Business Insider: ‘WIKILEAKS: U.S. Fought To Lower Minimum Wage In Haiti So Hanes And Levis Would Stay Cheap’
June 16, 2011 § Leave a comment
Robert Johnson | Jun. 3, 2011
A Wikileaks post published on The Nation shows that the Obama Administration fought to keep Haitian wages at 31 cents an hour.
(This article was taken down by The Nation due to an embargo, but it was excerpted at Columbia Journalism Review.)
It started when Haiti passed a law two years ago raising its minimum wage to 61 cents an hour. According to an embassy cable:
This infuriated American corporations like Hanes and Levi Strauss that pay Haitians slave wages to sew their clothes. They said they would only fork over a seven-cent-an-hour increase, and they got the State Department involved. The U.S. ambassador put pressure on Haiti’s president, who duly carved out a $3 a day minimum wage for textile companies (the U.S. minimum wage, which itself is very low, works out to $58 a day).
Haiti has about 25,000 garment workers. If you paid each of them $2 a day more, it would cost their employers $50,000 per working day, or about $12.5 million a year … As of last year Hanes had 3,200 Haitians making t-shirts for it. Paying each of them two bucks a day more would cost it about $1.6 million a year. Hanesbrands Incorporated made $211 million on $4.3 billion in sales last year.
Thanks to U.S. intervention, the minimum was raised only to 31 cents.
These papers have come to light thanks to Haiti Liberte, a small Haitian newspaper with offices in Port-au-Prince and New York City.
June 2, 2011 § Leave a comment
By KEITH BRADSHER
Published: May 31, 2011
HONG KONG — Wages are surging this year inChina and among its main low-wage Asian rivals, benefiting workers across the region. But the increases confront trading companies and Western retailers with cost increases and are making higher prices likely for American and European consumers.
Bruce Rockowitz, the chief executive of Li & Fung, the largest trading company supplying Chinese consumer goods to American retail chains, said in a speech here on Tuesday that the company’s average costs for goods rose 15 percent in the first five months of this year compared with the same period last year. Executives at other consumer goods companies have encountered similar or larger increases.
Airline flights to Vietnam, Bangladesh, Indonesia and other low-wage Asian countries are packed these days with executives looking for alternatives to double-digit wage increases in China. But wages are rising as fast or faster in many of these countries, following China’s example, while commodity prices have surged around the world, leaving buyers with few places to turn.
Bangladesh raised its minimum wage by 87 percent late last year, yet apparel factories there are still struggling to find enough workers to complete ever-rising numbers of orders. “Everywhere you see signs saying ‘people wanted,’ “ said Annisul Huq, the chairman of the Mohammadi Group, a large Bangladesh garment manufacturer.
The Gap surprised financial markets on May 19 by announcing that a 20 percent jump in costs from suppliers by the second half of this year would depress its profits, prompting a 17.5 percent plunge of its shares the next day. Coach, the luxury handbag company, announced in January that it would try to reduce its reliance on China to less than half of its products within four years, from 80 percent now, by moving production to Vietnam and India.
Yet wages in Vietnam have been rising as fast as Chinese wages, or faster, while India has posed many problems for large-scale manufacturers. Mr. Rockowitz said that India’s infrastructure — roads and ports — was “really poor,” while labor issues, including government regulations, make it hard to build Chinese-style factories for tens of thousands of workers.
With costs rising in China and few alternatives elsewhere, “you have the perfect storm for raising prices,” said Bennett Model, the chief executive of Cassin, a Manhattan-based line of designer clothing. The company’s costs have risen 25 to 35 percent in the last year for cotton and fur garments alike.
Cassin has begun experimenting with garment production in Guatemala with some success, Mr. Model said, adding that many garment companies were still leery of buying from anywhere except China. “Everybody’s scared of the quality — you spend so many years training a factory” to meet detailed specifications, he said.
Yet with 14 million people, Guatemala has the population of only a single large Chinese metropolitan area like Shenzhen or Guangzhou.
Workers in developing countries all over the world are becoming more aware of pay elsewhere through the Internet and the use of social media like Facebook, increasing the pressure for higher wages, Mr. Rockowitz said.
Li & Fung handles about 4 percent of American retailers’ imports from China of virtually all kinds of consumer goods, according to investment analysts. The exception is electronics, which tend to be imported directly to the United States by other companies like Apple.
Mr. Rockowitz and other executives predict that the extremely high concentration of factories in southeastern China near Hong Kong will give way to a dispersal across the country in the next five years. Workers are becoming much more reluctant to spend up to three days on buses and trains from the interior to reach coastal factories, particularly when the growth of domestic spending in China is creating more jobs in the interior.
Even the recent opening of high-speed rail routes that cut travel times up to 80 percent has not been enough to revive the flow of migrants. “They don’t have to take a 1,000-mile trip to the coast — there’s a shortage of people, unbelievable,” said Douglas Hsu, the chairman and chief executive of the Far Eastern Group, a big Taiwanese multinational with extensive investments in mainland China.
And wages in China’s interior have been rising even faster in percentage terms than in coastal provinces, steadily narrowing what was once a pattern of much higher wages in coastal export zones.
Many companies have another reason for staying in China these days: that is where their sales are growing fastest. “If the market is in China, which in many cases it now is, there’s much less incentive to move,” said Charles Oliver, the senior partner of GCiS China, a market research company in Shanghai.
China has become the world’s largest market for a long list of products, like cars and steel. Producing and selling in China protects companies from later facing “Buy Chinese” policies, antidumping cases or other Chinese import restrictions.
Manufacturing in China allows companies to incur costs in renminbi, the same currency as a growing part of their sales. That insulates them from one kind of currency volatility even as the renminbifluctuates more against the dollar and euro.
Rising wages and strengthening currencies in Asia are making it less attractive to move higher-value industries like auto manufacturing out of the West. But little mentioned by almost anyone making or trading consumer goods in Asia these days is the possibility of moving these relatively labor-intensive manufacturing industries back to the United States or Europe.
Mr. Rockowitz was dismissive of the idea in his remarks on Tuesday at the Foreign Correspondents’ Club.
“The Western world does not have the work force to do this kind of business,” he said. “For ‘made in Italy,’ the workers are old now and there are no new workers coming in.”