Hesperian Health Guides
Low wages keep people in poverty
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Low wages keep people in poverty. If the harder you worked, the more money you earned, then export factory workers would be among the richest people in the world. But workers in export factories live in poverty. Employers pay workers as little as they can and lobby governments to keep the minimum wage as low as possible. Though it may be illegal, factory owners often pay less than the minimum wage, and refuse to pay bonuses, overtime, or social security benefits. Since governments want companies to build factories and stay in their countries, they rarely enforce laws regarding wages, hours, benefits, or working conditions.
When companies pay workers barely enough money to survive, they deny them the right to a healthy, dignified life.
- 1 Not paying full wages and benefits
- 2 Mandatory overtime
- 3 Piecework hurts workers’ health
- 4 Paying some workers less than others
- 5 Contract and temporary workers
- 6 Working to pay off debt
- 7 Get your full pay
Not paying full wages and benefits
Many employers do not fully pay even the low wages the law requires. Some do not pay minimum wage or a higher wage for overtime hours, for all the hours worked or all the pieces made. Legally required bonuses for attendance, holidays, and festivals may be unpaid. And workers are fined for breaking factory rules. Sometimes factories schedule vacations during holidays to avoid giving holiday pay — this is not legal.
Some employers deduct health or other social security payments from workers’ pay but do not pay it into the social security system. This means workers take home less money but also cannot get the health care and other benefits they have paid for and deserve.
Even where workers’ pay is not set by the piece, high production targets must be met before the shift is allowed to end.
If an employer requires workers to work overtime, punishes workers by forcing them to work extra hours, or locks workers in the factory to finish a job, this is forced labor. Forced labor violates national and international human rights laws and worker rights agreements.
International companies (brands) force overtime on factories they contract by demanding production schedules that are almost impossible to meet. In search of ever lower costs, they drive a system in which factory owners keep wages as low as possible to ensure their profits. Most of the time, wages are not enough to support one person, let alone a whole family, so workers are forced to depend on extra pay from overtime work and bonuses.
Piecework hurts workers’ health
A piecework pay system, where employers pay workers by the piece instead of by the hours or days worked, allows employers to pressure workers to work faster and longer than may be legally allowed, even if they are tired, injured, or ill.
Piecework pay is often set so low that workers must work overtime just to make enough money to survive. If workers complain, bosses threaten them with losing their overtime or their job. They punish workers by not letting them drink water, eat, or go to the toilet. Sometimes, they even lock the doors or gates to force them to keep working!
Paying some workers less than others
Bosses discriminate against some workers— women, indigenous people, migrant and child laborers — by paying them less than others doing the same work. Although women workers are often a majority, they may not be promoted to better paying jobs, even if they can do the job well.
Contract and temporary workers
Another way employers keep people in poverty is by hiring workers for only a short time. They may hire workers when there is a lot of work and fire them when there is not. Employers often contract temporary agencies to provide these workers to avoid the legal responsibilities of being the direct employer.
This system stops workers from getting benefits the law may give to permanent workers. Because contract and temporary workers come and go, it also hides illnesses and injuries caused by work, and makes it harder for workers to organize for better, safer conditions.
Working to pay off debt
Getting paid too little means workers do not have enough money to save, for emergencies, or to pay for things they need. Stores in and around the factory often let workers purchase goods on credit but charge high interest rates. Employers, banks, and loan sharks charge high rates for loans. Workers owe so much in interest that when they settle accounts they have even less money to live on. Then they have to buy more on credit or take out another loan!
Migrant workers also become victims of the debt system. Recruiters charge a lot of money to get them jobs in other countries. Workers begin paying their debt when they arrive. But recruiters and employers often demand more money, charge high interest, or change the rules. Some workers get trapped in a system that never lets them pay off their debts. This is called "debt bondage."
Savings groups help workers get out of debt
Kavita had been working for a long time to pay off a loan from the boss, but her debt did not seem to go down. Many women were in the same situation. One day, an organizer from the group Sankalp talked with them about their debts and about finding a way to pay them off. The organizer proposed that they start a savings group. If 10 women worked together, they could save up to 1 rupee a week, she said. The organizer would help them set up a bank account. If they saved regularly, the bank could also give them a loan, with much better conditions than the boss.
The women got organized and saved 1 rupee a week. After 3 months, they had enough to pay the debt of 1 woman and chose Kavita. The women, including Kavita, kept saving and every few months they paid somebody else’s debt. After paying all 10 women’s debts, they kept saving money to give loans to each other instead of going to the boss or the bank. Now they are better prepared to pay for emergencies than ever before.
Activity Examine your pay
You should be able to find out if you have received all the pay you have earned. This activity will help you to:
Know what you should be paid. Find out what the employer is supposed to pay for each piece, or hour or day, and for overtime. Find out if they are required to pay for holidays or increase pay for each year of work.
Know what should be deducted. If part of your pay is deducted for taxes, social security, savings, or housing, make sure the employer is subtracting the correct amounts. Ask co-workers if their tax or social security deductions are the same as yours. Ask your union or a lawyer to help you contact the government to ensure your employer is paying the correct amounts.
Keep records. Write down all your working hours, the number of pieces you make, the price for each piece, and any other information that might be useful, in a notebook or on a calendar. Keep copies of pay stubs, deposits, and any other information about your pay.
Calculate your pay. With the record of pieces you made, or the days and hours you worked, you can calculate how much money you are owed.
Make a time log
Create a form (or use a calendar) to record hours worked and time off. Add columns (see the example below) to fit your situation. For example, add a column to record the number of pieces you made or for bonuses.
Whether you are paid by the hour or by the piece, your employer must pay you at least the legal minimum wage plus extra pay for overtime hours. The pay rates below are only examples.
If you get paid by the time you worked:
|1. What is the legal work week in your country? How much did you work?||In our country the legal work week is 44 hours. I worked 58 hours.|
|2. Divide the number of regular hours by the pay you should receive.||I was promised $110 a week.|
So, $110÷44 hours = $2.50 an hour.
|3. Multiply the number of overtime hours you worked by the overtime pay rate.||Overtime is paid at 1½ times|
regular pay, so $2.50 x 1.5 = $3.75
|4. Add your weekly regular pay and your weekly overtime pay.||I worked 14 hours overtime, so,|
14 x $3.75 = $52.50 (overtime pay)
$110 (regular pay) + $52.50
(overtime pay) = $162.50
|5. Add bonuses earned this week, such as bonuses for meeting production goals, attendance, or food stipends.||$162.50 + $20 attendance bonus|
+ $20 production goal bonus
|6. Subtract taxes and fees for things such as health care and other social insurance. For example:||$202.50|
- $20 for taxes
-$25 for social security
= $157.50 weekly pay.
If you get paid piece rate:
|1. Multiply the number of pieces you made by pay per piece.||1000 pieces x $0.15 = $150|
|2. Add bonuses earned this week.||$150 + $20 production goal bonus|
|3. Subtract taxes and fees for things such as health care and other social insurance.||$170 - $30 for social security|
= $140 weekly pay.
Get your full pay
Compare your time log and pay sheet with your paycheck every pay period. If you find that you are not getting as much as you calculated:
- Talk to the bookkeeper (or your supervisor) and ask about the difference between your records and theirs. It is helpful to bring the contract or written agreement that defines your salary and deductions, but your time log will be even more useful when confronting the person who pays you. Have a co-worker go with you for support and to be a witness.
- Seek advice and support from unions, worker groups, or other organizations. Bring as much information as possible about the factory (name, address, owners) to make it easier to start a legal process. The boss might be within the law in what he is paying you, but if it is not what he promised in writing or verbally, you may be able to demand the correct pay through social pressure, worker unity, or the legal system.
- Talk to other workers. If you are not getting paid correctly, it is very likely that other workers are in a similar situation. Together you can talk about solutions and support each other.
The minimum wage is not enough!
I work in a TV factory in Ciudad Acuña, Mexico where I earn a little above the minimum wage. During one of our trainings with the Comité Fronterizo de Obreras (CFO) we did an activity to determine our sustainable living wage. We looked at our weekly expenses, divided into "things we need to survive" such as basic foods, clean water, and hygienic products, "things we need to pay each month" like electricity, rent, and transportation, and "things that we need to have a dignified life," which included more nutritious and varied foods and school fees. When we compared how much we needed each week with how much we earned we saw that even if we bought the cheapest brands of everything and did without a lot of things, we only earned about 25% of what we needed! We actually need 4 to 5 times the legal minimum wage in order to cover our most basic monthly expenses. The CFO is now working to raise the minimum wage so that working full time at minimum wage is enough for a worker to sustain her family and live a healthy life.