The Excesses of Globalization

The top three revenue earners in Kenya are tea, horticultural products and tourism. There is little interest in tourism after the 2008 post election violence, which has still to be resolved. Sales of horticultural products are depressed due to the global economic climate. And tea is a turbulent commodity; most plantations are owned by multinationals. It's not difficult to work out who benefits from the tea industry in Kenya.

In addition, most of the big players in Kenya in these sectors are foreign. They pay little or no tax; they employ as few people as possible; they pay them as little as possible. The country will never get rich from their top revenue earners because they are in the hands of people and organisations who are allowed to exploit the country for everything they can get, and are happy to do so.

The majority of people in these sectors are not permanently employed, are often part time and have little or no protection from their employers. You might expect the International Labour Organization's (ILO) 'World of Work Report, 2008' to give considerable coverage to Kenya and other African countries. But you'd be disappointed. There are mentions of African regions but there seems to be little data about most African countries. In the light of this lack of data, one may conclude that conditions in Africa are far worse than in other continents.

The report as a whole shows that income inequalities are increasing in most countries and have been doing so for nearly two decades. The conclusion is that the economic model that led to the current financial crisis is not sustainable and that balancing economic with social and environmental goals is vital to recovery, as well as to a reverse in the trend towards higher levels of inequality.

While a few, rich people, gained from the economic expansion preceding the current crisis, the majority did not get richer. Indeed, many became poorer. But it's that poor majority that must pay for the current financial rescue package. Those on high incomes have seen huge increases in their incomes. Those on low incomes have seen small increases or even decreases. Women in all countries, especially developing countries, are less likely to be employed and more likely to be employed on an informal basis. They also receive lower wages than men.

The ILO's report shows that financial globalization has played a major part in these increases in inequality. Unemployment has increased while productivity has decreased. Globalization has resulted in a significant increase in banking crises. The report argues that there is a need for regulation to limit the excesses of financial players and protect the vulnerable, who usually suffer the most when things go wrong.

The ILO also notes the issue of 'performance pay systems' for senior employees. This has resulted in large increases in executive pay that is not reflected in company performance. In 2007 in the US, executive pay in the top 15 firms was 500 times that of the average employee, compared to 360 times higher in 2003. Other countries experienced similar patters. The report suggests that executives are in a dominant bargaining position and the result is both an increase in inequality and a decrease in economic efficiency.

In contrast, the bargaining position of employees, trade unions and other labour institutions has weakened. There have been increases in part time and non permanent employment, which means lower pay. In addition, taxation has become less progressive, shifting the burden of tax from the richer sectors of the population towards the poorer. Redistribution and social protection are thus compromised.

The 'Decent Work Agenda' proposed by the ILO includes "well-designed labour regulations and social protection, and respect for basic workers’ rights" to achieve higher levels of employment and greater equality. They argue that, along with a reform of the financial architecture, this will contribute to a more balanced and sustainable economy. At the same time, it will help to address the social consequences of the current financial crisis.

The above suggests an opportunity for 'development by omission'. It is not acceptable for tax systems to move away from progressive forms of tax, ones that shift the burden from the poor to the rich. Nor is it acceptable for the highest paid individuals in a firm to have the power to award themselves ever increasing salaries and bonuses while the lowest paid get only small increases. The move towards less formal employment with the resulting drop in income only increases vulnerability. Big, private sector, employers have seen their profits swell for many years. The increase in profits has often been a result of cutting wage costs and this cannot continue indefinitely.

It's easy for employers to blame the economic slowdown, the rising cost of fuel, the food crisis and various other trends, but these labour trends have been worsening for a long time. They are inimical to both development and equality. The dogmatic claims for the benefits of globalization have not materialised. Employment has not increased as a result, it has decreased. Conditions have disimproved and there are rising levels of inequality.

Governments need to take into account the social consequences of globalisation, in addition to the economic consequences. This is especially true for governments of developing countries, such as Kenya. The government needs to keep an eye on employers who are increasing their executive pay, cutting employee pay and increasing their levels of temporary and part time employment. So far, they seem more interested in promoting the interests of employers, regardless of the costs to employees and the country as a whole.

The government need also to rebuild the health, education, social services, infrastructure and other public goods that have been allowed to decline for so long. Many Kenyans will not benefit directly from labour reform as most do not work in the formal sector. Any efforts at redistribution and redress needs to take this into account.

Who Paid for those Christmas Presents?

I will probably say this many times in one way or another on this blog:

HIV may well be mainly sexually transmitted in Kenya, but under what circumstances do people have sex? Why do some have sex frequently and with many different people? Why do they not take precautions, perhaps by using a condom, avoiding people they know to have a sexually transmitted infection (see note below about health) or people they know to be violent? Why do they agree to more dangerous sexual practices, such as anal sex or dry sex?

IRIN ran an article recently about a young woman who had to have sex with her supervisor in order to be guaranteed regular work. She works in an Export Processing Zone (EPZ). EPZs were set up with the specific intention of allowing companies to operate their production units where labour is cheap.

This is not to say that EPZs were set up with purely evil intentions. Countries with EPZs could have had strong labour laws that protected their labour force and that punished employers who flouted these laws.

But competition ensured that the country with the fewest employee protections would win the contracts. Laws in Kenya governing EPZs rarely mention employees but are pretty explicit when it comes to the companies that are flocking to the country to take advantage of the cheap labour.

The companies setting up production units in Kenya and other countries with the 'unique selling point' of cheap labour are ones that produce fashionable clothes, popular brands of watches, pharmaceuticals and other things bought by most people in developed countries, the 'minority world'.

The number of people implicated in the abuse suffered by employees of EPZs is high, taking in multinational corporations, governments and the very population driving the process: the market.

That means you and I; the people who buy sports shoes, laptops, MP3 players, mobile phones and various other things that are only affordable because of a high level of exploitation. Cheap labour ensures our access to these goods.

Don't buy the popular media reflex that developing countries are poor because of corrupt governments. Serious corruption is global.

I almost forgot to mention the part played by the organisations that are supposed to be assisting developing countries to develop: those international financial institutions whose names shall remain the World Bank and the International Monetary Fund. They loan money to desperate countries with certain conditions attached. Those countries must be 'flexible', they must deregulate, they must reduce 'barriers to trade' and public services, they must reduce the civil service...

... many civil servants being involved in the 'anticompetitive' practice of regulating employers, ensuring workers rights, inspecting companies to reduce dangerous conditions and exploitation. In fact, EPZs are not bound by the Factories Act and do not have unions because such things would seriously reduce their competitiveness. EPZs don't even make people redundant, they only 'retrench' them, which is completely different. Well, it’s far cheaper for employers, anyway.

These measures keep international financial institutions, governments, consumers and employers happy. With EPZs, the world is almost perfect.

Except for the majority world; the place where over five billion people live (out of a global population of over six billion). The people who work in these EPZs are not guaranteed work, they must accept any conditions without complaint and they cannot strike. As the Kenya Human Rights Commission say in their report 'Manufacture of Poverty', employees 'report to the factory gates every morning without pay to check whether or not there is work'.

So what makes a prospective employee more 'competitive', more likely to work today and subsequent days? Aside from being silent about flouted fire regulations and other safety measures, impossible production targets, compulsory overtime and other abuses?

Well, agreeing to sleep with the person responsible for choosing who works and who doesn't work would be a start. Sleep with the supervisor. And every time the question of who to employ comes up, the question of what price is to be paid must also be answered. The woman interviewed in IRIN's article is not the only one who suffered abuse and continues to suffer abuse in this way.

So this is a whole field of scenarios where HIV is transmitted. But the issue here is not the transmission of HIV, alone. There is a whole range of human rights being abused with impunity, with the tacit acceptance of most of the people and institutions in the world who could and who should be objecting.

So instead of criticizing people's sexual practices, perhaps we could examine our own purchasing practices.

Note about health:

The International Monetary Fund and World Bank, mentioned above, have also given loans on condition that the number of people employed by public services such as health, education and infrastructure be fixed at low levels. Spending on such services is severely limited and this has many consequences for people’s overall health.

For example, intestinal parasites are very common, as is TB, malaria and many waterborne diseases like cholera. Sexually transmitted infections are also common, especially Herpes Simplex Virus. All of these make people more susceptible to HIV. The health of Kenyans is severely compromised by these loan conditions.

The HIV ‘experts’ who implement prevention programmes do so with the expectation that existing health, education and infrastructure will ensure the success of these programmes. Even the World Bank itself funds such programmes.

So, when they find that there are very few health and education facilities and very little infrastructure in Kenya and other developing countries, one hopes they will also know who to call on to find out why: themselves.

Maybe I am hopelessly idealistic.