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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). 184
Chapter 5: Gender aspects of trade In sum, trade expansion has created better employment options for women in EPZ factories in most cases, but export sectors overall appear to provide lower-wage jobs relative to sectors that produce for the domestic economy. Country wage trajectories are also likely to be contingent on the dynamism of the sector: workers in EPZs facing intense competition from fast-growing countries (for example, Mauritius and Mexico vis-à-vis China) are likely to experience real wage erosion while wage growth is rapid in expanding export sectors/EPZs (for example, in China, where average wage growth has been more rapid than the global average (ILO, 2010)). 5.3.4 Empirical analyses of trade impacts on gender wage gaps 1) Does increased demand for female labour reduce gender wage gaps? The standard international trade theory has not fared well in predicting wage gaps in developing country cases. Far from narrowing, wage gaps between skilled and unskilled labour (not differentiated by gender) have widened in many developing countries under the impact of trade, whether the latter is measured in terms of import expansion, protection rates, trade reform or export orientation. Occupational-level analysis for 1990–2000 also finds that wage inequality between high-skilled and lowskilled occupations widened due to the faster wage growth in high-skilled occupations (Corley et al., 2005). Studies that examine trends in gender wage gaps without directly linking them to trade policy changes find some decline in gender wage gaps in manufacturing from the mid-1980s to the early 2000s (Tran-Nguyen and Beviglia Zampetti, 2004; Corley et al., 2005). However, as the researchers observe, even in the most successful East Asian economies the gender wage ratios varied between 59 and 65 per cent in the early 2000s. Almost all of the developing countries that narrowed gender wage inequalities between 1996 and 2003 had very high levels of gender wage inequality. Moreover, gender wage inequality increased in developing countries that had low levels of inequality. A meta-study of a large number of industrial and developing country analyses shows that between the 1960s and 1990s gender wage gaps narrowed owing to the increasing education levels of women, but there is no evidence that the discriminatory portion of the gender wage gap – which focuses on wages of equally skilled women and men – narrowed (Weichselbaumer and Winter-Ebmer, 2005). 8 This evidence suggests that, while women are making progress in closing the earnings gaps, they are not reaping the full benefits of their rising education levels. In major exporter countries with strong demand for women’s labour, the discriminatory gender wage gaps increased over the course of the 1990s and early 2000s. In Bangladesh, for example, the gender wage ratio in apparel manufacturing declined from 66 per cent in 1990 8 Much of the research indicates that gender gaps are only partly due to productivity differentials, with about two-thirds of the gender gaps attributable to discrimination. See, for example, Horton (1996) and Psacharopoulos and Tzannatos (1992). 185
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Trade and Employment From Myths to
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Trade and Employment From Myths to
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PREFACE Trade negotiations -bilater
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Trade and Employment: From Myths to
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EDITORS AND CONTRIBUTORS EDITORS Ma
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ACKNOWLEDGEMENTS The editors wish t
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NEW EVIDENCE ON TRADE AND EMPLOYMEN
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Chapter 2: New evidence on trade an
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Region Annualized percentage change
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Region 1980 1985 1990 1995 2000 200
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Figure 2.4.b: Long-run association
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20 See Harrison and Rodriguez-Clare
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ASSESSING THE IMPACT OF TRADE ON EM
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APPPENDIX 3.A: TABLES Chapter 3: As
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TRADE AND THE INFORMAL ECONOMY 4.1
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Chapter 4: Trade and the informal e
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