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Mexico continues enduring the worst wage gap of all countries, even after the adjustments resulting from the new World Bank PPP surveys round
PPP WAGE GAPS FOR SELECTED DEVELOPED AND "EMERGING" ECONOMIES FOR PRODUCTION-LINE MANUFACTURING WORKERS. (Updated from 1975 up to 2006)
In 2006, already with the new World Bank PPP estimates round integrated (see page 28 of report), Mexican manufacturing production-line workers continue enduring the worst real wage in purchasing power parities (PPPs), for they have the greatest equalised wage gap with  the U.S. (83%), when compared against other emerging economies and against eight developed economies. In other words, a Mexican worker earns only 17% of the purchasing power (material quality of life) enjoyed by the equivalent U.S. counterpart, to do the same work for a product that will be marketed globally at global prices. In clear contrast, Brazil’s wage gap –the most similar economy with available data– is clearly less dramatic (63%) than in the Mexican case, although it still has a long way to go to approach a living wage ethos, All Asian economies show higher nominal wages and smaller wage gaps than Mexico. South Korea, in particular, has a smaller wage gap than Japan in 2006 (21% versus 29% respectively) and for the second consecutive year. The five major European economies and Canada have wage gaps of less than 20% or surpluses –Germany (-23%), Canada (-5%)– vis-à-vis equivalent U.S. workers.
The Classic Problem Scenario
With market liberalisation, MNCs sell their products in both the host countries and in all other markets where they are active, including their home country, at the same or at a very similar sales price. They achieve maximum profitability when the manufacturing process in their developing countries' operations is at par in quality and production efficiency with the standards used in their home operations, but their cost of labour is dramatically lower. The MNCs' markets, manufacturing and marketing operations are globalised but their labour costs remain strategically very low in order to achieve maximum competitiveness at the expense of the South's workers. As a result, the MNCs get all the benefit. Sometimes the salaries that they pay are higher than the legal minimum wage in the host country. But, these wages still keep the workers in dire poverty. A minimum wage does not make a living wage even in the most developed economies. What has occurred, with market globalisation, is the dramatic widening of the gap between wages in the North and in the South.
The Argument
Workers performing the same or an equivalent job for the same business entity, in the generation of products and services that this entity markets at global prices in the global market, must enjoy an equivalent remuneration. This equivalent remuneration is considered a living wage, which is a human right. A living wage provides workers in the South with the same ability to fulfil their needs, in terms of food, housing, clothing, healthcare, education, transportation, savings and even leisure, as that enjoyed by equivalent workers in the North, which we define in terms of the purchasing power parities (PPP) as defined by the World Bank and the OECD.
The definition of a living wage of The Jus Semper Global Alliance is as follows: A living wage is that which, using the same logic of ILO´s Convention 100, awards "equal pay for work of equal value" between North and South in PPPs terms.
The premise is that workers must earn equal pay for equal work in terms of material quality of life for obvious reasons of social justice but also, and equally important, for reasons of global sustainability.
The argument of an equivalent living wages is anchored on two criteria:
- Article 23 of the UN Universal Declaration of Human Rights, on the following points:
- Everyone, without any discrimination, has the right to equal pay for equal work
- Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.
- ILO´s Convention 100 of "equal pay for work of equal value', which is applied for gender equality, but applied in this case to North-South equality, using PPPs as the mechanism.
The proposal is to make workers in the South earn living wages at par with those of the First World in terms of PPPs in the course of a generation (thirty years). There will not be any real progress in the sustainability of the market system -in all three economic, environmental and social dimensions- if there is no sustained generation of aggregate demand, in that period, through the gradual closing of the wage gap between North and South. This does not mean, whatsoever, that progress should be equivalent to the increase of irrational consumption, depleting all non-renewable resources. Eventually, during the twenty-first Century, a new paradigm must be built in which the purpose of the market is the welfare of all ranks of society, and the privileging of sustainability and not of capitalist accumulation.
Yet, while that stage is reached, there is no justification at all, moral or economical, for the workers of the South not to earn wages equivalent to those of their counterparts in the North, in PPP terms, based on equal pay for equal work of equal market value. Just as the International Labour Organisation's Decent Work Agenda states, the decent work concept has led to an international consensus that productive employment and decent work are key elements to achieving poverty reduction. The blatant and perverse exploitation of workers in the South must be stopped.
The analysis is and update for 12 economies and the U.S., prepared by TJSGA, using hourly compensation costs for production-line manufacturing workers (1975-2006) as reported by the U.S. Department of Labour, and PPP data from the World Bank and the OECD. The report exposes once again a global labour system that profits over the majority of the people in favour of a global elite.
Download the pdf file with the wage gap update for 12 economies (Germany, France, Italy, Canada, U.K., Spain, Japan, South Korea, Singapore, Brazil, Hong Kong and Mexico).
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MEXICO'S WAGE GAP
The political and social disaster endured by Mexico clearly reflects the deplorable and shameful state of manufacturing wages in Mexico when compared with developed and similar economies
The desertion of Mexico’s governments in the last three decades of the basic responsibilities of any government that praises itself for being democratic and, as its consequence, the explosion of a state of social disarray in the last few years are accurately exposed in the  state of labour endowments of production-line workers in the manufacturing sector. Since 1980 PPP manufacturing real wages –relative to their purchasing power equalisation with U.S. wages– begin a consistent erosion, dropping 51% between 1980 and 2006, for employers adjust their prices –but not wages proportionally– supported by the full endorsement of the State through its customary policy of wage pauperisation.
With the adjustment of the new World Bank's PPP estimates round already incorporated, which reduces Mexico's cost of living from PPP 73 to PPP 65 in 2005 and keeps the same level in 2006, real wage erosion is so dramatic that the assessment does not cease to be deplorable. Mexico reaches its least precarious equalisation level in 1980 when manufacturing wages reach a 35% equalisation, with a cost of living of 66% of the U.S. Twenty six years later the cost of living (price levels) is 65% of the U.S. (a relation of 65¢ against $1 in the U.S.). That is, with virtually the same cost of living that in 1980 (98,4% of 1980) relative to the U.S. cost, Mexican workers receive less than half what they received in 1980 in PPP terms (17 versus 35). In order to be compensated equitably vis-à-vis their U.S. counterparts, Mexican workers should receive a wage of $15,80/hour instead of the miserable $2,75/hour. In this way, the wage gap between what should be and what is, translates into the 83% gap that has been resilient since 1995 (charts in pages 14-17).
The future of manufacturing wages in Mexico is expected to get only worse for the remainder of the current government. In 2008 the increase to the federal minimum wage –benchmark for wages in all sectors– was 4%, under the argument of a 2007 inflation rate of only 3,76%, which is not credible given that the World Bank reported increases of 36,7% in food and 48% in energy sources. The cost of the basic basket of 42 food staples increased by 35% in 2007 (Di Constanzo: 13/1/08). This exposes a clear manipulation of data by the Mexican government and a policy of wage pauperisation. Twelve months later the minimum wage increase has been set at 4,6% for 2009 despite the official inflation rate of 6,23% (Bank of Mexico on 29/12/08), still greatly underestimated. In other words, the government is openly maintaining its policy of real wage erosion for Mexican workers by setting an increase below the official inflation rate.
Download the pdf file with the analysis of Mexico's wage gap here.
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BRAZIL'S WAGE GAP
The recovery of Brazil’s production-line manufacturing wages barely advances in 2006
In 2006 already with the new World Bank PPP estimates round integrated (see page 20 of the report), Brazil’s manufacturing real wages continued enduring one the largest wage gaps with the U.S. (63%), only less wide than in Hong Kong and Mexico, twenty points less wide than in the latter; yet still quite distant from the levels of developed economies.
Since 1996, (first year with manufacturing wage comparable data available) real wages lost 39% up to 2002 –relative to their PPP equalisation with the U.S. Prices drop with the 1999 crisis but wages do even more; thus, real wages collapse in the span of seven years.
Nonetheless, in Brazil’s case, between 2003 and 2005, wage equalisation starts improving;, averaging a 9,8% recovery annually. This amounts to a cumulate recovery of 32% up to 2005 (equalisation index from 28 in 2002 to 37 in 2005). However, Brazil’s production-line manufacturing wages stagnate in 2006, for they experience a meagre improvement of 2,5% (equalisation of 36,56% to 37,48%), which in rounded numbers keeps the equalisation index at 37. This is due to Brazil’s PPP cost of living increase in 2006 of 13,35% from a 47,8 to a 54,2 index, and nominal wages of U.S. counterparts increasing 1,55% whilst Brazil’s nominal wages increase by 18%; thus a net recovery of only 2,5% between 2005 and 2006.
Download the pdf file with the analysis of Brazil's wage gap here.
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SPAIN'S WAGE GAP
The state of manufacturing wages in Spain follows the European trend and resumes its wage-gap reduction of production-line manufacturing real wages vi-à-vis its U.S. counterparts
In 2006 already with the new World Bank PPP estimates round integrated (see page 22 of the report), Spain’s manufacturing real wages keep approaching those of  the G7, with an equalisation wage gap with the U.S. of only 18%; substantially less than Japan’s 29% and increasingly closer to real wages in France, United Kingdom and Italy.
Since 1975 real wages improved 58% up to 2006 –relative to their equalisation with the U.S. based on PPP– regardless of price levels and exchange rate fluctuations during this period; albeit this is less than the 65% growth up to 2004, before its 12,3% loss in purchasing power previously discussed. In 2006, the European equalisation wage gap, which increased in 2005 for all EU countries in the study, returns to a positive path. In this way, Spain reduces by 3 points its wage gap relative to 2005 (21% to 18%). Yet, as in the case of the other EU countries, this is still below Spain’s wage gap of only 14% experienced in 2004.
In the 31-year period the gap between Spain’s nominal PPP equalised wages is substantially reduced, dropping 62% because Spanish nominal manufacturing wages increased 647%, from $2,52 to $18,83/hour, whilst the cost-of-living PPP index –relative to that of the U.S.– only increased 22%, moving from 78 to 95. Due to the combination of U.S. nominal wages increasing only 293% –below Spain’s 647% growth– from $6,16 to $24,18/hour in the same period, and Spain’s PPP cost of living index barely growing vis-à-vis the U.S., Spanish PPP wage equalisation increases to the 82% level.
The comparison of 2005-2006 accurately illustrates this trend. Spain’s nominal wages grow 5,06% (17,92 to $18,83) whilst U.S. wages increase only 1,6% ($23,81 to $24,81). Moreover, Spain’s cost of living relative to the U.S. drops 3 points, decreasing from a 98 to a 95 PPP index. Thus, equalisation improves from 79% to 82% in the last year reported.
Download the pdf file with the analysis of Spain's wage gap here.
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TABLE T4*: 1975 - 2006 REAL-WAGE GAPS FOR TWELVE ECONOMIES, IN PURCHASING POWER PARITY (PPP) TERMS, FOR PRODUCTION-LINE MANUFACTURING WORKERS. *(The base table used for all PPP real-wage gap analysis)
International comparisons of hourly compensation costs for production-line workers between the US and selected developed and "emerging" markets, barring Japan, Mexico and Singapore, show clear improvements in real wage gaps in 2005 and 2006 from 2000.
Based on the new 2005 PPP World Bank surveys, our research shows that since 2000 the euro-area countries, the UK, South Korea, Brazil and Hong Kong  have reduced their wage gaps with the U.S. for manufacturing production-line jobs sensibly. South Korea and Spain, in particular, showed the greatest wage-gap reductions. Mexico keeps showing the worst wage gaps of all, with no improvement in 2006 and a dismal state of real wages since 1980. Japan maintains a consistent increase of its living-wage gap with the U.S., which is approaching twice its 2000 level, whilst Hong Kong and Singapore dramatically reduced its wage gap since 1980.
✦ The €uro-area countries in the analysis (France, Germany, Italy and Spain), experienced marked real-wage increases in 2005 or in both 2005 and 2006 vis-à-vis 2000 relative to real wages in the U.S. Spain shows a consistent improvement trend, reducing its wage gap with the U.S. from 26% in 2000 to 21% in 2005 and 18% in 2006. The UK continues to reduce its wage gap, which stands now at 8%. These living-wage positions nonetheless are wider than in 2004 –even after applying the World Bank's 2005 PPPs round results– when the five EU economies in the analysis had smaller wage gaps or living-wage surpluses with the U.S. (2004 equalisation indices: France 94, Germany 1,39, Italy 1,04, UK 1,00 and Spain 89). 49% between 2000 and 2006, based on the World Bank's new PPPs survey. The new results show that, after increasing its wage gap in 2005, Singapore recovered in 2006 its 2000 wage-gap level.
✦ In Asia, South Korea maintains a consistent reduction of its living-wage gap from 30% in 2000 to 21% in 2006, a 30% drop in six years. In contrast, Japan continues to widen its wage gap with the U.S. from 16% in 2000 to 29% in 2006, an 81% increase so far this decade. Our analysis for Hong Kong and Singapore starts now in 1980, indicating that both have sensibly improved their real wages with a growth in their equalisation indices of 78% and 135% respectively since 1980. Singapore also experienced a dramatic change in its wage-gap level after the World Bank's 2005 PPPs round results were applied. The new data reduced Singapore's production-line wage gaps with the U.S. by 23%, from an average gap of 64% to 49% between 2000 and 2006, based on the World Bank's new PPPs survey. The new results show that, after increasing its wage gap in 2005, Singapore recovered in 2006 its 2000 wage-gap level.
✦ In the Americas, the new survey data shows that Brazil's recovery of real wages stagnated in 2006 and remains at par with 2005 at 63%, nine points smaller than in 2002 nonetheless. In 1996 Brazil had its smallest production-line wage gap with the U.S. (54%), which went up to as much as 72% in 2002. Canada maintains a surplus in production-line real wages against the U.S. and remains at par with its 2000 equalisation index (1,05). Mexico's production- line real wages remain at their lowest level in 2006 vis-à-vis its main trading partner, and the World Bank's new PPP data confirms their collapse and stagnation. Mexico's highest wage equalisation index with the U.S. was 35 in 1980 and since 1995 remains at less than 50% of its 1980 level. Mexico's manufacturing production-line real wage gap with the U.S. Is now at 83% –the worst of all countries in the analysis– due to the misery wages paid to its labour force.
Download the pdf file of Table 4 here.
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CSR in Iberian America: Opportunity or Moot Point
An assessment of the development of CSR in Iberian America in the threshold of the implosion of the neoliberal mantra
The assessment that this paper makes relative to CSR in Iberian America –previously published in 2006 in the Social Responsibility Journal– remains as current as it has ever been. In looking at a region famous for sheltering the world's greatest social inequality, the author, Álvaro de Regil,  then conveyed great scepticism regarding the value that CSR could have in Iberian America to force corporations to behave in a sustainable manner from the perspective of free societies. He deemed to be quite difficult to achieve a true CSR ethos due to the democratic mockery that we endure in both Iberian America and virtually worldwide. He argued that today's societies are completely dominated by the market, for all public decisions are taken from the market's perspective and not in compliance with the basic democratic responsibility of procuring the welfare of every rank of society. Instead, we live in marketocracies in Iberian America and in most parts of the world; an ethos which stands out for its great degree of corruption in governments, that act as market agents and not as public servants governing by fulfilling the people's mandate.
Two years later, with the global implosion and extreme crisis of capitalism, the future of CSR globally becomes rather evident. The author describes the irrelevance of the development of specific CSR concepts in the region for being, in most cases, as they are worldwide, envisioned from a market context, which is regarded as the supreme value that reigns over the lives of today's societies. Thus, according to the author, today's CSR is far from responding to the essential demands of Iberian Americans. The most conspicuous case is the absence in today's CSR of a vital element in human dignity: the right to decent work and a living wage, in accordance with article 23 of the UN's Declaration of Human Rights.
In the authors opinion, due to the pillage that the rule of the market perpetrates and the extreme inequality that generates, there is a sense of urgency in Iberian America not present in other regions in the South. Regardless of their awareness about CSR, Iberian Americans know quite well that corporations cannot rule the world and dictate to governments the policies that benefit their very private interests. This has forced them to mobilise to confront the power structures imposed by free market dogma. Such mobilisation has succeeded in several South American countries in getting rid of oligarchic governments, albeit not yet in entirely dismantling the structures of exploitation.
In this way, the author deems that the current CSR is an irrelevant issue in Iberian America for it does not address, whatsoever, the need of most citizens to force corporations to eliminate their predatory practices and contribute to the welfare of all ranks of society. What people are doing is redefining the purpose of democracy, and how it addresses each aspect of life, starting with the social, economic and environmental policies that are essential for building a truly sustainable paradigm. And they are doing it in a far more effective manner that what could be expected from a CSR that the author deems to be a mockery.
Download the assessment of the development of CSR in Iberian America here!
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Table T5: New living-wage gaps 1996-2006 –in purchasing power parity terms (PPPs)– vis-à-vis the U.S. for all manufacturing employees for the four largest economies in the Americas (Canada, Brazil, Mexico and Argentina)!
In 2008 the U.S. Bureau of Labour Statistics (BLS) began reporting hourly compensation costs for both production-line workers and all manufacturing employees for the years 1996-2006. The BLS also included, for the first time, hourly wages for Argentina for all manufacturing employees. Spain is included in our analysis for comparison purposes between the Americas and a large euro-area economy.
International comparisons of hourly  compensation costs for all manufacturing workers between the US, Canada and the two major Iberian American economies indicate that, barring Mexico, living-wage gaps are smaller for production-line workers than for all manufacturing employees.
Hourly wages for all manufacturing employees in Canada have been stable at an average of 94% of the U.S. benchmark. Brazil's all manufacturing employees hourly wages –with a much wider living-wage gap with the U.S.– are recovering after a prolonged downturn of 41% –from an equalisation index of 46 in 1996 to 28 in 2002– and have now improved to a 36 index. Argentina's equalisation index collapsed during its turn of the century crisis by nearly 49% –from a 39 index in 1998 to a dramatic 20 index in 2002– and has now recovered and surpassed its 1998 position, reducing its living-wage gap with the U.S. to 50%.
As has become customary, Mexico's all manufacturing employees as well as production-line worker wages are by far the lowest of all economies in our research –by far the worst of all OECD countries and of the three major Iberian-American economies. Even more disturbing is that Mexico's living-wage gap for production-line workers is at a more dismal state (83%) than for all manufacturing employees. This is a clear sign that, in stark contrast with Canada, Brazil and Spain, Mexico's blue-collar workers endure greater wage exploitation than white-collar and all other non-production manufacturing workers.
Download the pdf file for Table 5 of wage gaps for all employees in manufacturing in the Americas here.
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BUSINESS AND HUMAN RIGHTS – Upholding the Market's Social Darwinism
An assessment of Mr. John Ruggie’s Report: “Protect, Respect and Remedy: a Framework for Business and Human Rights”
In January 2008 Álvaro de Regil published a study that included a detailed evaluation of Mr. John Ruggie’s work, as part of a comprehensive assessment of the debate on the responsibilities of business regarding human rights. In this new work, he continues the same approach by assessing the vision and arguments that Mr. Ruggie –UN's Special Representative for Business and Human Rights– advances in his new paper: Protect, Respect and Remedy: a Framework for Business and Human Rights.
The author's conclusion is that Ruggie’s vision in the current report continues to be in open conflict with the basic concept of democracy and of true long-term sustainability, for he continues to uphold the market as the principle that reigns supreme over the lives of societies across the world; never mind the customary, massive, ubiquitous and systemic violation of a wide range of human rights that the market exerts over billions of people every second of our time.
In his report, Mr. Ruggie deems the governance gaps –created by market globalisation– between the markets’ footprint on human rights and society’s capacity to manage it, as the root cause of the increasing abuse of human rights, and regards bridging these gaps as our fundamental challenge.
The author's assessment is in stark disagreement. In his opinion, it is absolutely futile for Mr. Ruggie to address the customary violation of human rights in the business ethos if he does not address the true root of the problem: true democracy has been supplanted by marketocracy and, thus, has disabled the States ability to impose a regulatory framework that effectively protects human rights from corporate malfeasance. The lack of regulation –a fundamental irresponsibility of any truly democratic government– is the current standard in almost every area of business activity. To be sure, the clearest and most pervasive case is the greatest debacle of capitalist economies that we are attesting to, as a direct consequence of the economic deregulation that governments have undemocratically imposed upon societies across the world since the 1970s.
Consequently, relative to human rights, de Regil contends that, as long as we do not demand from our governments a universal and legally-binding framework to protect human rights from business’ predatory practices –as a core element of international law– we will remain “in a sea of rhetoric rights, deception and posturing”. De Regil contends that unless we force our governments to fulfil our demands they will continue relying on the good old formula of pretending that they are making changes so that, at the end, everything remains the same. Something that, by the way, it is likely to occur in all areas of business, particularly in financial markets, unless society gets directly and permanently involved in the public matter, which is a fact of life in today's societies.
Download the assessment of John Ruggie's report here!
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WORLD TRANSNATIONAL CORPORATION REGULATORY AUTHORITY
A proposal from civil society to make corporations and governments accountable for corporate malfeasance
This issue commentary introduces a proposal –in development– for true and  direct democratic practice by making governments implement the World Transnational Corporation Regulatory Authority (WTNCRA). This concept has previously secured citizen support for provisional inclusion in the Simultaneous Policy (Simpol); which is being developed through a direct democracy process and aims to deliver social justice around the world, resolve global problems and regulate the economic power of international capital for the good of all.
The WTNCRA provides a vehicle to exercise direct democracy from the bottom up. It seeks to make corporations accountable to civil society for the impact of their activity as well as governments for regulating business practice. People can submit formal complaints against any corporation on behalf of global, national or local communities through public petitions, and bring prosecution through the International Criminal Court (ICC), which would have the power to impose penalties on companies for their corporate malfeasance or on governments for failing to meet their regulatory responsibilities.
Nonetheless, this proposal still needs to devise a way for people to have access to the ICC, for currently its mandate does not include corporate malfeasance. Moreover, it is not recognised by all States, including prominently the United States, the country with the largest number of global corporations.
The WTNCRA makes clearly evident the need of civil society for direct access to international judicial institutions empowered to penalise corporations for their customary and ubiquitous corporate malfeasance. The logical next step is for civil society to devise a specific strategy to force governments to agree on expanding the jurisdiction of the ICC to the prosecution of corporate malfeasance and on allowing society to file formal complaints against corporations and against States refusing to enforce existing agreements. The WTNCRA also exposes the great limitations of representative democracy and the urgent need for society to achieve true and direct democratic practice in a variety of ways such as the one advanced by this proposal.
Download the full commentary here!
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BUSINESS AND HUMAN RIGHTS
Towards a New Paradigm of True Democracy and the Sustainability of People and Planet, or Rhetoric Rights in a Sea of Deception and Posturing. The good old formula of changing so that everything remains the same...!
This study is motivated by the concern and frustration for the lack of meaningful progress in the struggle to establish a normative framework to protect human rights (HR) along the entire domain of business activity. The author, Álvaro de Regil, Executive Director of TJSGA, approaches this critical issue with the conviction that we endure an era in which, to say the least, a savage and perverse market ethos has been imposed upon humanity and the planet as a paradigm of life, with rules and structures designed in direct line with the conditions demanded by business for its exclusive benefit. As a consequence, societies' human rights are systematically stamped on by business activity in the name of free marketeering. In this context, The Jus Semper Global Alliance (TJSGA) has closely followed the development of the debate, beginning with the publication in 2003 of the draft of the Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regards to Human Rights. In those days we expressed our restrained support of such Norms. To be sure, despite their broad ambiguity, such Norms constitute a first positive step upon which to build, with the direct participation of global civil society, a true regulating framework that effectively protects HR from the impact of business activity. Taking into account that, by now, different sectors of civil society and the business world -including the work of the Business Leaders Initiative on Human Rights- have conveyed their positions, regarding both the Norms as well as the work of the UN on the matter, through Mr. John Ruggie -Special Representative on HR of the UN Secretary General- and the UN Global Compact, it was better to wait to obtain a comprehensive vision instead of assessing these activities individually as they were taking place. In this way, this is an assessment of the debate on the responsibilities of business regarding human rights in particular, but also generally on the political, civil, economic, cultural and labour rights; an assessment that, furthermore, constitutes the position of our only initiative: The Living Wages North and South Initiative (TLWNSI), relative to business and HR. Hence, the assessment ends by proposing a new HR paradigm with respect to business, from TLWNSI's perspective, with true democracy and real sustainability as its underpinnings. Prior to embarking on the assessment, nonetheless, the author clearly establishes the context of the world's stage, from the economic, democratic, true sustainability and the current state of HR in business perspectives, from which he performs his assessment. This is how, from the very title, de Regil reveals his conviction that, in the struggle for establishing a framework regulating the responsibilities of business in respecting HR in their environs, there is a dominant position rejecting regulating the impact of business on the enjoyment of HR through a binding framework, with no other argument but the primacy of business over people and planet. In his perception, it is more than evident the clear reluctance of the UN member governments to comply with their most basic responsibility: to enhance the current HR framework, in a world globalised by the owners of the market, and guarantee the protection of the current rights. De Regil contends that the governments of the world and their multilateral agencies have clearly imposed, in a completely undemocratic fashion, an ethos where the market reigns supreme over people and planet. Consequently, they not only condone but enthusiastically support the systematic and customary violation of HR in business, with the payment of misery wages, vis-à-vis living wages, standing out prominently in what today constitutes a modern-day-slavery business practice; the shining feature of this era's Darwinian business culture. Accordingly, despite the overwhelming evidence of the systematic and customary violation of HR by business, what is clearly observed is an unrelenting litany of postures and gesticulations that pretend to change to remain the same, in line with the will of the owners of the market. Nevertheless, de Regil asserts that the last word has not been said, and that we, civil society, the common citizens of both rich and poor countries, are not letting up nor will we weaken our vigour and pace to completely and radically change the current ethos. Download the new Business and Human Rights study here!
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THE PLACE PREMIUM: WAGE DIFFERENCES FOR IDENTICAL WORKERS ACROSS THE US BORDER
Another angle of labour exploitation through North-South wage discrimination
Researchers Michael Clemens, Claudio Montenegro and Lant Pritchett applied their analytical model on micro data on the wages of over two million individual formal-sector wage- earners in 43 countries. This exercise made these researchers arrive to basically the same conclusion that constitutes the fundamental argument of Jus Semper's sole initiative: The Living Wages North and South Initiative (TLWNSI): Northern wages are much higher than Southern wages for workers of equal intrinsic productivity because of North-South exploitation and not due to price differences.
This paper compares the wages of workers inside the United States to the wages of observably identical workers outside the United States—controlling for country of birth, country of education, years of education, work experience, sex, and rural-urban residence. The authors drew fundamental conclusions:
✦ for many countries, the wage gaps caused by barriers to movement across international borders are among the largest known forms of wage discrimination. They arise only from socially constructed characteristics of the worker (like country of birth) that are not related to worker productivity (labour demand) or to the preferences of potential migrants (labour supply).
✦ these gaps represent one of the largest remaining price distortions in any global market. The differentials the researchers recorded are generally larger than price gaps for goods or financial instruments between developing countries and the US. As Jus Semper has always argued through TLWNSI, there is no relationship between the difference in wages for equivalent workers and the differences in prices between Southern countries and the U.S. based on purchasing power parities. This is all the more evident when comparing equivalent workers working for the same company in a Southern country vis-à-vis the U.S. As our living wage-gaps analysis consistently exposes every year, Southern workers earn only a fraction of what they should earn for performing the exact same job based on true price differences. Not surprisingly, the researchers, also found that the gains from a marginal relaxation on barrier to labour mobility produced welfare gains would greatly exceed the total gains to developing countries from elimination of all remaining global trade barriers.
✦ these gaps imply that simply allowing labour mobility can reduce a given household’s poverty to a much greater degree than most known in situ antipoverty interventions. Their estimates strongly suggest that no existing policy carried out in situ can benefit the marginal poor household as much as one year of access to the US labour market.
They also performed comparisons parting from results of concrete consumer-oriented actions such as consumer boycotts that brought the same conclusion. For instance, they looked at Harrison and Scorse (2004) finding that international anti-sweatshop campaigns against textile, footwear, and apparel plants in Indonesia caused a 20-25% increase in real wages for workers at foreign-owned and export-focused plants between 1990 and 1996. Their analysis model showed that this campaign translates to an annual wage gain of US$647 at purchasing power parity, which at a 10% discount rate has a present value of about US $6.960, which would account for 58% of the annual wage gain from working in the US. From another angle, this means that the cumulative lifetime effect of the anti-sweatshop movement on an Indonesian worker’s earnings could be earned if that person had the chance to work in the US once for a period of about 30 weeks.
In summary, this rich-data analysis exposes once again the argument rhetorically used by the International Labour Organisation to position its so-called decent work agenda: that the decent work concept has led to an international consensus that productive employment and decent work are key elements to achieving poverty reduction. In other words, there is no other measure more effective to combat poverty in Southern countries than paying living wages in the South and not the misery wages that workers receive as a result of the system of customary exploitation that has been in place for centuries.
Download the full paper on wage differences for identical workers North-South!
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CHILD LABOUR, TRADE RELATIONS AND CORPORATE SOCIAL RESPONSIBILITY – WHAT THE EUROPEAN UNION SHOULD DO
As the author, Gerard Oonk comments: on the 27th of May 2008 the Council of the European Union published its conclusions on the rights of the child in the EU's external action. In point 4 the Council focusses on a number of policies to fight all forms of child labour, including policies on CSR. But the most remarkable is that the Council (representing the governments of the Member States) has also agreed for the first time to study trade related measures against child labour.
In a world where corporations seem to have more rights than citizens and where many of the rights enacted at the highest multilateral level and ratified by the legislative arms of many so-called “democratic” States are customarily violated by corporations across the world, the rights of the child are customarily treated with the highest level of disregard and disdain in many States, particularly when child labour exploitation perpetrated by companies based in their territory takes place outside their borders.
As this report explains, there are 218 million children suffering from child labour worldwide. This is possible because the products where child labour is part of the production process are consumed worldwide as a result of the pervasiveness of the distribution and marketing systems that global corporations deploy, with the enthusiastic consent of governments worldwide. This is the case of the countries of the European Union, which dramatically exposes the mismatch between the rights of the economically powerful and the rights of the child. Whereas regulations in other fields abound, including those regulating the rights of companies, children seem to be left to fend for themselves in the national/international marketplace. Also trade relations are of often incoherent with policies working towards the implementation of human rights.
As Gerard Oonk contends: this is absolutely unacceptable. The EU Member States like other states have ‘the duty to protect against human rights abuses by third parties, including business, while companies themselves also have the responsibility to respect human rights. In this way, the European Union has an important role in realising this Member States’ duty as well as to ensure that companies live up to this responsibility. The Council of the European Union has given its own conclusions on the issue of children’s rights underlining its commitment to supporting the fight against all forms of child labour, and emphasising the need for EU agreements with third countries on fighting all forms of child labour, and has requested the Commission to analyse the impact of positive incentives on child labour free products.
This paper, prepared on behalf of the Stop Child Labour – School is the best place to work’ campaign, provides a comprehensive set of recommendations for the European Union, covering both issues of trade relations and corporate social responsibility. Its recommendations, to a large extent, build on the existing consensus of the European Parliament for stronger policies and certain forms of regulation on CSR as well as on effective trade related measures.
The positive receptiveness by the Council of the EU to the demands of civil society to protect the rights of the child notwithstanding, it remains to be seen whether this is just another outburst of bureaucratic grandiloquence or if this is indeed a serious undertaking by the EU to eradicate child labour in the world.
Download the paper on the recommendations to the EU to stop child labour!
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OECD WATCH 2008 REVIEW OF NATIONAL CONTACT POINTS (NCPs) AND THE IMPLEMENTATION OF THE OECD GUIDELINES
Submission to the Annual Meeting of NCPs, June 2008.
At their 2007 Annual Meeting, NCPs agreed that the 2007/2008 implementation cycle on the OECD Guidelines should give priority to the improvement of NCP performance, and  OECD Watch welcomes the effort by the OECD to review NCP activity. This follows the presentation by OECD Watch of its Model NCP which was intended as a positive contribution to the improvement of NCP performance. The Model NCP was the result of a broad, year-long multi-stakeholder consultation process.
The chorus of high-level voices calling for major improvements in the OECD Guidelines and NCP procedures leaves OECD Watch convinced that this year and the immediate years to come offer a unique opportunity for the OECD, the UN, State governments, the private sector and civil society to collectively participate in putting a process in motion to strengthen global corporate accountability.
Download OECD Watch submission, from the perspective of global civil society, to the 2008 National Contact Points Meeting!
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UNEQUAL EXCHANGE
On how the South endows the "North's good living" through the miniscule wages of its labour force, subsidising the wages of Northern workers, through a premeditated and perverse system of exploitation. TLWNSI's raison d'etre!
In this Brief Claudio Jedlicki* assesses economist Arghiri Emmanuel's theory of Unequal Exchange, to delve, from an economic analysis angle, into TLWNSI's central argument: that we endure a North-South system of exploitation, which, among other features, has a direct and premeditated impact on the misery wages paid in all countries in the South. This unequal exchange constitutes a trade imperialism that historically has generated vast earnings for the North, greater than the interests recovered by banks and the profits obtained by transnationals.
Nonetheless, the author alerts us, these are only the traceable evidence left by the system of exploitation, for the earnings, in themselves, cannot be seen, since they are hidden in the prices the North manages for all the goods and services in its transactions with the South, as well as for the miniscule value of Southern exports, which is mainly the result of its low labour endowments.
Indeed, in this commercial imperialism labour endowments stand out, which, in a fashion exogenous to the so-called logic of market economies, are established by way of institutional policies. In this way, the author's assertion that the North-South unequal exchange constitutes a very meaningful endowment for the high average living standard of Northern Societies becomes an indisputable argument. To be sure, the South's misery subsidises "the North's good living".
This is why Jedlicki argues that any serious assessment in pursuit of a solution to the North-South's unequal exchange cannot escape this reality. Thus, any re-assessment of the South's exports, with the sustainability of people and planet in mind, forcefully entails rebalancing living standards on both sides, increasing in the South and diminishing in the North.
*Researcher at the Centre de Recherche et de Documentation de l'Amérique Latine (CREDAL), which is part of the Centre National de la Recherche Scientifique (CNRS) of France.
Download our full brief here!
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CORPORATE DESIGN. THE MISSING BUSINESS AND PUBLIC POLICY ISSUE OF OUR TIME
How can corporations be designed so as to blend social, environmental, and financial mission at their very core? This is the design challenge of the 21st century
Corporation 20/20 is a new multi-stakeholder initiative that seeks to answer this question. Its goal is to develop and disseminate corporate designs where social purpose moves from the periphery to the heart of future organisations. To this endeavour, this initiative has developed six principles to be followed for corporate redesign: - The purpose of the corporation is to harness private interest to serve the public interest.
- Corporations shall distribute their wealth equitably among those who contribute to its creation.
- Corporations shall accrue fair returns for shareholders, but not at the expense of the legitimate interests of other stakeholders.
- Corporations shall be governed in a manner that is participatory, transparent, ethical, and accountable.
- Corporations shall operate sustainably, meeting the needs of the present generation without compromising the ability of future generations to meet their needs.
- Corporations shall not infringe on the right of natural persons to govern themselves, nor infringe on other universal human rights.
These principles seek to address the imbalance caused by nearly two centuries of legal decisions and corporate practices, which together have expanded the rights of corporations without a commensurate expansion of their obligations. Elaborating on the subject, Corporation 20/20 has just published a report that explores different routes for redesigning the purpose of business, describing the roles that the different stakeholders may adopt towards this objective. The authors, Marjorie Kelly and Allen White, argue that implementing these principles in the 21st century requires the true commitment of business, governments and civil society. Corporate redesign seeks to change the narrow purpose of business inherited from the 19th century: shareholder value, to now place at the same level -as the first principle declares- the responsibility of serving the public good. Why does society allow corporations to exist? To serve the public good. Why do individuals start corporations? To serve their own interests. Effective design knits these two together. In this way, the first principle articulates an emerging social consensus: corporations have social responsibilities, and when those conflict with profit-making, without a doubt, the public good comes first. In sync with Jus Semper's position, the purpose of democratic societies must be the long-term and dignified sustainability of people and planet. The market must only be a mean to this goal and not its end, as it is today. The authors correctly consider that resistance to such changes should not be underestimated. Parties with a vested interest in the status quo will undoubtedly oppose corporate redesign. Yet, from a broader societal perspective, the authors tell us that there is no choice. There is simply no doubt that, as dominant institutions in society, corporations have societal obligations. Thus, shaping future corporate forms to honour these obligations is the design imperative of the 21st century. In this way, the authors conclude their report by further exploring the subject, envisioning the roles that different stakeholders may adopt and illustrating them with case studies of real businesses that were designed with human welfare as their main purpose. Download the report on corporate redesign here!
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PAPER SERIES ON CORPORATE REDESIGN PRESENTED DURING THE SUMMIT OF CORPORATION 20/20
Paper series prepared for distribution at the recent Summit on the Future of the Corporation
This document offers a collection of ten papers exploring key components  of corporate design, prepared to set the stage for The Summit on the Future of the Corporation. All papers seek to answer this question: What would corporations look like that were designed to seamlessly integrate social purpose into the core of the organisation? Rather than constraining themselves to a debate between government regulation and free markets, these essays explore the design of a new business system: structure, culture, management practice, ownership control, business and investment law, as well as the key role of stakeholders, from consumers to investors. The papers depart from conventional wisdom to foster dialogue and action among an ever-growing circle of citizens who believe that corporations can and must play a pivotal role in achieving a sustainable future.
Download the paper series on corporate redesign here!
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