International minimum wage.

[ViolentPanda]

Sparking massive inflation.

Wage inflation, price inflation or both (think about this, I'm giving you an opportunity not to make a fool of yourself )?

 

[CyberRose]

I was asking why it should vary from industry to industry, not why it should vary from country to country. I can see why it would make sense to vary it from country to country.

I didn't say it should vary from industry to industry, were you replying to someone else?

 

[teuchter]

I didn't say it should vary from industry to industry, were you replying to someone else?

I was initially replying to the OP:

The wage should be set on an indsutry by industry basis looking at heavy indsutries first (chemical, hard rock mining, petro-extraction processing, white goods manufacture, automotive, ship building etc).

Asking why it should be set industry by industry.

You replied to that question of mine talking about why it should vary country to country, as if that was what I had asked about.

 

[CyberRose]

Ok my apologies

 

[teuchter]

Anyway - no-one has yet explained why a minimum wage should be set industry by industry. It seems illogical to me.

 

[david dissadent]

Anyway - no-one has yet explained why a minimum wage should be set industry by industry. It seems illogical to me.

Some industries produce output that is largely traded internationally and others that is only traded locally. Take coal for example, most coal producers are largely exporters and they earn roughly the same amount per ton of the same quality (minus transport costs). So setting a minimum wage of something like $2 per hour would be easily recoverable on a ton of coal for many producers. But not all, some third world producers would not be able to compete, but the assumption is that many would and instead of having miners living in penury they would have sufficient spare income to begin to buy televisions, washing machines and the like as well as locally produced goods and services like food and going to the cinema. The dollars earned exporting coal would be recycled through the local economy rather than going to hedge fund managers in New York or Rolex manufacturers in Switzerland.

But not all goods are sold for dollars. In Columbia they mine coal and manufacture coca cola, or at least can it. Setting a minimum wage on this product would not be recoverable in dollars so would mean a significant rise in prices that would cost people with no jobs. And many people would no longer be able to afford to employ people so it would likely be bad for the economy as people lost jobs.

What’s more many people work in the informal sectors in third world countries. I specifically left out things like retail, agriculture and food processing.

I actually see this as a rare win\ win for both human rights and 'capitalism'. It solves two components of the current financial malaise, the loss of incomes in the developed world as work is offshored and the steady demographic problem of aging populations in consuming societies who are now rapidly increasing the amount they save vs the amount they borrow. The gap in incomes has been being made up by the huge surge in housing values that have been turned into liquid cash and used to buy stuff manufactured in the developing world.... the banks no longer have the cash and the houses no longer have the value so this liquidity is taken from the market. Additionally US 401ks are taking a god awful pounding and the baby boomers retirement is nearing and pension companies are being blitzed by falling stock market and asset values. So savings rates are shooting up.

see here for the forthcoming economic problems once this one has been 'sorted'.

The solution to that economic problem is to actually reward people something more like what their labour is actually worth to the world economy. It means that while manufacturing is being redistributed so too is wealth. Wealthier factory workers can be more assertive for their human rights and those of their compatriots.

 

[spring-peeper]

If everywhere had the same minimum wages, wouldn't it be hard for regions to compete for jobs? One of the things that encourages businesses to set up in one region over another is the labour costs. Let's look at call centers. Several large companies have been using the Indian call centers as a way to lower costs. For India, having the lower labour costs has resulted in many new jobs. A win/win for both the company and the Indian economy.

Someone had mentioned setting it up by industry. I understand that this scenerio is about the minimum wage, but how would this work with unionized companies that pay over minimum wage. Would these companies have to roll back the wages of their employees? If this is the case, I'd expect a lot of resistance.

Let's look at the auto industry in Canada and the US. Right now, the Big Three are paying labour costs of over $70 US an hour for assembly workers. Toyota and other manufacturers are paying $20-30 an hour. The governments are attempting to force the Big Three to bring their wages closer to the other manufacturers, but it's an ugly situation.

And...no one seems have addressed the issue of cost of living. I live in a climate that goes to -30 -> I need more money for housing and clothing.

 

[toblerone3]

I can't really see the trans-nats going for that. It'd prevent them playing their current game of playing nation-states off against each other in competition to host their manufacturing capacity.

Messing with the transnational companies' game of divide and rule would be one of the scheme's big attractions.

 

[david dissadent]

If everywhere had the same minimum wages, wouldn't it be hard for regions to compete for jobs? One of the things that encourages businesses to set up in one region over another is the labour costs. Let's look at call centers. Several large companies have been using the Indian call centers as a way to lower costs. For India, having the lower labour costs has resulted in many new jobs. A win/win for both the company and the Indian economy.

British people calling up Indian call centers and using there credit cards to buy goods and services is over. The credit is gone. A huge gaping hole now exists in the world economy. Those Indians answering the phones will shortly be out of a job. Lose\ lose. This was all predicted back in the 90s with the 'race to the bottom'. This idea would simply put a floor under how much regions and companies can compete by reducing wages. Education, infrastructure, mechanisation, efficiency, per hour productivity and many other areas can still allow companies and regions to remain competative without destroying the demand side of the entire global economy.

Someone had mentioned setting it up by industry. I understand that this scenerio is about the minimum wage, but how would this work with unionized companies that pay over minimum wage. Would these companies have to roll back the wages of their employees? If this is the case, I'd expect a lot of resistance.

Its a minimum wage not a maximum one. If companies are already competative with their current wage structure then they would not need to reduce it. Western workers are very often far more productive per hour due to very high levels of education allowing for high rates of mechanisation and automation in factories.

Let's look at the auto industry in Canada and the US. Right now, the Big Three are paying labour costs of over $70 US an hour for assembly workers. Toyota and other manufacturers are paying $20-30 an hour. The governments are attempting to force the Big Three to bring their wages closer to the other manufacturers, but it's an ugly situation.

And...no one seems have addressed the issue of cost of living. I live in a climate that goes to -30 -> I need more money for housing and clothing.

You have chosen an awful example. GM is bankrupt and insolvent. The US has quite high emissions standards for its cars, and GM has been producing inferior cars for decades. But some bright spark classified all light trucks as exempt from MPG standards as they were for 'industrial and agricultural use..... so SUVs which are (literally) light truck chassis were exempt from MPG standards and GM basically stopped manufacturing cars in the US and now manufactures SUVs and trucks, but with the evaporation of easy credit, the vast destruction of asset values, the ageing population having to save more and the surging volatility in the oil price.... GM has an unsellable product in the US. It also has been very very active in offshoring US jobs. The few workers it employs may be on $70 an hour but its Mexican subsidiaries are not. Detroit is a ghost town.... it makes 70s Liverpool and Glasgow look economical vibrant. All those offshored jobs no longer buy cars, so once the credit tide went out GM as one of those caught not wearing a swimming costume.


As for regional cost of living variations, well no one will spend more on a washing machine because it was assembled in Ontario rather than Shenzhen. Either workers in Ontario are more productive (more units per hour) or you have less discretionary spending than your Shenzhen counterpart. The idea is to ensure that a decent portion of the cost of the washing machine is returned to the laborers that assemble it.

It may also be a spur for more international labour unions, after all if steel workers in Poland and Brazil have a global minimum wage that they cannot be paid under, then they may be less inclined to see themselves as in nationalistic competition with each other and co-operate more on ensuring the system is rigorously enforced and working on health and safety conditions.



To be honest with you I have not yet seen any other proposals that address many of the underlying issues to this economic malaise. The entire global economy is being temporarily held together with trillion dollar sellotape and string.

Anyone got any other suggestions?

 

[derf]

Wage inflation, price inflation or both (think about this, I'm giving you an opportunity not to make a fool of yourself )?

Both, but these things tend to run out of control as we have seen so many times.

The other thing is that much of the export trade here works on the weakness of the Rp and low manufacturing costs against western currencies and costs. What would that do to the local manufacturing trades?