US retailers and manufacturers are reaping enormous profit in the garment industry, setting wages with little relation to productivity. "In Mexico, for example, apparel worker are 70% as productive as their U.S. counterparts, yet they earn just 10% as much per hour," according to surveys by Kurt Salmon Associates Inc. .
How Sweatshops Affect Economy.
In the sweatshops the workers are on temporary contracts and can be fired any time and no union is allowed. The "making of garments- is carried out in "export processing zones-. The advantages of these industrial areas for designers are low or no taxes and cheap labour. These zones offer benefits to the country by creating jobs, local businesses can increase profits as people spend their wages and locals learn new skills. Following the example of name-brand giants like Nike and Tommy Hilfiger, many other U.S. corporations are now "globalizing." What this means, among other things, is that they are closing down their U.S. factories, laying off tens of thousands of American workers, and moving those jobs overseas to nations that do not enforce laws to protect their workers or the environment. Luckily Canadians can receive unemployment(if they worked a number of sufficient hours), workers in Burma receive pennies for doing three to four times the work. The argument in favor of globalization is that moving these jobs into undeveloped nations will stimulate local economies and improve the standard of living in the nations that "host" these sweatshops. But in fact, quite the opposite is true. Third World nations have to compete by offering these contractors nearly tax-exempt status, meaning that the companies pay nothing for the infrastructure (roads, water, power, sewage, etc.) that the host nations build to lure the contractors in. The contractors then surround themselves with walls and fences and military guards, secluding themselves in so-called "Free Trade Zones" or "Export Processing Zones," where they are immune from local laws and hidden from public scrutiny.