From poverty to power - Oxfam-Québec

3 POVERTY AND WEALTH THE CHANGING WORLD OF WORKcountries, setting national and provincial governments to bid againsteach other, so reducing the gains from investment for them all.Cheap labour may produce a short-term boost to a company’sprofits, but it is a poor development strategy. Since jobs are the keysource of income for poor people, low wages drive up inequality andundermine social cohesion; underpaid workers consume less, and soreduce the domestic market for goods and services that is vital formany firms. Impoverished families are unable to spend as much onhealth and education, undermining the prospects and productivity offuture generations. In addition, an economy whose competitive edgederives from low wages is always vulnerable to competition from evenlower-wage rivals entering the same markets.In sectors such as food, clothing, and electronics, global supplychains are driving the push for flexible labour practices. Retail giantshave responded to cut-throat competition by pushing risks and costsdown the supply chain, as shown in Figure 3.3, and evading theircorporate social responsibility.Oxfam’s study of 11 garment factories in Tangiers found evidenceof the pressure on suppliers. Together the factories employ more than6,500 women, producing shirts, trousers, dresses, skirts, and children’sclothing for several of the largest Spanish retailers. All the factoriesreported falling prices, on average around 30 per cent over three years.‘Prices fall every year … a pair of trousers worth €3.30 ($3.90) threeyears ago is now worth €2 ($2.40),’ said one factory manager. ‘Theyalways want higher-quality garments, the price goes down due tocompetition, and you’re in no position to argue.’ In the previous threeyears, lead times had fallen from 14 days to five or seven days, someof the shortest in the industry. 117At the sharp end of this frantic drive for cost-cutting are the weakestactors in the supply chain – casual workers. Employees interviewed inBangladesh’s proliferating garment factories work a seven-day week,often putting in 15 hours a day or more. In a busy month, workerscarry on through the night before snatching a couple of hours’ sleepon the factory floor. If a worker puts in over 100 hours overtime amonth on top of her normal 63-hour week, she gets a bonus, whichbrings her monthly earnings to barely $60. 118157