The luxury of good treatment

We all know that migrant workers have contributed mightily to Bangladesh's growth over the decades. There are also those who will tell us that it’s governments who grow economies. That happenstance of 17,000 migrant workers not being able to get to Malaysia on time simply because the government was incompetent should give us pause about that second contention. If the government can't get simple things like paperwork right then what sort of mess do we think they're making of complex things like an economy?

This newspaper's conclusion that migrant workers deserve better is entirely correct. Good news is, things are going to get better. Despite whatever it is that the government does to paperwork in offices, Bangladesh is getting richer -- and so migrant workers will be better treated.
This is not because richer places become all nice and kind and treat people better. It's because in richer places people won't come and do work if they're badly treated. For there's a basic equation that we have to keep in mind: Rich places are where wages are high; if wages are high then the place is rich.
Wages are determined by the average wage in a place. We can refer to David Ricardo and point out that average wages will be determined by average productivity. Or we can use the more modern Ha-Joon Chang who uses as his example two bus drivers, one in Dhaka, one in Stockholm. They do the same job, same sort of hours, same equipment, but one earns wildly more than the other. Despite the Dhaka job being more difficult (yes, I've seen the buses in both places) it's the guy in Stockholm making more money, reports DT.
Why? Because other wages are higher in Sweden. The true determinant of wages is how much can you earn in the next job over? If he stops driving a bus and starts cutting hair, or changes tires, then how much can he make? That will determine how much the employer has to pay to get him to come drive the bus. It's everyone else's wages that determine the bus driver's. For we can run this from the point of view of the driver too -- how much you have to be paid to drive a bus will depend upon how much you can make cutting hair, digging ditches, and all the other jobs available.
Two bus drivers, one in Dhaka, one in Stockholm. They do the same job, same sort of hours, same equipment, but one earns wildly more than the other.
This is going to be true of migrant workers too. The reason so many go abroad is because the money's better. So what happens when Bangladesh becomes richer? Foreign countries will have to pay even more to attract migrant workers from Bangladesh rather than them earning those higher wages at home. The supply of those willing to go abroad will reduce without those higher wages.
It's not just wages. It's compensation. The whole package of what is gained from going to work.The treatment, the lunchbreak, pension, medical cover -- everything. Including how you're treated by those bureaucrats pushing pencils in an office somewhere. There will come a time in the country's climb to economic riches that people simply will not put up with 17,000 applications getting “lost” in an office.
This newspaper is quite right, migrant workers deserve to be better treated. As do all workers. This is something that is solved by a place getting rich. People with high wages are obviously treated better. But again, it's possible, maybe necessary, to look at this the other way around as well. Richer people, able to gain higher wages, won't put up with bad treatment at work. Precisely and exactly because they can work elsewhere for about the same wages.
That is, as Bangladesh becomes richer the bureaucrats are going to have to get themselves sorted out. Otherwise there will be no migrant workers for them to lose the paperwork for. Which would mean that terrible tragedy, bureaucrats losing their jobs -- and who would employ them at any price?
Tim Worstall is a senior fellow at the Adam Smith Institute in London.