Re: The Price of Cheap Clothes : Thu May 02, 2013 1:04 pm  

Man in Madrid wrote: Whilst not specific to Bangladesh, I've just arrived back in Bangkok for the next 6 months and local labour rates plays some part in my day to day role. At the beginning of this year, the Thai national minimum wage increased to 300 THB per day (current r/e approx 41THB = £1.00, meaning minimum pay is approx £7.30 per day). In the North of Thailand, which is mainly agricultural and a producer of rice, sugar cane, and soy, the minimum wage was previously 159 THB / day (£3.88). This rise is an 88% increase in labour cost! As most small businesses are so labour intensive, labour represents a much bigger percentage of the cost of the finished product than in the west, for example. (I was in a produce packhouse here yesterday, and there must have been 300 people doing pretty much the same job that I saw being undertaken by 30 people and some basic mechanisation only 2 weeks ago in Spalding, Lincs). Businesses are therefore losing their competetive edge. The effect on small businesses has been huge, and increased inflation means the individual benefit has not been fully achieved. Interesting article can be found here: http://www.bloomberg.com/news/2013-02-26/thai-bankruptcies-rise-as-minimum-wage-rolls-out-southeast-asia.html A living, minimum wage should be an objective everywhere, but it needs to be managed and implemented in such a way as to reduce any impact - a staged approach may be the best long term solution. Regarding safe conditions, this should be a pre-requisite: if a suppliers' premisies and working conditions are not safe, then any discerning business should not buy from that supplier. Good post.

Man in Madrid wrote: Whilst not specific to Bangladesh, I've just arrived back in Bangkok for the next 6 months and local labour rates plays some part in my day to day role. At the beginning of this year, the Thai national minimum wage increased to 300 THB per day (current r/e approx 41THB = £1.00, meaning minimum pay is approx £7.30 per day). In the North of Thailand, which is mainly agricultural and a producer of rice, sugar cane, and soy, the minimum wage was previously 159 THB / day (£3.88). This rise is an 88% increase in labour cost! As most small businesses are so labour intensive, labour represents a much bigger percentage of the cost of the finished product than in the west, for example. (I was in a produce packhouse here yesterday, and there must have been 300 people doing pretty much the same job that I saw being undertaken by 30 people and some basic mechanisation only 2 weeks ago in Spalding, Lincs). Businesses are therefore losing their competetive edge. The effect on small businesses has been huge, and increased inflation means the individual benefit has not been fully achieved. Interesting article can be found here: http://www.bloomberg.com/news/2013-02-26/thai-bankruptcies-rise-as-minimum-wage-rolls-out-southeast-asia.html A living, minimum wage should be an objective everywhere, but it needs to be managed and implemented in such a way as to reduce any impact - a staged approach may be the best long term solution. Regarding safe conditions, this should be a pre-requisite: if a suppliers' premisies and working conditions are not safe, then any discerning business should not buy from that supplier. Good post.

Re: The Price of Cheap Clothes : Thu May 02, 2013 1:48 pm  

Man in Madrid wrote:

... A living, minimum wage should be an objective everywhere, but it needs to be managed and implemented in such a way as to reduce any impact - a staged approach may be the best long term solution.

Agreed.
I don't know if that Thai rice is for export or for domestic consumption but I would say that, if and where the goods are for export, I think the minimum wage could be imposed faster and more effectively if, say, the EU used judicious import restrictions unless fair wages in decent workplaces are proven.

Man in Madrid wrote:

... Regarding safe conditions, this should be a pre-requisite: if a suppliers' premises and working conditions are not safe, then any discerning business should not buy from that supplier.

It does seem that Western businesses are sanguine about the conditions in which their goods are produced, until it comes out in the press or a pressure group gets hold of the info and publicises it, then we hear all the "we are working to improve ... " etc.

Re: The Price of Cheap Clothes : Thu May 02, 2013 3:17 pm  

Man in Madrid wrote:

Businesses are therefore losing their competetive edge.

But that competetive edge is only gained by exploiting the work force.

Re: The Price of Cheap Clothes : Thu May 02, 2013 5:07 pm  

Big Graeme wrote:

But that competetive edge is only gained by exploiting the work force.

But is it exploiting the workforce if the national minimum wage at the time was being applied?

Re: The Price of Cheap Clothes : Thu May 02, 2013 5:19 pm  

El Barbudo wrote:

Agreed.
I don't know if that Thai rice is for export or for domestic consumption but I would say that, if and where the goods are for export, I think the minimum wage could be imposed faster and more effectively if, say, the EU used judicious import restrictions unless fair wages in decent workplaces are proven.

It does seem that Western businesses are sanguine about the conditions in which their goods are produced, until it comes out in the press or a pressure group gets hold of the info and publicises it, then we hear all the "we are working to improve ... " etc.

The rice is for both domestic and export - Thailand is pretty much the largest rice exporter in the world.

Western business have some degree of blame, but the fact remains that there is a difference between a living wage and a nationally adopted minimum wage: the same is true in the UK

Re: The Price of Cheap Clothes : Thu May 02, 2013 5:32 pm  

Man in Madrid wrote:

But is it exploiting the workforce if the national minimum wage at the time was being applied?

Paying the national minimum wage means you are 1p the right side of illegality. It has absolutely nothing to do with the issue of exploitation.

Re: The Price of Cheap Clothes : Thu May 02, 2013 9:24 pm  

I found a book in a charity shop yesterday a large-format paperback that cost me more than the 1968 cover price of 12 shillings and 6 pence (I paid 69p). It's the history of the TUC from 1868 to 1968 and the first part is available to read online HERE. I suggest people should read it, British working conditions 150 years ago are very similar to those we pay to make our throwaway items

I found a book in a charity shop yesterday a large-format paperback that cost me more than the 1968 cover price of 12 shillings and 6 pence (I paid 69p). It's the history of the TUC from 1868 to 1968 and the first part is available to read online HERE. I suggest people should read it, British working conditions 150 years ago are very similar to those we pay to make our throwaway items

Re: The Price of Cheap Clothes : Fri May 10, 2013 6:44 am  

Derwent wrote: Yes in certain sectors you could, no doubt about that, in others you couldn't. It wouldn't make much of a difference to higher end retailers who are buying jeans for £3 and selling for £75, but it would make a difference to Primark-type retailes who buy for £1 and sell for £5. But again the retailer works on a target profit margin so any increase would be passed on to customers which would create the inflation I mentioned some time back. Unless the retailer is prepared to absorb the extra cost (which is unlikely) then somebody else in the chain has to pay it, and that would be the consumer. An increase in the labour cost to produce a t-shirt in Bangladesh has absolutely zero effect on the fixed and variable costs of a UK (or other Western developed nation) retailer. The TUC has determined that a doubling of the rate paid to Bangladeshi garment workers would add all of 2p to the cost of a t-shirt LINK. Of course you could argue that the TUC are taking a simplistic view and are not factoring in the applied percentage profit margins at each stage of production, distribution and sale. But I would counter that with: other than "that's the way it's always worked", why should that be the case? There is simply no sensible reason, other than sheer greed, why those workers wages cannot be doubled.

Derwent wrote: Yes in certain sectors you could, no doubt about that, in others you couldn't. It wouldn't make much of a difference to higher end retailers who are buying jeans for £3 and selling for £75, but it would make a difference to Primark-type retailes who buy for £1 and sell for £5. But again the retailer works on a target profit margin so any increase would be passed on to customers which would create the inflation I mentioned some time back. Unless the retailer is prepared to absorb the extra cost (which is unlikely) then somebody else in the chain has to pay it, and that would be the consumer. An increase in the labour cost to produce a t-shirt in Bangladesh has absolutely zero effect on the fixed and variable costs of a UK (or other Western developed nation) retailer. The TUC has determined that a doubling of the rate paid to Bangladeshi garment workers would add all of 2p to the cost of a t-shirt LINK. Of course you could argue that the TUC are taking a simplistic view and are not factoring in the applied percentage profit margins at each stage of production, distribution and sale. But I would counter that with: other than "that's the way it's always worked", why should that be the case? There is simply no sensible reason, other than sheer greed, why those workers wages cannot be doubled.