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Bargaining across borders - doing garment industry's dirty laundry
by Newropeans-Magazine
2009-10-29 09:49:21
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Dictionary defines ‘shame’ as a painful emotion caused by a strong sense of guilt and embarrassment. One way to evoke this emotion is to read the results of the recent Norwegian study concerning the wages that the Western garment retailers pay for their sub-contractors in Asia.

Garment industry has become one of the most globalised industries during the last decades. Production has been moved from one continent to another in order to take advantage of the cheap labor and make the producation costs even lower. For that end, large retailers and brands have subcontracted the production to labour contractors and factories that sometimes subcontract the work even further. As a result, we have a complex and opaque global supply chain of garment industry reaching from large retailers to anonymous small factories and home based workers.

Despite years of negative publicity and initiatives aiming at improving and regulating the working conditions in the manufacturing countries, the result remains the same: our clothes are still made by people who are not paid enough to survive. According to the recent report, western companies commonly require their subcontractors to pay a local minimum wage for their workers. The problem is, however, that in most of the countries of cheap labour this official mininum wage is far away from the ‘living wages' needed for survival. Only very few exeptions, such as the Spanish chain ‘Zara’ and Norwegian ‘Stormberg’ are requiring their subcontractors to pay the actual living wages.

The globalisation of production has lead to a “buyer-driven” industry, where large retailers and brands of the western world determine the conditions of production, forcing the manufacturers on the other end of the supply chain merely to adapt or to be replaced by more flexible ones. The destructiveness of this kind of industry follows the fact that the profit of the retailers are made at the expense of workers and firms in the manufacturing country - cheaper labour equals bigger competitive advantage.

At the moment, 50 percent of the profits from selling a shirt goes to the retailer, only 13 percent goes back to the manufacturer. This example points out the shortcomings of the neoliberal model of free trade development. In stead of raising the living standards around the globe, it has created a system that benefits only the already wealthy end of the supply chain. Despite the growing profits of the garment industry, the wages in manufacturing countries have been stagnating, and in countries like Bangladesh or Cambodhia the existing garment industry has not raised the standard of living significantly. It is true that free trade has created jobs, but these jobs don’t pay enough to make a living.

To change this situation, the workers in Asia are now taking matters into their own hands and demanding higher wages through the campaign of Asia Floor Wage (AFW) Alliance. This is not the first time that workers are demanding their rights, but what is different this time is that in stead of local attempts, AFW strives for a unified regional strategy to improve the situation of the workers in Asia.

The key idea behind the campaign is to make the workers’ organizing efforts reach across borders. The aim is thus to create common standards of production to the whole region and through that to increase the bargaining power of the workers. Currently, the central demand of the AFW is focused around a common wage demand. Earlier local attempts on higher wages have been easily turned down by a threat of moving the factory to another country where the wages are even lower. But through a regionally agreed living wage, the workers would not be forced to compete against each another and to dump their prices that are already too low. Furthermore, since the wages are the same in the whole region, workers can no longer be blackmailed by a threat of moving the factory to another country.

Political decisions, internal regulation of the industry and consumer activism are all important means for improving the working conditions in the garment industry, but alone they are not enough. For a company the temptation of a profit made through lower production costs is often irresistable, in a similar fashion as the temptation of a cheap product is irresistable for a customer. That is why it is crucially important that the impetus for change comes also from the other end of the global chain of supply. We have to break the vicious circle of buyer-driven industry and empower the workers in a way that they can not be walked over anymore. For this purpose, the common regional wage standard is a good tool. If it is succesfully implied, it will bring the workers to the same (global) level with the retailers and increase their bargaining power significantly.

Marko Kananen*
Wien, Austria

*Marko Tapio Kananen is social scientist specialised in the European Union, and journalist at Ideal Communications in Vienna

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