The key to ending the race to the bottom

by May 29, 2012All Articles

A spectre starting to haunt the international labour movement — a spectre of a descent into barbarism. It is the image of a possible future, reflected in signs such as South Africa’s Olympians marching proudly in London in national colours, made in China, and in the ongoing pressure internationally on jobs, wages and conditions.
However, most employers and the employed, let alone the vast legions of the jobless, have still to look seriously beyond domestic symptoms at the terrifying global image of an increasingly probable future; the immediacy of problems on the domestic front will still be their focus, at least for now. In South Africa, such problems are likely to be manifest in a winter of considerable industrial discontent.
Workers will, as they have in the past, try to protect the buying power of their wages and defend the gains they have made. To do so, they will probably demand increases of close to or above double digits and call for no undermining of existing labour laws. A prime focus will be on the increases in transport costs — aided in no small measure by the rise in fuel and road tax levies and the introduction of e-tolling — that will start to feed fully into the economy by mid-year. Officially calculated inflation is then likely to move substantially upward, perhaps to the 10 percent mark.
Most workers are aware that this amounts to substantial belt tightening for all wage and salary earners, never mind those individuals on fixed incomes or the vast army of the unemployed. The latest increases in living costs, coupled with inevitable attempts to hold down wage rises, will also add to levels of anger and desperation.
But wage earners and the unemployed are not alone in feeling the squeeze — and in becoming more desperate. Employers are also under increasing pressure to, at the very least, maintain profit levels and, if possible, increase them. This, in turn, means squeezing wages at the production end and margins at the point of consumption. In what is, in effect, a regional battle in a global class war, many in government, along with employers, their organisations and various blinkered standard bearers of a global free market, will also respond in the same way they have in the past: they will point out that inflation is only a shade higher than 6 percent. At the same time the free market lobby will continue to peddle the myth that greater ease of hiring and firing will create more jobs.
In the first place, and as this column has pointed out many times over the years, officially measured inflation is usually a gross under-estimation of the real cost of living for lower paid workers. Yet it is they who bear the brunt of cost of living increases, especially in terms of food and transport.
In the second, it is a simple fact that employers only employ the number of workers required to adequately perform the functions required by the business, be it mining, manufacturing, distribution or services. Employers are not in the business of creating jobs: they are in the business of making profits in which labour is a necessary component, but a cost.
And one of the ways of reducing the cost of labour is to relocate production. This can be from one city or region to another or across a border or to the other side of the world. In almost every case this results not only in lower wages, but much worse working conditions.
It therefore follows — all other factors being equal — that cheaper labour means reduced costs, leading to a more competitive enterprise and greater potential for more profit. In this scenario, those who sell their labour are obvious victims of what has accurately been described as a “race to the bottom”, a race accompanied by pollution and the destruction of the earth’s renewable resources.
Courtesy of the cyber age this global perspective is now coming increasingly to the fore for the labour movement. Workers everywhere are now able to see that they are under similar pressure from employers responding to the demands of the system. But what few realised until recently was the speed and scale of this race to the bottom, especially in the technology sector. And awareness of these facts has also often come from sources outside of the labour and human rights movements. This year, for example, a young infographic team in the United States that produces material for post-graduate study, researched and posted what they called “The truth about Tech”. It is now another source for the international campaign for “decent work”.
The team discovered that a third of all the electronic gadgetry, from cell phones to televisions, GPS systems and the latest computer tablets in use in the US is now made in China. But the other two-thirds they found is made in countries such as Mexico, Vietnam, Thailand and Hungary where wage rates are also a fraction of those in the US and where working conditions are often nothing short of appalling. Along with low rates of pay, long hours and casualisation, there is also the widespread use of both child and migrant labour, in often dangerous working conditions. This led the infographic team to note: “What you don’t know [about technology production] is hurting someone.”
Unsaid, but obvious, is the fact that workers in the US are being hurt by losing jobs to workers in other countries who are, in turn, being hurt by having to labour in often unsafe conditions for little more than starvation wages: a classic example of the labour movement slogan, “An injury to one is an injury to all”.
As the spectre of barbarism becomes clearer there are stirrings among organised workers, summed up by another old slogan of the labour movement: A better world is possible. However, to try to make this a reality, would mean not just a truce in the ongoing class war, but an end to the war itself.
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