TCS Daily

Sewing Discontent

By Iain Murray - July 11, 2006 12:00 AM

Globalization continues to be a boon to mankind. Economic benefits once reserved to residents of the developed world are spreading rapidly throughout the developing world. Thanks to free trade, companies from rich countries are bringing improvements in health, safety, and environmental quality to their overseas employees and their communities.

Across the world, countries freeing up their markets to foreign countries are benefiting the most. In China, for example, the standard of living has increased so much over the past 20 years that the average Chinese person today is six times richer in real terms than before the reforms began. And large companies investing in the developing world bring other benefits, though. In addition to paying higher wages, their facilities are generally safer and healthier for their employees than those of local competitors. Their processes are also generally cleaner, so contributing to environmental improvement.

Yet another Western export threatens to derail this process. Labor unions are beginning to globalize, threatening to spread overseas the onerous rules and inefficiencies for which they're renowned in the West. They target not local businesses, but businesses investing from abroad, with scant regard for the likely effects of their policies on work. They make outrageous demands from businesses in the name of fairness, but their real motivation is getting more dues from members forced to join them.

A prime example is currently taking place in Turkey. Paxar, a U.S.-based textile company, owns a facility in Saray where it pays some of the highest wages to textile employees in the country -- in the top 2 percent -- employs over 500 people, and offers excellent health and safety conditions. It is a great example of globalization's benefits for developing economies.

Yet rather than holding the company up as an example to for local businesses to emulate, a Turkish union, TEKSIF, has allied itself with international unions and non-governmental organizations (NGOs) in a campaign against the company.

TEKSIF is demanding wage increases that would raise Paxar's costs by 38 percent -- even though the company already pays some of the country's highest wages in the industry. The Turkish textile industry is highly vulnerable to foreign competition; it lost 200,000 jobs last year. Such a wage increase would almost certainly force Paxar to lay off workers. The union seems unconcerned by this.

Understandably, support for the union among employees is paltry. When TEKSIF called a strike on May 11, only 8 workers supported it. For three weeks (until the courts suspended the strike), Paxar regularly faced picket lines, but these were bolstered by union officials and occasionally unionized workers brought in from other sites to boost numbers for the media. In order to beef up its campaign, TEKSIF has called in support from NGOs like the Clean Clothes Campaign, Social Accountability International, and the Workers' Rights Consortium, as well as the International Textile, Garment and Leather Workers' Association, which form part of the Joint Initiative on Corporate Accountability and Workers Rights (JoIn).

JoIn has talked about holding days of action in European cities to draw attention to the alleged plight of the Turkish workers -- never mind those workers' lack of support for the union. Nor do JoIn and its allies seem bothered by allegations of intimidation and threats of violence against workers from union officials. To the NGOs, this is all part of an ongoing global campaign against capitalism, based on a caricature of western companies making huge profits from sweatshop labor, an image intended to manufacture moral outrage.

The Clean Clothes Campaign, for example, has provided a facility on its web site to allow outraged members of the public to bombard Paxar's clients with letters expressing disgust at the company's failure to accede to the union's demands. The Campaign is known for greatly expanding the definition of a "sweatshop" from a facility offering inadequate local wages and dangerous conditions to include those otherwise safe and generous, but which prohibit union activity.

But seeking to impose closed shop conditions on companies goes well beyond misguided outrage into creating actual harm. Nearly 2.3 million of an estimated 3 million Turkish textile workers labor in the "unregistered sector" under much poorer working conditions. Forcing Paxar to lay off employees or, worse, withdraw from the country altogether does nothing to help these workers. JoIn regards Turkey as a "prototype" project. If it succeeds in Turkey, it will expand its efforts elsewhere, hurting thousands, and possibly millions, as a result.

It has been nearly 200 years since David Ricardo explained the phenomenon of comparative advantage amongst trading nations. When developing countries open their economies, they enlist Western companies in using this principle to the advantage of their own consumers and workers. The current global union campaign seeks to eliminate this advantage, which will hurt those it alleges to help. Meanwhile, the workers in the genuine sweatshops, who see Western companies as shining lights of ethical business practices, will see those lights snuffed out and their hopes buried.

Iain Murray is a Senior Fellow in International Policy at the Competitive Enterprise Institute.


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