China Expereincing Renewed Pressure

The Chinese economy has for a long time sourced its revenues from the textile industry. For decades China has been one of the biggest producers of textile products around the world. The factors that have supported Chinas ability to produce high quality and cheaper apparels from their textile industries include; high availability of cheap labor, availability of resources and the low government rates on set p of a manufacturing plant. The trade volumes of Chinas textile industry has grown by a margin of 27.11 times over a period of 25 years. In the year 2005, textile products took up to 15.4% of all Chinese exports, on a global ranking China takes up 24.4% of the worlds textile products.

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Inspite of the high volumes of textile products from the Peoples Republic of China, the country has been faced with major issues that have been recurring over time. The need for an increase in the minimum wage for textile industrial workers has been on the rise. Other factors such as excessive reliance on natural resources, low-level technology, and the highly concentrated markets have majorly contributed to a flat line in the exports of textile products. The minimum wage of employees has been a matter of concern to the main government and the international labor unions. The consequences of the existence of large garment industries and the existence of cheap labor requirements lead to the following outcomes; low wages on employees, irregularly long working hours and an increased number of industrial workers. In numerous textile industries across China, women constitutes a bigger percentage of workers in textile manufacturing plants.

Contributing Factors for increase of Minimum Wage

The Labor Union Demands

Increased complaints from labor unions across China has led to multiple strikes by workers in many of the manufacturing plants. The textile industry which is one of the biggest employers of low-skilled labor has been charged with the low payment to its workers and the level of sanitary conditions where the employees reside. Demands for an increase in wage rate from the current one of $1.24 per hour (Jia, 2014). This wage rate is relatively small when compared to the wage rate of employees in other textile firms from developed nations. Currently, the wage rate per employees per month in China is at $321 while at the US the wage rate is at $1,200 per month. This is an indicator for the major factors that contribute to the demands for higher wages in the textile industry. Many employees feel like they are extorted and end up working long hours for a minimum wage.

Need to Reduce the Breach between the Rich and the Poor

There is a need to reduce the gap between the rich and the poor. The textile industry is one of the biggest employers in the Republic of China, in any case, 70% of these industrial workers are women. There has been a great need to balance the socio-economic status of all citizens in the country. Thus being the best mechanisms of improving the socio-economic status of the whole population (Jia, 2014).

External Pressure for the International Labor Union

The international labor union has urged the Chinese government to increase the wage rate of employees in the textile industry. The reason for this is the lack of correlation of the payment of industrial workers in textile firms in different countries in comparison with China. The International labor union has called for an increase in the payments of employees working in the large textile manufacturing industries across the Shenzhen Export Zones.

The need for an increase in the wages of textile workers comes from a number of factors; pressure from the International labor union under the discretion of the World Bank. Other forms of pressure are internally within the Chinese Republic, for instance; the government is earning large revenues off its citizens. The profits accrued does not trickle down to the locals. Local Chinese need to be emancipated and be alerted on demanding for their rights lest they are extorted off their salaries for life.

Consequences of Higher Wages

Taking above the case of China, when the Chinese government takes into the pleas of the labor unions to increase the wages of employees across Chinas textile industry. Consequently, employees other employees across other nations like India, Thailand, and Pakistan who are also major players in the textile industry, would demand for increased wages. This means that the average cost of labor would increase and consequently the prices of textile product exports across the world would increase. This significantly would lead to a lower consumption of textile products due to a high price markup (Gonzalez & Miles, 2001).

Another consequence is that the profit margins earned by the Chinese government would be reduced hence, in the long run, reducing the production requirements for export. The dynamics of the international market would take a low dip in that the cost of Chinese textile products would have increased which is an indicator of a developing decrease in the number of textile products taken in by the international market.

References

GonzAlez, X. & Miles, D. (2001). Wage inequality in a developing country: decrease in minimum wage or increase in education returns. Empirical Economics, 26(1), 135-148. http://dx.doi.org/10.1007/s001810000056

Jia, P. (2014). Employment and Working Hour Effects of Minimum Wage Increase: Evidence from China. China & World Economy, 22(2), 61-80. http://dx.doi.org/10.1111/j.1749-124x.2014.12062.x