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Before we talk about TPP, TTIP, TiSA let’s talk about Wage Inequality

The world and left-oriented press and media are reporting non-stop about Donald Trump and the Brexit. Are these election results simply results of racism?

No, they are a result of a much broader problem. The Brexit vote and the vote of Donald Trump are clear statements against globalization. The capitalism as we know it is broken and the main cause may be wage inequality. We are at a pivotal point in history where we need to fix this inequality.

Left-Behind Middle Class

We hear and see it everywhere: workers who are working full-time but still live roughly above the poverty level. 75-year-old seniors are working part-time because their pension is insufficient to survive. People are losing their jobs because production is shifted to low wage countries. These workers are people who don’t enjoy the benefits of globalization. They are forced into low-paying jobs or they lose their jobs entirely. Some are working in unacceptable wording conditions. They are working hard but the monthly wage is still not sufficient to survive not to mention to live. So what is the result? People feel that they are being left behind and they start to show resistance. This resistance found its expression in legitimate elections rather than violent riots as Marx predicted it. The political establishment is losing its power and the politics and social stability are in danger.

Advantages of the Global Trade are Uneven

The BBC reported about an internal briefing of the World Bank which admits that global free trade has not been a success for all. The BBC quotes the World Bank that the effects of globalization are “often uneven” and “may have led to rising wage inequality”. If we want to create a fair compensation for workers all around the globe we need to create fair labor conditions. Closing borders and limiting free trade will not result in rising wages or wage equality. “If all the developed countries close their borders, it’s going to be very difficult [to achieve the 2030 poverty targets] and it’s going to be very difficult for those countries as well, ” says D. Jim Kim head of the World Bank.

Let’s pivot and create Equal Wages Worldwide

Free Trade Wage Inequailty
Image: International Labour Organization

According to the International Labor Organization, the top 10% earners in Europe get 26% of the monthly wages pie. In Brazil, this number increases to 35% and in India to 42,7%. Before we continue talking about TTIP, TPP, TiSA and other free trade agreements we need to declare certain standards of wages, work, and social justice. Closing factories in the United States by entering free trade agreements with low-wage and child labor countries like Malaysia and Brunei will simply shift these jobs to those countries. Instead of establishing a free trade agreement we need to establish fair trade agreements. Factories companies in Malaysia, Vietnam, or Bangladesh need to offer a comparable social standard to all its workers. The social standard includes pensions, maternity, disability, and child benefits and a fair pay to everyone. By setting social and working standards in countries all over the world we will see slight adjustments of the wage level worldwide. Companies must be forced to pay social benefits and fair wages to its employees in order to export its products.

Politics needs to be Open and Honest

“The lack of transparency and openness has meant that we have wound up with a form of globalization that works for a few, but not for all of us” explains Joseph Stiglitz, a Nobel Prize-winning economist. He argues that citizens now understand which role globalization plays and that citizens who are left behind are demanding a voice. Stiglitz sees the problem in our current political system. A lack of democracy during the globalization process led to the result that we have a globalization that works “for a few but not for all of us”. Politicians need to make sure that all citizens have a voice in upcoming globalization processes. TTIP, TPP, TiSA were all prime examples of a pure lack of transparency. Nobody but a few selected people actually knows what is written in the agreement and usual citizens have no chance to take part in it. Politics needs to start working on a globalization that reflects the demands of its citizens not of the elite.

Let’s create FAIR FREE TRADE around the globe!

Further Reading: There’s still time to make globalization work for all. Let’s start by fixing wage inequality by Guy Ryder, Director-General, International Labour Organization (ILO)

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