The times they are a changing.
And they are changing at pandemic speed. Five months ago is ancient history. Now is a but a fleeting interval. From now, the future. What will our world look like six months from now? What will it look like in three years?
So much for being the ‘Greatest Nation Ever Known’. We just got rolled by a virus whilst beset with incompetent leadership, inadequate healthcare, a global warming crisis, and a failed economic model. We weren’t prepared. Could’ve been, should’ve been, but we weren’t. For now, we must learn how to live with the virus while charting a new course. Can we rise to the challenge of dealing with the pandemic and its aftermath, and of correcting those existing, pre-pandemic, problems? We really need to do both.
There will be changes. Chances are that we will see a diminishment of globalization. The offshoring of medical supplies, such as protective equipment, and critical medicines has hurt. Those will probably return onshore. Such dependence was always a risk. The production of other ‘self-sufficient’ goods should be brought back. Some of the jobs will return; return to a much-diminished economy. Education, at all levels, will probably be changed forever. We are going to hear, “We can’t afford to do —-, a lot, when, in truth, we can’t afford to not do something about the pre-existing problems of healthcare, economic disparity, global warming, and a few other small things. In these short few months, the world was changed, changed forever, before our very eyes. If we are very wise and really lucky, we will get this mostly right.
Somethings stay the same.
During the Great Depression, jobs were scarce. Asked; the old men who came of age during the era would say, “there just weren’t any jobs.” When there are no jobs; education, gender, ethnicity, and race didn’t matter much. Many of those with good jobs got them because of who they knew or were related to. Whence the expression often heard from those of a certain age at the time, “It’s not what you know but who you know.”
During WWII, lack of education, gender, ethnicity, race, and age were not barriers to gainful employment. There was lots of work, not enough workers; anyone willing to work could get a job. After the War, with fewer jobs and more people seeking work; education, gender, ethnicity, race, and who you know were again used as a way of deciding whether or not to retain, whether or not to hire. We humans, too, are subject to selection; though ours is a process of our own contrivance. In ours, those with wealth or in positions of power do the selecting. As with nature, this process can be cruel.
Of late, and for quite a long while now, we have seen more qualified applicants than openings for jobs, university slots, etc. Again, we have seen the selection process narrow. Again, education, gender, ethnicity, race, age, and who you know matter. Perhaps not overtly, but certainly, in effect. Non-discrimination laws skew selection a bit toward neutral, but selecting someone in selects another someone out. As we head into the tough times that lie ahead; we will see more and more selectivity.
We are entering these tough times at a time when workers’ wages, pushed down by globalization and automation were already low. In the coming months and years, more people competing for fewer jobs will only put more downward pressure on wages. It will be harder and harder for workers to make the cut of getting work. Odds are that we are entering a protracted period when it will be particularly hard for those without advanced degrees, those over 50, those with health issues, those a with a criminal record, those of a racial minority, those of certain cultures, women of childbearing age, … to find work that pays a living wage.
When there are far more workers than jobs, the individual worker is more expendable. An expendable worker will work for less. That’s how we got to where we are now. From a global perspective, the capitalists know that all workers are expendable. If all of America’s workers were to die within the next year, American capitalists know that they could get other workers in a heartbeat from, Mexico, Asia, Africa, …, to fill those emptied shoes. Globalization — In a Free Labor Market, labor loses.
What should be done? Individual workers can improve their own odds by getting more education and training, staying healthy, staying out of trouble, being of pleasant demeanor, …, or marrying into a wealthy family. Disadvantages of ethnicity and race can be offset to a degree by excelling in education, training, staying healthy, staying out of trouble, being of pleasant demeanor, … marrying into a wealthy family. Anti-discrimination laws can help minorities, but as noted above: selecting someone in selects another someone out. This is an already huge problem that is about to become much larger. Governmental involvement in the distribution of wealth and income will become imperative.
Culture, not the culture of the Louvre, but culture as in social customs, will no doubt play an indirect role in the selection process. Education and/or training is an obvious way to improve one’s chances of gaining well-paid employment; of gaming the selection process. Some cultures value education more than others. Young adults from these cultures are more likely to be better educated. Some cultures teach their young the value of planning and strategic thinking; values more likely to yield good decisions in regards to college, career choices, etc. Cultures that teach the value of honesty and hard work provide their young with qualities that make them more attractive to an employer. Some of our young people have not been afforded the cultural influences, or the parenting, that might teach them the value of education, planning and strategic thinking, of honesty and hard work. It is not kosher to speak about demeanor and behavior, but they play a huge role in employability. This is where the educational systems of the future must step up to the task at hand; bridge the gaps, make things more equitable. One’s zip code should not be life determinate. Let everyone start from the same line.
If we are lucky and can avoid any more of these recent bouts of regression, racism and bigotry should diminish to almost non-existent within another generation.
As we move on from now, things that haven’t been working are not going to suddenly start working. Capitalism and free markets are not going to work any better in a more severely stressed economy. They are going to be more of a failure than ever at addressing disparity. The lives of the poor, of minorities, is not going to be improving in the next few months, years. Unless significant changes are made to our economic model, they will be getting very much worse.
Very well said Ken,
It’s almost a bit much for me to wrap my mind around now, but I have been reading a book that advocates for (amongst other things) being able to fluidly switch from capitalist to socialist (and anywhere in between) policies to match the needs of a particular problem. It claims that very flexibility is the hallmark of a successful political economy. While I agree with this, and think your piece effectively articulates the interconnectdness of the concerns we need to take into account, the book was written before the height of the Information/Internet(/Propoganda) Age.
Thus, the need to simplify the selection process so that a quorum can understand and make the right political decisions. But these simplifications become so easy to skew and skewer. Moreover, the following prospect can be terrifying: having to make so many informed decisions rather than choosing your tribe’s pre-approved ones. Given the time-sensitive nature of the issues, as you explain, doing nothing is costly, I am constantly torn between trying to reason with and convince the cynics and those who think the problems are imaginary versus thinking of ways to make their selections a nonfactor.
This inner conflict is a constant battle for marginalized groups created by active racism, sexism and bigotry and those that passively tolerate and profit from them. Marginalized groups must contend with looking for employment amongst members of the same class where there is little transaction (assimilation?) costs but little capital and opportunities, or compete in the workplace where jobs and mobility lay, but spend energy and resources overcoming barriers that labor competitors do not have.
I do, however, have one ray of hope to share The best lesson I grokked from Brutal Need, a book on the civil rights movement from the perspective of NY legal aid groups, is that the solutions on the micro-level and the macro-level are rarely ever the same but need to be effectively coordinated. I not only share your optimism that we may be a generation away from ” bouts of regression, racism and bigotry” substantially diminishing (if that is not your optimism, I am still pretending it is anyway, I feel lonely), but that we are making headway on more macro levels. Right now, corporations have been forced to experiment with diversity initiatives which will mirror the individualistic notions of anti-racism and acceptance, and will be inefficient. But that is a necessary part of the evolution and of breaking down the transaction (assimilation?) costs of marginalized groups in the most prosperous/abundant/powerful positions. It will be achieved through the only way possible -> experimentation. We will learn much more about the barriers to entry for these groups, and they will slowly be dismantled by people who understand the hardship of being screwed over by their zipcode thus alleviating some of the problems of treating labor as capital. Hopefully, this leads us to making braver selections on policies and through that, smarter selections on governance (corporate and political), allowing more and more to escape the cycle you explained of wealthy educated whites attempting to solve the problems on their own with them as the investing class and others as the chattel.
Sorry for the rant, had a bit of inspiration with my coffee.
Thanks, Idriss Z, for reading and the thoughtful comment.
I think the need to look again at economic models is the biggest thing going on right now. Rather like population and global warming, many of the worlds’ problems are attributable Capitalism. Suspect that we are beyond capitalism and socialism, need to think anew using what we know.
I’m hawking the film: Capital in the Twenty-first Century based on Piketty’s book of the Same name.
Piketty gets the tax, regulation, finance, … cold, but couple things more, I think. If you get a chance to watch it, write it up and we’ll discuss.
Roosevelt had wanted a shorter work week than the 40 hours we have today. Pretty much and even if educated, people are having difficulty finding jobs and jobs that will pay well. Sandwichman suggests a shorter work week to maybe 32 hours per week to employ more people. Have you considered this in your plan?
Plan? What plan?
Shorter workweeks might help with the distribution. Big problem is still how to get the wealth away from the Elites; how to give the non-elites leverage. This ever-increasing flow of wealth to the top is killing the lower 90%. We hear a lot about how people need this and that, such as a job to get up and go to each day, etc., these days. I haven’t that much faith in conventional wisdom; most of it is stuff we’ve been taught to believe; amounts to a social control mechanism.
Recently, stumbled onto the Institute for New Economic Thinking looking for papers on this matter, this article is highly relevant I believe
There Can Be No Equality Without a Dramatic Renewal of Employment Opportunity for All American Workers
July 16, 2020 By William Lazonick, Philip Moss, and Joshua Weitz
“To fulfill MLK’s vision of jobs and freedom for Black Americans, Washington must rein in corporate greed
In his “I Have a Dream” speech at the March on Washington for Jobs and Freedom on August 28, 1963, Dr. Martin Luther King declared that a century after the Emancipation Proclamation, “the Negro is still badly crippled by the manacles of segregation and the chains of discrimination. One hundred years later the Negro lives on a lonely island of poverty in the midst of a vast ocean of material prosperity.” Racial justice demanded equal employment opportunity.
Upon the signing of the Civil Rights Act on July 2, 1964, discrimination in access to jobs because of an individual’s race, color, religion, sex or national origin became illegal under the landmark legislation’s Title VII. The following year, the U.S. government created a new federal agency, the Equal Employment Opportunity Commission (EEOC), to implement Title VII. But what, in fact, was the employment opportunity that white males possessed to which Blacks, other minorities, and women, wanted equal access?
The employment opportunity that privileged the white male was much more than a job. By the 1960s, growing numbers of white men had employment that gave them steadily rising real earnings, often with decades of tenure at one organization. The “career-with-one-company” (CWOC) that had become the employment norm by the beginning of the 1960s included health insurance and a defined-benefit pension, both funded by the employee’s business corporation or government agency. This white-man’s world constituted the foundation for the “vast ocean of material prosperity” to which Dr. King referred. It is what, in the decades immediately after World War II, turned much of white America into a growing and thriving middle class.
This was a white middle class made up of, at the lower end, blue-collar workers with no more than a high-school education. Union representation in collective bargaining enforced the unions’ first-hired, last fired “seniority” principle while securing wage increases in step with productivity growth, with “cost-of-living allowances” that adjusted wages for inflation usually built into the contracts. Aided by government subsidies such as the federal GI Bill and tuition-free higher education at state “land grant” colleges, the male offspring of the white blue-collar worker had ample opportunity to transition to higher incomes, superior benefits, and even more employment security as white-collar workers. In the 1950s, the white male who had recently ascended to the upper echelons of the middle class became known as “the organization man.”
Our forthcoming book, Fifty Years After: Black Employment in the United States under the Equal Employment Opportunity Commission, analyzes how, in the immediate aftermath of the 1964 Civil Rights Act, African Americans with no more than a high-school education gained access to CWOC employment at the blue-collar level. Owing to strong demand for production workers in the 1960s and 1970s and affirmative-action support under the EEOC, Blacks were making inroads into white-male privilege by gaining substantial access to well-paid and secure operative and craft occupations; big steps up from the common-laborer jobs into which they had previously been segregated.
In research published last month on the website of the Institute for New Economic Thinking (INET), we outline how the decline of unionized jobs from the beginning of the 1980s in the United States decimated an emergent African American blue-collar middle class. Over the decades it became clear, however, that, while African Americans were hit earlier and harder than whites, they were not the only ones to fall out of the middle class. Increasingly, white blue-collar workers with no more than a high-school education also lost their middle-class status as the ideology that companies should be run to “maximize shareholder value” put a permanent end to the CWOC norm. Over subsequent decades and up to the present, growing numbers of American workers with only a high-school education, regardless of race, have experienced stagnating incomes, downward socioeconomic mobility, and even, at certain times, declining life expectancy.
In our new INET Working Paper, “Employment and Earnings of African Americans, Fifty Years After: Progress?”, we provide a statistical overview of the devastating impact that the decline of the American middle class has had on Blacks. For a quest for economic equality to become a reality, the pay and stability of employment for Blacks must be improved far more than for whites. But in view of the downward mobility of white workers, even a substantial closing of the Black-white income gap will not solve the problems of poverty and injustice in the United States. Contrary to the situation in the 1960s, in the presence of the impoverished and vulnerable American working class of the 2020s, “equal employment opportunity” will not yield the “jobs and freedom” that the 1963 March on Washington demanded for Blacks.
It should be no surprise that the Covid-19 crisis is having an especially devastating impact on people of color, but workers of every race and ethnicity are feeling immense pain. But even when the public-health crisis has abated, the gargantuan political task for the years and decades ahead will be the restoration of employment opportunity that will enable all Americans to live healthy, secure, and happy lives.
The government-policy equivalent of therapies and vaccines will be required to eradicate the malicious “maximizing shareholder value” disease, which bears prime responsibility for the decades-long destruction of the American middle class. On July 9, in outlining his economic platform, Democratic presidential candidate Joe Biden declared that “it is way past time to put an end to the era of shareholder capitalism.” Yet there is virtually nothing on the subject in the 110 pages of the Biden-Sanders Unity Task Force Recommendations released the previous day. The only policy aimed at U.S. corporations that Biden mentioned was an increase in the corporate tax rate from 21% to 28%, which would put it halfway back to where it was before the Republican tax cuts.
As Americans unite to fight for jobs and freedom, we are curious what happened to the Joe Biden who, in September 2016, as vice-president of the United States, wrote in a Wall Street Journal op-ed: “The federal government can help foster private enterprise by providing worker training, building world-class infrastructure, and supporting research and innovation. But government should also take a look at regulations that promote share buybacks, tax laws that discourage long-term investment and corporate reporting standards that fail to account for long-run growth. The future of the economy depends on it.” At this fraught juncture in American history, bold leadership matters. “
Idriss, again, thanks.
A response in part, my thinking:
The attacks on the unions by the likes of Reagan and Thatcher did great harm. But, something else was really going on and those two were simply not the ones most able to figure it out. It was the lessened demand for labor that caused the loss of union jobs. The end of the Post WWII era when America was no longer manufacturer to the world was most significant; the beginnings of the Great Lakes Area Rustbelt. In my business career, I turn-keyed industrial control systems. From the late 1970s thru the 1980s, in every plant/system, ¾ of the workers were replaced by the automation. The very same was true for all those car plants, etc. that someone else automated. Before, in the 1950s, kids who didn’t even go to high school could get a good union job in Detroit. In 1970, in Computer Sci., at UC Berkeley, this was the subject of conversation. Unions don’t provide jobs. Training doesn’t provide jobs. Today, we have a blue-collar working class trying to get by on 1970 wages; making $40k when rent is $20K; with no leverage. In 1970, we paid $140/mo for a two-bedroom apt. on Channing Way in Berkeley, an apt. that rents for $3000/mo today.
Completely agreed Ken,
I think, however, there is difference in the steps these reasonings are taking place in. Currently we are in a similar situation as the 60s 70s era, but instead of the number of jobs being artificially lower than the amount of qualified minority (including poor whites) labor because of racism, they imbalance is due to the economic system. What their paper gets at is step 2: when minorities get the job, how can it provide upward mobility (to at least a living standard)? And that entails strengthening unions, anti-discrimination laws, diversity programs, CWOC, etc.
But you are right about the preliminary problem and it needing a new solution, which makes me lean to the New Deal era policies with a focus on marginalized groups; policies geared toward improving today’s infrastructure, getting minorities into gov’t tech (what terrifies me is gen z has little interest in public service and they’re the ones that know how to internet best), modernizing welfare and oversight programs, green energy, and other emerging 21st century industries (we already dropped the ball on marijuana in a big way, educated whites and the tobacco companies snatched those opportunities up quick. I’ve been wasting a lot of time watching and reading about Alpha & Leela Zero play chess against humans and engines because I think it gives some insight on what separates an (artificially) intelligent being from a highly functioning robot, here lies a few answers for the blue collar work that may not be automatable, I believe. Of course, all of this must contend with the entrenched interests of capital markets and making them take a longer view on the economy.
In the sixties and seventies numerous well paying jobs still existed to which a person with just a high school education could do well on and make a living. After leaving high school in 67, I was clearing $5/hour as a laborer, even so when my Air Force Academy cousin showed up and asked my dad for a $20, my dad turned to me and asked if I could give it to him. Payday and I gave him $25. Those type of labor intensive jobs do not exist in great numbers anymore.
Warren Buffet decided to stay in the textile business until 1985. As reported in a 1978 annual report, Buffet stayed in the textile business because:
In 1985, Buffet found he could not maintain the business unless he made large investments in the business to improve the efficiency of it. Buffet found he was competing in a global market. Much of the trouble we experienced was attributable, both directly and indirectly, to competition from foreign countries whose workers are paid a small fraction of the U.S. minimum wage. It is here I depart from Buffets argument as I have found throughout my years in manufacturing throughput, it was never the labor cost which was the issue. It was the Overhead Cost. It doesn’t matter as Buffet could not solve that issue either as much of it was legislated.
Buffet had the opportunity to invest in capital improvements in the operation and he chose not to do it. Burlington did make those investments and here is what happened to them:
Burlington made a decision to stick to the textile business, and in 1985 had sales of about $2.8 billion. During the 1964-85 period, the company made capital expenditures of about $3 billion, far more than any other U.S. textile company and more than $200-per-share on that $60 stock. A very large part of the expenditures, I am sure, was devoted to cost improvement and expansion. Given Burlington’s basic commitment to stay in textiles, I would also surmise that the company’s capital decisions were quite rational.
Buffet’s conclusion? From experiences and observation of other businesses, a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row (though intelligence and effort help considerably, of course, in any business, good or bad). Some years ago Buffet wrote: “When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.” Nothing has since changed my point of view on that matter. Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
If you invest in capital and improve operations, other companies may do the same and the world of that business hardly changes.
In 1981 PATCO went on strike on August 3. PATCO called for a reduced 32-hour work week, a $10,000 pay increase for all air-traffic controllers and a better benefits package for retirement. Reagan declared the PATCO strike a “peril to national safety” and ordered union members back to work under the terms of the Taft–Hartley Act. Only 1,300 of the 13,000 controllers returned to work. At 10:55 a.m., Reagan included the following in a statement:
Reagan again demanded those remaining on strike return to work within 48 hours or officially forfeit their positions. A federal court fined the union $100,000 and certain individuals $1,000/ day. Meanwhile, Transportation Secretary Drew Lewis organized replacements and started contingency plans. By prioritizing and cutting flights severely (about 7,000), and even adopting methods of air traffic management that PATCO had previously lobbied for, the government was initially able to have 50% of flights available.
Following the PATCO workers’ refusal to return to work, Reagan fired the remaining those 11,345 striking air traffic controllers who had ignored the order on August 5. They were banned them from federal service for life. PATCO was decertified by the Labor Relations Authority on October 22, 1981. The decision was appealed and attempts to use the courts to reverse the firings failed.
The corporate contract with Labor disappeared with that move by Reagan. Even my salaried as felt the impact of that decision by Reagan. It was not long before corporations hired striker replacements instead of negotiating in labor conflict. The numbers of Labor strikes were cut in half from 1970.
The strikers? “Were mostly working-class men and women who had achieved suburban middle class lives as air traffic controllers without having gone to college. Many were veterans of the US armed forces where they had learned their skills. The union had backed Reagan in his election campaign. None the less, Reagan refused to back down. Several strikers were jailed; the union was fined, and eventually it went bankrupt. Only about 800 got their jobs back when Clinton lifted the ban on rehiring those who went on strike. Many of the strikers were forced into poverty as a result of being blacklisted for U.S. government employment.”
Just two pieces of history here. I will say this, Buffet could compete with Asia in textiles if he could eliminate much of the Overhead costs that go with the business and Labor. So could other businesses. This is the land of capitalists who have learned they can move the business overseas, avoid the Overhead associated with Labor and the country, and return to the US with the products to sell in the largest consumer nation globally “yet.”
The benefits package PATCO was asking for does not exist in Asia. Is it unreasonable to ask for an early and better retirement with healthcare, LTC, and a pension? In Thailand which does have universal healthcare, a Yazaki plant worker has benefits of a breakfast, lunch, a snack if working OT, transportation back and forth to work via bus, and a nurse on staff. The same is true in the Philippines, China and Malaysia. That is one example of Overhead which Asian companies avoid and US companies endure.
The issue here is why should a US company be allowed to leave the US, return to the US to sell product, and not pay the difference in Overhead they avoided? So again I ask you, what is your plan?
Yup. We see people of color as (sometimes as a majority of) essential workers and front line responders and know that they are being underpaid and too often being w/o benefits.
People downplay the impact of automation, but by the 1990s, the labor content of white goods (washers, refrigerators etc) fell by 75%. Automobiles dropped from 100 hours per car to maybe 20 between 1920 and 2000. The Rust Belt had already rusted out by 1980. China’s manufacturer to the world only works as long as they avoid too much automation and process optimization or increase political repression but likely both. Even if we manufactured everything ever here and stopped all manufactured imports, we’d still keep losing manufacturing jobs.
Maybe we need to bring back the 90% marginal tax rate on high incomes and consider dropping the capital gains deduction from 50%. Businesses don’t need capital. They have been furiously returning capital to their shareholders. The world is awash in capital. What businesses need are customers, and only the government can create customers.
Yup. And close the off shore tax havens, the shell companies, … Tax according to sales location and mfg points.
Trump has about 400 shells. Ivanka has more than 200. I wonder why?
Wow, I did not know the depth that went to, I really appreciated the historical atmosphere, which certainly makes me reconsider the effect of institutional memory on this; the willingness to back unions may not be high enough.
I have been following recent bankruptcy filings and am trying to go through the Biden-Warren plan and see how that may affect things. You mentioning textiles actually reminds of an article from today that perfectly explains your point regarding clothing manufacturing: they moved all the jobs from NY because of the wild rent increases from landlords: (Oh, and I’ll have a better idea on the plan when I get through the discussions on the GILTI loophole. I feel its important to at the same time ask where can we put labor to effective use and for good pay that would have long term benefit for the nation that can’t be entirely automated and may be able to receive support from private sector= tech, infrastructure maintenance/updating, and green energy)
Assassination of New York: “In this indictment of those who have wrecked New York, Robert Fitch points to the financial and real-estate elites. Their goals, he argues, have been simple and monolithic: to increase the value of the land they own by extruding low-rent workers and factories, replacing them with high-rent professionals and office buildings. The planning establishment has been able of raise the value of real estate inside the city boundaries over twenty-fold. In doing so, Fitch suggests, it effectively closed New York’s deep-water port, eliminated its freight rail system, shuttered its factories and destroyed its capacity for incubating new business.”
COVID-19 AND THE GARMENT INDUSTRY’S INVISIBLE HAND
July 21, 2020 by Katherine Hearst
The chain will keep us together
“Further up the supply chain in Dublin, Debenhams retail workers were informed via email on 9 April that they were losing their jobs. The eleven company stores were to be liquidated; the entire Irish arm of the company was gone. In the dark of a bank holiday weekend, the women, many of whom had done over twenty years of service for the company, scrambled around for information.
“It was so calculated… because of that long weekend, there was nowhere open,” Ann, a mandated shop committee member and personal shopper for Debenhams of fourteen years, explains. “By the Tuesday, Debenhams were hoping we would have been yesterday’s news. We’re in the middle of a pandemic, let’s move on. Unfortunately for them, that wasn’t to be.”
On the following Tuesday the workers rang around every radio station, TV channel and newspaper. “We inundated every minister we could think of with emails. We came out fighting, screaming and champing at the bit,” Ann recalls.
And they did their research. Much like the brands cloaking their most exploited workforce in a quagmire of third-party contractors at the other end of the supply chain, Debenhams used obfuscation when dealing with their staff. The strikers had no previous experience of campaigning, but they rolled up their sleeves and did the painstaking work of unpicking the string of companies Debenhams was using to dodge responsibility.
Debenhams.ie became Debenhams Online, which continued to trade in Ireland after liquidation of the stores was announced – until the strikers managed to crash their online store four times. “We got all our friends and family to inundate the comment section… if you go on there now you won’t be able to use it” Ann recalls proudly, adding with a smile, “we were pretty chuffed with that.”
According to Mandate Trade Union, in early 2020 the UK parent company took control of the Debenhams Ireland online business before seeking liquidation. According to Michael Meegan, the union Divisional Organiser, “shortly after doing this, Debenham’s UK withdrew its financial support of the Debenhams Ireland business which directly resulted in the Irish arm of the business going into liquidation.” In doing so, “approximately 1,500 workers lost their jobs.”
To stop the company transferring the stock in the Irish stores to the UK, Ann and her colleagues drew up 24 hour rotas for pickets outside the stores – often doing ‘spot checks’ at 3am to ensure it was being manned and that “not a pair of stockings would leave that store.” Burly security guards sent by the liquidators, KPMG, were startled by a line of women standing resolutely in front of the doors.
“The company should live up to its obligations and abide by the redundancy agreement that the company freely entered into with the workers in 2016”, Meegan explains. “These workers have a combined 10,000 years of service to this company, helping to generate profits for the owners year after year.”
This rigorous detective work led the Debenhams workers to the garment strikers in Bangladesh. While unpicking the stitches of the garment supply chain, they found that at the other end workers were being denied at least two months’ pay and that Debenhams UK owed $18.5 million to suppliers in Bangladesh for goods they had released from UK ports into their warehouses. According to a Bangladeshi supplier for Debenhams and member of the Debenhams Vendor Community, a network of suppliers, in addition to the goods that were released from the UK ports without payment, the company owed around $44.6m on orders sitting in the factories.
“The money we’re asking for is not charity money, it’s our money, our people live on that. It’s our sweat and blood,” he explains. He estimates that up to 160,000 workers could potentially be left starving as a result of Debenhams refusal to honour payment. The company eventually agreed to pay for $5m of the goods sitting idle in UK ports – after initially demanding a staggering 90% discount they eventually negotiated a 25% discount. Subsequently they hired subcontractor, Centrotex to negotiate payment for just $1.4m of the $44.6 worth of goods in the Bangladeshi factories.
In response, the Irish strikers set up a Go Fund Me for the Bangladeshi workers, stating that “as a group of workers recently made redundant by Debenhams it angered us that this company could be responsible for ruining the livelihoods of so many people in such a cavalier manner.” Debenhams were approached for comment and said that “suppliers who are continuing to work with Debenhams in administration are being paid to terms.”
H&M stressed that “in these troubling times it is crucial we get our facts straight”. The Debenhams workers learnt this very early on in their fight for their redundancy payments. “We’ve learnt a lot through this process, it’s opened our eyes and what we’ve seen has disgusted us”, Ann explains.
In their pursuit of the truth, they have unravelled a rotten business model propped up on the exploited labour of those sewing stitches at the bottom of it. For workers at both ends of the chain, there’s no going back through the portal.”
[So yea, it seems there is little hope of conquering this problem without a broad understanding and better solutions to tax avoidance, a topic that always intimidated me, trying to learn more now.]