Sweatshops for the Muslim world

Chip Goodyear, the head of Australia’s BHP Billton, the world’s largest mining company, has said that that Muslim world will be the next big emerging market after India and China.

The head of the world’s largest mining company says the Muslim population stretching from North Africa to Pakistan and Kazakhstan is large, young and underemployed – characteristics that it shares with China and other rapidly developing economies.

There’s no argument about the demographics: much of the Muslim world is young, unemployed and poor. Not every Muslim land has oil and natural resources to exploit: for some of them, their only comparative advantage seems to be cheap labour. So as wages rise in India and as they will surely rise in China, why wouldn’t multinationals look then to the relatively poor corners of the Muslim world for cheap labour to run their factories and call centers?

Of course, this means they will establish what some in the West call “sweatshops”: places where people don’t get paid Western standards of pay; don’t work in environments that would meet Western occupational health and safety expectations; and don’t work forty hour weeks with leave loading and one month of paternity leave. They are, of course, pretty horrible places and we should all thank God that we were not born into such conditions.

However, the sad reality is that if people — without physical coercion — enter into a contract to work in a sweatshop then that means that they are deriving some benefit from that transaction; ergo, working in a sweatshop is preferable to not working in a sweatshop (being unemployed, starving, or turning to crime to earn a living).

And it is obvious why a poor person in the third world would see a Western-owned sweatshop as a pretty good deal: conditions in Western-owned sweatshops are generally better than in the local alternatives; and foreign companies tend to pay more than their local counterparts. And although the unskilled unemployed may provide cheap labour initially, the influx of foreign capital brings with it an influx of foreign ‘know how’, and the foreign-owned factories soon find themselves competing with local factories for labour. Eventually, conditions will improve, wages will rise, and skills will increase.

So, if we want to improve the economic conditions of the Third World — including, of course, much of the Muslim world — then should we tolerate the initial proliferation of sweatshops as a distasteful but necessary step towards economic development?

8 comments ↓

#1 Yakoub on 09.05.07 at 6:08 pm

“…should we tolerate the initial proliferation of sweatshops as a distasteful but necessary step towards economic development?”

That’s certainly what some Neoliberal economists argue – but the question is whether cheap labour necessarily means sweat shops. There is a lot of noise about this in the UK and fair trade businesses, who insist on a fair wage for producers, are doing well – although it’s not always clear whether they are always the best solution. The argument is really whether we believe the neoliberals when they insist minimum regulation is a requirement for economic development, to the extent that poor nations set up special industrial zones for sweatshops where national laws don’t count and workers can thus be legally treated like dirt. But the fact is, on a item on clothing that costs £6 in the UK, the manufacture costs 10p. So it’s quite possible to have prosperity, cheap clothes and factories where people don’t have urinate into carrier bags because toilet breaks are forebidden. Raising awareness, and convincing consumers in affluent nations they have a voice, is the answer.

#2 Yusuf Smith on 09.05.07 at 7:07 pm

As-Salaamu ‘alaikum,

Parts of the Muslim world may be attractive to certain types of capitalists not only because of cheap labour (and if they paid higher wages, they would still be in for a tidy profit because of exchange rates) but because of political conditions which are not conducive to workers campaigning for better working conditions – i.e. the dictatorships and pseudo-democracies of places like Uzbekistan and Kazakhstan. This is how it was in South America in the 1980s, and where are the high-quality Chilean manufactured goods now?

#3 Thomas J. Watson on 09.05.07 at 9:46 pm

Yakoub, the premium paid for “fair trade” products is a tax on the stupid but I suppose it’s less harmful than the calls to boycott products manufactured in sweatshops. The people who do that are basically saying it’s better for women to be prostitutes for $2 than to be sewing Nikes for $3.

#4 Anon. on 09.05.07 at 10:27 pm

http://theislamicist.wordpress.com/

Hilarious. Slight parody of someone else…

#5 Shadower on 09.06.07 at 4:25 pm

They are getting jobs and earning better than the average wage in their country.

I have seen both sides of the globalization argument and reject the anti-globalization argument.

In claiming to want to help the people that work in these “sweat shops” they only will make their lives worse.

#6 sarah on 09.07.07 at 12:17 pm

A great post about an important issue.

To go to any of the markets in Pakistan is to see young children living these Oliver Twist lives in the street, buying, selling, scamming; men with one eye and grimy hands work 19th century machinery and women hawking clothes, accessories or even themselves on the street.

It’s sad when the only options available to human beings is starvation or sweatshop. no human being should have to work under such conditions.

It’s difficult when you realise it is people just like you who are the sweatshopped “other” in the imaginations of corporations and the western first class.

#7 Jack Lacton on 09.09.07 at 9:32 am

The vast majority of what pass as ’sweatshops’ in the world pay higher wages than the average wage of the country in which they’re situated.

It seems a pretty simple first step towards developing the economies of those countries willing to go down that path.

#8 James on 09.27.07 at 9:54 am

Amir,

The real answer is for the local economies to develop themselves. Otherwise what you have is a fast and furious race to the bottom.

What kind of choice is “work in vile rat-infested surrounding and get paid a pittance or become a prostitute.” Sounds like an offer provided by a mafiosi. How about providing a job that pays a living wage and provides dignity for the worker? How about being a good corporate citizen?
We have seen this movie before Amir. Ever since Don Renaldo (Ronald Reagan) gutted the new deal we have been in the clutches of the Chicago boys and the delirium of “free trade.” What has “trickle down economy” gotten us? A lot of Pee-ons.
The Laffer curve is bunk, Supply-side economics is garbage, Globalization is ruining everyone save a few connected elites.
Take a look at what is happening in China. Take a look at what happens when Totalitarianism and laissez-faire economics combine. Or do you really want more toxic toys, more tainted pet food, more poisoned toothpaste? As it stands now Corporate Capitalism has totally lost it’s bearings it has shifted from being at best amoral to being criminally immoral. There are crime lords with a better code of conduct than most Transnational cooperations.
Personally I can not see how any person of morality or conscience can support many transnational corporations. The Transnationals have become truly evil, lead by sociopaths, they have given up their souls to Mammon.

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