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New Frontiers in the Global Race to the Bottom

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Myanmar-Cigar-Factory

Labor in Bangladesh is not cheap enough for the apparel industry. Time to move to Myanmar, so long as the government–a group of military leaders not precisely known for taking the poor into consideration–doesn’t raise the minimum wage to a shockingly high 40 cents an hour.

In the last few years, top Western clothing retailers such as Gap, H&M, Marks and Spencer Group PLC and Primark Stores Ltd. have signed contracts with more than a dozen garment factories in Myanmar, the former British colony also known as Burma. The country emerged from decades of military dictatorship in 2011 and major U.S. and European sanctions shortly thereafter. It now offers some of the cheapest labor costs on the planet combined with easy access to Asian markets — both attractive features for corporations looking to source low-cost, ready-made garments for export.

Last summer, Gap raised eyebrows when it became the first American apparel company to publicly sign a contract in Myanmar since President Barack Obama eased sanctions. At the time, Gap said, “The apparel industry will play a key role in helping to fuel the economic prosperity of the country.”

But if garment-factory bosses get their way, comparatively little of that newfound wealth will flow to workers.

The Myanmar Garment Manufacturers Association, representing about 350 factories, says the government’s proposed wage is too high and will force employers out of business. It wants its own industry-specific rate of about $2 a day instead. Starting pay in factories currently hovers around $1 a day.

An association official recalled a meeting two weeks ago that brought together representatives of about 160 factories, including the owners of plants that supply Gap and H&M, to discuss the government’s wage proposal. “At one point, we did a roll call vote to see a show of hands, who would say basically they couldn’t afford to pay it, and every hand went up,” says the group’s project manager Jacob Clere, reached on the phone in Yangon, the nation’s largest city and garment-manufacturing hub. “In terms of the membership, they’re all saying they can’t afford to pay it.”

That sentiment contrasts sharply with the repeated public assurances of brands that say they are committed to improving labor standards in Myanmar.

What I love about how the garment industry is framing this is by saying that the apparel contractors can’t pay this minimum wage. Not letting them off the hook here, but the real issue is that Gap, Walmart, Primark, etc., won’t pay enough per garment to allow them to pay that higher wage. Again, let’s be clear where most of the power resides in the global apparel industry–with the big western companies doing the contracting. The garment owners may often be awful people who treat employees with unnecessary cruelty. But they are most certainly operating with very thin profit margins thanks to the cost standards imposed upon them by the western companies. They are the ones that need to be held culpable. This is why we need international standards on wages, conditions, and other facts of work in the global garment trade, precisely so that a nation like Myanmar can pay their workers 40 cents an hour without the garment companies having all the leverage to defeat it.

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  • Bugboy

    “…and will force employers out of business”

    I think I’ve heard this tune before?

    • tsam

      It’s the Rickroll of economic tunes.

    • Hogan

      I once got to hear it live during hearings for a local living wage bill. “Employers will flee the city in droves, and those of you left behind will be reduced to practicing subsistence agriculture with implements of wood and bone.”

      (One of the councilmembers responded to the “flee the city” talk by saying, “Fine. I-95 is this way, and I-76 is that way.”)

      • Linnaeus

        Now the tactic seems to be state legislatures prohibiting local wage laws.

        • Brett

          Yep, it’s the tactic they started taking when cities called their bluff and raised minimum wages anyways.

  • Rudolph Schnaubelt

    Workers, people, need to realize the oligarchs see the rest of us as fungible plug-in factors of production. Workers in Michigan unionized? Capital moves to Alabama. Alabama workers want a living wage? Move to Mexico? Mexico still has a functioning government? Move to Myanmar.

    Labour needs to transcend borders just as capital has. As it stands now international borders only apply to individuals not to corporate persons. The worker in Cuba is stuck in Cuba. The money in Cuba can go to Switzerland and be put to use exploiting workers wherever.

    • Ktotwf

      It is almost as though workers need to seize the means of production and liquidate the bourgeoisie.

      • Rudolph Schnaubelt

        Hope springs eternal.

  • Ahuitzotl

    At one point, we did a roll call vote to see a show of hands, who would say basically they couldn’t afford to pay it, and every hand went up

    hey, these people are venal and evil, not stupid. If you ask them who wants to make slightly less money, what do you expect?

  • Mondfledermaus

    40 cents! That’s not too bad, Mexico comes out about 56 cents, and the cost of living is higher. Although the working week is 48 hours but workers get paid 56 hours (whopping 31 bucks a week).

  • Manju

    There is no race to the bottom. “The benefits of export-led economic growth to the mass of people in the newly industrializing economies are not a matter of conjecture”. *

    What we want to do is speed up this process…by demanding a modestly higher minimum wage for all developing nations.

    Now that’s not too far away from Erik’s position. But his framing is spectacularly counter-factual.

    *The person quoted above is not Ayn Rand.

  • Brett

    I notice some of the brands listed have signed the Bangladeshi Safety Accord. They must have been planning to limit their exposure in Bangladesh anyways, while shifting production to Myanmar.

    I’m a little confused about this part-

    The Myanmar Garment Manufacturers Association, representing about 350 factories, says the government’s proposed wage is too high and will force employers out of business. It wants its own industry-specific rate of about $2 a day instead. Starting pay in factories currently hovers around $1 a day.

    So they’re still proposing a higher factory wage than the existing standard? That’s . . . something, at least.

  • msobel

    I just had a massive irony strike and realized that “international standards on wages, conditions, and other facts of work in the global garment trade” is what the US should be negotiating for in the TPP.

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