Trade and Employment From Myths to Facts - International Labour ...

Trade and Employment: From Myths to Facts
that the EPZ workers constitute the lowest paid workers in the local labour market.
Based on a review of studies for 2006–09 in Mexico and Central America, Domínguez
et al. (2010) also argue that maquiladora workers often earn less than self-employed
women, earn less than the industrial sector minimum wage or earn a salary that is
insufficient to cover basic needs.
In making EPZ/non-EPZ wage comparisons, studies do not factor in the long
hours and excessive overtime endemic to EPZ jobs. The use of monthly or annual
earnings in making wage comparisons, without taking into account the working
hours, is likely to overstate the relative advantage of EPZ jobs. EPZ factory workers
have longer hours than their non-EPZ counterparts, which may even make the
hourly EPZ pay lower than the hourly pay in alternative jobs. While a higher annual
or monthly income may be more attractive for workers and will make a bigger dent
in the income poverty rate, this income is attained at the expense of women workers’
physical well-being as well as possibly being at lower hourly wages in comparison
to alternatives.
Use of the local poverty line as the yardstick is equally problematic. Domestic
poverty lines are often very low, and are not sufficient to support adequate livelihoods.
Use of the minimum wage as the yardstick, as is common in policy discussions, is
likewise inadequate when there is a clear erosion of the minimum wage over time.
Such was the case in Bangladesh, for example, where the 2006 minimum wage adjustment
for the garment sector left the real minimum wage for entry-level garment
workers below its 1993 levels (Berik and Rodgers, 2010).
Lim’s hypothesis about the long-term trajectory of EPZ working conditions
has been examined by Fussell (2000). Based on data from a 1993 survey of women
workers in Tijuana along the Mexico-United States border, Fussell shows that as
global competition from Mexico’s competitors intensified maquiladora employers
not only reduced average real wages but also tapped into a workforce of older,
married women with the lowest levels of schooling. These women lack better alternatives
in the local labour market and are therefore a stable workforce for
maquiladora employers. While the change in composition of maquiladora employment
implies that younger women have improved their job options in the local
labour market, possibly in the service sectors, Fussell shows that growth of
maquiladora employment over the course of the 1980s and early 1990s has not
brought about improvement in wages in this sector. Similarly, in Mauritius, between
1991 and 2004 the growth of EPZ earnings lagged behind non-EPZ earnings, resulting
in a widening earnings gap, even though EPZ earnings more than doubled
over this period (Otobe, 2008).
Studies that focus on non-EPZ export sectors find that average wage rates of
both women and men in export sectors are lower than in non-export sectors. Interindustry
analysis of wages conducted for Mexico (2001–05) and Taiwan (1984–93)
indicates that the export orientation of a sector exerts downward pressure on wages
of women and men over and above the effect of a host of other industry characteristics
such as skill composition, female share of industry employment and capital intensity
(Brown-Grossman and Domínguez-Villalobos, 2010; Berik, 2000).
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