A race to the bottom as inequality widens

At a petrol station selling fuel under the brand name of a major multinational corporation, a weary-looking Nepalese pump attendant is on duty.

Jan 20, 2017

By Anil Netto
At a petrol station selling fuel under the brand name of a major multinational corporation, a weary-looking Nepalese pump attendant is on duty.

It is about 11.00pm, and I ask the attendant when he will finish working.

“Midnight,” he replies.

What time did he start work?

“Six in the morning,” he says. When he sees the look of surprise on my face, he adds, “We get three hours break in the afternoon.”

So that makes it 15 hours of work. Does he get paid overtime?

“Not much,” he says. “Normally, I get about RM1,200 but with overtime, it comes up to around RM1,400.”

What about days off?

“We have to work everyday, but I take a day off on my own once a month.” When I look at him quizzically, he explains that he doesn’t actually work for the petrol station but for an agent.

Ah, a “contractor for labour”, who supplies businesses with outsourced workers. This allows ‘employers’ like the petrol station to relieve themselves of their obligations, legally or morally, towards their workers through the use of labour contractors.

These labour contractors are then regarded as the employers while the actual employers gets to wash their hands off their obligations to the workers. It is a deplorable state of affairs that allows workers to be easily exploited.

This is all part of the so-called “labour flexibility” — in the race to the bottom. Workers are squeezed and paid a pittance while large multinational corporations and their top directors and shareholders earn a fortune.

Different forms of “labour flexibility” take place in many sectors in our globalised world, where capital flows to countries where labour cost is the cheapest and most “flexible.” Labour-intensive work is outsourced to subcontractor firms or labour contractors.

Or raw materials are purchased at basement prices relative to their final retail prices. Take for instance, your branded T-shirts, jeans, handbags, smartphones, tablets and designer coffee. What percentage of the final retail price of these products goes to the worker toiling behind the scenes, the pump attendants, the waiters, the sales attendants, the farmers, the assembly line workers? In many cases, the amount is so minuscule, it is scandalous.

This partly explains why eight men own as much wealth as the poorer half of humanity, who make up 3.6bn people. The wealthiest person, Bill Gates, has a net wealth of US$75bn. These finding were revealed in an Oxfam report published on January 16.

Over two decades ago, I could see this trend happening even within a company. Clerical staff and production workers would receive annual increments of around RM50, while the annual increments of managers would run into several hundred ringgit. Why? Just the annual bonus alone for a top manager would be several times more than the annual pay of a production worker.

Today, this gap has widened, and CEOs earn many times more than the amounts earned by ordinary workers. Between 1988 and 2011, the incomes of the poorest 10 per cent increased by just US$65 per person, while the incomes of the richest 1 per cent grew by $11,800 per person — 182 times as much, said Oxfam.

“The richest are accumulating wealth at such an astonishing rate that the world could see its first trillionaire in just 25 years,” notes Oxfam.

In the quest to maximise returns to shareholders, large companies are avoiding taxes, squeezing wages and slashing the price of raw and intermediate materials and resorting to outsourced work. Wealth is squirelled away to off-shore banking and tax havens — away from the eyes of the public.

Corporate tax avoidance costs poor countries at least $100 billion every year, notes Oxfam.

“This is enough money to provide an education for the 124 million children who aren’t in school and fund healthcare interventions that could prevent the deaths of at least six million children every year.”

It is not true that most of the super wealthy got their riches through sheer dint of hard work. Oxfam’s analysis shows “over half the world’s billionaires either inherited their wealth or accumulated it through industries which are prone to corruption and cronyism.”

Moreover, “big business and the super-rich use their money and connections to ensure government policy works for them.”

Closer to home, the 1MDB scandal reveals how certain individuals have profited immensely from the web of transactions around the world.

Ordinary people may not be aware of the intricacies of neoliberal economics and global finance, trade and tax policies that favour big business and the super-wealthy. But they do sense that something is not quite right, once they feel the growing strain in their pockets and the wealth disparities around them. This seething resentment and disquiet, even anger, has manifested in unexpected election and referendum results around the world.

This massive concentration of wealth is immoral. During Jesus’ time on earth, the contrast between the super wealthy on the one hand, and the daily paid casual workers and the destitute on the other hand was just as pronounced. The birth of Jesus in the manger among lowly shepherds contrasted sharply with the ostentatious lifestyles of Caesar Augustus, Roman governors, proxy kings, the local religious elite and the wealthy landlords of his time.

New Testament scholars point out that Pilate entered Jerusalem on a military horse in a procession aimed as a show of Roman military force to deter any security problems during a major Jewish festival. But Jesus carefully chose to enter the city on a humble donkey or a colt, an animal closely identified with the toil of ordinary workers, many of them impoverished — and in doing so, emphasised the contrast.

If the parable of the Rich Man and Lazarus is extended to the global stage, then the unjust neoliberal economic system stands condemned for allowing the top one percent to wallow amidst opulence and staggering wealth with hardly a concern for much of the struggling 99 per cent.

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