Development and poverty

POVERTY

• Poverty is present everywhere. Manifestation of poverty is a challenge.
• Poverty and development are two sides to a coin. Where there is poverty, there may not be development.
• Poverty is not only a lack of money to take care of basic necessity of life it creates a picture of aimlessness, uncertainty and hopelessness in the mind of the poor. 
• An unhealthy or poor population produces less and may be forced into practices damaging the environment. It is the poor people who suffer most acutely from lack of development. 
• The poor are anxious about the future in regard to the national political life, degradation of the environment, the high rise of inequality among people coupled with mass unemployment.
• The high level of selfishness in the society with people looking only to their needs and fearful of others. Corruption is endemic. Crime rate is high and the future of generation yet unborn is clouded with uncertainty.

DEVELOPMENT

• Development is often socio-economic, political, science and technology biased. 
• The concept of development is a complex one. Its difficulty is not only in terms of definition or description but also in terms of measurement. 
• Lack of infrastructure, deep seated corruption, various forms of conflict, bad governance and poor healthcare facilities cannot promote a healthy population committed to work for progress and development.
• GDP as the measurement does not say anything about the distribution of total income of its country. It does not capture the totality of the development situation of the country.
• The people are both the means and the end of economic development.
• Human beings are at the center of concerns for sustainable development. 
• They are entitled to a healthy and productive life in harmony with nature.
• Development cannot be merely economic development or GDP as important as that may be. 
• Development must include the conditions of reality that allow people to take their destiny into their own hands, individually and collectively involving economic, social, political, psychological, environmental, cultural, religious and international dimensions. 
• Development is the ability and capability of the people to procure sufficient natural resources to meet the basic needs of all in a self-reliant manner.
• The situation of the bottom forty percent of society is often bypassed by development and government.
• Human welfare is the ultimate end of development not economic indices.
• The welfare of the human person in its totality is the good health of a person and his skills cultivated through educational programmes as his endeavours add to the wealth of his nation.
• Development strategy should be people centred and community participation must be evident. Any project that people/community cannot identify with will collapse. 

SUSTAINABLE DEVELOPMENT

• World Commission on the Environment and Development (WCED) defines sustainable development as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’
• WCED posits that the present generation has been reckless and wasteful both in its exploitation and use of natural resources by pursuing a series of socio-economic and industrial policies which endangers global environmental security. It condemned the inequalities with and among nations and called for a restructuring of contemporary economic relations to guarantee an equitable distribution of national and international wealth.
• The International Economic System (IES) is primarily profit orientated. Consequently, everything could be sacrificed on the altar of profit to the detriment of development of peoples and individuals, the often stated corporative responsibility of multinationals.
• Can accountability and transparency be found in their political intercourse?
• Poor countries are without development and citizens may not be able to compete with others because of lack of necessary capital, the technical-know-how and expertise. Symbiotically, without development poverty may not be eradicated. The solution to the dilemmatic situation is to confront the reality of poverty and challenges of development simultaneously, nationally and internationally.

There is no humiliation more abusive than hunger ... Pranab Mukherjee

Any kind of development that don't benefit bottom 40% of people, environmentally sustainable and generate mass employment is not a development at all. The trickle down theory, the standing rationale for our economic reforms, doesn't not address the aspirations of the poor people and eliminate poverty is unacceptable nonsense. Health, drinking water, sanitation, education, skill development and empowerment with adequate capital are essential for poverty eradication and meaningful development of poor people especially in rural India. Govt spending meager 2.27% on healthcare and 3.70% on education in the current budget against a minimum of 5-6% indicates empathy deficit towards the poor people of India. Even these meager allocations are towards high end spending rather than improving PHCs and schools. Hyped disruptive economic reforms Demonetisation & GST continuum have impacted poor most with loss of livelihoods and incomes and driven towards desperation and our rulers thought fit to turn a Nelson's eye.

China development model & Foxconn exploits workers

The suicides by employees at Taiwanese company Foxconn’s plant in China are only the tip of the iceberg when it comes to the negative social effects generated by the Chinese development model are a lack of human rights, high levels of exploitation and few social welfare benefits. China has been called the world’s factory. It sits at the end of almost every production chain in the world. The shiny exterior of the Chinese model is supported by hundreds of millions of workers laboring under the pressures of streamlined production and cost cutting. Many of these workers are not registered as permanent residents in the cities where they are employed and therefore do not enjoy the benefits granted to city residents.

The many foreign companies and the local Chinese export industry are exploiting this national brand with the support of the Chinese national government, which is seeking to strengthen and enrich itself by increasing its income. China has set a modern working hour policy, but the minimum wage is very low. The legal weekly working hours in China are less than 40 hours, and monthly overtime is limited to 36 hours. This superficially advanced work hour policy is used as a skillful cover for the exploitation. The official minimum salary regulations are very rigid, and the adjustment never keeps up with inflation. Someone on the minimum wage working only regular hours will have a very low income. Although illegal, it is very common to work more than 100 hours of overtime per month. Taking Foxconn as an example, an ordinary worker only earns 950 yuan (US$139) per month. However, if they work 98 hours of overtime — 66 hours on weekdays and 32 hours on weekends — they can earn about 1,840 yuan. Under this wage system, there is a 1:1 ratio between salary and overtime pay. The monthly GDP per capita in Shenzhen, where the Foxconn plant is located, is 6,637 yuan and the average nominal professional salary is 3,233 yuan per month. Life for a worker would be very difficult if he or she didn’t work overtime.

Chinese workers really like to work over time and that they would be unhappy if there was no extra work to be done. This is the situation at Foxconn. Chinese workers would ask the capitalist for overtime work. They would even flatter their line managers or team managers for the opportunity. Because the minimum wage is so low, companies request employees to work overtime to boost productivity. For the same reason, employees are forced to do overtime, resulting in employees doing too much overtime.

Another factor is social insurance. Guangdong provincial authorities offer outsiders very meager social welfare benefits. Enterprises are requested to sign a legal work contract with employees. According to Chinese labor legislation, companies must sign contracts with their employees, and once such a work contract is signed, the employee must be given social insurance coverage. However, the Guangdong authorities are not strict in this regard. Shenzhen divides its social insurance into two categories. About 2 million residents registered in Shenzhen are given “city workers’ social security,” while over 10 million non-­registered residents are either “ghost workers” receiving no coverage, or outsiders covered by “general social security for non-resident workers.” There are big differences in the premiums and benefits between the two. Similar dual systems are used in Shanghai and other big cities. In other words, China’s residence system saves capitalists around the world from spending a lot of money on social benefits.

The social insurance issue illustrates the Chinese model’s biggest problem — the dual system that differentiates between urban and rural areas and does not extend residency status to out-of-town workers. It’s easy to see why this system cannot be changed. Once residency rights are deregulated, who would pay for the cities’ increased social welfare expenditure for the workers? The national government does not want to foot the bill and local governments only care about the interests of their own city and residents.

Some may say that Foxconn is a victim because it offers good benefits, pays high salaries and has people lining up to work for them, but why has misfortune struck this “exemplary high-tech company?” Let us not forget that it is an industrial behemoth sitting at the end of the global production chain. It imprisons and alienates workers and compels them to work overtime in an inhumane enclosed park where they loose sight of the purpose of their work. Foxconn slashes prices to win orders, but who should take responsibility for the resulting problems? Who designed the system? We should be looking to the foreign manufacturing companies of the packaging industry, the multinational capitalists that earn huge profits and the Chinese government that only cares about increasing its wealth and strength.

Read also China's Growth Model Flaws

Read also China's Ten Grave Problems

Read also Life of taxi driver in China

My View:
China has 150 million industrial workers and out of which 120 million (80%) are internal migrant workers who are not covered by any benefits, rights or welfare measures. These workers are compelled to work about 90 hours a week and are paid wages* just sufficient for living in dormitory like accommodation (typically 6 workers sharing a single room). China's growth and prosperity is attributable to exploitation of these workers, destruction of ecological assets and unbridled pollution levels. Ultimate prosperity of a nation will have large middle class as its corner stone. China's prosperity depending on lower class exploitation is unsustainable and sooner or later bubble is bound to burst. 

*Typically, a worker in China earns about half of nation's per capita income for his 100 hour weekly working without any access to benefits, rights & welfare.

China Economy - Fact Sheet

• In 1978, Deng Xiaoping begins China’s opening up reforms leading to rapid economic growth.
• In 1978 China per capital income was $155 where as in 2014 it is $7,590.
• 300 million people have moved from rural areas to cities in the last 30 years, and the same is predicted for the next 30 years.
• Lifted 800 million people out of poverty – an unparalleled achievement. 
• In urban centers in China, poverty has been virtually eliminated.
• China’s development has been driven by the coastal east.
• Half of the world’s concrete and a third of the world’s steel is used annually in China.
• China's development in the rural west is lagging behind. Its per capita income is still below the world average.
• China's growth strategy was to assemble and sell cheap goods to the world.
• The total value of world income is closing is $70 trillion per year, and there are seven billion people in the world, so the average income is heading towards $10,000 per person per year. (Mar 29, 2012)
• No other country has averaged a growth rate more than 9 percent over a 25-year period. Consistently high growth rates are an anomaly limited to a handful of economies in East Asia.
• Today China has become “The Factory of the World”.
• China has contributed to 67% of the total reduction of global poverty during the last 25 years.
• One Child policy, the policy has allowed China to reach goals of significant importance to its population, such as economic growth and stability. Despite appearing absurd and morally questionable to the outside world, the fact that is important is that it works for China.

In China, all development is precarious and is at the expense of exploitation of workers without any limits not only for the prosperity of China but the whole world. While the world enjoys cheap goods produced by Chinese workers, he works and lives in most inhuman conditions.

• China has been an attractive destination for global corporations due to its low wage rates and labor laws that disallow independent trade unions and limit the right to strike. But China does not yet meet international labor law standards.
• Most workers in China’s factories, mines, mills, warehouses, docks and transport hubs still have little or no say in selecting their union representatives, and no means, short of stopping work, to bring recalcitrant employers into direct negotiations over industrial grievances. 
• No freedom for Chinese workers to exercise their basic human rights.  
• The wages of Chinese workers have been suppressed due to the lack of freedom of association. Wages would be higher and rising faster if the Chinese government secured the fundamental freedoms of association and collective bargaining for its citizens.
• In Pegatron, iPhone manufacturer in China, workers earn about $1.85 per hour and pull significant overtime hours to make enough money to cover living expenses. The standard shift was nine hours a day, but that starting in September staff worked an additional minimum of 20 hours of overtime each week, usually split between an extra two hours each weekday and one 10-hour shift on Saturdays totaling 65 hours weekly. With overtime accounted for, the factory's workers earn about $753 in monthly wages.
• Even though Apple is publicly committed to good employment practice and its supplier code of conduct demands that employees in its supply chain are treated with respect and dignity. But in reality illegally long hours and draconian rules for a very small daily wage. Many Foxconn workers manage to go home only once a year.
• Up to 24 people can share one room and the rules are strict, even prohibiting the use of a kettle or a hairdryer. 
• Anything between 60 and 80 hours of overtime a month was normal. One worker produced a payslip showing 98 hours of extra time in a single month – nearly three times the legal maximum (of 36 hours in a month) and in breach of Apple's own code of conduct. The rule that employees should have one day off in seven is often flouted.
• During work, some employees claimed they were forbidden to speak to each other and some were forced to stand for hours without a break. Foxconn, a Fortune 500 company, does not deny it breaks the overtime laws, but claims that all overtime is voluntary.
• A typical working day means getting up at 6.30am, catching a bus for the 30-minute ride to the factory at 7.10am and attending a compulsory – but unpaid – assembly at 8.10am, before starting work at 8.30am. Shifts, including overtime and breaks, end at 8.30pm. Night shifts follow a similar pattern.
• Demand for the first iPad was so intense that workers claim they had to put in a seven-day week during peak production period. "We only had a rest day every 13 days," claimed one "And there was no overtime premium for weekends". 
• They don't have a social life any more. Their life is just working in a factory and that is it.
• In 2010, the most infamous incident of exploitation of workers happened in one of those Foxconn factories, where 18 workers attempted to commit suicide and 14 of them succeeded.
• Despite evident and blatant worker exploitation, there is no legal battle against Foxconn. No one has successfully filed a lawsuit against Foxconn due to flaws in the law and its ineffective enforcement.
• In the HP production unit in Foxconn must complete an action within 3 seconds, standing on the same spot for 10 consecutive hours per day. They were granted with only 10 minutes for a break in the middle of the day for drinking water and visiting restroom.
• Overtime hours in excess of 100 hours was common, and some were even in excess of 200 hours. In 87% of the factories, one day of rest was not guaranteed and daily overtime work exceeding 3 hours was a norm.
• The exploitation of workers is so stunningly pervasive that it virtually happens at ever corner. The firms exploit the workers blatantly, with no fear of being prosecuted.

My View:

Development is defined as simultaneous upliftment of all classes of society. The "Trickle-down theory" which emphasizes that money appropriated for the top would trickle down to the needy is only to characterize economic policies favoring the wealthy or privileged and is unacceptable non-sense. The day is not too far when Chinese workers will get fed up with the exploitation and start ascertaining their rights and rightful share of the cake and then Chinese model of economic development built around "worker exploitation" will crumble like pack of cards. With them companies/economies built around cheap Chinese work force will also crumble. 

In his last interview JRD Tata said "I don't want India to become a super power or super economy. I want India to be a happy nation."

Therefore it makes sense to build our economy, robustly, with fulfilling our national needs as the highest priority rather than chasing the fragile & fluctuating world supply demand chain with ample scope for corruption, laundering, manipulations and mismanagement etc.