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

Chapter 5: Gender aspects of trade
mobile industries secure concessions from their workers by making credible threats
to move company operations outside the US (Bronfenbrenner, 2000). Workers fear
that if they try to organize into unions, strike or otherwise struggle to improve working
conditions, they will lose their jobs. Even if workers do not lose their jobs immediately,
they are prevented from exercising their right to freedom of association and collective
bargaining.
Developing country governments, on the other hand, have been reluctant to
enforce labour laws in general and to support union rights in the EPZs or non-EPZ
export factories in particular for fear of losing foreign direct investment. In countries
that rely on exports of labour-intensive manufactures to generate much-needed foreign
exchange, there is an obvious incentive not to undermine the competitiveness of the
export sectors. Moreover, most developing country governments lack the resources
to enforce their labour laws, particularly under the budget constraints brought by
market reforms. As a result, in developing and developed countries alike, workers
lose the key means for improving wages and working conditions.
Absence of effective union rights is especially of concern in reducing gender
wage gaps. Doraisami (2008) attributes the persistent gender wage gap in Malaysia’s
manufacturing sector to the prohibition of union rights in foreign-owned, exportoriented
enterprises. She argues that the absence of national-level unions, along with
the lack of a legally established minimum wage, prevented women workers, who were
concentrated in export industries, from improving their earnings. Even when new
laws that grant union rights in EPZs are phased in, their implementation has fallen
behind schedule or has been postponed (Berik and Rodgers, 2010).
The cross-country and panel analysis by Busse and Spielmann (2006) further
underscores the appeal of the low-wage strategy. Taking as the point of departure the
standard trade theory, this study provides robust evidence to support the positive association
between comparative advantage in labour-intensive manufactured goods
and gender wage inequality. Gender wage inequality has a consistent positive effect
on trade outcomes, measured variously as the ratio of labour-intensive exports to
total exports and the revealed comparative advantage in labour-intensive exports. 12
5) Does moving up the industrial ladder reduce gender wage inequalities?
If gender wage inequality strengthens comparative advantage in labour-intensive manufactures,
then a prerequisite for promoting gender-equitable development is for
developing countries to move out of this particular export niche to diversify the production
structure and produce higher-value-added products. Such a move would make
possible payment of higher wages commensurate with productivity growth and closing
of gender wage gaps. The Republic of Korea and Taiwan (China), which are the most
12 Busse and Spielmann’s study of the effects of gender wage inequality on trade competitiveness
includes 29 countries in the cross-section analysis for 2000, and 40 countries in the panel analysis
for the period 1975-2000.
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