It's time for a global minimum wage - Opinion - Al Jazeera English

The real problem has to do with the way the global labour market works. Because of neoliberal economic policies imposed over the past few decades, companies now have the power to rove the globe in search of what CEOs refer to as the "best investment conditions". Poor countries like Bangladesh have to compete with other poor countries to attract much-needed foreign capital by offering the lowest minimum wages, the flimsiest safety standards, the cheapest taxes, and so on. Most economists justify this destructive "race to the bottom" under the banner of "comparative advantage".

As part of this deal, companies no longer have to bargain with local workers - they can opt out of the social contract whenever it suits them. If workers in Savar, say, got together to demand better wages or safety standards, the companies that use them would just start sourcing from somewhere else, leaving them unemployed. Such a move wouldn't take more than a mouse-click at the headquarters of Gap or Wal-Mart.

So workers are made to face a stark choice: accept dangerous conditions and minimum wages of $0.21 per hour, or lose their jobs. The constant threat of replacement keeps workers cheap and docile, to the tremendous benefit of corporate profits.

Wages in many sectors are falling as desperate people the world over compete to sell their labour for less than the next person, even as worker productivity increases and corporate profits reach record highs.

To put it bluntly, the global labour market is rigged in the interest of multinational companies; it is designed to allow them to pump value out of human bodies - mostly poor, brown, female bodies - as efficiently as possible. Those bodies generate the enormous wealth that flows into corporate coffers, but only a fraction of it goes back to them in wages - the vast majority gets pocketed as profits and CEO bonuses.

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Muhammad Yunus, founder of the Grameen Bank and a winner of the Nobel Peace Prize, recently proposed a plan along these lines, arguing for a wage floor of $0.50 per hour. I'm thrilled that Yunus is bringing publicity to this cause, but his plan isn't quite good enough: the wage floor would apply only to the garment industry, and it would be left up to corporations to take action - something we already know they won't do. For Yunus, this would be a matter of "corporate social responsibility" - and brand enhancement - rather than a matter of basic justice.

A bigger problem with Yunus' plan, however, is that a fixed minimum wage would be little use to people who live in countries where it's impossible to survive on even $0.50 an hour. That, and it would unfairly hurt the poorest, lowest-wage countries by eliminating their comparative advantage.

A better idea would be to set the global minimum wage at a fixed percent - economist Thomas Palley recommends 50 percent - of each country's median wage, so it would be tailored to local economic conditions, costs of living, and purchasing power. As wages increase across the spectrum, the floor would move up automatically, so we wouldn't have to constantly pressure politicians to raise the minimum to keep up with inflation. All countries would be treated equally, and countries that presently enjoy a comparative advantage through cheap labour would retain that advantage.

It's time for a global minimum wage - Opinion - Al Jazeera English