Why is academics’ understanding of the garment industry so limited?

Do academics have anything useful to contribute to the debates around social accountability?

When they bring real knowledge, of course they do. But not when they purport to know things they don't.

Muhammed Yunnus, a Bangladeshi Nobel prize winner, has proposed a global minimum wage for garment workers, the immediate doubling of Bangladeshi minimum wages, a special surcharge on Western sales to fund a Bangladesh Garment Workers Welfare Trust and a marketing programme in the West promoting ethical sourcing. He has asserted – without showing any evidence – that “Consumers would be proud to support” a surcharged product.

He argues that buyers should “jointly fix a minimum international wage for the industry. This might be about 50 cents an hour, twice the level typically found in Bangladesh.”

He goes on to argue that “It wouldn't be necessary for all the companies to agree on the minimum wage at the same time. If some leading firms take the initiative, it would start the ball rolling.” He continues:

“There is also another practical way to help ensure better standards for Bangladeshi garment workers… Let's say a garment factory produces and sells a piece of clothing for $5, which is then packaged and shipped to New York.

“Another $30 was added in the US for taking the product to the final consumer… Would a consumer in a shopping mall feel upset if they were asked to pay $35.50 instead of $35? My answer is no, they won't even notice. If we could create a Garment Workers Welfare Trust in Bangladesh with that additional 50 cents, we could resolve most of the problems workers face – safety, work environment, pensions, healthcare, housing, their children's health, education, childcare, retirement, old age and travel. Everything could be taken care of through this trust.”

 “When consumers saw that a well-known and trusted institution had taken responsibility to ensure both the present and the future of the workers who produced the garment, they wouldn't mind paying 50 cents extra”, he claims. “Consumers would be proud to support the product and the company, rather than feeling guilty about wearing a product made under harsh working conditions”

Separately, Yunnus has argued that ““The average wage is 25 cents an hour, making it 50 cents an hour won’t cost a leg and an arm” because raising wages for Bangladesh’s 3 million or so garment workers would spur increases in other countries, according to Yunnus. “Prices will go up everywhere, Bangladesh will not lose its competitive edge,”

If Bangladeshi wages doubled, of course, and no one else’s did, few people buyers would put up with the horrors and inconveniences of buying there. Putting up wages in Bangladesh will do nothing to increase wages elsewhere.

Yunnus is a widely respected academic, with a background in economics. He also has a following in much of the world as a development visionary: he won the Nobel Peace Prize in 2006 for his work developing microfinance, especially for poor Bangladeshis trying to start up the smallest businesses.

 But he has no experience, academically or in real life, of dealing with Western consumers. He describes Disney as “A very large foreign buyer” – implying near ignorance of the global garment trade, and similar ignorance what the Walt Disney Company does for a living. He has no identifiable expertise or even knowledge about Western markets or what motivates Western customers.

His assertions about what Western customers are prepared to pay are based on no research, or even any known case of his ever having ventured inside a Western apparel retailer. His heart in undoubtedly in the right place – and in the pioneering work he has done on microfinance, he may well have pulled more Bangladeshi women out of poverty than even te Bangladeshi garment industry.

His considerable expertise in helping desperately poor peasants start in business may well carry a lot of lessons into getting marginalised people in the West get a start. But they have no value in predicting how shoppers will behave in Gap or M&S. His goodwill might possibly inspire someone to start an altruism-based campaign to get Western shops to pay more for garments made by well-paid people – and, with enough enthusiasm and well-aimed PR, such a campaign might work. But right now there is simply not a shred of evidence it would.

Yunnus’ assertions aren’t wrong: they commit a far worse offence. For an academic (which is what he is by training), they’re simply unprofessional. He’d like the world to reward good practice – but as far as garment pricing is concerned, there just isn’t an example of good practice being rewarded.

Bluntly: Yunnus should stick to microfinance. On that, he’s worth listening to. On Western consumer motivation, he simply has nothing to contribute