India’s minimum wage to make the bottles for top-selling celebrity perfumes, including two from Katie Price.

Workers at a factory in India have been paid just 26p an hour to make perfume bottles for England World Cup sponsor Umbro and the glamour model Katie Price, better known as Jordan.

An Observer investigation found that the 7,000 employees at the factory in Gujarat are rewarded with a basic wage that is below even the minimum expected in India, and is just half the estimated minimum living wage.

The average take-home pay of 141 rupees, about £2.05 per day, would barely even cover the cost of buying food, according to one recent study of the Indian market, where inflation is currently running at 10%. The firm, Pragati Glass, was approached three years ago by Price’s representatives and was contracted to produce 300,000 bottles. Marketed under the name “Stunning”, the first perfume she launched sells in Superdrug for £19.99 for a 50ml bottle.

Pragati also manufactured the bottles for Price’s second perfume, Besotted, which also sells for £19.99 for a 50ml bottle. The scents were an instant success and, in a UK perfume market estimated to be worth about £640m, they further boosted Price’s already swelling coffers. She is estimated to be worth £30m, thanks to a range of business interests that also includes her bestselling books and jewellery.

Pragati’s factory is in Kosamba in the state of Gujarat, where nearly one third of the population live below the national poverty level. There, according to Dinesh Gupta, managing director of Pragati Glass, employees are paid a basic wage equivalent to £1.75 per day for an eight-hour shift, with an additional 31p from the government bringing the wage up to what he says is the legal minimum of 141 rupees (£2.05).

This does not appear to be correct. Official figures do not list glass workers in Gujarat as a unique category, as they do in some states such as Maharashtra where the firm is based and where the minimum wage for an unskilled glass worker works out as £2.45 per day, rising to £2.55 for a skilled worker. But the minimum wage for an unskilled worker involved in a manufacturing process in Gujarat is listed as £2.25, rising to £2.40 for a skilled worker. Gupta insists that the company has done nothing wrong and that it is paying the minimum wage. When it was put to him again on Friday that 141 rupees is below the minimum wage, he refused to comment other than to deny any wrongdoing.

The perfume itself is often the cheapest part of the package, accounting for as little as 3% of the overall cost for the cheaper fragrances, according to one industry estimate. Packaging and marketing make up a far larger proportion of the cost to the manufacturer, but the potential to make money should not be underestimated: the profit margin on a celebrity perfume can be as high as 95%.

Even with such colossal margins some businesses are determined to keep costs to a minimum. India offers that opportunity. Price’s people were quoted £113 for 1,000 bottles. For the complete boxed and bottled package they were charged £342 for 1,000 bottles – 34p each.

In a small room in Pragati’s offices in Mumbai, Stephen Noronha, the vice-president in charge of export, showed off a room in which the walls were lined with cabinets full of hundreds of bottles produced by the company. Holding two empty bottles produced for Price’s perfume, he explained they were made in the Gujarat factory, while the stoppers were made in Mumbai.

He said his company also handled the packaging and filled the bottles with perfume supplied to them. The original order was placed by Bob Coleman, a perfume tycoon who used Pragati to produce a perfume for the late reality TV star Jade Goody.

The firm produced more than 300,000 bottles for her perfume, Shh. Goody, who died last year, visited the factory in 2006, but production ended after the racism row that erupted following comments she made on the Celebrity Big Brother programme to the Indian Bollywood star Shilpa Shetty. Coleman, who also launched a perfume for Jordan’s ex-husband Peter André, died last year.

Last night a spokesman for Price said: “The manufacturers of Katie’s perfumes insist that at least the minimum ethical trading policies are met and in many cases they are exceeded. They take the report of the minimum wage not being met very seriously and will take it upon themselves to investigate these reports further.”

He said the “ethical production of the manufacturing and selling of Katie Price’s perfume was of paramount importance to her”, adding that “all products manufactured by Katie Price have a checking policy that ensures health, safety and ethical trading guidelines are met or in most cases exceeded and any third parties working with Katie are made to meet the same standards”.

Although many of the other bottles Noronha displayed were for relatively unknown brands, a couple of names were more familiar. Noronha pulled out a small clear glass bottle, embossed with the Umbro logo. He said the company had won a contract to produce bottles for the England sponsor, which sells a range of branded fragrances, including eau de toilette spray. Most are in the budget category and retail for about £1.50.

Last night Umbro, which is owned by Nike, said it had ended any relationship with Pragati. A spokeswoman explained that a licensee had subcontracted the work to another company, Aroma de France, based in India, which in turn had subcontracted it to Pragati Glass.

She said that at no point was Umbro aware that Pragati was the subcontractor. She explained that, when Umbro was bought by Nike two years ago, new and stricter rules were introduced on suppliers, and when the licensee revealed it was subcontracting an audit was ordered, which had revealed that the company was out of step with Umbro’s code of conduct.

In January, she said, the contract was terminated because “the high compliance standards we demand from our suppliers were not being met despite endeavours to improve the situation”. The company has since moved its production operations to China.

Noronha also produced a bottle embossed with the name of Encona, the UK spicy sauce producers. George Phillips, commercial director of Enco Products, confirmed that the company had approached Pragati Glass and had visited its factory to investigate the possibility of using its services but had not reached the stage of conducting due diligence, which it would do with any company before entering into a contract. He said that Pragati had produced a mould for a bottle, but no decision had yet been taken on whether to proceed. He stressed that his company was not a regular client of Pragati and added that any suggestion of underpaying workers would be a matter of “grave concern”.

Last year an in-depth study by the Ambekar Institute for Labour Studies in Mumbai examined the cost of living in India for industrial workers. The monthly living wage in Gujarat, the study concluded, was 6,757 rupees (£98).

A Pragati worker putting in six days a week at the factory earns the equivalen of £49 per month. Food costs alone would consume all but £1.22 of that. Last night anti-poverty campaigners said it was unacceptable for western companies to cut costs by using subcontractors who pay low wages to workers in the developing world.

Dominic Eagleton, policy officer for ActionAid, said: “A bad job is better than no job at all, but by paying such low wages employers are keeping workers trapped in poverty rather than helping them escape it.

“Rather than driving down prices at every opportunity, British companies should pay a fair price to their suppliers in India and should make sure these suppliers pay a decent wage. Anything else is profiting from other people’s dire poverty.”

Discussion / Impacts / Outcomes

Women! Are you reading this website while sporting a toot of the Katie Price perfumes Stunning or Besotted on or about your slender, elegant wrists or neck? Because if you are, you should probably be feeling deeply ashamed of yourself right now. That’s because a report in The Observer on Sunday claimed that the bottles were made in India by workers who are being paid 26p an hour, which is less than the minimum wage in case you hadn’t already guessed. As a result of that report, Superdrug have withdrawn the fragrances from their shelves, stating that it all flies in the face of their “robust ethical trading policy” (Source: Dawson 2010, np link).

In a move that could affect India’s draw as a cheap manufacturing destination, Superdrug, the UK’s second-largest health and beauty retailer, has pulled out the perfumes of reality TV star Katie Price from its shelves following allegations that Indian workers making the bottles were not even paid minimum wages. The Observer on Sunday said its investigations revealed that Indian workers at a factory in Gujarat were paid £2.05 a day to make perfume bottles for Price’s Stunning and Besotted fragrances. Glassworkers should earn at least £2.25 a day. A spokeswoman for Superdrug, the high street shop, said: “As a business, we have a robust ethical trading policy so that our customers can be confident that they are buying products that are made in an ethical way. Therefore, we have taken the decision to remove Katie Price’s fragrances from our shelves at this time while we conduct an investigation.” Price’s spokesperson said production has now been moved to the UK. In a statement, the spokesperson said: “Following a press report about the production of Katie Price perfume bottles by the Pragati Glass Company, we can confirm that this factory in India is no longer used as a source of component. The production of the bottle, its packaging, filling and finishing has been moved from India to the UK and France”(Source: IANS 2010, np link).

In a statement, Price’s spokesperson said: “We would like to reiterate as always that all products manufactured for Katie Price, or third parties working on behalf of Katie Price, have a checking policy that ensures health, safety and ethical trading guidelines are met and in most cases are exceeded. We are investigating if and how this has occurred in these circumstances” (Source: Anon 2010a, np link).

Under Katie Price’s contract with her perfume licensee (a reputable UK company), that licensee is responsible for ensuring that all Katie Price product is manufactured and sold on fair, ethical and legal terms.  When The Observer’s claims about low wages at the Indian perfume bottle manufacturer were brought to Katie’s attention, she suspended her contract with the UK licensee, and asked it to provide her with a full, written report on the low wages allegations.  She now awaits that report (Source: katieprice.co.uk – Anon 2010b, np -  link).

Minimum wages in India are complex. Each state has published daily rates for thousands of categories of workers. Pragati Glass, the Gujarati-based producer, claims it is meeting the daily minimum wage requirements for its class of workers ($3.05 or R23.61). These wildly pedantic labour laws are one of the many things impeding Indian economic development, but it does not yet appear that Pragati is disobeying the law. That has failed to satisfy Price’s distributors and so hundreds of Indians have lost their jobs as production has moved to the UK and France. Is that sort of wage-differential discrimination cultural imperialism? (Source: Chait 2010, np).

I applaud the Guardian for their defense of these poor Indian workers. Of course now they have no job at all, but hey ho…. / Quite. It would be nice if everyone could earn what a UK newspaper journalist gets but the reality is in some parts of the world 26p per hour is a wage to aspire to. Children will go hungry tonight because of this great piece of crusading journalism. / India isn’t that backward you tards. They have had a national minimum wage since 1948. Currently it is set at 100 Rupees or about £1.50 an hour. / It’s not like Katie Price personally forced slave labour on these people, hell the company who make the perfume probably didn’t either. Some company that bid on the contract to make the bottles probably subcontracted out their production to an indian company which owned another company which produced the bottles. / Are there seriously people saying that “at least they had a job”? I know this is a consumer website, but surely mindless consumer idiots can have some class conciousness? A bit of solidarity with the workers? Having no job is better than being horrendously exploited for 26p/hour. Well, until some scab (like the above) goes out and does the job, undermining worker struggle [Source: Mycock et al 2010, np link].

The perfume IS probably disgusting and quite frankly so is K[atie] P[rice]‘s behaviour at the moment in most aspects of her life in my opinion, but I think it’s pretty silly to assume that Katie Price had any clue about the child labour nevermind that she took pleasure in it as someone has suggested. Saying that, I think it’s bad enough that she didn’t know and I find it sad that celebrities can lend their name to products without fully knowing the implications. Sadly that is the case with most celebrity fragrances these days. The only other thing I will say in her defence is that how many of you reading this and judging her have ever shopped in Primark? Or similar type shops where illegal child labour is rife? I’m betting it’s most of you. We like to pick and choose when we are shocked, and sadly KP seems to be getting the brunt of it despite not being greatly involved in the manufacturing. / When you buy a t-shirt for £2′s you can almost garantee it’s been made in some sweat shop somewhere / … / Well I just googled pragati glass and looked into there website……Hmmmm… I could recognise lots of high street brand shapes in there…..Use your imagination and change a few lids around…….Touch of p….ugo… / Hate to say it people, but even the more expensive brands have their stuff made in sweat shops- I’d not be the least suprized if the stuff katie price wears was also made in sweat shops. Its one thing to claim “ethical reasons” for withdrawing a line but the fact is if she were really serious she’d be dressing in Eden clothing and only allowing her kids to wear hand-me-downs made by UK factories. I think there is more to this then ethical reasons! (Source: Anon et al 2010, np link).

I think what people don’t understand is the effect that this will have on the indian people who have lost their jobs as a result of this, it is a very low wage but to those people it would have been a lifeline and possibly a source of income for whole families. It’s a shame they couldn’t have negotiated better wages and working conditions rather than axing it and leaving hundreds jobless. (Source: comment on Anon 2010c, np link)

I understand that the Pragati Glass Company, which manufactures the offending Price perfume bottles, has closed down its operation in India and switched production to much more expensive premises in the UK and France. Why ever do that? Surely it should have taken a leaf out of Apple’s book. Confronted with irrefutable evidence that it was paying its Chinese workers a pittance and driving them to suicide, Foxconn –  main supplier of the iPad and iPhone – reformed its working practices and doubled employees’ wages. That must be a lot less harmful to Apple’s margins than repatriating production – and has the added merit of sustaining employment in a developing economy [see our ‘iPad suicides timeline (2010)’ page for more on this] (Source: Smith 2010, np link).

Sources / Further Reading

Anon (2010a) Superdrug pulls Katie Price perfume. BBC news 15 June (www.bbc.co.uk/news/10321647 last accessed 8 March 2011)

Anon (2010b) Fragrance statement. KatiePrice.co.uk 21 June (www.katieprice.co.uk/fragrance-statement last accessed 8 March 2011)

Anon (2010c) Katie Price’s perfumes axed over ‘slave labour’ wages. Marie Claire 15 June (www.marieclaire.co.uk/news/beauty/473275/katie-price-s-perfumes-axed-over-slave-labour-wages.html last accessed 8 March 2011)

Anon et al (2010) Comments on Cleeve, D. (2010) Superdrug pull Katie Price perfume. Handbag.com 15 June (www.handbag.com/celebrity/gossip/superdrug-pull-katie-price-perfume-113891 last accessed 8 March 2011, comments now unavailable)

Chait, G. (2010) Something stinks about spreading a cultural emblem for financial gain. Cape Argus (South Africa) June 21, p.18

Cleeve, D. (2010) Superdrug pull Katie Price perfume. Handbag.com 15 June (www.handbag.com/celebrity/gossip/superdrug-pull-katie-price-perfume-113891 last accessed 8 March 2011)

Dawson, A. (2010) Katie Price scent whipped off Superdrug shelves after Indian bottle wage rumpus. Bitterwallet.com 15 June (www.bitterwallet.com/katie-price-scent-whipped-off-superdrug-shelves-after-indian-bottle-wage-rumpus/30875 last accessed 8 March 2011)

IANS (2010) Katie Price perfume pulled from Superdrug for Gujarat sweat factory allegations. Chai samosa: connecting Indians in the UK. 16 June (http://chaisamosa.net/index.php/latest-news/201006162259/katie-price-perfume-pulled-from-superdrug-over-gujarat-sweat-factory-allegations/menu-id-363html last accessed 8 March 2011)

Mycock, I. et al (2010) Comments on Dawson, A. (2010) Katie Price scent whipped off Superdrug shelves after Indian bottle wage rumpus. Bitterwallet.com 15 June (www.bitterwallet.com/katie-price-scent-whipped-off-superdrug-shelves-after-indian-bottle-wage-rumpus/30875 last accessed 8 March 2011)

Smith, S. (2010) The politics of marketing: Katie Price perfume causes a stink. Marketing Week 15 June (http://stuartsmithsblog.wordpress.com/2010/06/15/katie-price-perfume-causes-a-stink/ last accessed 8 March 2011)

Compiled and posted by Ian Cook, thanks to Freddie Abrahams (last updated March 2011). Article reproduced without charge with permission from Guardian News and Media Limited (copyright 2010).