By Ravi Ratnasabapathy
The article originally appeared on Capx.co 3rd June 2016
Last week, the Sun newspaper in the UK claimed that a factory in Sri Lanka that produces a line of clothing for a popular singer Beyonce is using sweatshop ‘slaves’. The report attracted little interest in Sri Lanka, partly because attention was more focused on the devastating floods that hit the island. But perhaps the report also failed to make waves because it simply did not ring true; the mainstream apparel factories in Sri Lanka are seen as responsible and respected employers in the formal sector.
Since the original Sun article, several international media outlets such as Quartz andVice have published pieces amplifying the story. Whilst some commentators have aired dissenting views, a local perspective may be useful.
The Sun report claims that the basic monthly salary of 18,500 Sri Lankan Rupees received by a seamstress at the factory that produces Beyonce’s Ivy Park clothing line amounts to slave labour. It goes on to claim that the workers earn just £4.30 a day, and then informs its readers what the equivalent (Rs. 902) could be spent on:
A McDonald’s meal: Rs. 650 (£3.07)
A pint of beer: Rs. 200 (94p)
A litre of milk: Rs. 150 (71p)
A pair of Levi jeans: Rs. 3,900 (£18.41).
This might shock readers in the UK, but none of that is what low-income people in Sri Lanka buy. They buy powdered milk (much cheaper), they rarely eat western style fast food (McDonald’s, in particular is several times the cost of a low-end Sri Lankan meal), alcohol is deliberately kept expensive through high taxes, and they are highly unlikely to buy Levi jeans – a local equivalent would cost a third of the price (or less).
A more realistic comparison of living costs is given by Sri Lanka’s National Consumer Price Index (NCPI) based on data from the Household Income and Expenditure Survey (HIES). Based on the March 2016 NCPI, a household (of 3.9 members) would typically spend just Rs. 35,356.96 (£168) per month on all their living expenses.
Let’s look purely at food costs. The World Food Programme Cost of Diet, a method to model the cost of a theoretical, simulated food basket which satisfies all nutritional requirements of a household, estimates that the cost of a nutritious diet for the model Sri Lankan household of five (parents and three children) varies from Rs. 12,208 per month in the Northern Province to Rs.15,371 in the Western Province.
Sri Lanka is not a rich country and wages are low but so are living costs. The Official Poverty line at national level for April 2016 is Rs. 3,943 per person, according to the Department of Census and Statistics.
A nurse in a government hospital would start on a salary of Rs. 15,620, and once promoted would receive Rs. 21,660. Salaries for teachers in the government service is similar, ranging from Rs.13,410 to Rs. 15,540. Like the apparel industry, both professions predominantly attract young women, although nurses naturally require a much higher level of education.
Set against the everyday realities of ordinary Sri Lankans, the basic wages of a sewing operator of Rs.18,500 seem more reasonable. Basic wages also do not include overtime and other benefits afforded to garment workers which could push their earnings well over Rs.20,000, at times going as far as Rs.30,000.
To be sure, these wages are still low and the job is demanding. The workers are undoubtedly poor and life will not be easy, but they are better off than some of their neighbours who eke out an existence in subsistence agriculture, work as maids, or are simply unemployed.
Until the country opened up to trade and investment in 1977, almost a quarter of the labour force lacked jobs. Things have improved since then. According to official figures, around 25% of the labour force is employed overseas as migrant workers, mostly in the Middle East, and many of them women. Women account for half the migrant worker population, the majority of whom work as house maids where conditions can be dangerous. There are cases where workers have been abused, unpaid or not paid as agreed and imprisoned in their countries of employment.
Claims have also been made that Sri Lanka has weak labour protections, when in fact Sri Lanka has comprehensive labour laws. In addition to regulations on hours worked, holidays, overtime and child labour, all employees are also entitled to statutory provident fund contributions by the employer amounting to 15% of their basic pay, which they can withdraw on retirement. Employees with a service in excess of five years are also entitled to statutory gratuity payments if they leave. In addition most of these factories, such as the one producing Beyonce’s Ivy Park range, provide transport, free meals and other welfare and incentive bonus programs.
These benefits do not extend to workers in the informal sector or those who are self-employed, which is where sewing operators are most likely to find work outside apparel factories.
The garment industry has rescued millions of people from poverty all over East Asia; it is labour intensive and provides many relatively low-skilled jobs that are easily learned and transferred, thus ideal for countries at an early stage of development. It forms a stepping-stone to more sophisticated industries and services.
The global development of the industry took place in three waves. The ILO reports that:
“During the first wave of production, the Republic of Korea, Singapore, the territory of Hong Kong and Taiwan achieved excellent results within their own borders, but then began to cut down production and invest heavily in other least-cost countries. As a result, between 1985 and 1990, the production of the Philippines, Indonesia, Thailand and Malaysia increased greatly and led the world market in exports.
These countries have in turn begun to invest or redistribute part of their production to a third wave of countries such as Bangladesh, Pakistan, Sri Lanka and more recently Laos, Nepal and Vietnam.”
Sri Lanka’s industry started off in the 1970s and has evolved significantly since. It is no longer is it seen as a ‘cheap’ destination but as a ‘quality’ supplier.
The call for better wages by activists based on rich country comparatives is misleading and dangerous. If followed through by the imposition of boycotts in favour of significantly higher minimum wages, it could endanger the very people they intend to help.
Concerned Westerners interested in doing some real good for workers in Sri Lanka and elsewhere should instead lobby their governments to cut tariffs on garment imports.
The greater the demand for clothing from Sri Lanka, the more factories there will be for Sri Lankans to work in. As the choice of jobs increases, salaries will rise and lifestyles will improve. The competition will push employers to increase productivity and the economy will grow. The children of these workers, better fed, clothed and educated than their parents were, will have better opportunities, perhaps even in white-collar jobs.
The Sun, quotes one of the workers interviewed as saying “We had to come and work here because our father could not afford to feed us and there are no jobs there”. The garment industry is the main source of income for many economically marginalised households in rural areas.
If the jobs in the factory became unviable, what would they return to?
Ravi Ratnasabapathy is a management accountant by training and a fellow at the Advocata Institute.