From Minimum Wages to Living Wages? – A case study of the export-oriented garment industry in Bangladesh

This text will take you on a journey to the Far East – Bangladesh to be more specific. In spring 2008 I went there to find some answers to the question of wages. I wanted to know if a change in focus from minimum wages to living wages could be achievable. The question will unfortunately remain unsolved at the end of the essay. To predict the future would be impossible. Instead three possible scenarios are presented. The likelihood of each and every scenario is later discussed. The conclusions at the end of the essay are based on an analysis of the theories presented and the interviews proceeded. The starting point for the research is the relocation strategies of corporations, which are outlined in the background chapter. This chapter also contains information about the garment industry in Bangladesh. The main research question is if there can be a shift from minimum wages to living wages in Bangladesh. In order to bring clarity to the question, three sub questions have been used. The first question looks into how wages are determined in the export-oriented garment industry in Bangladesh. The second question concerns the corporations’ responsibility for their workers. The third, and last, question addresses how cultural dimensions influence the corporations and how wages are set. To find the answers to the sub questions I divided the research into four main topics: “Wages – Minimum and Living Wages”, “Morality, Ethics and Business Ethics”, “Employees as Stakeholders of the Companies” and “The Cultural Dimension”. The topics are dealt with in separate chapters. The chapters contain a theoretical overview, as well as the information gathered from the interviews. The chapters are followed by a further analysis of the empirical findings. The chapter on wages contains an in-depth explanation of the difference between minimum wages and living wages. In the conducted study all workers were paid the minimum wage in coherence with the law. This wage was however much lower than what the definition of a living wage declares. Therefore many workers did over-time in order to reach a higher standard of living. Business ethics and the stakeholder theory will be used to discuss the opportunities and limitations of the responsibility of the corporations for their workers. The scholar Hofstede’s system of measuring national cultural values will be used to look into specific cultural aspects. According to his system, Bangladesh has a high ranking in power distance, a low ranking in individualism and a middle ranking in masculinity. These three dimensions will be discussed; both correlations and exceptions found in this study will be presented. The three possible scenarios for a change are presented in the conclusions. Firstly, the minimum wages could be changed into living wages, if the government decides on raising the wages of the garment workers…


1 Research Overview
1.1 Background
1.1.1 Relocation strategies
1.1.2 The garment industry in Bangladesh
1.2 The main research question to be addressed
1.3 Research objective
1.4 Delimitations
1.5 Definition of Concepts
1.6 Outline of the essay
2 Method
2.1 Research approach
2.2 Selection of respondents
2.2.1 The factories
2.2.2 The interviewees
2.3 Collecting data
2.3.1 Choice of interview method
2.3.2 Interpreter
2.3.3 Quantitative vs. qualitative method
2.3.4 Handling of data
3 Chapter I: Wages – Minimum and Living Wages
3.1 Wages
3.2 Minimum wages
3.3 Living wages
3.4 Wages in the garment industry
3.4.1 Minimum wages in Bangladesh
3.4.2 Wage systems in factories visited
3.4.3 Wages amongst the respondents
3.5 Summary
ii4 Chapter II: Morality, Ethics and Business Ethics
4.1 Theories on morality, ethics and business ethics
4.2 Business ethics in the export-oriented garment industry
4.3 Summary
5 Chapter III: Employees as Stakeholders
5.1 The stakeholder theory
5.2 The garment workers as stakeholders
5.3 Summary
6 Chapter IV: The Cultural Dimension
6.1 Power distance
6.2 Power distance in Bangladesh
6.3 Individualism
6.4 Individualism in Bangladesh
6.5 Masculinity
6.6 Masculinity in Bangladesh
6.7 Bangladesh compared to other countries
6. 8 Summary
7 Reflections
7.1 How are wages determined in the export-oriented garment industry in Bangladesh?
7.2 Which responsibilities does a company have for its workers?
7.2.1 Summary
7.3 How does the cultural context influence the wages?
7.3.1 Power Distance
7.3.2 Individualism vs. Collectivism
7.3.3 Masculinity vs. Femininity
7.3.4 Summary
8 From Minimum Wages to Living Wages?
9 Bibliography

Author: Wulff, Gabriella

Source: University of Boras

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