Where have all the good jobs gone

from the book

Sharing the Pie

by Steve Brouwer



Leanness and Meanness, International Style

We live in an era when free trade is trumpeted as the defining virtue of Americanism. American capital is free to travel to any part of the world in search of maximum profit, and foreign capital is encouraged to do likewise in the United States. In the process, American citizens encounter and purchase a never-ending flurry of products-Japanese cars, Chinese clothing, Mexican cars and clothing-which are driving our merchandise trade deficit higher than ever, to nearly $200 billion in 1996.

Among the products Americans purchase in great quantity from factories operated abroad are athletic shoes, first and foremost those with the Nike label. The Nike company is American-owned, mostly by its founder, Phil Knight, who is said to be worth more than $5 billion. Nike combines low-wage and low-tech production with the most sophisticated high-tech marketing and distribution of goods. It produces sneakers at a cost of about $5.60, materials and labor combined, then sells them for $73 to $135 per pair all over the world. Nike, based in Oregon, has no U.S. production facilities and depends entirely on fast, high-dexterity, low-pay labor abroad. The company scours the world to find subcontractors who pay the lowest possible wages. Until the early 1990s, most Nikes were assembled by subcontractors in South Korea and Taiwan. When wages rose too much there, twenty factories were closed. Thirty-five new ones were opened, often under Korean and Taiwanese ownership, in Indonesia, Thailand, China, and Bangladesh. In 1991 an experienced female worker in Indonesia earned 82 cents per day; others made much less.

Indonesian workers who sewed Nikes told a reporter from the Far Eastern Economic Review that they were "terrified" of their South Korean managers, who often threatened them. Others told the New York Times that Korean supervisors "liked to hit people, slap people. There were some who would kick the Muslim workers when they were praying during their lunch break.

Because of international pressure, Nike fired the subcontractor who operated that particular Indonesian factory; by 1996 Nike was managing to pay the legal minimum wage, which had risen to a little over $2 per day. Journalist Bob Herbert asked Knight why he didn't pay higher wages to the workers in Indonesia. Herbert reported the interesting answer: "He said it would wreck the country's economy if wages were allowed to get too high."

In the meantime Nike began slowing down its Indonesian expansion because it was pursuing cheaper options with its subcontractors in China, which now produces almost one half of all the world's shoes. One gigantic new Chinese factory complex in YuYuan employs forty thousand workers, 70 percent of them women. Each immense building at the site is emblazoned with a major brand name-Nike, Reebok, Adidas, L. A. Gear-and inside production is carried out to the exact specifications of that particular Western company. Outside the plants, it is possible to witness one of the strange paradoxes of multinational production: foreign managers, brought in from Taiwan (where many were once officers in the Taiwanese army, scream out orders and march new recruits around in military formation. Workers live in newly constructed barracks-ten to a room is considered relatively low-density housing-and perform twelve-hour shifts. The workplaces resemble prisons. At another South China plant, this one owned by Taiwanese investors, one hundred guards are employed to make sure that no one escapes the premises.

In the North China city of Tianjin, the Korean-run factories are even more harsh. According to sociologist Anita Chan, managers resort to "beatings, military control, and public humiliation" to keep their workers in line. Of the ten labor strikes that occurred in Tianjin in 1993, nine were against Korean operations. The Chinese authorities who respond to labor unrest and complaints are not necessarily sympathetic to their own citizens. In addition, many officials in the trade unions are retired officers from the Red Army, and their highly regimented training makes them poor arbitrators of workers' complaints. "The common underlying belief," writes Anita Chan, "that they and the Taiwanese and Korean managers share is not in Confucianism but militarism and authoritarianism."

Taiwan and South Korea are two of the "Asian Tiger" economies that have been the marvel of the industrialized world and the envy of other developing countries. In the 1970s and 1980s, they rose to prominence as Newly Industrialized Countries (NICs) thanks to strictly authoritarian governments that suppressed any sign of labor activity. Their regimes kept wages low and profits very high, in part through their willingness to permit the highest rate of industrial accidents and deaths in the world; at one point in the 1980s it was calculated that 2.26 percent of South Korea's labor force sustained serious injuries or died at work every year. Taiwanese employers vied with the South Koreans for the dubious distinction of requiring the longest workweek in the world.

Working people fought back. In 1988, after a nominally democratic government was installed in South Korea, there was a wave of strikes and fourteen hundred unions were formed. Korean companies retaliated with a vengeance, using well-organized gangs of thugs called Kusidae to terrorize workers and drive out the new unions. One American company, a subsidiary of the Tandy Corporation (the corporation that makes Radio Shack equipment), used these anti-labor squadrons to subdue its female workforce. Groups of male Kusidae assisted male managers in the factory in a brutal attack on women union leaders; several women were hung upside down, beaten, and sexually molested; twenty-three others were physically abused in other ways until they signed resignation letters.

Such viciousness was a sign of business "realism"-that is, knowing what to do to boost profits and promote growth in an increasingly competitive world. After four decades of political and labor repression, pressures from the restive working and middle classes eventually pushed both Taiwan and South Korea toward democracy. The new labor unions negotiated successfully for substantial raises that more closely reflected the productivity of the South Korean economy. And, after free elections were held, public anger against two ax-presidents was so great that they were convicted of crimes against the people and thrown into prison.

The traditions of authoritarian repression that once propelled South Korea and Taiwan toward economic success are still alive; they have been eagerly assumed by other regimes in Southeast Asia. Countries such as Thailand, the Philippines, Malaysia, and Indonesia are being pulled into the international web of export manufacturing and are trying to achieve very rapid economic growth under severely anti-labor regimes.

These management techniques can be transplanted to places outside of Asia. In Guatemala five hundred export factories have opened up over the past fifteen years in order to take advantage of the lowest wages in Central America and the disciplinary methods of a repressive government. At these production facilities, half of which are Korean-owned, the most common complaint of workers is that they are yelled at and beaten by their employers. One Guatemalan manager excused the Korean companies' actions by explaining that "the people are accustomed to being treated badly; if you don't treat them badly they don't understand." Wendy Diaz, a fifteen-year-old worker at Global Fashion in Honduras, testified to the U.S. Congress that she had to work seventy-four hours per week for 40 cents an hour. Her South Korean managers, who were accused of hitting and sexually harassing employees, were overseeing the manufacture of clothing for Wal-Mart.

Sharing the Pie