Fair Trade – Is It Really Better for Workers? A Case Study of Kaisa Grass Baskets in Bangladesh
Poe, Keith; Kyle, Steven C.
This paper analyzes the extent to which fair trade organizations increase wages for rural poor women in Bangladesh. Fair trade is a fusion of market-oriented business with grass-roots activism attempting to reduce poverty through market mechanisms by creating trading partnerships between poor artisans and rich consumers. The intent of fair trade organizations is to return a greater share of value-added to the artisans as wages or other non-monetary benefits. Information for this study was collected through interviews with a variety of fair trade organizations, staff and artisans in Bangladesh over the summer of 2005. To test the hypothesis that fair trade organizations increase incomes for the rural poor, particular attention was given to an NGO, a Non-Profit company, and a For-Profit business that export nearly identical kaisa grass baskets. Worker incomes hover around subsistence levels and are not very different from what agricultural day laborers in the surrounding areas receive. The For-Profit business pays more in wages than the NGO and Non-Profit company, bringing into question the effectiveness of Fair Trade as a mechanism for raising incomes of the poor in low income countries such as Bangladesh .
WP 2006-21 October 2006
Charles H. Dyson School of Applied Economics and Management, Cornell University