Conventional economic wisdom has it that developing countries need to put up with poor working conditions and pay so that the country can become wealthy and their conditions improve.
A quick glance at the history books and we can see that’s exactly what happened during the industrial revolution. Demand grew, labour became scarce and so wages and conditions were improved to entice workers.
But things have changed since then.
Take Bangladesh for example. It’s the worlds 2nd biggest clothing manufacturer (after China) and iirc the worlds biggest shirt maker since the 90s – yet typical wages are still around UK 7p / US$0.13 per hour, with 60 hour / 6 day weeks the norm.
How many decades then before they earn the British minimum wage of over £5 an hour?
Well I bought some £2 shirts from Primark when I started my new job – and they are as good as shirts I’ve paid £10 – £15 for in the past. So there isn’t much scope for earning more through improving quality.
They could perhaps dig into China’s share of the market – but they already have a huge share of the global trade, so short of discovering lifeforms on other planets to export to, again there isn’t that much scope for growth.
The problem is that economic thinking hasn’t really kept up with developments in technology.
Manufacturing is now much less labour intensive than in the days of the industrial revolution, and many jobs are much less skilled, so the prospect of a shortage of labour in Bangladesh pushing up wages seems very remote.
And if the Bangladesh government were to impose a minimum wage, global manufacturers would simply find another poor country to exploit.
It’s unbelievable some of the excuses people come up with. Here for example: http://www.independent.org/pdf/working_papers/53_sweatshop.pdf they claim that global firms aren’t really exploiting workers by paying them 13cents an hour, because domestic employers pay even less! Missing the point somewhat I feel.
Obviously the cost of living in poor countries is much cheaper than in developed countries – but why not pay workers at least enough so that they can work a 40 hour week and not work themselves into an early grave? And get more shift workers to fill up the shortfall, giving more people the chance of a job.
In a 10hr day the typical employee can stitch 200 shirts apparently. If Primark were able to give the Vat cut directly to the employees they could earn the same as they do now for a much shorter working week.
In fact I’d happily pay £3 for one of these shirts, and still feel like, well I was stealing the shirt of their backs! 200 shirts at an extra £1 each, steady on, they’d be earning more than me! To be fair, their sewing is much better than mine.
But getting back to the main theme of my post though, it’s easy to understand a photolab going bust after the boom in digital cameras, but when entire global industries that are still relevant such as the car industry are unable to make a profit, something has gone wrong somewhere.
Moving jobs from developed countries to developing countries on a large scale is great for the middlemen and investors who become filthy rich, but not a lot of fun for those in the developing world who work for a pittance in often scandalous conditions for long hours, nor for the people in the developed world who lose their jobs and can no longer afford to buy the goods made in developing countries.
We are in uncharted waters here. Yes genius economic minds of the past can give us some general guidance, but we need to start rewriting the rule book if we are to share the worlds resources more fairly and give everyone a better chance of a decent life.
