The Guardian is wrong

on global minimum wage   

Open letter to Katharine Viner, editor in chief of the Guardian  

The idea of a global minimum wage based on the median salary or on the cost of living of each country, more utopian than workable, is the most common suggestion for a long time, but the establishment of such a system, would prove impossible or would require at least several decades. The living wage was first mentioned when the International Labor Organization (ILO) was created in 1919. This maintains the illusion since a century that solutions are implemented and contributes to the bogging down of the cause of the global minimum wage. Meanwhile, several tens of millions of children, women and men, who are paid a few tens or a little over a hundred euros a month, continue to work in conditions close to slavery and are impatiently waiting for a concrete project.

In an article entitled “How to stop the global inequality machine” published last year, the Guardian’s columnist Jason Hickel wrongly lends capacity and power to the ILO to install a world minimum wage. This anthropologist at the London Schools of Economics affirms, about the setting up of the “Global minimum system” advocated by the American economist Thomas Palley: “The International Labor Organization has already proven that they have the capacity to manage such a system. And it would make good sense to couple it with a universal basic income.” Yet, if we refer only to the facts, in 1928, the last Convention concerning the Creation of Minimum Wage-Fixing Machinery, left tremendous leeway to each signatory nation and the Convention was a failure: “Each Member which ratifies this Convention shall be free to decide the nature and form of the minimum wage-fixing machinery, and the methods to be followed in its operation.” So only 99 countries ratified the convention, including China in 1930 and India in 1955 – to little effect, as we now know. Other countries didn’t join until 2006 or 2007, some 80 years later! In addition, in his last book Politics against domination, Ian Shapiro, sterling professor of Political Science at Yale, wrote “Created as a branch of the League of Nations by the Treaty of Versailles, the ILO has no enforcement power”.

Even if the idea of the living wage system seems a priori seductive, it is certain that the ILO could never be able to impose this very complex process on the countries concerned. Moreover, the rate of 50% of the median wage of each country, recommended in 2011 by Thomas Palley in his book From Financial Crisis to Stagnation, main contribution to the subject of  global minimum wage written  by an renowned economist these last years, is not uniformly adaptable and would not systematically modify the living conditions of workers. Take Bangladesh and Ethiopia, for example, if a textile worker's monthly wage is $65/80, and the median wage does not exceed $130/160 there would be no wage increase, but we have to admit that when Thomas Palley made his proposals, the economic parameters were different ($18/25 per month in Ethiopia and Bangladesh in 2010).

In book The divide, Jason Hickel propose to twin with a universal basic income but it seems even more risky. A salary that some poverty-stricken States would not be able to afford to pay to their civil servants, or that businesses manufacturing goods for the local population would not be able to pay to their employees, obviously cannot be accepted. A wage without an economic basis could prove counterproductive. He could destabilize poor nations and worsen the living conditions of individuals.

Because it is a reality that no entrepreneur in the world is unaware of: in front of each wage increase, it is necessary, unless one wants to initiate a new collectivist model, that there is the corresponding financial resource and if we take the example of the H&M and Zara chains, whose 13,000 gigantic stores occupy several tens of millions of square meters that disfigure the most beautiful avenues in the world, this one exists. The two groups invest each year in the opening of 1,000 new stores. By reducing a little these or dividends or increasing the selling price of each article by only a few cents,tens of cents or 1 or 2 dollars/euros on more expensive coins, it would be quite possible to pay each worker several hundred dollars a month and the same is true in most industrial sectors.

We have to be pragmatic and that is why the International Convention for a Global Minimum Wage' project only proposes an increase in the wages of workers producing goods and services for export to Western markets. Under this impetus, other local wages would mechanically increase over the years and the macro-economic effect would reduce poverty.  

The columnist’s conclusion may seem relativistic when he points to a possible change in future activities due to a "rising tide of automation". But robotized or not, industrial activities will not return soon and massively in Western countries. First, because the competitiveness of lower-cost countries was only one reason for their departure from our countries, but also because manufacturing know-how, capacity and ecosystems have disappeared in most sectors of the consumer goods manufacturing industry. The introduction of a global minimum wage therefore remains more than ever, essential and urgent from a human but also an environmental point of view because higher wages would reduce consumerism and devastation. The low-cost economy constitutes an ecological, economic and humanitarian anomaly.

We must commend the initiatives of NGOs that are struggle for local wage increases, but as Jason Hickel writes in his introduction: "If we want to globalise capitalism, it is logical to globalise the rules and standards that also protect people". Only a comprehensive project, reasonable and adapted to economic realities, with a strategy and proposing an evolving global minimum wage comprising several levels according to the region and degree of development, could materialize in a few years.        Sent july 7, 2018 

Francis JOURNOT   

International Convention for a Global Minimum Wage

http://www.international-convention-for-minimum-wage.org/