Re-shoring, Jobs and Globalization–Perspectives from David Cameron

 

  • How to make a success of globalization and ensure our businesses, our peoples and our societies can benefit from the next phases of globalization?
  • What are the opportunities of re-shoring for the West and how to seize them?
  • How to secure sustainable and well-paid jobs and give people pride in using their skills?
  • Is re-shoring going to bring back all the jobs that were off-shored in the first place?
  • What are the factors that are driving re-shoring?
  • Does reshoring mean the West wins and the East loses?
  • Is there a chance for Britain and US to become the “Re-shore Nations”?

If you care about the questions above, please enjoy the speech given by David Cameron, Prime Minister of the United Kingdom at the 2014 World Economic Forum in Davos. The speech is a great supplement to our discussions this week on globalization.

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More on Bangladesh: What’s Next?

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I’m sure  you have all been reading about the current factory protests in Bangladesh, but here are the basics of the current situation. Factory workers of Bangladesh are asking for a $100 monthly minimum wage, as compared to their current $38 monthly wage. The issue is that factory owners are finding it difficult to pay such a dramatic increase on worker’s wages because of their customers (large global brands). The owners are looking to these global brands as the cause of these issues, claiming these large brands are unwilling to pay more for their goods manufactured in Bangladesh. Currently, factories are unable to produce the goods these global brands have ordered due to the protests.

My question is: What’s next not just for Bangladesh, but for the United States? How will our economy be affected if the factory workers, factory owners, and global brands cannot come to a solution relatively soon? What does this mean for us as consumers? Is there anything we can do as consumers? Welcome for any thoughts!

by MacKenzie Cahoone

Extended reading: http://world.time.com/2013/09/23/bangladeshi-garment-workers-set-factories-ablaze-in-bid-for-higher-wages/ 

Is clothing “made in USA” more ethical? How “ethical” should be defined?

It has become a commonly held view that apparel workers in many developing countries are unfairly treated because they are much lower paid compared with their counterparts in the developed countries.  For example, American Apparel, a company that insists all of its products made in USA, claims itself to be sweatshop-free on the basis that it pays workers an hourly wage of $12.  However, does an hourly wage of $12 in the USA necessarily mean more “ethical” than an hourly wage of several cents in a poor developing country like Bangladesh?  

An often ignored fact is that in many developing countries, jobs in the apparel sector are better paid than positions in other sectors. For example, according to a recent study conducted by the World Bank, in Bangladesh, wage level in its apparel sector is 17.7% higher than the average level of all sectors, 72.2% higher than the wage level in the agriculture sector and 4.5% higher than the wage level in the service sector. This is not surprising, because in many developing countries, “moving from agriculture and low-end services into apparel jobs is a channel for social upgrading” (Lopez-Acevedo & Robertson, 2012).

Then, what does an hourly wage of $12 mean in a developed country like the United States? Data from the Bureau of Labor Statistics show that, in 2012, average wage level in the U.S. apparel manufacturing sector (NAICS 315) is 26.2% below the average wage level of all sectors. More specifically, the average wage level for the production occupations is 47.3% below the national average level and 53.6% below the national average level for sewing machine operators, the exact type of job that the hourly wage of $12 refers to. 

The point to make here after the comparison is that it is misleading to define “ethical” or comment on “corporate social responsibility” without putting the matter in the context of the stage of development and the nature of the economy.  Wage level is not determined by good will, but by the principle of economics 101.

By Sheng Lu

apparel payment

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What we shall learn from the Bangladesh fire accident?

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1. Is corporate social responsibility a problem ONLY in developing countries?

How ethical is  clothing “made in UK” or “made in USA”? Suggested reading:

ANALYSIS – How ethical is UK manufacturing? (Textile Month International, 2012)

Sweatshops Are Fashion’s Dirty Little Secret. But They Don’t Exist in L.A. — Do They? (2012)

2. As a consumer, shall we be responsible for something too?

Isn’t that we always want better quality products at lower price and delivered at faster speed? Because clothing retail is such a highly competitive buyer-driven business, in order to meet our “demand”, isn’t companies have to find a way to increase product quality, shorten production time, frequently change design patterns but stick to the old delivery schedule and lower sourcing cost? Can we say the “race to the bottom” CRS practice in clothing factories has nothing to do with us as consumers?

3. Some people suggest: since there are so many ethical problems in developing countries, why not we just move apparel manufacturing back to the US or EU?

 If you ask these garment workers in Bangladesh, they would tell you that despite the horrible working conditions, they still feel “happy” to work there. Before working for the garment factory, their life was even worse—because of poverty and limited opportunity available to them. For example, for many young females in the least developing countries, if they do not work for garment factories, the other place for them to go is prostitution. We need to think about this question: if the Bangladesh factory was forced to close (Western brands no longer give them the order), what would happen to its workers?

4. Why internationally we still have no official labor standard, despite we have international organizations such as ILO, WTO, World Bank and United Nations out there as well as many international rules in other areas?

The nature of the problem is very similar as the ongoing global climate change negotiation. Countries are at different stages of development and what seems “ethical” may not necessarily fit for another country’s national conditions.

But still, everyone has a role to play to improve the status quo and create a better world, no matter as a consumer, professional working in the T&A industry, scholar or policy maker.

Sheng Lu

Garment-Factory Fire in Pakistan Kills 300 Trapped Behind Locked Doors

In the class, we just mentioned that the conditions under which our clothing were made significantly vary from country to country. Compared with the vidoes we watched yesterday, the story covered by the news is such a sharp contrast.

However, we may also want to think: despite the far-from pleasant working environment, why pepole in Pakistan are still willing to work there? As a consumer or professional in the US fashion apparel industry, what we can do to help improve the working conditions as shown in the picture? and what role can international trade play in helping developing countries like Pakistan to achieve economic development?

As reported by the New York Times article :

“Textiles are a major source of foreign currency for Pakistan, accounting for 7.4 percent of its gross domestic product in 2011 and employing 38 percent of the manufacturing work force. Pakistani cotton products are highly sought in neighboring India and form the backbone of a burgeoning fashion industry that caters to the elite. President Asif Ali Zardari’s government has often called on the United States to drop tariff barriers to Pakistani textile imports, which it says would be preferable to traditional aid.”

We will gradually touch these critical issues in the later part of the course. Stay tuned.

World Bank Released New Report on the Impacts of Quota Elimination on the World Labor Market

Sewing Success?: Employment, Wages, and Poverty following the End of the Multi-Fibre Arrangement

Edited by Gladys Lopez-Acevedo, Raymond Robertson

Directions in Development : DID – Poverty English; Paperback; 532 pages; 6×9 Published March 14, 2012 by World Bank ISBN: 978-0-8213-8778-8; SKU: 18778

Full report can be downloaded from here