Vol. XI, Bulletin No. 1                                                     January 10, 2006

Stealing Workers' Wages in China

"These investigations are only the tip of the iceberg," Charles Kernaghan, director of the National Labor Committee, said on December 15 as he released reports on two of China's sweatshops that make holiday goods for U.S. and European shoppers at Wal-Mart and other stores.

What the iceberg tip revealed once again was that China is the world's sweatshop.  Research conducted by  Kernaghan's committee and another worker rights group, China Labor Watch, found that two factories in southern China -- one producing holiday greeting cards, the other making battery-operated toy cars and trucks under the Mattel brand name -- both trample on the workers' legal rights. 

The factories have similar patterns of enforcing excessively long hours on the job: that is, work days of up to 13 1/2 hours, six or seven days a week, far exceeding China's legal limit. But above all the two factories systematically rob their workers, most of them women, of their rightful wages by.
How a Toy Factory Controls Workers and Manipulates Monitoring

The joint report on the Lungcheong Toy factory, located in booming Guangdong province adjoining Hong Kong, provides many additional details on abuses endured by the plant's 3,000 workers, most of them young women, who specialize in molding, assembling, and spraying plastic toy cars and trucks.  For example:
Workers Pay the Price for the Relentless Push To Slash Production Costs

"For years, and especially of late," Kernaghan wrote, "Wal-Mart and Mattel have been telling the American people how seriously they are committed to their corporate codes of conduct, and how much time and money they have put into expanding their factory monitoring programs.  However, serious human rights continue unabated year after year in the Lungcheong Toy factory....

"In the end, what we see is the constant, relentless push to slash production costs....It is the workers who pay the price in increased production quotas, forced overtime, while being shortchanged on their wages and benefits, and denied their fundamental rights." 

By coincidence, when the reports were released jointly at noon on December 15 in New York City, in Hong Kong leaders of the World Trade Organization were spending a sleepless night arguing over how to expand the WTO's powers.  Once again, of course, the WTO ignored the trade-related trend that cheats workers of their wages and robs them of other human rights.

Nobel Laureates on Worker Rights

"Protecting the right to form unions...is vital to promoting broadly shared economic prosperity, social justice, and strong democracies."  So declared 11 Nobel Peace Laureates in the large type heading a full-page ad that appeared in the New York Times, the Washington Post, and the International Herald-Tribune a few days before International Human Rights Day, December 10.

Former President Jimmy Carter, Bishop Desmond Tutu, and the Dalai Lama were among the 11 signing what they called "a global call for human rights in the workplace."   They stated that they "are gravely concerned about the state of workers' rights in many countries," including Burma, China, Columbia, the Ukraine, and Zimbabwe. They also pointed their fingers at the United States:

"Even the wealthiest nation in the world -- the United States of America -- fails to adequately protect workers' rights to form unions and bargain collectively.  Millions of U.S. workers lack any legal protection to form unions and thousands are discriminated against every year for trying to exercise these rights."

Publication of the ad, sponsored by the AFL-CIO, was part of what is now an annual International Human Rights Day campaign in the United States and 12 other countries "to restore workers' freedom to form unions and bargain together for a better life."

Human Rights Obligations Abandoned at WTO Door

Meanwhile, a few days prior to the mid-December ministerial conference of the World Trade Organization in Hong Kong, a human rights caucus of 108 nongovernmental organizations from around the world publicly reminded "our governments that their human rights obligations cannot be abandoned at the WTO door."  Trade policy that offends human rights "lacks moral and political legitimacy," they insisted.  So they called it "both logically and legally indefensible" that the WTO "has repeatedly denied and rejected any intersection between its mandate and human rights."

Predictably, however, the indefensible happened again. Human rights never made the agenda, not for workers or for anyone else, except for the rights of business people and business institutions. In any case, if the taboo subject had come up, it would have been drowned out by all the bureaucratic chatter at the mass conference, where the United States government had the largest presence, with more than 350 persons in its delegation.

Vatican on Trade and the Common Good

"Trade relations can no longer be based solely on the principle of free, unchecked competition, for it very often creates an economic dictatorship.  Free trade can be called just only when it conforms to the demands of social justice."

Those words of  Pope Paul VI, from his 1967 encyclical Populorum Progressio ("On the Development of Peoples"), were quoted by Archbishop Silvano Tomasi, the official observer representing the Holy See, in his message to the ministerial conference of the World Trade Organization in Hong Kong last month   By his presence and by his words, the archbishop recognized the importance of a "multilateral system of trade relations" (which the WTO is), but emphasized that it should be "equitable and participatory" and "directed at attaining the common good."

While not directly identifying how the WTO falls short, Tomasi did imply criticisms with points like these:
Archbishop Expresses Concern about Access to Essential Drugs

Tomasi praised the WTO for modifying its trade-related intellectual property rights (TRIPs) agreement to "assure that poor countries' access to the means for the production and importation of essential drugs needed to face the main pandemics suffered by their populations."  He rightly warned against weakening this decision through bilateral and regional trade agreements with tough "TRIPs-plus" provisions.  He did not cite the United States government is the guilty party, most recently through the Central-American Free Trade Agreement (CAFTA).

Economists on Global Trade and Fairness

A global trading regime that assures fair trade for all -- what would it look like? 

Two economists, Joseph E. Stiglitz, winner of the 2001 Nobel Prize in economics and Columbia University professor of economics, and Andrew Charlton, research professor at the London School of Economics, answer that question in their new book, "Fair Trade For All: How Trade Can Promote Development," written and published before the WTO ministerial conference in Hong Kong.

"Regardless of the outcome of Hong Kong, we have a long way to go," they write in the preface, and devote the rest of the book to mapping the way to that goal. The starting point, they insist, should be to agree on the basic principles for a fair trade agreement. They list four "founding principles" that seem self-evident (to them) and then go to great lengths to develop what each one means in practice.

One of the principles is "Any agreement should be fair."  They quote from the declaration adopted at the WTO's Doha {Qatar) ministerial conference in 2001 recognizing "the need for all our peoples to benefit from the increased opportunities and welfare gains that the multilateral trading system generates," and add: "Similarly, the analysis in this book is based on a concept for social justice and a degree of equity between nations." 

'Current Trade System Loaded Against Developing Nations'

That means, for example, that "any agreement that differentially hurts developing countries more or benefits developed countries more (say, as measured by the net gains as a percentage of GDP) should be presumptively viewed as unfair" (the italics are the authors').  Under that standard, Stiglitz and Charlton find that  the present trading regime is unfair -- loaded against the interests of developing nations.  More fundamentally, they view the WTO, "by process and structure, a mercantilist institution, that has worked on a principle of self-interested bargaining." 

Further, trade agreements should take into account, but rarely do, the asymmetry of power and resources between rich and poor nations. for example a sanction (duties on imports) that Ecuador might impose on the United States for violating a WTO agreement would have a negligible effect on U.S. producers, but the same sanction would have a "devastating" impact on Ecuador.

Another basic principle: "Any agreement should be arrived at fairly."  Here the authors concentrate on procedural fairness, as distinguished from fairness in terms of outcomes. Among other things, this principle requires negotiations to be open and transparent, thus reducing the disadvantage that poor countries have because of their limited staffs and the complexity of trade issues.  Moreover, the costly and complicated WTO dispute settlement system needs reform; at present it "favors developed countries both de jure and de facto."

What Should and What Should Not Be on Trade Agenda
"Fair Trade for All" outlines two additional basic principles:
Heading the writers' list of what should not be on the trade agenda: intellectual property rights. They agree that patents, copyrights, and other forms of intellectual property rights do need some international protection, but recommend reforming the WTO's weighty regulatory system and switching it to another international forum, e.g., the World Intellectual Property Organization.

Significantly, the writers hold that human rights issues legitimately belong on the WTO agenda.  Among the examples they cite are government "restrictions on collective bargaining and the right to take collective action."  Also:  "Clearly, when individuals are forced  to provide labor services (e.g., when they are prisoners) or [governments are] allowed to use child labor, costs of production may be lowered.  As a global community, we do not want to provide economic incentives for such behavior.  On the contrary, we want to discourage it....Though the resort to such measures  [sanctions] should be carefully circumscribed, the instances enumerated are among those in which sanctions may arguably be justified."

Pioneering against a Taboo that Afflicts Public Policy

Today most American economists and trade policymakers have a taboo against connecting trade and fairness.  In their book Stiglitz and Charlton make major contributions by defying that taboo.
They could be wrong in some elements of their second contribution -- their judgments in applying moral principles to some concrete trade realities -- but they deserve congratulations anyway.  They are pioneering a taboo-free path that others of their stature should follow.

Heterodoxy of a Top UN Economist

"Shortcircuiting Labour: Unionizing Electronics Workers in Malaysia," a book published in Malaysia in March 1990, has a forward by Jomo K.S., who was then professor of economics at the University of Malaya.  After I belatedly learned last month that Jomo had became an assistant general secretary of the United Nations early in 2005, I fortunately found my copy of the1990 book, a thin paperback, hidden between two larger volumes in one of my unevenly organized bookcases.

 "Shortcircuiting Labour" by Elizabeth Grace describes the unsuccessful struggle to unionize Malaysia's 85,000 electronics workers, most of them women.  Grace's book, researched for her dissertation at the University of Malaya, exposes "the virulent anti-unionism of American electronics firms" (Hewlett Packard and Motorola, for example) and how their opposition meshed with the Malaysian government's policy of "favoring a fragmented labor movement in Malaysia."

Bias against Unions Spreading Beyond Electronics Industry

In response to my query, G. Rajasekaran, general secretary of the Malaysian Trades Union Congress, emailed this update: "The electronics industry, especially its U.S.-based companies, remains anti-union as always.  I would say the anti-union stance is spreading to other industries as well in recent years."

During the 1980s, according to Grace, Japanese-owned firms liked "the stability a union can bring to a plant's operations," and did not share the view of U.S. companies that unions are "troublesome and unnecessary third parties."   But nowadays, according to Rajasekaran, "even Japan-based companies in other sectors are vehemently opposing industrial unions."

I became acquainted with Professor Jomo during my labor research trips to Malaysia during the 1980s, and I lined up a small grant from the AFL-CIO's Asian institute to help him get Grace's book printed.  I found Jomo a highly creative thinker and prolific writer, and he still is.  His most recent books are two just published this month by Oxford University Press: "Globalization under Hegemony: the Changing World Economy" and "The Great Divergence: Hegemony, Uneven Development, and Global Inequality."

'Heterodox' Economic Approach to Changing World Economy

As those books show, Jomo has become a prominent figure in the "heterodox" economics movement, which explores and promotes economic ideas different from those of the "Washington Consensus" that has dominated the policies of the World Bank, the International Monetary Fund, the World Trade Organization, and the U.S. government.  Jomo summarizes his position in a paper, "Economic Reform for Whom?  Beyond the Washington Consensus," published in the December issue of the e-bulletin Post-Autistic Economics Review.

To publicize their ideas and enlarge their ranks, Jomo and other heterodox economists have organized their own network, called the International Development Economics Associates, or IDEAs for short, and have set up their own website, <http://www.ideaswebsite.org>, which is worth checking out, whether or not you believe in the Washington Consensus.

Media Greed and Job Safety

In a January 9 article, Howard Kurtz, the Washington Post's media critic, blamed the country's leading newspapers, including his own, for haste in  headlining erroneous information that 12 miners had survived West Virginia's coal mine disaster.  He went on from there to make a more serious accusation:

"The larger issue," he wrote, "is that much of the press has abandoned reporting on health and safety regulations until disaster strikes.  How many reporters have dug into the Labor Department's Mine Safety and Health Administration, which under the Bush administration was run by a former Utah mine manager until last year?  About as many as did pieces, before Hurricane Katrina, on why a former Arabian horse official was running the dysfunctional bureaucracy of the Federal Emergency Management Agency. Heck of a job."

The still larger issue, not mentioned by Kurtz, is that the press has largely abandoned the labor beat.  Whereas every major newspaper once had reporters working full time on reporting labor issues, today Steven Greenhouse of the New York Times is the only survivor.

According to data in an article by Michael Manning in the December 2 New York Review, the average profit margin in the newspaper industry in 2004 was 20.5%, compared with 6% for the Fortune 500 companies that same year.  To maintain or increase those very generous profits for shareholders, newspaper managers, like sweatshop managers in China, simply slashed production costs.  Labor reporters, and labor reporting, were among the casualties.

Human Rights for Workers: Bulletin No. X1-1    January 10, 2006
Robert A. Senser, editor
Copyright 2005
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