Asian tigers lured by low pay in the valleys

Far Eastern firms are piling in to Wales, where workers earn less than in Korea, writes Roger Dobson
Click to follow
The Independent Online
Once it was the land of my fathers. Now it's the land of low pay. Wales has become a magnet for Far Eastern firms setting up European factories because it has one of the cheapest workforces in the world.

Just how cheap is highlighted by a forthcoming report from the Low Pay Unit which says the Principality has developed an international reputation for low wages.

Wales 1996 - Land of Low Pay reveals that more than 30 per cent of men and 60 per cent of women earn less than the Council of Europe decency threshold of pounds 6.03 an hour - a sum calculated to provide a decent standard of living.

Vacancies advertised at the Job Centre in Merthyr Tydfil, a run-down former mining town in the valleys, were typical of the rockbottom wage packets being paid to the Welsh. In all 40 per cent of the jobs advertised were offering less than pounds 4 an hour.

An assistant shop manager job (pounds 2.70 an hour) was not only below the European Union decency level, it was pounds 40 a week less than three years ago, before the minimum wage was abolished. A security guard job (pounds 2.20 an hour) was also well below European poverty levels, as was the pounds 2.85 an hour for cleaners.

"Low pay is endemic throughout Wales, in the towns and cities, in the rural areas and in the valley communities," said Huw Edwards, senior lecturer in social policy at Brighton University and former MP for Monmouth, who carried out the Low Pay Unit investigation.

While wages are low, government inducements are high. Regional grants to prospective employers, deregulation of the labour market and standards of employee protection lower than in other European countries have all helped attract firms from Taiwan, Korea and Japan.

The Ronson lighter company, for instance, has moved its production from Korea to South Wales partly because Korean wages are now, on average, higher. In Merthyr Tydfil itself, Korean Halla Euro enterprises has set up shop with a pledge of 309 jobs, while ASAT from Hong Kong is promising 1,000 jobs in Monmouthshire. GSS from Taiwan is pledging 300 jobs in Cwmbran. Three Japanese firms employing more than 3,000 people are also established in South Wales.

Thirty years ago, it was very different. Taiwan and Korea were the world's industrial sweatshops. Imported technology, poor wages and third world economies allowed them to rival the all-conquering Japanese, whose cheap electronics, cameras and motorbikes had already led to the loss of tens of thousands of jobs in the West.

But success brought prosperity for the workers, and the low wages shot up, inspiring Taiwanese and Korean industrialists to look west for bases in Europe.

Fourteen Korean companies have moved to the UK in the last six years, and Wales and Scotland are currently trying to woo the biggest of all, LG International, which could provide 4,000 jobs.

According to Sung Soo Park, Minister-Counsellor at the South Korean Embassy, the main attractions for Korean companies are central and local government inducements - and wage levels.

"The wage levels are very reasonable, particularly compared to other parts of Europe. It offers the right mix of wage and skill levels. The average industrial wage in Korea was pounds 11,208 in 1994 and is probably higher now," he said.

In Mid-Glamorgan, the South Wales valleys area, 51 per cent of men earn less than the decency threshold. In Dyfed and Gwynedd, two of the main rural areas of the Principality, more than 95 per cent of women working full time in manual jobs earn wages below the decency threshold.

A quarter of schoolchildren qualify for free school meals, the highest rate in Britain and almost double that for East Anglia.

Wales's TUC chief, David Jenkins, said: "The Welsh economy has demonstrated that you can respond fairly quickly to absolute unemployment levels. We have unemployment figures unacceptably high, but nevertheless roughly bumping along at the level of the UK average.

"But the price we have paid has been to bring in very quickly huge numbers of quick easy jobs. We have got to work with them helping them and encouraging them to go upmarket in skills and products, and therefore go upmarket in levels of pay. We have to mature the economy. The faster we can mature the companies, the faster we will see pay levels in Wales returning to the UK average."

The Welsh Development Agency rejects the low pay label. Chief economist Brian Morgan said: "When you look at the economy as a whole, wages are 10.4 per cent lower than elsewhere in Britain, but that is because less well paid sectors of the economy are concentrated here, not because people are given more in the Northeast of England for the same work.

"Wales is successful because productivity is high, and workers tend to stick with jobs for longer periods."