Friday, January 02, 2015

The New Sweatshops

Rising wages in China, workers’ protests in Cambodia and collapsing factories in Bangladesh means the sweatshops are switching to Africa.

China has already lost its appeal as cheap garment producing country – with current wages at around $500 a month in major industrial hubs along the country’s coast and $250 in the interior, and foreign apparel retailers have turned to factories in Bangladesh and Cambodia in recent years. Bangladesh’s textile sector has grown to a $25bn industry that employs 4.4mn people, and Cambodia`s grew to $5.5bn with more than 650,000 factory jobs. But workers in these cheapest garment production countries are increasingly agitating for better pay. Bangladesh last year raised the minimum wage for the country’s garment workers by 77% to $68 a month following serious labour disputes. In Cambodia, the labour ministry in November 2014 set the new monthly minimum wage for the country’s garment workers at $128, up from some $75 a month just a few years back and now almost double than in Bangladesh. Higher wages are squeezing the profits of local textile production companies.

Now the garments industry have already found alternatives to Asia as a production hub. H&M, together with Tesco and Primark, have begun sourcing clothes from Ethiopia, an African country without industrial minimum wages where unskilled garment workers receive$35 to $40 a month, clearly undercutting labour costs in Bangladesh. Foreign textile investors are highly welcomed and benefit from an abundance of cheap labour – with urban unemployment rates close to 20% –, cheap energy and locally produced cotton.

 In Kenya, the textile industry is also expanding. Monthly salaries there are at around $120, but the government is trying to lure manufacturers with generous incentives plus African countries have duty-free access to the US textile market under a special trade agreement signed in 2000.

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