One Person’s ‘Ethical’ Wage is Another Person’s Peanut

One Person’s ‘Ethical’ Wage is Another Person’s Peanut

Back when I was an undergraduate law student, and even though I was the son of a Judge who had worked for the government all his life, I decided that I wouldn’t work for my government, a decision I have stood by to date. There were two major reasons for this stance; the first was that I felt government work was uninspiring, underpaid and overly bureaucratic and the second was that even though I really wanted to be a lawyer, I had always fancied myself an entrepreneur. 

Now as far as wages are concerned; there is one point of universal agreement; that the working person should be paid his or her just wages. All religions, cultures, political and economic systems seem to agree to this fundamental principle of work and reward.  

However, the problem seems to arise when it comes to the question of who should pay the workman? When should he be paid? And most important of all, how much should he be paid?

Furthermore, who decides what people should be paid? Who defines and sets the parameters of ‘just wages’?

An apparel factory in Dhaka with 300 employees, housed in a multi-purpose building. Credit: NYU Stern BHR via Flickr?

The main institution responsible for setting wages for public workers in almost every region of the world today is the government. While the government might not set specific amounts to be paid, it sets the framework and policies which determine the wages its workers would receive. Ideally, the government is supposed to set these frameworks with the wellbeing of its people (the workers) in mind. It is upon this framework that such terminologies such as “minimum wage” and “maximum overtime” have been built. 

In making these decisions though, the government has to keep an eye on the economy and the economic development of the country. Thus, these decisions are not made as easily as one might think; the government has to consider what the employers in the country are able to pay, the effect of the wage structure on the development of the economy and the general wellbeing of the country. Therefore, wages are essentially a compromise to find the ideal balance between what the workers deserve and what the employers are able and willing to pay. 

I believe that this is where the principle of ethical wages of the sustainability movement came from. While definitions differ, “ethical wages” in this context means the prevailing industry wage. These prevailing wages are also deemed fair to all parties concerned. As this article puts it, “by these standards, CEO and top management salaries are considered “ethical” even though CEO salaries are increasing at incredible rates while workers at the bottom of the corporate structure are forced by the “prevailing industry wage” to compete in a race to the bottom”.

On the surface, this is the ideal. However, in reality, it is far more nuanced than this. The big questions here are; what is ethical? Who decides what is ethical?

Garment workers in a factory in Dhaka. Credit: NYU Stern BHR via Flickr

In developing countries such as mine, the governments need foreign investments to thrive and so steadily seek the favour of corporations and markets around the world. One of their key offerings is the availability of an affordable labour force (which in reality translates as a cheap labour force). It is often the belief of governments such as mine that the companies who come into the country (often to take advantage of the cheap labour force) would immensely help improve the wellbeing of the economy, raise living standards and eventually lead to higher wages of her citizen-employees. With this position, the game is rigged from the start against the workers, more often than not, by their own government. 

What I find most interesting however is that when we look beneath the surface, past the posturing of governments and the campaigns of the sustainability and ethical community, we would find that the actual decisions as to ethical wages of workers in any industry, lie in the hands of the market; that is the brands and foreign companies who run these businesses in countries such as mine and who we already know are not very excited at the thought of paying ethical (aka higher) wages. 

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The result is that little or no progress is made in securing better wages for millions of impoverished workers around the world. When fashion brands declare that they are going sustainable and will be working only within an ethical supply chain it is greeted with much fanfare. The brand announces a 20% increase in all wages. At the end of the day, at the end of the supply chain, the impact does not translate to a better life for the woman on the factory floor. This is because the wages were peanuts to start with and a 20% increase in peanuts just makes for slightly tastier peanuts. An indicator of this reality in the fashion industry for instance is that these workers would never be able to afford to purchase the very clothes that they spend their lives making. 

While writing this article, it came to me that a lasting solution to this perhaps lies in an unorthodox move; changing the market of consideration while setting the standard of ethical wages. So if for instance, a fashion brand (say Gucci) is manufacturing clothes in Bangladesh, clothes to be sold in the United States and other developed nations, the factory workers should be paid according to the market forces of the United States and not that of Bangladesh. 

Zara store in St. Petersburg, Russia. Credit: Shutterstock

It might be too much to ask for these companies to pay as much as they would pay in the US or Canada. However, if a minimum wage of maybe 20-50% of what is obtainable in the country where the goods are going to be sold is paid out to the local workers, the lives of these workers would improve drastically. The biggest obstacle to this of course would be the interests of the brands. This is beacause regardless of whatever else they proclaim; these companies head over to countries such as Bangladesh in the first place so as to be able to pay peanuts to their local workers. 

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This might be a lot to take in, I know. But look at this way; these workers are making clothes to be sold in the US market, with US specifications and standards, down to the buttons. Is it too much of a leap then to ask that they be paid according to US standards?

Such an increase will not harm the bottom lines of brands. In reality, they can always transfer the burden to their consumers. And let’s be honest, there is no dearth of consumers to shoulder these costs. In this way, these companies can afford to put their money where their mouths are and actually take active steps to practice what they preach. In this way, one brand’s peanuts can become another man’s ethical wage.

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Title image credit: Shutterstock.

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