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05/16/2013

Bangladesh and us: outsourcing poverty

Walmart bangladesh blog
Walmart, Las Vegas in 2006. The world's largest retailer was cutting costs to counter a sales slump. It has held out against signing a fire and safety agreement for Bangladesh, saying its own inspections are more efficient. (AP Photo/Jae C. Hong)

After the darkest week in decades for Bangladesh’s workers, glimmers of light are appearing on the horizon. But like all glimmers, they may be an illusion.

Some -- and only some -- of the big brands whose cheap-chic clothes are produced in Bangladesh are ready to sign accords on boosting the appalling safety conditions. And after 1,100 of its underpaid citizens died under tons of rubble in the Dhaka factory collapse, the Bangladesh government is pledging a wage hike.

That wouldn’t be hard, you’d think, with a minimum wage that averages $38 a week.

But think again.

One reason those wages are so abysmally low – and likely not to change very much -- is because wages in the West have also sunk or stagnated while the richest few have burst their metaphorical piggy banks.

That’s created a vicious circle of demand for cheaper goods among the poor and shrinking middle class, increased the pressure from Western-based corporations to keep down costs in their outsourced factories overseas and redoubled efforts of Bangladesh (and other low-waged countries) to stay “competitive” by downloading destitution onto their workers.

“We’re living at a time of year-round deals,” says economist Armine Yalnizyan of the Centre for Economic Policy Alternatives. “There’s a cut-throat level of competition and we’re moving toward lower and lower prices – but somebody is making the sacrifice.

“The flip side of every low price is a low wage.”  

And not merely in the poorest countries. A new report from the Organization for Economic Co-operation and Development – whose 34 members are from advanced and emerging countries -- shows that income inequality  increased more during the slump years preceding 2010 than in all the previous 12 years. And there’s little sign of a turnaround any time soon.

Even where government welfare programs cushion the blow, the OECD said, there is a threat of “greater inequality and poverty in the years ahead” as austerity programs batter social spending at the time of greatest need.

Among the countries with the biggest equality gap is the U.S. – statistically the world’s wealthiest nation. Canada rates a mediocre 22nd out of 34 on the equality scale.

Meanwhile more workers in “wealthy” countries are in temporary and precarious jobs and minimum wages have fallen behind the rising costs of food and shelter.

What does it mean to Dhaka?

“The next generation (in the West) will be paid less,” says Yalnizyan. “There will be less disposable cash. But there will also be a demand for profits. So the way to feed the beast is to squeeze costs.”

Whether the survivors of the factory disaster reap the benefits of the current sympathy surge is an open question. Whether their children will is more in doubt.

Olivia Ward has covered conflicts, politics and human rights from the former Soviet Union to South Asia, winning national and international awards.
 

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