The wage level in Bangladesh's ready-made garments (RMG) sector has been the subject of a recent controversy with multiple participants: a British peer, a Bangladeshi-American scholar, the all-girls band Spice Girls of the UK, and two newspapers in the UK and Bangladesh. The issue boils down to whether wage-earners in the factories of developing countries benefit from international trade and if western brands and customers underpay the producers of goods and services they cherish.
The story that kicked off the latest round of this debate was a report on working conditions in the RMG factories of Bangladesh published in the British liberal newspaper The Guardian which would have gone unnoticed if not for the comments by Meghnad Desai, an economist and Labour Party member of the upper house of the British parliament, the House of Lords. Desai, who is also referred to as Baron Desai, took exception to this January 20 report, written for The Guardian by journalist Simon Murphy. Murphy's data came from his visits to RMG factories in Bangladesh including one operated by Interstoff Apparels located in Gazipur.
The heading for Murphy's investigative account of RMG wages was catchy. The Guardian declared in bold letters, "Revealed: Spice Girls T-shirts made in factory paying staff 35p an hour"! It then detailed some accusations of harassment and poor working conditions in the Interstoff factory. "The Spice Girls T-shirts sold to raise money for Comic Relief's "gender justice" campaign were made at a factory in Bangladesh where women earn the equivalent of 35p an hour during shifts in which they claim to be verbally abused and harassed," Murphy added.
Desai soon joined the fray and chided Murphy for being ignorant about the cost of living in Bangladesh. On January 23, he wrote to The Guardian that its readers shouldn't be angry at "poverty wages" being paid to Bangladeshi workers. "What may seem like poverty pay to a Guardian reader need not be so for a worker in Bangladesh," said Desai—because 35p was equivalent to Tk 35, he argued. Using an exchange rate of Tk 100 to a pound sterling, he calculated that a wage-earner at the Gazipur factory who works 40 hours a week (using the length of the typical workweek in the UK) makes Tk 1,400 a week, or Tk 70,000 a year.
If one were to ask, "Can Tk 1,400 a week be considered a living wage?" the reply from Desai and another British reader, Richard Horrocks, who contributed to the conversation on the pages of The Guardian, would be a resounding "Yes!" Desai then reminded the readers that "£14 (or Tk 1,400) can go a long way in Bangladesh."
Desai's apparently harmless number-crunching set off sparks in academic circles and the media in three continents: North America, Europe, and Asia. I shall save the arithmetic errors and analytical fallacies in the calculations provided by Desai for a separate discussion, but they immediately caught the attention of Dr Taj Hashmi. In a critique of Desai on social media, the online news site "Countercurrents.org", and the New Age newspaper in Bangladesh (February 3), Hashmi lashed out at Desai and labelled his views as "insensitive" and devoid of any awareness of the high cost of living in Bangladesh. "Most garment factory workers who earn between Tk 4,000 and 16,000 per month (from USD 47 to USD 188) live below the poverty line, and some having four dependents to look after, just make enough for bare subsistence," Hashmi wrote, and then went on to mention job insecurity, lack of sanitation, and verbal and physical abuses that the workers often must endure.
Have we seen the end of this Desai-Hashmi spat? Apparently not. Desai's comments were followed by some other observations supporting his views, including one extreme illustration by Horrocks which purported to show that Bangladeshi workers are better off than British workers, considering the low cost of living in Bangladesh and the current minimum wages in the UK.
"The average UK monthly salary is £2,800 (OECD figure). The average Bangladesh monthly salary is £109. That makes 35p per hour equivalent to £9 per hour. The UK 'national living wage', the minimum payable to those aged 25 and over, is £8.21 per hour. So where is the scandal?" Horrocks asks.
A spokesman for the Spice Girls said that they were "deeply shocked and appalled" and would personally fund an investigation into the factory's working conditions. Comic Relief, the charity raising money by selling the T-shirts made in Bangladesh, said it was "shocked and concerned".
I will concede that the summary that I present above, custom-tailored to fit the confines of the space available in this column, while accurate and reflective of the essence of the debate between Murphy, Desai, and Hashmi, probably did not capture all the different strands of the very complex issues involved. Academics often spend days and write volumes when dealing with a sensitive issue involving working class and poverty in a South Asian country!
It now appears that as with such disputes which involve fuzzy areas such as the poverty line, real wages, and living wages, the arguments by each party contain some grains of truth. Desai's overall thesis is valid, but he probably did not mean to argue that the wage rate of 35p an hour in Bangladesh offers a living wage. Some of his other math and economics are faulty particularly in the following logic: The income of the Bangladeshi factory worker who made Tk 70,000 per year was making almost half the per capita income of Bangladesh which Desai cited as being £1,400. "If she were employed for 50 weeks, she would make up to half the per capita income—not rich, but not poor by local poverty standards."
On the other hand, Hashmi is not 100 percent accurate when he opines that most garment factory workers live below the poverty line. According to the new pay scale, the minimum wage for a worker is Tk 8,000, and some make as much as Tk 16,000, according to Hashmi. The poverty level of income, on the other hand, is defined at Tk 4,788.
Dr Abdullah Shibli is an economist and Senior Research Fellow at the International Sustainable Development Institute (ISDI), a think-tank in Boston, USA.