The electronics island where COPS shoot ARMY and workers are rioting On November 20th, I visited the Indonesian island of Batam. And about an hour after I left, a protest by local workers over the minimum wage just about turned into a riot. The day before, I've since learned, local Police and Army units fought each other in a six-hour battle sparked by allegations Army members freelanced as …
As a symbol of what is happening as a result of globalisation, it speaks volumes: that we exploit low income workers to keep our toys cheap, while at the same time driving demand for high-value bling that those same workers can never afford... allows those of us in stronger economies to maintain a sense of superiority and to keep the labour pool quiescent by holding out a faint glimmer of hope of a better life...
Sad that nothing has really changed since the start of the industrial revolution - we just relocate the factories whenever the local wages rise above a pittance..
Edit: Icon because he reminds me of Charles Dickens... Charley recognised exploitation when he saw it...
Except millions more people can now afford an iPhone or an iPhone knockoff than could 5 or 10 years ago in Indonesia.
Economic growth in developing nation is pretty tough on individuals but very good for entire populations. The fact of the matter is that people have to endure shitty conditions for much less time than those generations who went through industrialisation in most Western developed countries.
Now unless you have a magic wand that can conjure western lifestyles overnight, I suggest you read Tim Worstall's latest article before getting on your Dickensian high horse.
Except that its not sustainable... the inequality gap in global incomes is widening, not closing. This effect is happening because the minimum level of skill and training necessary to maintain even a basic standard of living is rising faster than the ability of low income earners to gain those skills. It is also, (in smaller part), due to the relatively lower number of labourers required in order to deliver goods to market.
If the bottom rung of the labour pool keeps rising, and the middle tier keeps disappearing, then we will end up in a situation where the vast majority of the global population are completely left behind. Its a bit like getting into the housing market - if the average price of a house rises faster than the earning capacity of first home buyers to get on the ladder, then eventually the entire system collapses since no one can afford to participate..
A excellent resource on the problem can be found here: http://www.mtnmath.com/banana/solutions.html
"the inequality gap in global incomes is widening, not closing."
Much as I hate that the gap is widening, it's worth noting that there are fewer hyperrich than in the past and that even discounting those on the high side of the gap, the average level of income and quality of life for low income earners worldwide is improving rapidly. Our middle classes are still "rich" by comparison and mostly treading water, but billions of people are finding their lives improving every year.
>we exploit low income workers to keep our toys cheap
That's not really true. The extra costs of labour wouldn't impact the final selling price that much - not enough to sway purchase decisions anyway. The cost of labour is minimal to the final customer, its the the intermediate companies who have a manager somewhere who can save a couple of million on aggregate production costs which drives this behaviour.
Large scale production tends to evil.
"we just relocate the factories whenever the local wages rise above a pittance.."
Not necessarily.
Glasgow lost its shipbuilding prowess to Japan despite japanese welders being paid a _lot_ more than glaswegian ones.
The difference was that thanks to semi-automated welding techniques, one welder could run a half dozen rigs simultaneously and produce more output in an 8 hour shift - to a much higher standard of workmanship - than a dozen gangs of burly welders - the other difference was that physical strength wasn't needed and a good percentage of the expert japanese welders were women. Because workers on the Clyde refused to change their methods to match, the entire industry foundered.
On the assembly line front - Hon Hai (Foxconn) has seen cheap foreign competition coming for years. That's one of the prime motivations for robotising as much as it can.
They shouldn't aim for a minimum wage. All it will do is depress wages as bureaucracy will never be quick to increase it. If there is no minimum wage, but there are lots of jobs, then just the demand for workers will cause the companies to increase wages to keep their staff.
As for $220/month. It might not be a living wage in Singapore itself, but in Bantam it probably goes a long way for those living in the shacks on stilts. Context is everything. It's like the calls for a national minimum wage here in the UK which then has to have exceptions for London. Even inside a small country like the UK the cost of living depends on where you live. Demands for the Living Wage have caused the public sector in the North East to be a lot better off than the private sector, and the private sector cannot afford the NMW for those whose jobs aren't worth it. They'd rather overload existing staff than get another person in (along with Employers NI and other costs).
Bantam is the current location for cheap labour, just like Japan was, then China. Now Chinese wages increase by over 20% each year, so they are looking for cheap labour themselves. Bantam and Africa are the place the Chinese are looking at.
So the wages of those in Bantam are low. Now. For a short time. But given the increase in workers, and the demand for them, it won't be long before their wages increase. So rather than worry about it and think like all politicians that "something must be done", the best thing is to do nothing and let the workers go to the jobs which pay better and have better conditions. Simple market forces will cause wages to increase within a few years.
"industrial parks, all of which are ringed by razor wire and boast a guard post."
Exactly like industrial parks in the UK and Europe. I've visited factories belonging to everyone from IBM to HP to Motorola to Ford to BAE to Raytheon. All of them had high fences, barbed wire, guard posts and would take your phone off you at the door in case it had a camera in it.
I've only been to Batam once, about 20 years ago.
In those pre-budget airline days it was significantly cheaper to take the ferry to Batam, overnight in a decent hotel then catch a morning flight to somewhere in mainland Sumatra rather than flying direct from Singapore.
At that time there was a lot of construction going on, but you only needed to walk a couple of hundred meters from the hotel and you were out in the rice paddies.
Amazing that the population is now over a million.
Those houses on the water ate not that bad really have stayed in similar as a guest it's pretty much standard waterfront housing in a lot of country areas in SEA (although will admit poor country areas) but go see the living conditions on some places in comparison, shanty towns edged under fly overs for example.
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