Who Really Benefits From Sweatshops?

Monthly Review
Sept 12, 2013
David L. Wilson

Consumers are ultimately the ones responsible for dangerous conditions in garment assembly plants in the Global South, Hong Kong-based business executive Bruce Rockowitz told the New York Times recently. The problem is that improved safety would raise the price of clothing, according to Rockowitz, who heads Li & Fung Limited, a sourcing company that hooks up retailers like Macy’s and Kohl’s with suppliers in low-wage countries like Bangladesh. “So far,” he said, “consumers have just not been willing to accept higher costs.”

Rockowitz isn’t alone in blaming consumers in Europe and the United States for sweatshop conditions in the apparel industry. The idea pervades popular culture. When 1,129 Bangladeshi sweatshop workers died in the Rana Plaza collapse in April, a lawyer in the United Kingdom proposed raising money for the victims by having consumers pay a voluntary “T-shirt tax” on clothing stitched in Bangladesh. “This isn’t just the fault of companies who supply cheap clothes,” barrister Victoria Butler-Cole explained.

But people rarely ask whether the facts support this idea. How much money do we really save because of cheap labor in the Global South?

Calculating the “T-Shirt Tax”

The quick answer is: nickels and dimes. Although estimates of the percentage of labor costs in clothing’s retail price “vary by product and location of production,” World Bank senior economist Zahid Hussain wrote in 2010, “it is clear from published academic research that labor costs typically constitute 1-3 percent for a garment produced in the developing world. Hence, large increases in labor costs do not require correspondingly large increases in retail price.” The Worker Rights Consortium, a group monitoring sweatshop conditions, came to a similar conclusion (PDF) in 2005.

Significant wage increases and improvements in conditions at Bangladeshi apparel plants would probably add 40 or 50 cents to the price of a $10 T-shirt, at most. And this is assuming, as Bruce Rockowitz does, that manufacturers and retailers would pass the extra cost on to us.

More
http://mrzine.monthlyreview.org/2013/wilson120913.html

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