The rickshaw puller dilemma

[x_section class=”left-text ” style=”margin: 0px 0px 0px 0px; padding: 0 0px 0 0px; “][x_row inner_container=”true” marginless_columns=”true” bg_color=”” style=”margin: 0px auto 0px auto; padding: 0px 0px 0px 0px; “][x_column bg_color=”” type=”1/1″ style=”padding: 0px 0px 0px 0px; “][x_custom_headline level=”h2″ looks_like=”h2″ accent=”false”]The rickshaw puller dilemma[/x_custom_headline][x_text class=”left-text “]

Why do small numbers seem so big when it comes to poor people?
By C Y Gopinath • May 30, 2015

[/x_text][/x_column][/x_row][/x_section][x_section style=”margin: 0px 0px 0px 0px; padding: 0 0px 0 0px; “][x_row inner_container=”false” marginless_columns=”false” bg_color=”” style=”margin: 0px auto 0px auto; padding: 0px 0px 0px 0px; “][x_column bg_color=”” type=”1/1″ style=”padding: 0px 0px 0px 0px; “][x_image type=”none” src=”http://blog.cygopinath.com/foodblog/wp-content/uploads/2015/10/Rickshaw-puller-525×525.png” alt=”” link=”false” href=”#” title=”” target=”” info=”none” info_place=”top” info_trigger=”hover” info_content=””][/x_column][/x_row][/x_section][x_section style=”margin: 0px 0px 0px 0px; padding: 0 0px 0 0px; “][x_row inner_container=”false” marginless_columns=”false” bg_color=”” style=”margin: 0px auto 0px auto; padding: 0px 0px 0px 0px; “][x_column bg_color=”” type=”1/1″ style=”padding: 0px 0px 0px 0px; “][x_text]“He will charge you the right amount,” the concierge assured me, when I asked him how much I should pay the rickshaw puller to go from my hotel in Dhaka’s Baridhara enclave to an office in Gulshan 2, about 20 minutes of pedaling in light traffic.

In Dhaka, Bangladesh, getting around means either using your feet or someone else’s. I don’t mind rickshaws, and had reasoned my way out of the moral morasses of having a human pull you like a horse (not difficult to do if you were brought up in Calcutta and realized that a horse does not have to support a family of wife and hungry children).

It was about 2 kms from the hotel to the my destination. The rickshaw puller looked down coyly when I asked him the fare.

“You decide, sir,” he said.

The nearby tea vendor was no help, and neither were the security guards loitering at a gate. I peeled off a 100 taka note (about USD 1.30) and offered it to him.

Disappointment washed over his face. This was too little. I quickly gave him another 100.

“Only?” he said.

This got him his third 100. So. I had parted with 300 taka (about 4 US$) for a short trip in which a barefoot man had pulled me through the streets. Was it too little? Was it about right? Worse yet, might I have overpaid?

The normal fare, I learned a little later, was no more than 30 taka, perhaps 50 on a good day. Suddenly 300 began to feel like a ransom: I’d paid a rickshaw puller ten times the normal fare.

I felt I had been scammed in plain sight. But that was only until I began to think about it a little more.

My assignment in Bangladesh was related to the plight of garment workers. This powerful industry, earning $24.5 billion a year mainly from exports to the USA and Europe, is responsible for 80% of the country’s export revenue and 12% of its GDP. It is the country’s largest employer, with over 4.2 million workers, mostly women who work killing hours in dangerous sweatshops for wages that would barely feed an individual, let alone families of 4 and 5.

The powerful factory owners, wielding the clout that comes from being the country’s number one money earners and employers, occupy positions of power in parliament, and can easily influence laws and policies to further their own interests.

One of the big issues concerns how much to pay a garment worker for her gruelling labours on the sweatshop floor. When the Rana Plaza factory collapsed on April 24, 2012, killing over a thousand, a garment worker’s wage was 3,000 taka (about US$ 38), the lowest in the world. Their demand was for 8,114 taka (USD 100), but the new minimum wage decreed a year after the collapse was 5,300 taka (68 US$).

The garment workers had been demanding about 8,100 taka (roughly USD 104), based on the budget below:

Even assuming this is not meant to support a family, this allows less than 70 taka (less than a dollar) for food alone, not to mention the absurd amounts for family and personal expenses.

At a workshop I conducted with 30 garments sector workers and representatives, they calculated that a woman would need at least 23,000 taka  to cover the basic nutrition, clothing and shelter needs of a family of four or five. (Many families support sick or raging elders as well.)The new minimum wage, in other words, was less than a quarter of what they needed to live a life barely decent.

But an odd conversation began when the new minimum wage were announced: people began to speculate on whether 5,300 taka was too much. Almost the same questions I had been asking myself after paying 300 taka to the rickshaw puller.

Of course, no one was heard asking if it was too little.

The Wall Street Journal, quoting garment factory owners, cautioned that the higher minimum wage “risks making the industry, a mainstay of the impoverished country’s economy, less competitive”.

This can be expressed in plain English as follows — a 5,300 taka minimum wage might topple Bangladesh from its position as the cheapest place on earth to make garments. The new minimum wage would bring Bangladesh close to par with India, Sri Lanka and Cambodia. What if garment manufacturers decided to take their business to one of those countries?

In other words, it was being suggested that 4 million women and men should somehow struggle on at less than a quarter of the bare survival minimum so that a few Americans and Europeans could buy more jeans and shirts than they needed at cheaper prices.

Let us ask a more piercing question: does a minimum wage really address the minimum needs of a garment worker?

In 1994, the minimum wage used to be only 930 taka. It rose to 1,662 in 2006, and four years later, in 2010, to 3,000, roughly a threefold increase in two irregular jumps over 14 years.

Meanwhile, the price of consumer products had been rising by 6.65% every year. What might have cost 1,000 taka in 1994 would cost around 3,865 taka in 2015. In other words, though the cost of living went up each year for 21 years, wages only rose thrice, and always after protracted and painful negotiations.

Various studies have shown that after adjustments for inflation, the new minimum wage that was announced after Rana Plaza represented a mere 5-10% increase in the total wage bill per worker.

The latest increase in minimum wage from 3,000 to 5,600 taka will also be spread out over the years.

One might be forgiven for thinking that the minimum in minimum wage feels more like the least Bangladesh is willing to pay its poorest people for a gruelling day’s work. It is certainly far from the minimum they need to live a decent life.

A study conducted by the World Bank concluded that “over the past decade, apparel manufacturing in most leading garment-exporting nations has delivered diminishing returns for its workers. Research conducted for this study on 15 of the world’s leading apparel-exporting countries found that between 2001 and 2011, wages for garment workers in the majority of these countries fell in real terms.”

Which brings me back to my rickshaw puller dilemma. Why did 300 taka seem like a fortune to pay him when my daily allowance was 4,576 taka for transportation and food? Why does 5,600 seem like a lot to pay a garment worker when her bosses are among the wealthiest people in the country?

A good way to understand this might be through a simple thought experiment. Let’s say you are about to pay 360,000 taka (about US$ 4,600) to buy a Rolex Oyster Perpetual watch when a stranger tips you off that the very same watch is available for 10,000 taka less (about US$ 125) in another shop a minute’s walk away. Would you walk over?

Most people would not think much before saying yes: 125$ saved is 125$ earned.

Now let’s assume you’re buying a Rolls Royce Wraith for 23 million taka (around US$ 296,000), and are told that the same car is going for 10,000 taka less at a nearby showroom. Would you go for the slightly cheaper car?

For most people, I found, the answer is not an automatic yes. Somehow, the same 10,000 taka feels like a lot less when seen as a part of 23 million taka (0.04%). In the case of the Rolex, the cheaper watch represented a 2.7% saving.

This should make us reflect, since the absolute value of 10,000 taka does not change, no matter what you are buying. In the case of the rickshaw puller, I had been seeing 300 taka as a 1000% increase over what others paid the rickshaw puller.

By the same relative token, a minimum wage increase of 86% (from 3,000 to 5,300 taka) might seem more than fair to many. The deeper question would be missed: whether the wage itself was fair.

In both cases, equity and justice for garment workers is the casualty of reflexive and flawed reasoning, and the human tendency to look at the value of money in relative frameworks.

I think of Mukta (name changed), who worked in a garment factory with her husband. When she became pregnant, rather than offer her her due medical benefits, the factory began putting pressure on her to leave, since her productivity, they claimed, would now fall. When she pushed back, they increased her production targets to an inhuman level where they could sack her on the pretext of not meeting her daily quotas.

When she continued to resist, her husband was beaten up by hired hoodlums. Mukta was told that her husband would be sacked if she didn’t quit. Finally she had no choice but to leave the job.

This is where it is for many garment workers in Bangladesh. Job security, fair terms and worker rights are still battles to be won before the discourse can move from minimum wages to fair wages.[/x_text][/x_column][/x_row][/x_section]