China set to be world’s sweatshop, report warns

Andrew Taylor – The Financial Times

Copyright The Financial Times
Published: December 9 2005
The eradication of poverty in China has stalled since the country
the World Trade Organisation four years ago, with more than
three-quarters of rural households expected to suffer a cut in real
incomes between 2001 and 2007, a report warns on Friday.
The study by the International Confederation of Free Trade Unions
(ICFTU), timed to coincide with next week’s WTO ministerial conference
in Hong Kong, says that China is becoming the sweat shop of the world
large numbers of agricultural and former state enterprise workers chase
work in the cities, depressing wages.
A separate report by Oxfam warned earlier this week that imports of
cheap subsidised US cotton to China would result in a loss of $208m in
income and 720,000 jobs this year, hitting in particular Gansu and
Xinjiang, two of China’s poorest regions.
ICFTU says that membership of the WTO has boosted the incomes of those
already benefiting from China’s economic reforms: private enterprise
capitalist and white collar workers. The losers have been blue collar
workers, farmers and unskilled office workers, “whose income has
remained stagnant for the last 10 years”.
About 250m people still earn less than $1 a day, the official measure
poverty, and 700m, 47 per cent of the population, live on less than $2
day. As a result, “the people who provide everything from T-shirts to
DVD players to the world’s consumers often have 60-70 hour working
weeks, live in dormitories with eight to 16 people in each room, earn
less than the minimum wages that go as low as $44 per month, and have
unemployment as the only prospect if they should get injured in the
factories”, says the ICFTU.
It warns that China will need to create 300m new jobs over the next
decade to compensate for job losses in agriculture and at former
state-owned enterprises – which is “much higher than China’s current
creation capacity”.
Unemployment and inequality therefore would continue to rise “if the
Chinese government’s strategy for further growth, employment creation
and poverty eradication is based only on securing a larger share of
global trade”.
Since 1995, the number of companies under state control has halved,
shedding 59m jobs, while emerging private enterprises have created only
16m jobs, according to the International Labour Organisation.
Guy Ryder, ICFTU general-secretary, said: “Most people seem to have
too blinded by China’s economic results to see the dark side. Domestic
concerns, such as their own trade deficits and the jobs they might lose
from cheap Chinese imports, have overshadowed any doubts the
international community may have about exactly how Chinese companies
able to produce DVD players that sell for less than $50.”,ft_acl=,s01=1.html

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