Labour charges to be 15-20% of market value of gold used
With rising gold prices rendering the age-old labour charges of Rs 100 to 250 per gram as peanuts, Rajkot-based jewellers have decided move on to market price-based labour costs. Henceforth, the jewellers have decided to charge labour rates in the range of 15-20 per cent of the prevailing market price of gold used in the jewellery.
Traditionally, a fixed amount for jewellery making labour (in the range of Rs 100 to Rs 250 per gram depending on the type of jewellery) is levied on the customers.
However, this has changed with gold prices moving up substantially. This move is aimed at reducing the losses in profits.
"It has become necessary for us to adopt a new policy with regard to labour charges, as high gold prices marked a dent in our profit," said Bhaya Saholiya, president, Rajkot Gold Dealer Association.
The labour charges in Rajkot have remained unchanged since 1995. But now onwards the association has decided to charge 15 per cent of market value of gold used in the jewellery as labour, while the maximum charge would be 20 per cent. The implementation of this new scheme of labour charges would increase the profit margins for jewellers from 5-6 per cent to 8-10 per cent.
According to Saholiya, jewelers from other parts of the state including Surendranagar and Bhavnagar were charging labour wages as per the market rate. He also added that jewellers down south were also adopting the same measures.
Saholiya said, "Due to high gold prices, the profit margins had come down significantly. We are facing losses in profits for the past two to three years. Moreover everything else is becoming costly and it is hard to maintain the showrooms."
Rajkot is having more than 200 jewellery showrooms in the city with 7000 small gold shops and more than 25000 labor workers.
According to industry estimates the daily trading volume of gold jewellery in Rajkot would be about Rs 1 to Rs 1.50 crore, while in the peak season like Dhanteras, Diwali and marriage season, it touches Rs 3 to 5 crores per day.
Main reason for falling prices globally is that equities are turning favourable and many emerging and developed market indices are at multi-year