Real wage comparison for apparel exporting countries, in 2001-2011.

Real Wages in Apparel Exporting Countries Experiencing Sharply Different Trends

Real wages of apparel workers declined between 2001 and 2011 in a series of low-cost countries in Asia and Central America while sharply rising in other countries, including China, Vietnam and Indonesia, according to a just released study by the NGO, Worker Rights Consortium. The report offers a way to compare labour costs in apparel exporting countries, reflecting a sharp disparity in the way they changed over the 10-year period.

Non-governmental organization WRC (Worker Rights Consortium) just released a very interesting 10-year comparison of wages in apparel exporting countries.

Covering the 2001-2011 period, the study compares the monthly wages in main origins of the US apparel import market.

Nominal wages for a list of low-cost countries were collected and deflated by taking into account the rise in consumer prices over the period.

Use of purchasing power parities (PPP) helped in comparing earnings of apparel workers in different countries.

Falling real wages

Deflated wages actually declined in a majority of countries over the 10-year period.

Mexico gets a record fall of 29% while Cambodian wages were down 22% from an already very low level, according to the WRC.

In the Dominican Republic, wages fell 23.7% in ten years.

Bangladesh experienced a decline of "only" 2.4%, reflecting a sudden increase of wages at the end of the period, as a result of recurrent strikes and demonstrations in the country.

Bangladeshi wages however remained the lowest amid exporting countries, at the end of the period.

Honduras and El Salvador also experienced a fall in real wages, but from much higher levels.

Surging Chinese wages

At the opposite, wages sharply rose in China, with a gain of 124% in 10 years, after taking account of inflation.

Real wages also strongly increased in Vietnam (40%), Indonesia (+38%), and Haiti (48%).

If also taking into consideration the cost of living through PPP (Purchasing Power Parity), Chinese workers now enjoy relatively better conditions than in most other apparel exporting countries.

A radically different situation still prevailed in 2001, when wages were lower in China than in nearly all rival countries.

In its study available on the internet (see below link), the WRC also calculated the ratio between real wage and minimum living wage needed to stay above poverty line.

Results are devastating for a large number of countries, as expected.

Excluding overtime payments

As usual, methodology of the study may be questioned, including the way nominal wages were collected, or the choice to exclude overtime payments which usually account for a large part of the actual wages of apparel workers.

Overtime often exceeds the legal limit in apparel plants, meaning this is difficult to assess how much workers effectively make, on average.

Including overtime would however result in sharply different conclusions and would also have forced WRC to admit this is an acceptable system, which the NGO refuses.

WRC: Global Wage Trends for Apparel Workers, 20012011


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