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Workers’ Wages Shrink as Apparel Industry Grows

A controversial new study concludes that the wages for apparel workers in countries which export clothing to the US often decline over time. The report’s analysis defies the conventional wisdom that low wages can be justified as a temporary measure in anticipation of substantial increases to follow later.

Issued by the Center for American Progress, the report examined changes in monthly wages for apparel workers from 2001 to 2011 for fifteen countries which export clothing to the US. Counterintuitively, wages for a majority of the nations assessed declined. In some instances, the dwindling of compensation was substantial: Mexico’s wages fell by almost 30 percent. All together, nine countries experienced a backslide: besides Mexico, Guatemala, Thailand, Honduras, El Salvador, the Philippines, the Dominican Republic, Cambodia, and Bangladesh took steps backwards even as the garment export industry underwent considerable expansion.

The study compared prevailing wages–wages disbursed to the average worker irrespective of industry–to the wages specifically paid to garment workers. The results were unpromising. First of all, apparel wages routinely fall well below the subsistence level. In fact, the study reported that only 36.8 percent of all the workers covered make what counts as a living wage. In China, approximately 22 percent earn enough to live on. In Viet Nam, only 29 percent make the cut. In Bangladesh, the number is a paltry 14 percent.

Apparel wages in four countries–the Dominican Republic, Guatemala, the Philippines, and Thailand–dropped in real terms by an average of 12.4 percent. In the Dominican Republic, the decline was particularly sharp, registering at a whopping 23.74 percent.

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Real wages actually rose in six countries: China, India, Indonesia, Peru, Haiti and Viet Nam. However, in some of these cases the increases were relatively modest; in real terms, wages in Peru rose 17.1 percent over the ten year period, a less than 2 percent annual gain.

The rise of China has been a crucial determinant regarding global apparel wages. Since it normalized trade relations with the US and won admission to the WTO, China has significantly expanded its share of the global apparel export market. In 2013, the countries suffering from falling wages accounted for a mere 27 percent of all clothing exported to the US. In 2000, Mexico alone doubled the exports China claimed.

The study concluded that “the growth of an export-apparel industry does not necessarily raise its workers out of poverty when left to its own workings.” Furthermore, it claimed that the opportunities for social mobility for low wage apparel workers would remain limited. It said, “While the expansion of garment-sector employment may have made the very poor initially significantly less poor, it has offered limited opportunities for workers in most of the major apparel-exporting countries to make further upward progress toward an income that offers them a minimally decent and secure standard of living.”