Wages remain a contentious issue between employers and workers, with governments caught in between. Capital is in thrall to low wages, to minimise overheads and maximize profit, and nowhere is this clearer than in Southeast Asia, where the daily minimum wage in some countries is as low as the price of a fastfood meal.
The global trade of the ASEAN (Association of Southeast Asian Nations) rose from USD 1.61 trillion in 2007 to USD 2.53 trillion in 2014. Foreign direct investment (FDI) flows to the region increased from USD 117.7 billion in 2013 to USD 136.2 billion in 2014, bucking the trend of decreasing FDIs in other parts of the world.
But the numbers are not adding up for the one in every four people who are poor in Southeast Asia. The income (and wealth) resulting from these economic gains has been captured by a handful, leaving crumbs to be divided among millions. The Gini coefficient, which is used to measure inequality, of five countries in the ASEAN increased in spite of these gains.
For the government leaders meeting at the 28th ASEAN Summit in Lao PDR this week, the rapidly growing gap between the richest and ordinary people should be at the top of their agenda. In particular, Oxfam calls on ASEAN member states to push businesses across Asia to lift minimum wages to living wage standards.
The government of Indonesia has proposed that the entire ASEAN adopt a common regional minimum wage. Oxfam believes that the ASEAN can take this a step further by using the idea of a living wage as a basis for establishing regional minimum wage standards that is in keeping with the ASEAN’s vision of an inclusive, sustainable, dynamic and resilient regional community.
Relentless pressure for lower and lower wages is one of the secret weapons of corporations in amassing profit. By moving their business to places where labor is cheap and workers’ unions discouraged thus stifling workers’ bargaining power, corporations rack up better margins. Governments race to the bottom, offering low minimum wages for labor, to attract business. This has invited inequality: “Weak unions and asymmetric globalisation, where capital is free to move while labour is much less so, are thus likely to have contributed significantly to the great surge of inequality,” according to Joseph Stiglitz.
In the garment sector, where the majority of workers are women, wages have fallen in real terms in the 15 biggest apparel exporting countries, many of which are in Asia. Oxfam research has highlighted young women having to work in inhuman and unsafe conditions for long hours, often without time to go to the toilet, making garments sold for huge profits overseas. This is unacceptable, and unnecessary.
Even when minimum wages are put in place to try and stop the race to the bottom in wages, these are often so low as to allow workers to scrape by. That is why securing a living wage is more valuable. A living wage factors in all basic expenses (food, housing, education, and health), and spending for disasters or medical emergencies. Crucially, it is adjusted for inflation. A living wage, in short, will allow workers to live with dignity.
By providing workers with a living wage, business will enable poor workers to enjoy what has eluded them for decades: a modicum of prosperity. A living wage is not the panacea to enduring social and economic inequality, but it would go a long way towards ending it.
A living wage also makes business sense. While paying higher wages will increase company overheads in the short term, they are beneficial to business interest in the long term. For one, business benefits from socio-economic stability and security of supply. Workers not trapped in poverty also tend to be more productive, resulting in higher margins for business. They also have more money to spend, which boosts the local economy more widely, adding to the process of economic growth.
In addition to the living wage, ASEAN must look into the gender wage gap, women across Asia being paid less wages as men for the same work. Oxfam proposes a number of other recommendations that should form part of a progressive ASEAN economic policy. One is for ASEAN member states to insist that workers’ associations and farmers’ and fishers’ groups, who have the lion’s share of low wages, are part of formal bodies which regulate minimum wage.
Finally, ASEAN member states must push for freedom of association and collective bargaining, so workers can fight for decent pay, and for safe working conditions.
The ASEAN is on the cusp of transformation. Adopting a regional policy on living wage and on other progressive labor practices will put many poor people on a path to prosperity, otherwise familiar only to a few.
* The writer is the Asia Regional Director of Oxfam, an international non-profit organization that believes a future without poverty is possible. The opinions expressed are her own.