Slave Labor’s Last Gasp

(Editor’s note: From the perspective of Western nations, workers in China and India toil under miserable conditions for slave wages. Things are not quite as bad as that, says Shanghai correspondent and frequent Rick’s Picks contributor Mario Cavolo, and conditions can only continue to improve.  In the essay below, drawing on his own experience as a cruise-ship worker, he explains why. RA)

It is no secret that Europe and America were built on slave labor. As the appalling details of Foxconn, Apple Computer’s (NASDAQ: AAPL) supplier, have recently made clear, China and India are being built on slave labor’s modern equivalent. The details of the story vary,  but in the end, human beings work 12-16 hour days, six to seven days per week. They are given a place to sleep at night, a place to occasionally wash, three basic meals per day and no wage or a very low wage, such as today’s equivalent of $6 per day. If a worker gets sick, his or her medical expenses are typically paid for.  Before we continue, think about that wage for a moment: $6 per day.

Chinese factory photo

Let’s switch gears for a moment, considering the case of a well-established, international industry where people also work like slaves for 12 hours per day, seven days per week. What industry am I referring to? The cruise-ship vacation industry. However, there is an enormous difference between the intense labor demands of cruise-ship workers and factory workers in China or India – namely, the monthly wage. A typical kitchen crew-member is hired from the Philippines or Central America. With more and more ships sailing Asian waters, more and more Chinese are filling these jobs. As part of a cruise ship’s hotel operation, they will work, on a contractual basis, 12 to 16 hours per day, seven days per week for six months, with a six-week rest between contracts and round-trip flight home paid. They are provided a decent shared-cabin bunk, plenty of good food and full medical coverage. When they are not working, they are sleeping because they are exhausted. During my contract providing entertainment services last year with Royal Caribbean Cruise line, I realized that while ship’s crew were permitted to disembark for several hours to visit the ports, they were simply too tired and needed to sleep instead; they rarely got off the ship.

$180 Per Month

However, the typical ship’s kitchen crew or housekeeping crew earned around USD $1200 per month or more, paid in cash. For comparison, Chinese and Indian factory workers – i.e., the workers involved in the FoxConn factory controversy — were being paid about five times less than that, or about USD $180 per month. With a recent sharp increase in worker suicides, FoxConn’s CEO, who has become a billionaire on the backs of his slaving workers, increased wages by 30%. It needs to be mentioned that FoxConn’s workers are not allowed to speak to one another during their standing-only, 12-hour daily shifts.

Let me ask you this: Does a 30% wage increase remedy the problem?  Pretend it is your job: standing for 12 hours, performing a monotonous assembly-line task, during which time you are not allowed to speak to fellow workers. Sounds like the kind of misery that might make some of us think about jumping off a tenth-story ledge. At first blush it is the working conditions that seem intolerable and not the low wage. Looking more closely at the low wage of USD $180 per month, considering living costs in China, it is the equivalent of around USD $720 back in the United States. That is my personal estimate, based on my having lived in China for the last 11 years. And let me mention that last week, I had a terrible headache for which I went to the local hospital and had a CT scan for USD $20. So please believe me when I tell you that the daily cost of living in China reflects typical expenses that are three to ten times lower than in North America or continental Europe. A 500ml bottle of water at the local mart is $1 or more in the West. Here its only $0.20.

Socking It Away

It is more than obvious to me that the worker’s misery lies mainly in their daily working conditions. How does a $50 monthly raise help my daily misery? On a cruise ship, the kitchen crew is also working 12-15 hours per day, seven days per week. If they are fortunate, they are moving around from task to task, breaking up the boredom and monotonous routine, rather than say, peeling carrots for 12 hours. And at the end of the month, the ship’s crew are paid relatively generously in cash and benefits. Think about how many typical middle-class American employees can put USD $1000 per month directly in the bank each month after expenses. Very few. And so, even though the daily life of a cruise ship crew is long and tough, and even though their quality of life leaves much to be desired, their progress in real wage earnings — in providing for their families back home, in saving for their future — is clearly meaningful and significant. The savings rate of a cruise ship’s crew is typically 70-80%!

So why is China rising? Two key reasons. With the Western economies facing distress and potential disaster in one form or another due to the growing sovereign-debt problem, we easily see that China’s private and public debt is far less leveraged. Even if the economy dips, even if the property bubble deflates by 20%-30%, the reaction will be far more muted because 50% to 60% of homeowners in China don’t even have mortgages. I am not referring to the 20% who are speculators, but rather to working-class Chinese who own the vast majority of homes in China. Secondly, corporate and state profits are plentiful, with hundreds of millions of lower- and middle-class employees taking home slave wages. The country’s infrastructure is being magnificently and broadly built out. Combine these two factors and you begin to see the current window in which China and, similarly, India, are able to make rapid economic progress and increase their economic power.

Today, across the globe, the fury and frustration is growing, is becoming more and more visible on a daily basis. As this applies to the labor situation in China, the tide is turning. As occurred long ago in the Western economies, over the coming years, the economic evolution of societies that are modernizing will be inflationary, with steadily rising wages and better working conditions contributing to a rising standard of living. As in Europe and America, slave labor in China and India will soon enough come to an end.

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  • Benjamin June 18, 2010, 1:15 am

    “As for banana and apple peels, those go in my compost and then back into my garden.”

    Oh, of course… those are organic. We all know paper and styro don’t break down. At least not “fast enough”.

    But if people did go more “green” and “sustainable”, I wonder how unsustainably filthy and smelly those compost heaps would become. It’s like the meat vs vegetarian argument. No animals would be killed? Bull. More farming for more veggies would destroy more habit and kill more critters in the harvest. You might say that you look so good because I allow you to. And it’s not that I have anything against people gardening and choosing whatever they do. When they get preachy and lament “evils”, though, I remind them they’re being foolish.

    That said, things are always in a state of flux, and at times things will be messier and at times cleaner. And yes, China (or any country) IS entitled, nay, _obligated_ to make a mess if it means the difference between a better and cleaner future or a dreadful, dirtier one in which poverty creates even more environmental problems than would otherwise exist (see my post to Mario above… if the worst did happen, we can be reasonably certain medical costs would rise because generally speaking, poverty causes more sickness. Same is true for poverty and pollution).

    And today, the North Americas has never BEEN cleaner. But I read an article the other day about Toronto’s so-called “air pollution” problem. Trouble with that is, I’ve been to Toronto several times. Clean everything! It’s almost surreal how clean the city is! And when I commented on that, an old-timer was kind enough to verify it for me. Toronto used to be much worse off, but then you still have people yammering on about it, as if ANY amount of dirt is an offense of the worst sort.

    And people want to know why China is so dirty. Well, aside from making progress, mentalities in the West have become such that we aren’t willing to tolerate anything less than unattainable perfection (now there’s a term I would not argue… unattainable living, not sustainable living. At least we can use honest terminology). So we make their dirt-for-progress worse. So the same preachers of the unattainable then complain about that worse pollution, even though it’s their damn fault for complaining about it so much in the first place!

    China is not the problem. Nor is materialism. WE are the problem. WE need to grow up and accept the facts of life. Case in point, as if China was not enough, is the BP incident. Forbid drilling in the interior, and they’ll go where things are rubber-stamped. It’s just like poaching in Africa was… tear down farming on the spurious grounds of infinite pesticide pollution (along with real abuses at the hands of colonialism), and people hunt to endanger beautiful creatures, and themselves suffer the whole “merry” way.

  • Tom Paine June 17, 2010, 5:09 pm

    “As occurred long ago in the Western economies, over the coming years, the economic evolution of societies that are modernizing will be inflationary, with steadily rising wages and better working conditions contributing to a rising standard of living. As in Europe and America, slave labor in China and India will soon enough come to an end.”

    I see one glaring problem with this scenario. Stated as question, it is, “Can enough resources be produced to accomodate a rising standard of living in these countries without utterly destroying the earth’s environment”?

    I’m not absolutley sure the answer is “No”, but I wonder if we have the wisdom to be able to give an affirmative answer and not instead end up with several “Deep Water Horizon” sequels or worse yet, WWIII.

    Also, I think, in order to avoid such cataclysmic outcomes what we will need to see is flattening out of living standards with developing country standards rising to meet falling western living standards somewhere well below current western standards. That might not be bad at all if we cut the tremendous amount of waste out of the western standards.

    I’m afraid though that too many Americans think it is some divinely ordained right for us to be driving grossly oversized and overpowered vehicles and throwing out tons of paper and plastic waste from our gross fast food diets.

    • Benjamin June 17, 2010, 9:50 pm

      And some people think it their ordained right to throw their constant and endless barage of garbage at the afore mentioned “pigs”.

      But just curious… what is so “gross” about fast food that can’t be said of homecooked meals? Have you ever prepared a live chicken for dinner?

      I haven’t. Because I know how gross it is.

      And just what _is_ fast food when the laws of physics say that all food in the making is pretty much moving at the same rate from craddle to grave? And what is wasterful fast food when I can go outside and pick an apple off the tree, skin it (I don’t like the skin), eat it, and throw away the skin and core?

      Doesn’t get any faster and wasteful than that, and don’t even get me started about bananas!

      But you never hear anyone complain about that!

    • Tom Paine June 17, 2010, 11:14 pm

      Well it is my ordained right to “throw my garbage”. Nobody has to read it if they don’t want, or they can comment as you have.

      As for banana and apple peels, those go in my compost and then back into my garden. I’m not sure how much of the plastic and paper waste thrown into fast food trash bins gets recycled, but I pretty much guarantee you that if everybody in the world was doing that, it would be totally unsustainable.

  • Photoradarscam June 17, 2010, 4:18 pm

    In the cruise ship comparison, the benefit of free housing was overlooked. Not having to pay any kind of rent or food helps BIG time. A cruise ship worker has very few expenses and can save almost all of their pay. And you said paid in cash? Wonder how much of that income tax actually gets paid.

    • mario cavolo June 17, 2010, 5:27 pm

      Hi PRS….yes the housing benefit was pointed out too briefly in the article as “…they are provided a decent shared-cabin bunk…”…Cheers, Mario

  • Celty June 17, 2010, 3:44 pm

    Thanks for that very positive insight. The monotonuos pessismism here was starting to set me on a suicidal path much like those foxconn workers.

  • warren June 17, 2010, 3:30 pm

    Soon enough for whom?

    • mario cavolo June 17, 2010, 4:52 pm

      yea Warren, personally I think not soon enough for the workers, life is, as I’ve said at many speeches and in many writings, a pretty shitty, struggling and miserable experience for well over 70% of the world’s population today and for the past few thousand years… I could put up with the wage/cost of living side of the equation much more easily than the monotonous working conditions…Cheers, Mario

  • Benjamin June 17, 2010, 8:43 am

    Mario Cavolo said: “…50% to 60% of homeowners in China don’t even have mortgages. I am not referring to the 20% who are speculators…”

    I don’t know how many in China are homeowners, but let’s assume 50% of the 1.5 billion own a home (let’s drop the 1.3 billion, because 1.3 b is what has been said for at least two decades. Surely it’s up by now).

    60% + 20% + 20% = 100%

    450 million have no morgage ; 150 million are speculators; as many speculators have a mortgage but are not speculators. So we’re talking 300 million people that could default, which is the population of the United States (or abouts). On top of that, there are still some 750 million that have no home and/or factory job (I presume). Over a billion people crushed should the worst happen, with only 450 million people able to bear any of their burden on 180/month.

    But there is lower cost of living. You said that is 3-10 times less, but I think you’ve been away from the ‘states too long, Mr Cavolo, because a CT here is easily ~100 times what it is in China. For someone making 1,200 month here in the ‘states…

    China: 180 / 20 = 9

    U.S.: 2,000 / 1,200 =~ 2

    So about 10% vs 50%. Not bad at all! However, let’s say the worst happens, and 300 million people go broke…

    1,000 million in the dumpster / 450 million still working, with no debt =~ 2.22, or 45% loss of income.
    But there is the 30% raise, so it’d really be…

    (180 x 1.3) – ( 180 x 1.3 / 2.22) =~ $129

    $20/ $129 =~ 15.5%

    But if some 300 million were to slide back into poverty, medical costs could be expected to rise. It happens. There’s no way to predict how much, but since 300M is 20% of 1,500M, let’s assume a 20% price rise in medical care. 15.5% becomes about 18.6% vs 50% here, which is still good but we’re only talking about one single expense, and not the entire costs of living. Of course, the same thing could be said of the U.S. and it undoubtedly will be said. That isn’ the point, though.

    What the point is is that a significat burden can result on Chinese workers. And what we still don’t know of yet is how the raises will affect the employment rate, nor how those who benefit would take to supporting a growing welfare class with their bonuses (and how a growing welfare class would to take it as well).

    That said, I would like to put forward my thoughts on European austerity and what this might mean for China that would change my above outlook. If you recall, earlier last week I responded to one of your posts …

    http://www.rickackerman.com/2010/06/hints-of-a-bottom-in-u-s-stocks-and-euro/#comment-6815

    …A falling euro would, imv, mean trade war, one which, despite Germany’s exceptional amount of production and exporting, is not one I think EU officialdom will be up for. And with all this talk of austerity, and the euro bouncing back up, I suspect Europe will surrendur jobs to China on a stronger currency, and let greater importing prevail over any serious change of direction in their way of life. This would result in one of three things, or all three perhaps in some occurring order…

    a) Private sector employment stagnates, which is to say govt emply stagnates; imports remain consumer-oriented under high unemployment.
    b) Increasingly over time, both begin to drop; importing of consumer goods is replaced by importing of resources and other capital goods.
    c) With government the only entity left to afford anything, a shift from govt to private employment will take place, and Europe will be centrally planned economy before it is all over.

    In my estimation, this would spare China the slide of 300 million people into bankruptcy (or at least a good deal of it), and possibly allow for some of the 750 million to begin raising their standard of living under gainful employ. After all, Europe has some 700 million people. That’s a lot of jobs they can lose in the short to mid or even long term.

    Once done, the stronger euro would buy back what Europe needs in order to shift from a govt. services/entitlement economy to one of increasing production. Still, centrally planned economies simply never work. At some point, govts would have to give up the ghost, and let a genuinely free market reign. In fact, I suspect this might begin to take place, as a sort of underground economy that uses gold, silver, and barter. At any rate, China would then focus more on true growing economic independence, as would Europe.

    As for the U.S. I think we’ll fall somewhere between whatever happens in China and Europe. Currency would remain weaker vs Euro, but stronger to the Chinese currency. Pretty much as it is now, but with growing debt and unemployment, our government will probably try to take over some things, and find themselves having to increasingly do so… much to the ire of the citizens. Long term, the outcome is the same as for China and Europe, imv.

    • mario cavolo June 17, 2010, 4:48 pm

      Hi Benjamin, your digging much deeper in to extrapolate the bigger picture is greatly appreciated, however, far too statistical to extrapolate a realistic picture…statistics don’t tell us much of life’s on the ground reality and if one statistic is “off” then all the others go to hell…that’s why I’m scratching my head as I read through your approach starting with “if” 50% of China are homeowners….man, you absolutely cannot make a generalization like that and then start building a theory and approach from there. For example, there are somewhere around 700,000,000 million “farmers”…those are farmer households…well yes they “own” their homes but they are worth practically nothing to anyone in the marketplace…they survive on the land, they don’t have electricity or running water, its sort of like “camping” forever on the land in a concrete shell and no RV fees….but this description is NOT poverty in the western homeless sense, they eat great, they huddle up to the coal fire with a huge pot of boiling soup that sits there all day long that has a pork bone and vegetables simmering in it all day and that’s what they eat with rice and they also have thick clothing and blankets in winter, they certainly don’t have the luxury of electricity and neither, by the way, do China university student dormitories!… do we call these farmers “homeowners” in the marketplace statistics?…no we don’t, let’s limit the observations to the urbanites and we can paint a more accurate picture… 3-10x lower cost of living…medical in the U.S. is a particular single expense that is much, much higher than here, yes of course but overall, I’ll even knock it down tighter for you to 3-5 times cheaper than then west for a typical middle class family monthly budget… I enjoy reading many of your posts but you lost me diving and extrapolating so deep, far more than my more jazz pianist type intellect can handle, call that an admission and compliment if you like, love your posts and much appreciated!

      Cheers, Mario

    • Benjamin June 17, 2010, 9:31 pm

      Thanks for taking the time to read through it, Mr Cavolo. I’ll see what I can do with the points you made. Long term, I do think things will be okay. Great, even, though ride will be a bumpy one.

      btw, I’ve increased respect for you, knowing some things about your background that you shared with us today. Long story, but I was once a truck driver, and completely understand about not leaving the space you work, being too tired to do anything else but sleep, and all on what was often rather modest pay.

  • Benjamin June 17, 2010, 4:47 am

    http://www.spiked-online.com/index.php/site/article/8954/

    Starts off a bit infuriating, but by the end it all falls into place (as is so typical of Brendan O’Neill’s style).

    Only point I can raise against any of it is that I seriously doubt that Chinese workers will get overwhelming support from Americans, whose jobs they view as having been taken by China.

    Which is to say… Given the economic picture, along with the ongoing success of Chinese slave protests, buying an iWhatever is not exactly something an increasing number of people are going to be able to afford. Would that we could support the Chinese workers by going out and shopping (now where have I heard that before?), but money’s tight and times is hard.

    And since F Beard is here today…

    http://www.goldsheetlinks.com/production.htm

    At a time, Zimbabwe (formerly Rhodesia) wasn’t doing so badly. Then, the world went off any resemblence to a barbarian standard, after which, apparently, gold production from South Africa has dropped off sharply ever since. And life in Zimbabwe, needless to say, is quite changed since those not-so-bad days. At the same time, too, not many people are buying gold. More people than not simply can’t justify such an expense.

    (back to the subject at hand)

    Maybe the same won’t be said of iPhones and China as could quite possibly be said of Zimbabwe and gold. But there is no denying that the similarities exist. I hope it doesn’t turn out the same, but as Benjamin Franklin said… “He that lives upon hopes will die fasting.”

    And before anyone says I’m being a negative with all my negativity, I hasten to point out that there has to be something positive for me to negate first. I’m a pessimist. I see the negative and report it, which is a big difference from being a destroyer of good things.

    • F. Beard June 17, 2010, 4:49 pm

      “At a time, Zimbabwe (formerly Rhodesia) wasn’t doing so badly. Then, the world went off any resemblence to a barbarian standard, after which, apparently, gold production from South Africa has dropped off sharply ever since. And life in Zimbabwe, needless to say, is quite changed since those not-so-bad days.” Benjamin

      Hey Ben. Interesting remark about gold production. Let’s abandon that barbarous relic and let the poor Africans do something productive with their time, I say.

      Gold vs paper or electronic bits is not the correct question, IMO. The correct question is how and by whom shall money be created. What we need is liberty not gold.

    • Benjamin June 17, 2010, 9:38 pm

      lol… I figured a little razzing never hurts. Just my style, sometimes, especially when I can make a point 🙂

      Anyway, sub-Saharan Africa is one of those places that has caught my interest for a very long time. The stories I could tell… of how they’ve been exploited for ends that, imv, are pure evil. Yet there is so much unexplored potential, and that that simply isn’t mentioned very much at all. I hope I live long enough to see positive changes take place there!

  • Daman Prakash June 17, 2010, 3:02 am

    The author captures conditions and pay of labor in present day China and India, adequately. Admittedly they remain low but so are monthly expenses on food, medical expenses, clothing, travel, entertainment and housing. The savings rate of these labor is high. Sociologists differ on reasons for suicide and most may not be due to low wages.

    Conditions are improving and many have earned their union rights and amenities to considerable extent in last few decades by uniting and fighting for their rights.

    That said it is erroneous to ascribe economic prosperity of UK and many European powers to slavery alone. These powers controlled most of Nations including US. At least graphic account of how British rulers plundered India’s wealth is well researched and known to me. Mostly agro economy on those days, land was grabbed from owners by levy of super taxes which cultivators was unable to pay. These lands were distributed to few highest bidders and exploiters who knew how to keep ” Collectors” appointed by Government happy. These wealthy called zamindar would exploit landless and slavery system was built and many were transported to plantation jobs overseas. Further, wealth of India possessed by 1000 odd Kings was exploited by keeping them on tenterhooks and forcing them to pay for right to rule their kingdom by paying hefty fee year after year.
    Indian natural resources and raw material was exported to Industries in UK on almost regular basis for no cost. The Governor General were corrupt and carried many ship loads of plundered personal wealth on return to UK.

    Exploits went on till Indians became pauper and ungovernable. Reigns were handed over to Indians in 1947 after Freedom struggle agitations became costly compared to plunderable wealth.

    It has taken six decades to rebuild this country from shambles but the corrupt procedures left behind by British are still surviving and continue to block growth on fast track.

    • Benjamin June 17, 2010, 6:25 am

      “That said it is erroneous to ascribe economic prosperity of UK and many European powers to slavery alone.”

      I’m no historian on Indian/British affairs, but it seems to me everything you described was feudalism on steroids. Or slavery, ie.

      “…but the corrupt procedures left behind by British are still surviving and continue to block growth on fast track.”

      You refer to the caste system, correct?

    • mario cavolo June 17, 2010, 4:00 pm

      Hi Daman, thanks very much for adding your thoughts, and actually, from your name I assume you are from India and I’m now thinking that perhaps my thoughts and comments were for “China” and I didn’t really need to bring India into it…I mean to say, your further comments showing your much deeper understanding of the situation and history in India reveal it there to be much, much different than China…Cheers and thanks greatly, Mario

  • F. Beard June 17, 2010, 2:29 am

    “Today, across the globe, the fury and frustration is growing, is becoming more and more visible on a daily basis. As this applies to the labor situation in China, the tide is turning. As occurred long ago in the Western economies, over the coming years, the economic evolution of societies that are modernizing will be inflationary, with steadily rising wages and better working conditions contributing to a rising standard of living. ”

    A rising standard of living to be recurrently shattered by the boom-bust cycle? Yes, that’s all we need, a well-armed, high tech China with an unstable banking and money system. The fractional reserve bankers will kill us yet. Can no one think of a better way to implement money than fractional reserves?

  • Martin Snell June 17, 2010, 1:41 am

    A couple of thoughts:

    1. Standing outside in the heat and the rain planting rice seedlings is also a pretty rough job, especially if you don’t know if the crop will even come in. Many of the young people in the factories are leaving a pretty dreary (for a young person in today’s world) existence back on the “farm”. I have been to some pretty backwater places in China and I can see why many want to leave, and may even consider life in a factory a step up (3 meals, a bed, running water, etc). Not saying that it is a nice existence, just that the alternative is worse (which is the key consideration).

    2. Most of these jobs are not highly skilled. Over a certain pay grade you automate.

    3. The suicide rate in China is about 13 per 100,000 per year (the US is 17). Considering Foxxcon is said to employ 500,000 workers, that would be an expected 65 suicides per year. I don’t think Foxxcon is seeing that many, so maybe they are doing “better” than the rest of China.

    4. Living conditions and wages are often more important on a relative basis (to one’s peers) than on an absolute basis. Think what a college undergrad can put up with for living conditions. After we got married, and living in Asia, we lived in a small 4 bedroom apartment with 2 other couples (one of whom had a child that lived with his parents) and a single person. This was normal so it did not seem like a burden. (We saved a lot of money that way too.)

    5. As for living conditions, most Europeans find it unfathomable how Americans can function without a 6 week summer holiday and 1 year of paid maternity leave. They would argue that it is the US that has “slave labor”.

    • mario cavolo June 17, 2010, 3:58 pm

      Hi Martin, thanks for adding those salient points, you having lived daily in an “alternate” kind of lifestyle sharing with others yet learning to make it work and see the benefits has given you the flavor to understand my comments on China…much appreciated and thanks, Mario

  • SDavid June 17, 2010, 1:09 am

    Great commentary, Mario.

    Slavery dates back a long time.

    Come to think of it, now we’re pretty much all slaves to the banks.

    • Steve June 17, 2010, 6:17 pm

      Get out the mortgage to the home and read FEE SIMPLE ABSOLUTE.

      Absolute – pretty easy !

      Simple – the lowest form of inheritable estate

      Fee – fife, feod, feud, feudal tenant, tenant in fee, peon, serf, slave

      Source – Blacks Law Dictionary Fourth Revised Edition 1968