Valérie Hayer from the Renew Europe Group and José Manuel Fernandes from the European People’s Party Group are the European Parliament’s co-rapporteurs for establishing own resources for the EU budget.
The collapse of the Rana Plaza building in Dhaka, Bangladesh 10 years ago is etched in many people’s memories. Over 1,100 people died that day under awful circumstances, as they were forced to go back to work in a crumbling building. The owners were fully aware of the risks, just as they knew that their workers were making the rest of the world’s T-shirts and trainers under inhumane conditions: endless hours of repetitive hard work, poor hygiene and only a sewing machine for company.
And all this for just $1.25 per day — a meager wage for which they paid with their lives.
Today, weeds have covered the remaining rubble on the outskirts of Dhaka. However, several institutions — from the U.N.’s International Labour Organization to Transparency International — report that working conditions in the garment industry haven’t substantially improved, and that workers continue to suffer financial exploitation. Human rights, dignity and fair wages remain at risk in the apparel sector. And the same goes for others, such as extractive industries, electronics or agriculture.
If there’s one thing we should all be ashamed of, it’s failing to do enough to improve the living conditions of the world’s poorest people — and their plight is often fueled by our own shopping habits. So, to tackle this scandal, we propose a “Fair Border Tax,” requiring companies importing products into the European Union to pay a levy for any worker in their global supply chain who’s paid a wage below the poverty level.
Part of the solution would be to make sure companies that are importing and selling commodities from third countries don’t take advantage of poor regulations, thereby, leaving people on the other side of the world in need — or below the international poverty thresholds established by the World Bank. Depending on the category of country they belong to — lower-income, lower-middle income or upper-middle income — the World Bank considers workers earning less than $2.15, $3.65 or $6.85 per day respectively to be (extremely) poor.
That’s why we are advocating for the creation of this “Fair Border Tax.”
This mechanism would follow a very simple logic: Any company importing products into the EU single market, which are made by workers paid less than the poverty threshold in their respective country, would have to pay a duty amounting to the difference between said threshold and the salary their workers received.
For example, if a clothing brand imports T-shirts from Bangladesh — which has a poverty threshold of $3.65 — for sale in the EU, the company would then be required to declare the salary cost of the worker(s) who made those T-shirts to customs authorities. And if it turns out that he or — more often than not — she has been paid, for instance, $2.60 a day, the company would have to pay the difference to the EU — i.e. $1.05.
The merits of this mechanism are threefold. First, companies operating in the EU would have a clear incentive to raise salaries in their global supply chain, thus improving living conditions for workers in third countries. Second, it should drive reform in countries with poor labor standards and regulations. Third, European consumers would stop contributing to extreme exploitation.
Of course, as mentioned above, this isn’t solely a problem for the garment industry. Thus, the measure should also apply to other sectors in order to ensure the EU is doing all it can to alleviate extreme poverty.
We believe that in the absence of such a mechanism, the gap between workers from rich countries and those living in countries with almost no social welfare will only continue to widen. Western nations can make sure their workers keep getting paid decent salaries, even in a crisis — just as they did during the COVID-19 pandemic. However, this is a luxury that poor countries cannot afford — or at least one that their leaders don’t prioritize.
Nevertheless, there’s still something that Europeans can do to tackle extreme poverty, and that is to stop fueling a perverse system, which traps hard-working people around the world in misery.
Editors’ note: The authors will present their report on the “Fair Border Tax” and other innovative resources for the EU budget in January this year.
