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New minimum wage set in Bangladesh - is it enough?

Burgess COMMENTARY

Peter Burgess

Follow Jasmine New minimum wage set in Bangladesh - is it enough?

Is Bangladesh's new minimum wage enough? ethicaltrade.org

The minimum wage for garment workers in Bangladesh has been raised. But will workers get the full benefit? Inflation has soared in Bangladesh since the minimum wage was last increased in 2010, and the amount was widely agreed to be inadequate. In...

Like (2) Comment (16) Unfollow Reply Privately12 days ago Comments Isabelle HAYNES, Syed Rahman like this 16 comments Jump to most recent comment

I believe that businesses and consumers benefiting from the low prices on products made in Bangladesh have a moral responsibility to work towards improving the lives of workers. Three issues are as important as wages to improving the lives of workers. First, the availability of safe, affordable housing and access to social and physical infrastructure. While there is a potential of creating slum housing or company 'towns', there is also an opportunity to create livable communities linked to work places. Residences can provide an opportunity for single workers to have access to institutions of learning, groceries and shopping. Single parents may find independence from family should they desire it if there is a social support system in place to provide child care and educational opportunities for their children.

Secondly access to be employment can be transformative as those stigmatized because of gender, disability or other factors beyond their control can be provided with a route to the future, encouraged to learn technology, to become innovators in their community. Solution oriented training can encourage workers to bring forward improvements to the standards and technology used. Accessible buildings and infrastructure can mean that people who have been placed in a position of dependence because of disability, can have greater financial independence and contribute to their family and society. If people who have little social status are enabled to work with technology and provide essential services under safe, supervised conditions... this may change social attitudes.

Thirdly, if companies improve the conditions under which their workers travel to work, this would have an impact on the lives of many. Many youth, women, seniors and persons with disabilities find inner city travel dangerous and sometimes humiliating as they may experience daily harassment in some neighborhoods. Improving accessible transit can benefit everyone. Like (3) Reply privately Flag as inappropriate 10 days ago Muhammad Aftab uddin chowdhury, Jasmine V. and 1 other like this

Thanks so much for your comments Cynthia. I think they give a well rounded an practical overview of the issue, including some possible solutions. The problem and difficulty is, and this is from someone who's very new to this arena, how do we engage with and influence the decision makers (local government and businesses) that these are critical factors that require attention in this way? How do we get them to stop looking at their bottom line?

Furthermore, how do we get society (both in the developed world and in Bangladesh) to realise that this is the best approach to take for all parties? There is of course the knock on affect in terms of the cost of living going up in Bangladesh as a result of having made these changes to consider as well. It seems like a vicious circle. How do we make it stop so that impoverished and quite frankly exploited people can have a chance at an acceptable and decent life?

You and I may realise that there is a collective responsibility here, but I'm not sure that the rest of the world realises it (including the decision makers) and even if they do, want to do something about it. Perhaps these are simplistic, naive questions on my part, but that's how I see it at the moment. I'm open to any ideas.
Like Reply privately Flag as inappropriate 10 days ago

Jasmine, I think it might be possible to have a consumer movement whereby certain expectations are imposed upon the manufacturers and sellers of goods. There is a lobby against using Canadian fish in the states because the same providers are involved in the fish trade (not something I support as bioregional ideology conflicts with the reality that what is available in the North is seals, fish, very few game animals, ice and snow). Efforts to move away from the seal and fur trade have been destructive to communities because the role that both play in the economy has not be addressed. I am concerned that boycotts on Bangladesh made goods could lead to increased pressure on already vulnerable workers and simply lead to companies going elsewhere. But I don't think poor conditions and wages should be tolerated. if consumers put pressure on manufacturers to contribute to the communities where they obtain their goods... and provide evidence that this is done it may have an impact.
Like Reply privately Flag as inappropriate 9 days ago

I think it is well enough because the wages have been increased more than 76.66%. From worker's point of view its a great improvement for their personal life if the other expenditure will be stable. Because when wages will be increase but house owner also increased their house rent. That is the very critical corner of their life.
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I believe 'Is Bangladesh's new minimum wage enough?' to be a different question than 'New minimum wage set in Bangladesh - is it enough?'

Stirling Smith summarized the situation well when he wrote: 'but so long as wages in the sector fall so far behind, and employers play hanky panky, as they say in south Asia, with the minimum wage rates, we need to look at new ways of boosting workers living standards.'

So what should be the new ways? Cynthia talks about a consumer movement, and I would agree with that idea except that the corporate actors use advertising and brand PR very aggressively to sell goods and separate customers from their money. There is nothing sufficiently powerful on the impact side (as opposed to the profit side) to get consumers to change behavior. No potential buyer is getting told that the product has a bad supply chain and should therefore be avoided ... nor is anyone being told that this product has an impeccable supply chain where people and the environment are respected.

My hope is that technology is going to change this sooner rather than later. My own efforts with TrueValueMetrics and Multi Dimension Impact Accounting (MDIA) is a step in this direction, but not yet developed enough for the prime time.

Jasmine has a tough assignment. I am very concerned that the academic community in their desire to be scientifically rigorous are making the effective analysis of development performance totally ineffective. There is a need for rigor, but metrics using the statistical techniques that apply in for example medical research are too expensive and, in my view, too useless. Something different is needed, and I argue there are techniques in accountancy that should be applied.

Peter Burgess - TrueValueMetrics
Multi Dimension Impact Accounting
Delete 8 days ago

Thank you for your comments Peter. Just a footnote for you to take into consideration, I have worked in corporate life, dealing with quite a bit of financial analysis for over twenty years; pay bands, salary structures, market data, financial modelling for budgets, sales targets, etc. This will give you some insight as to my skill set being balanced between having commercial awareness as well as academic.The more I read, the more I understand about human nature and the reality of life today as well as our past. It is not only technical skills, nor academic rigour that will make the required changes. They will of course help and facilitate, but it will be our will, our humanity that will ultimately make the shift. It is, as with all of the past history of human existence, a part of the evolution of mankind, but will need a collective effort. Do what you feel you need to do on your part Peter and I will do what ever I can do in my capacity. I am by no means tackling this issue solely, nor do I intend to take on full responsibility.
Like Reply privately Flag as inappropriate 8 days ago

Jasmine ... thanks for the feedback. I like the fact that you have corporate experience. I never did much formal post graduate academic work, but I have worked alongside many academically trained folk in their consulting capacity or as their formal job and was mightily disappointed in their ability and interest in thinking deeply about the problems at hand and willingness to think outside the box. I have been of the view for a very long time that 'development' has failed ... that is the outcomes from the amount of the fund flows have been quite modest, tiny relative to what it could have been and should have been. There are reasons for this, many of which are politically incorrect.

Like yourself, I know one cannot do very much oneself ... but there is a huge leverage that people with education and experience have, and I wish you well in applying that as you go forward.

With respect to the issue of workplace conditions in Bangladesh and whole lot of other places, there is, in my view a need for some out of the box thinking about how to hold everyone connected with these supply chains accountable, including the buyers of the goods. This can only be done by a vastly improved data situation, one that cannot easily be gamed by complicit profit seeking individuals and organizations.

All the best

Peter Burgess - TrueValueMetrics
Multi Dimension Impact Accounting
Delete 7 days ago

@Peter I am interested in your data collection methodology... are you doing work in any supply chains or department stores?
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Developing societies are quite different in terms of value systems. Building a consumer movement to address supply chain and labor issues is an almost impossible task at this point of time. The best way forward is engaging the management in this task. Better care doesnt necessarily mean increased wages alone. Many of the suggestions given by Cynthia also contribute to that. But the real challenge is how to convince the companies to spend on such measures. Though it is easier said than done, it is not impossible either. In one case, the local government was collecting a cess from the industry for building community infrastructure. In another case, the government is mandating the company to allocate a fixed share of their declared profits for such activities as decided by the local community. If the product is part of the global supply chain, the global firms also could pressurize their local partners in this direction.

Like Reply privately Flag as inappropriate 4 days ago

Dear Jasmin, how much the minimum wage for that region? have you compare it to another? I think, salary is not more important than the other benefit like medical allowance or dental allowance. Or like it doesn't matter about the high tax, if the government provide the public service (community service)

Like Reply privately Flag as inappropriate 4 days ago

Minimum wages is all very well. Glorious figures that appear on paper, is for the benefit of those who have stigmatised it as 'Sweat Shops' and put the brakes on, in sourcing products from Bangladesh.. The objective is, to have it channeled down to the beneficiaries. Is that being done ? I stand corrected, but I am under the impression that, this particular industry is not in the organised (industrial) sector, hence it can be circumvented.

Like Reply privately Flag as inappropriate 3 days ago

I believe that if possible goods should be tracked so that the conditions of the workplace be evaluated. I am utterly dismayed that sweat shops exist and that those who make my clothing or household goods could be ill treated. If it is tolerated without an attempt to address it, especially after the death toll in Bangladesh it becomes in a way complicity. The drive towards still cheaper goods or to avoid accountability may inspire movement out of Bangladesh as much as the righteousness of a boycott. I am leery of boycotts although in circumstances where a nation is known to be a tyranny using whole scale slave labor or in situations such as North Korea or Iran or South Africa (of the past) it may be the only way to challenge political systems. I am not sure how to ensure that the wages are provided by legitimate businesses to their workers. I don't know the solutions of the industry but some of these issues have been addressed successfully historically...and can be addressed using modern technology of tracking and systems of accountability... given these costs may rise and many either cannot or will not pay additional costs for goods. There has been a moral disconnection between those who order the goods and market them which excludes from their calculations the benefits that should come to those who create the goods. Perhaps some of this is distance... when the goods are made elsewhere...one can feel unable to provide monitoring and in leaving this to others can disconnect from the means by which cheap goods are made cheaper. Like Reply privately Flag as inappropriate 3 days ago

i think one question to be asked is 'what were [and now are] the wages, compared to the wages in the region?' i do not believe in sweatshops but, being a realist, i also know a country and/or region can price itself out of exporting in a period of time. this has happened in mexico and now is occurring in china. companies that seek lower wage countries are looking towards vietnam, phillipines, and some of the former soviet countries where the wages and currency conversion are more viable. i got a bit of a lesson of this when traveling through monterrey and purchasing a coffee mug, when i took off the price tag, it read 'made in china'. on my next trip i talked to some of the companies and realized they imported a lot from around the globe as though mexico is not on the same economic level as the us, there were countries mexico looked to for low cost good. you have to look to the region to answer the question as it may not appear much to some and to some, it may be quite a bit.

Like Reply privately Flag as inappropriate 3 days ago

@Cynthia, The industry has wheels within wheels. some internal (national) & others external (international) all aimed at the sole purpose of making a quick buck, regardless of how much is channeled back to source (workers), or empathy for their labour/well being. (a) Ideally, if a system of direct selling i.e. B2C existed & worked, then possibly we could see a light at the end of the tunnel (b) If there could be a system in place where the exorbitant mark-ups, or a part of it could have a reserve flow, that too would also help - but then, it is akin to asking for the moon..

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@Cynthia asked me about data collection methods. It is a big subject ... these are some elements of my approach.

If you are in the field doing analysis, make use of what I call easy data. Quite often there are data about the subject, but not in the form that you would ideally want. Get what exists in the format that exists and do the reformatting yourself.

Be very clear what is the purpose of your work, and translate that into data that would help to understand the elements that go into making the work successful. Being clear about purpose is a big help. Get data to track progress of the elements that go into the purpose.

Think in terms of State, Progress and Performance. This is an idea from accounting where State is the balance sheet, Progress is the change in State or change in the balance sheet, and Performance is the amount of resources associated with a given amount of Progress.

State changes rather slowly, and it is relatively easy to get data about State, that is, becomes more accurate, over time. In the Multi Dimension Impact Accounting (MDIA) framework, the State includes not only things expressed in money terms but also things expressed in value terms.

Trying to measure progress by measuring the activity transactions is very effort intensive and very difficult to get right. This is the P&L account in money profit accounting, and is done rigorously for money in the corporate environment but is too costly and ineffective in the context of socio-economic analysis. Most M&E efforts tend to be about transactions, and they produce inconclusive results. The answers obtained do not improve significantly when scientifically rigorous random trials are used, but the cost of these data gets to be huge.

Measuring progress by looking at change in State is much easier and very informative. When we look at the progress of most places around the planet we are faced with a lot of challenges that are obvious when looked at through this lens, but are routinely ignored by all of the transaction based measures of performance.

At any point in time there are thousands of 'development workers' doing studies in the field. These are expensive initiatives, and the output is a study, or capacity building, or any number of other things. Usually the data for these activities becomes 'single use data' ... the most expensive form of data. I would like to see these data used to support these activities being used to build a global database of data about the state of place wherever these workers are located. MDIA is developing the data architecture that will make this practical, together with the dataflow technology to get the data from a mobile device to the cloud, and then via OLAP able to be pushed back to other interested users.

Institutions like the World Bank and the UN have collected huge amounts of data over the years, and are in the process of making some of these data available to outsiders. The problem is that most of this information is consolidated into a form that is only useful for top level analysis ... the data that went into making the available summaries is, as I understand it not accessible. I wish I was wrong on this, but I don't think so.

The challenge in making MDIA work is now moving from the data architecture to an organizational structure that would allow important data to be freely accessible. The governance of such a structure should probably be something like ICANN which has a key role in the operation of the World Wide Web.

Early in my career a group of us used to collect market price data wherever we were working. Very rapidly we had an interesting profile of prices around the world for those things that were being traded in local markets. This was way before cell phones and mobile computing ... and it gave us an insight into the performance of the economy that was missing from all the higher level official papers.

This is a big subject

Peter Burgess

Delete 3 days ago

@Peter thanks for your answers.

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