There isn’t solid research or theory to support cutting corporate taxes to boost wages

Fabrizio Carmignani, Griffith University

The argument that cutting the Australian company tax rate will lead to higher investment and wages, more employment and faster GDP growth does not have solid empirical or theoretical backing.

A close look at the economic research in this area shows a lack of consensus. Different studies, looking at different samples of countries, over different periods of time, reach different conclusions.

And the predictions made by theoretical models are sensitive to the underlying assumptions and structures built into the models themselves.

Many of the issues surrounding tax cuts remain unsettled – such as the size or length of the impact, how it affects inequality and the relationship with other government policies.

Read more:
Qantas and other big Australian businesses are investing regardless of tax cuts

The recent International Monetary Fund (IMF) forecast for the American economy highlights some of the issues.

In short, the IMF acknowledges that the recent US tax cuts will have a positive impact on economic growth in 2018-19. However, this is conditional on the US government not cutting expenditure, is likely to be short-lived, and will come at the cost of increased government deficits.

In this light, corporate tax cuts seem to be a long-term pain for a short-term gain, which is probably not what we need in Australia.

Conflicting information

Let’s start with the point that is probably least controversial – that a reduction in the corporate tax rate will lead to an increase in wages.

Think of the output produced by a corporation as a pie. This pie is shared among shareholders (in the form of dividends), banks and other lenders (in the form of interest paid on loans), workers (in the form of wages) and the government (in the form of taxes).

If we reduce the government’s share then there is more for everybody else, including workers. And some data do suggest that wages increase when corporate tax rates decline.

Yet economists disagree on the extent to which wages would actually increase in response to a tax cut.

Some research suggests that this increase might be small, even in a country like Germany, which is often used as an example of the beneficial impact of tax cuts on wages.

Certain aspects of the German economy and industrial relations system make it more likely that German workers will benefit from corporate tax cuts compared to Australian workers.

In Germany, workers’ representatives sit on company supervisory boards, which monitor and appoint members of management boards.

This means German workers have a stronger say when it comes to sharing the pie. For any given decrease in the slice of the government, German workers are more likely to get a bigger slice for themselves. This is not necessarily the case in Australia.

It is therefore difficult to draw implications for Australia from studies that look at the experience of Germany or other countries with significantly different institutional arrangements.

Furthermore, the fact that wages should increase in response to a corporate tax cut does not automatically imply that other economic variables will also respond positively. For instance, the more wages increase in response to a corporate tax cut, the smaller the increase in employment is likely to be.

Read more:
The full story on company tax cuts and your hip pocket

This leads to an even more controversial question: what is the effect of corporate tax cuts on real economic activity, such as employment and GDP growth?

The trickle-down effect of corporate tax cuts rests on the idea that business investment would increase once taxes are cut, which in turn leads to the creation of more jobs and faster economic growth.

However, this line of reasoning neglects the fact that investment decisions in today’s globalised world are not necessarily driven by the corporate tax rate.

Many other factors come into corporate investment decisions, such as the quality of institutions, the proximity to important markets, and the cost of labour (wages).

Because of these other factors, the impacts of tax cuts on employment and growth can be small, short-lived, or conditional on other government policy actions, such as managing debt.

In a similar vein, recent theoretical work that incorporates more realistic assumptions about the economy (such as the distribution of entrepreneurial skills in the population) suggests that a tax cut only has a significant impact on economic growth when the tax rate is initially high.

This means that even within a given country, the effect of a corporate tax cut can change depending on initial economic and policy conditions.

Putting tax cuts in a broader context

Beyond growth and employment, the effects of corporate tax cuts should also be considered in terms of deficit and inequality.

From the point of view of the public budget, a cut in the tax rate has to be somehow financed. How?

A first possibility is that the tax cut pays for itself. This is essentially the idea that as the tax rate goes down, the increase in the tax base (e.g. pre-tax corporate profit) is sufficiently large to ensure that the total tax revenue increases.

However, an increase in the tax base would require a significant and sustained increase in business investment, which, as we have already seen, does not necessarily happen.

The government could increase other taxes, but this means the government would effectively be taking from one group of taxpayers (possibly workers themselves) to give to corporations.

Another option is to reduce some government expenditures. But this could also involve taking from one group to give to another. If the decision is made to cut social welfare and public goods like education and health, then more vulnerable segments of the population will bear the cost of lowering the corporate tax rate. This means more inequality in the economy.

Of course the government could decide to just let the deficit be. This would result in higher debt. But can Prime Minister Turnbull (or President Trump for that matter) accept that?

The ConversationThe central economic challenge for Australia is to promote long-term, inclusive growth. Are we confident that this is what corporate tax cuts will deliver? Based on the economic research that I have read, the answer is no.

Fabrizio Carmignani, Professor, Griffith Business School, Griffith University

This article was originally published on The Conversation. Read the original article.


Blaming immigrants for unemployment, lower wages and high house prices is too simplistic

Robert Breunig, Crawford School of Public Policy, Australian National University and Mark Fabian, Australian National University

Australia should cut its immigration intake, according to Tony Abbott in a recent speech at the Sydney Institute. Abbott explicitly cites economic theory in his arguments: “It’s a basic law of economics that increasing the supply of labour depresses wages; and that increasing demand for housing boosts price.”

But this economic analysis is too basic. Yes, supply matters. But so does demand.

While migration has increased labour supply, it has done so primarily in sectors where firms were starved of labour, and at a time of broad economic growth.

Immigration has put pressure on infrastructure, but our problems are more a function of governments failing to upgrade and expand infrastructure, even as migrants pay taxes.

And while migrants do live in houses, the federal government’s fondness for stoking demand and the inactivity of state governments in increasing supply are the real issues affecting affordability.

The economy isn’t a fixed pie

Let’s take Abbott’s claims about immigration one by one, starting with wages.

It’s true that if you increase labour supply that, holding other factors that affect wages constant, wages will decline. However, those other factors are rarely constant.

Notably, if the demand for labour is increasing by more than supply (including new migrants), then wages will rise.

This is a big part of the story when it comes to the relationship between wages and migration in Australia. Large migrant numbers have been an almost constant feature of Australia’s economy since the end of the second world war, if not earlier.

But these migrants typically arrived in the midst of economic growth and rising demand for labour. This is particularly true in recent decades, when we have had one of the longest periods of unbroken growth in the history of the developed world.

In our study of the Australian labour market, we found no relationship between immigration rates and poor outcomes for incumbent Australian workers in terms of wages or jobs.

Australia uses a point system for migration that targets skilled migrants in areas of high labour demand. Business is suffering in these areas. Migrants into these sectors don’t take jobs from anybody else because they are meeting previously unmet demand.

These migrants receive a higher wage than they would in their place of origin, and they allow their new employers to reduce costs. This ultimately leads to lower prices for consumers. Just about everybody benefits.

Read more:
A focus on skills will allow Australia to reap fruits of its labour

There’s an idea called the “lump of labour fallacy”, which holds that there is a certain amount of work to be done in an economy, and if you bring in more labour it will increase competition for those jobs.

But migrants also bring capital, investing in houses, appliances, businesses, education and many other things. This increases economic activity and the number of jobs available.

Furthermore, innovation has been shown to be strongly linked to immigration. In the United States, for instance, immigrants apply for patents at twice the rate of non-immigrants. And a large number of studies show that immigrants are over-represented in patents, patent impact and innovative activity in a wide range of countries.

We don’t entirely know why this is. It could be that innovative countries attract migrants, or it could be than migrants help innovation. It’s likely that the effect goes both ways and is a strong argument against curtailing immigration.

Read more:
How migrant workers are critical to the future of Australia’s agricultural industry

Abbott’s comments are more reasonable in the case of housing affordability because here all other things really are held constant. Specifically, studies show that housing demand is overheated in part by federal government policies (negative gearing and capital gains tax exemptions, for instance) and state governments not doing enough to increase supply.

Governments have responded to high housing prices by further stoking demand, suggesting that people dip into their superannuation, for instance.

In the wake of Abbott’s speech there has been speculation that our current immigration numbers could exacerbate the pressures of automation, artificial intelligence and other labour-saving innovations.

But our understanding of these forces is nascent at best. In previous instances of major technological disruption, like the industrial revolution, the long-run effects on employment were negligible. When ATMs debuted, for example, many bank tellers lost their jobs. But the cost of branches also declined, new branches opened and total employment did not decline.

Read more:
New research shows immigration has only a minor effect on wages

In his speech, Abbott said that the government needs policies that are principled, practical and popular. What would be popular is if governments across the country could fix our myriad policy problems. Abbott identified some of the big ones – wages, infrastructure and housing affordability.

What would be practical is to identify the causes of these problems and address these directly. Immigration is certainly not a major cause. It would be principled to undertake evidence-based analysis regarding what the causes are and how to address them.

The ConversationA lot of that has already been done, notably by the Grattan Institute. What remains is for governments to do the politically difficult work of facing the facts.

Robert Breunig, Professor of Economics, Crawford School of Public Policy, Australian National University and Mark Fabian, Postgraduate student, Australian National University

This article was originally published on The Conversation. Read the original article.

It would cost you 20 cents more per T-shirt to pay an Indian worker a living wage

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A farmer harvests cotton in Maharashtra, India.

Murray Ross Hall, The University of Queensland and Thomas Wiedmann, UNSW

If we really care about protecting the people who make the things we wear and use, we need to raise wages for workers in supply chains to above the poverty line. Our research shows that this only requires a 20 cent increase in the Australian retail price for a T-shirt made in India.

This small increase can lift wages by up to 225% in India, closing the living wage gap for the most vulnerable workers in the supply chain, such as cotton farmers. The living wage gap is the difference between a living wage and current wages.

Read more: Explainer: what exactly is a living wage?

The living wage is the income required for a decent standard of living for a worker and their family. It lifts the worker above the poverty line and is defined by the costs to meet basic needs such as food and shelter. It also limits the number of working hours per week required to meet these needs.

A living wage has long been advocated as a way to support vulnerable and exploited workers. About 42% of all workers globally are in insecure jobs and have no social protections, 29% remain in moderate to extreme poverty and about 25 million people are in slavery.

Many of the goods we now buy are part of global supply chains. Since the 1980s the production of labour-intensive products such as textiles and footwear has shifted to countries with low-cost labour.

Cost-cutting often impacts those with the weakest bargaining position, such as cotton farmers – cotton prices have been on a downward trend over the past decade. Without realising it, our demand for low prices can cause vulnerable workers in other countries to work for less than a living wage.

Our research calculated the living wage gaps in India, broken down by region, gender, skill and type of employment. For instance, female workers on cotton farms in Gujarat earn 207% below the living wage. Casual female workers in Haryana have a living wage gap of about 34%.

It would take on average a 15 cent price increase on T-shirts in Australia to close the living wage gap for cotton workers in India. Adding another five cents would close the living wage gap for Indian textile workers, and also account for the increase in agent fees, which are a percentage of the production costs.

The living wage gap may be larger or smaller on particular farms or factories, but a 20 cent increase on average would be sufficient to lift all Indian workers in the garment supply chain out of poverty.

Read more: Why the fashion industry keeps failing to fix labour exploitation

The small cost to address poverty and climate change for producing a T-shirt in India. Murray Hall.

How we can raise the living wage

The cost to close the living wage gap in developing countries is small because wages for workers in these countries make up only a fraction of the retail price charged in countries like Australia.

Our work shows it costs about A$5.30 to produce a T-shirt in a country like India and ship it to Australia. The remaining costs embedded in a A$25 T-shirt come from warehousing, distribution and retail costs within Australia itself.

As a result, a 20 cent increase represents a less than 1% increase in the Australian retail price. It would cost only another 40 cents to cover the cost of greenhouse gas abatement. This means an ethically made T-shirt would only cost 2.5% more than current prices.

A roadblock to implementing living wages is simply knowing the source of materials. Only about 7% of fashion companies in Australia know where all of their cotton comes from. Unless an Australian retailer specifies the source of cotton, the decision is made by the overseas textile contractor, often based on price.

Another challenge is that we need an accepted method for calculating and auditing the payment of living wages in the supply chain. The retailer needs to know how much the cotton farmer should be paid and have a system to check it has been done.

Over the past four years consumer pressure has pushed fashion companies to understand their supply chains and to consider paying living wages, but there is still a long way to go.

Read more: What businesses can do to stamp out slavery in their supply chains

In 2012 a group of the world’s largest ethical trade organisations formed the Global Living Wage Coalition.

This organisation has developed a manual for measuring the living wage and requiring? living wages to be paid to their producers. The producers are audited along the supply chain and in return can advertise their compliance with ethical standards. Shoppers will soon be able to look for a label – similar to the Fairtrade symbol – to know that living wages have been paid throughout the supply chain.

The ConversationThe famous economist John Maynard Keynes argued that consumers are not entitled to a discount at the expense of the basic needs of workers. In fact, we only need to pay a small amount more to provide a living wage and make a big difference to the world’s poorest workers.

Murray Ross Hall, PhD Candidate, School of Earth and Environmental Science, The University of Queensland and Thomas Wiedmann, Associate Professor, UNSW

This article was originally published on The Conversation. Read the original article.


What income inequality looks like across Australia

Nicholas Biddle, Australian National University and Francis Markham, Australian National University

With affordable houses increasingly out of reach, wage growth slow and household debt high, Australians are certainly feeling poor. But how do they compare to their neighbours? New Census data confirms there’s a lot of variability in income.

The Census breaks the country up into 349 geographic regions (named in quote marks below), some of which cover more than one major town and some of which group related suburbs within cities. We examined 331 of these regions, excluding those containing fewer than 1,000 households.

The data show there are high levels of income inequality within these regions. A simple way to measure this is to look at the ratio of income between those who are well off (the top 20% within a region) and of those who are relatively disadvantaged (the bottom 20%) in the Census data. In Australia the weekly household income for the top 20% (A$1,579 per week) is 3.5 times the income of the bottom 20% (A$457).

The “Melbourne City” region has the most unequal incomes in Australia, where the top 20% have an income that is 8.3 times as high as those in the bottom 20%. “Adelaide City” (ratio of 5.5) and the “Sydney Inner City” (4.8) also have quite high levels of inequality.

Two of the poorest regions in the Northern Territory also have very high inequality. These are the vast region that encircles Darwin, called “Daly, Tiwi, West Arnhem” (ratio of 5.2) and the “East Arnhem” region (5.3).

However, there are regions with varying income levels, that also had relatively low inequality ratios. The region of “Molonglo”, in South Canberra (ratio of 2.2), “West Pilbara” in Western Australia (2.4) and “Kempsey, Nambucca” on New South Wales’ north coast (2.5) all have low levels of inequality.

For our analysis, we used equivalised household income. Equivalisation is a technique in which members of a household receive different weightings, based on the amount of additional resources they need.

The Australian Bureau of Statistics assumes that the first adult in a household has a weighting of 1, each additional adult a weighting of 0.5, and each child a weighting of 0.3. Total household income is then divided by the sum of the weightings for a representative income.

Incomes across Australia

For the whole of Australia, the equivalised median household income (the income in the middle of the distribution) is A$878 per week. The region with the lowest median income was “Daly, Tiwi, West Arnhem” in the Northern Territory, at A$510 per week.

However, several regional areas like “Maryborough, Pyrenees” (northwest of Ballarat in Victoria), “Kempsey, Nambucca” (NSW), “Maryborough” (between Bundaberg and the Sunshine Coast in Queensland), “Inverell, Tenterfield” (in NSW’s Northern Tablelands) and “South East Coast” in Tasmania all had median incomes of A$575 per week or less.

At the other end of the distribution, households in leafy suburbs of North Sydney – “Mosman” (NSW) had a median income of A$1,767 per week. Areas like “South Canberra” (ACT), “Manly” (in Sydney’s east) and the mining-dominated “West Pilbara” (WA) all had median incomes of A$1,674 or more per week.

We also looked at the extremes of the distribution. We define high income as those households with an income of A$1,500 or more per week. This equates to about 22% of the population. We defined low-income households as having an income of less than A$400 per week (about 14% of households).

Around 40% of households in the “Daly, Tiwi, West Arnhem” region were classified as being in poverty compared to around 6% in “North Sydney, Mosman” region. Conversely, around 60% of households in this region were classified as having high income, compared with only 6% of households in “Kempsey, Nambucca”.

How segregated are we within regions and cities?

While government policy is often delivered at the regional level, people live their lives at the local or neighbourhood level. However, the relatively disadvantaged and the upper-middle class are often segregated within these regions.

Richard Reeves of the Brookings Institute argues the segregation of the upper-middle class in Australia means this group “hoards” the benefits in the region they live in. Among the location advantages he lists are: access to the best schools, opportunities to network with the wealthy and powerful and the ability to disproportionately accrue capital gains on housing assets. To avoid this kind of “opportunity hoarding”, the rich and poor would need to be evenly spread within a region.

A simple way to look at this is through a “dissimilarity index”. In essence, this measures the evenness with which two groups are spread across a larger area. It ranges from zero to one, with higher values indicating a more uneven distribution and zero indicating complete mixing.

Looking at the distribution of the high income. Across Australia, the dissimilarity index has a value of 0.27. This means that around 27% of high-income households would have to move neighbourhoods to make the distribution completely even.

This varies quite substantially by region. “Far North” (encompassing Cape York in QLD) has a dissimilarity index of 0.42. “Auburn” (in western suburbs of Sydney, NSW) and “Playford” (on Adelaide’s northern fringe) also have quite large values.

Our richest regions tend to have the most even distribution of the wealthy, with “North Sydney, Mosman”, “Molonglo” and “Manly” having values of 0.06 or less.

“East Arnhem” has a very high level of concentration of low income individuals by neighbourhood, with a dissimilarity index of 0.70. The next two highest regions (“Katherine” and “Alice Springs”) are also in the Northern Territory, with index values of 0.53 and 0.55 respectively.

We can also compare the measures we used, to find out how they relate to each other. The following figure shows that the richest regions tend to be those with the highest level of income inequality.

However, as inequality goes up, there tends to be a greater concentration of low income households by neighbourhood (there’s also less of a concentration of high income households).

Have and have nots

It’s true that the level of income mobility is higher in Australia than it is in the US. However, Australia also has prominent examples of economic policies that disproportionately benefit the upper-middle class, such as the capital gains tax discount and superannuation tax incentives.

Australia also has a geographically concentrated income distribution, with the rich living in neighbourhoods with other rich people. The poor are also more likely to live in close proximity to people who share their disadvantage.

If Richard Reeves is right, and the spatial segregation of high and low income households reinforces inequality across the generations, then policies that encourage the mixing of different social classes in the same neighbourhood and region should be a way forward.

The ConversationThis article was put together with research assistance from Hubert Wu, Australian National University and Harvard University.

Nicholas Biddle, Associate Professor, ANU College of Arts and Social Sciences, Australian National University and Francis Markham, Research Fellow, College of Arts and Social Sciences, Australian National University

This article was originally published on The Conversation. Read the original article.


Vital Signs: dismal wages growth makes a joke of budget forecasts

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Pay packets rose just 0.5% in the first quarter.
bradleypjohnson/Flickr, CC BY-ND

Richard Holden, UNSW

Vital Signs is a weekly economic wrap from UNSW economics professor and Harvard PhD Richard Holden (@profholden). Vital Signs aims to contextualise weekly economic events and cut through the noise of the data affecting global economies. The Conversation

This week: investor loans continue to rise, unemployment ticks down, wages growth remains distressingly low, and consumers are unconvinced the budget will improve their financial situation.

Now that Australia’s two major political parties (and the Greens) have decided that robbing banks is legitimate public policy, we return our focus to how the Australian economy is actually functioning.

ABS data released Monday showed that investor housing loans rose slightly, up 0.8% on the previous month. The really interesting figures on this front are still to come, since the Australian Prudential Regulation Authority announced tighter macro-prudential measures – especially on interest-only loans – at the end of March. There are already some anecdotal suggestions that these have started to dampen investor demand, but there is no proper evidence yet. The next round of ABS housing finance data will certainly provide some clues.

The ABS also reported this week that first quarter wage growth was distressingly low, with pay packets rising just 0.5%. That puts private-sector annual wages growth at 1.8%. The main concerns here are, of course, for workers struggling to get by and the fact that rising levels of income inequality are not being dented by robust wage growth.

Added to this, however, is the impact of low wage growth on the budget, and the economy more generally. The RBA has pointed out in recent months that around one-third of mortgage holders have less that one month’s repayment buffer. As the cost of living keeps rising, but wages don’t, people with close to no wiggle room get squeezed more and more.

Last week’s budget, and the forecast return to surplus in 2020-21, was predicated in no small part on very robust wage growth.

On budget night I wrote that these wage growth assumptions were bullish and unlikely to eventuate. 3% going to 3.75% annual wage growth looks really aggressive against a stagnating 1.8 – 1.9% (counting the public sector’s slightly stronger growth). When wage growth is lower than it has been since the mid 1990s, how can one forecast with a straight face that the growth rate will double?

Ratings agency Standard & Poor’s certainly understands this. It almost grudgingly reaffirmed Australia’s AAA credit rating this week, but cast doubt on the projected return to surplus, saying “budget deficits could persist for several years, with little improvement, unless the Parliament implements more forceful fiscal policy decisions”.

Figures released Thursday showed the unemployment rate fell from 5.9% to 5.7%. This is seemingly good news, although this ABS series has been notoriously unreliable in recent times.

The workforce participation rate was steady at 64.8% – and this may be a better and more relevant measure of short-term fluctuations in employment.

There was also a continued shift to part-time employment. Total jobs were up 37,400, but people in full-time work fell by 11,600 and the number of part-time jobs was up 49,000.

Consumer confidence weakened a little in May according to the Westpac-Melbourne Institute Index. It was down a point to 98.0 in May (recall that for indices like these 100 is the level at which optimists and pessimists are in equal supply).

Westpac chief economist Bill Evans said:

Respondents’ confidence in housing and the outlook for house prices deteriorated sharply, while the assessment of the budget around the outlook for family finances was decidedly weaker.

And why wouldn’t it be? The budget contained essentially nothing to address the housing affordability crisis, further fuelling concerns that there will be a messy correction to prices.

Meanwhile, the government’s best ideas for how to grow wages and incomes were to waive a white flag about spending restraint, whine about how the Senate won’t pass their legislation (“this is a Senate tax”, said the treasurer on budget day), and launch a populist attack on our five largest banks.

And that attack – the bank tax – will be passed on to consumers, just like the last increase in regulatory capital required by APRA.

So the government raised the taxes of most Australians and blamed the cross-bench. That doesn’t fill me with confidence. And it seems I am not alone.

Richard Holden, Professor of Economics and PLuS Alliance Fellow, UNSW

This article was originally published on The Conversation. Read the original article.


Mexico: Low Wages For Farmers


Victim of Orissa, India Violence Rescued from Trafficking Ring

Christians displaced by Kandhamal violence in 2008 sold for coerced labor or sex.

NEW DELHI, August 25 (CDN) — Nearly two years after large-scale anti-Christian violence broke out in India’s Kandhamal district, Orissa state, a team working against human trafficking on Aug. 9 rescued a 16-year-old Christian girl – one of at least 60 people sold into slavery after being displaced by the 2008 attacks.

The recovery in Delhi of the girl represented the cracking of a network that has trafficked Christian girls and women from Orissa to the national capital, sources said.

“Human trafficking agents operating in the tribal belt of Orissa have targeted the Christian girls who are displaced by the Kandhamal communal violence – we have been receiving complaints of missing girls from Kandhamal after the violence broke out in 2008,” said attorney Lansinglu Rongmei, one of the rescue team members. “Roughly 60 girls are estimated missing and have been trafficked to different states.”

The girl, whose name is withheld, is a tribal Christian who was sold into slavery along with her 19-year-old sister and two other girls, all victims of the 2008 violence; they were trafficked from the Daringbadi block of Kandhamal district to the capital in December 2009, according to the Human Rights Law Network (HRLN). Her sister and the other two girls remain missing.

The mother of the girl accompanied the rescue team the evening of Aug. 9 in the Rohini area of Delhi, said a source from the HRLN Anti-Human Trafficking department on condition of anonymity.

“It was only the joint efforts of the All India Christian Council [AICC], HRLN Anti-Human Trafficking and the area police that made this rescue possible,” the source said.

The rescue team took action after the minor’s mother approached the HRLN of Kandhamal for help, which in turn called the Delhi office. Team members said they were disappointed by the reaction of police, who were initially cooperative but later “just unwilling to help,” in the words of one member.

The girl was used only for labor, although she was sexually harassed, sources said.

Rongmei told Compass that police refused to file a First Information Report, telling rescue team members, “No rape of the victim took place as per the medical examination, and there was no need for a case registration against anyone.”

The rescue team was not given a copy of the report of a medical examination at Bhagwan Mahavir Hospital, Pitampura, in Delhi, but they were told it indicated no sign of rape.

“It is confirmed that she was not raped,” said Madhu Chandra, spokesperson of the AICC and part of the rescue team. “She was physically abused, with teeth bite marks and bruises on her body – her neck, leg and right hand.”



The girl stated that a well-known woman from their village in Kandhamal district gave her and her sister a false promise of safe and secure work in Delhi as gardeners.

Instead, operatives brought the sisters and the two other girls to a placement agency in Ratala village in Delhi, Sakhi Maid Bureau, which was run by a man identified only as Montu.

The HRLN source told Compass that the girl was with the placement agency for six days as the owner, Montu, attempted to rape her on several occasions. She was threatened, beaten, drugged with alcohol and sexually molested, the source said.

The girl said her sister and the other two girls were treated the same way.

She was placed in a home in Rohini, Sector 11, as domestic help beginning in January. Until July, she said, she was treated relatively well there, except for a few instances of being slapped by the lady of the house. Then the family’s 10-year-old son began to hit her and their 14-year-old son tried to assault her sexually, and she tried to flee earlier this month.

The girl told the rescue team that she informed the lady of the house about the elder son’s misbehavior, but that the woman stated that she could do nothing about it.

“She bears marks from being beaten on her right hand by the younger boy,” said Chandra.

He told Compass that the owner of the placement agency collected the girl’s wages from the family who employed her, promising to send the money to her mother in Kandhamal district, but that he failed to do so.  

Compass was unable to meet with the girl as she was still traumatized and undergoing counseling sessions. The girl’s mother sobbed for her other daughter, grieved that no one knew what condition she was in.

Montu, the placement agency operator, has absconded, according to police.


Passive Police

Prasant Vihar Police Station House Officer Sudhir Kumar confirmed the rescue team’s accusation that he refused to register a complaint in the girl’s case.

“The victim is from Kandhamal, let her go back to Kandhamal and register her complaint there,” Kumar told Compass. “No rape of the victim took place as per the medical examination, and thus there is no need for registering a case against anyone.”

Assistant Commissioner of Police Sukhvir Singh told Compass he had no explanation why the girl’s complaint was not registered, but he insisted on having her and the rescue team return.

“We will file their complaint if they come back to us now,” he said.

Karuna Dayal, coordinator of Anti-Human Trafficking Initiatives at HRLN, led the rescue team, which also included AICC Legal Secretary Advocate Rongmei, Chandra and Ashis Kumar Subodh of the AICC, and three others from the HRLN – Afsar Ahmed, attorney Diviya Jyoti Jaipuria and one identified only as Sangram.

Dr. John Dayal, secretary general of the AICC, said large-scale human trafficking in Christian tribal and Dalit women of Kandhamal district is one of the worst problems in the aftermath of the Kandhamal violence.

“Police have made arrests in the nearby Andhra Pradesh and other states,” he said. “Because of the displacement due to the violence, they lost their future, and it is very easy for strangers to come and lure them. Community and family life has been disrupted; the children do not have the normal security that growing children must have. Trauma, unemployment and desperate measures have resulted in the loss of childhood, forcing many to grow up before their age.”

The AICC is calling on the National Commission for Women, the National Commission for Scheduled Castes and the National Commission for Scheduled Tribes to investigate, he added.

Report from Compass Direct News


Christian Child Abducted, Forced into Bonded Labor in Pakistan

Muslim landowner offers to remove chains from 11-year-old boy if he converts to Islam.

WAZIRABAD, Pakistan, June 21 (CDN) — An 11-year-old Christian boy here is growing weak and ill from malnutrition from working in slave-like conditions for a Muslim landowner who kidnapped him and is forcing him to work off his family’s debts, his mother told Compass.

Katherine Bibi said landowner Ashraf Cheema of Dhonikay village, Wazirabad, has offered her son better conditions and possibly cancellation of the debt if he will convert to Islam.

“He is frequently invited to convert to Islam by Ashraf Cheema, and in return he is promised that he will be freed from the iron chains and his work will be eased and he will be served better meals,” she said. “Cheema has said, ‘The debt of your father and brother might also be forgiven if you convert.’”

Young Danish Masih works without break from 4 a.m. to 11 p.m., often in iron chains, on half a loaf of bread per day, according to Dawood Masih of the National Commission of Justice and Peace (NCJP).

“Due to the lack of sleep and immense physical and mental pressure, he is becoming weaker and ill,” Dawood Masih said. “And he is doing this bonded labor without any kind of leave, including sick leave, for the last one-and-a-half years, in place of his father Riaz Masih and elder brother Adnan Kashif.”

The boy’s father and older brother had been working for Cheema to pay off a debt of 142,000 rupees (US$1,640), but their employer was neither paying their monthly wages nor deducting the amounts from their debt, said Emmanuel Berkat Gill of the All Pakistan Minorities Alliance (APMA). Riaz Masih’s monthly wage was 3,000 rupees (US$35), and Adnan Kashif earned 2,500 rupees (US$29) per month.

Cheema also extorted land worth 35,000 rupees (US$404) from the boy’s older brother, again without deducting the amount from their debt, and ransacked the family’s house in Ali Naggar village, stealing Katherine Bibi’s dowry worth 200,000 rupees (US$2,308), she and Gill said.  

“Being a rich, powerful and influential Muslim landowner, Cheema did all of this and also had the cruelty to not deduct the amount from the debt,” Gill said.

Suffering under Cheema in this way, the family decided to flee to Islamabad, 165 miles (102 miles) away, Katherine Bibi said. About 18 months ago, however, the peaceful life they had begun anew was shattered when Cheema abducted their youngest son, also known as Mithu, and took him to his farmhouse at Dhonikay village near Ali Naggar in Wazirabad.

“After all these cruelties, Ashraf Cheema owes us some amount, rather than us owing him,” an inconsolable Katherine Bibi told Compass by telephone.   

She has gone to court to recover her son – both her husband and older son do not risk provoking Cheema by attaching their names to the case – and on June 10 District and Sessions Judge Chaudhary Muhammad Ilyas sent a bailiff to Cheema’s farm to secure the return of the 11-year-old.

“But the bailiff returned unsuccessfully without Mithu, as Ashraf Cheema, being an influential and rich landowner, was told beforehand about the raid by an anonymous insider, and he hid the child,” Katherine Bibi said.

She said that since the bailiff failed to recover her son, Cheema has hurled threats at her and her husband, saying, “After this raid by the bailiff, you will neither be able to get back your son, nor will you be granted a cancellation for your debt.”

After joint efforts by Gill of APMA and Dawood Masih of the NCJP, however, Cheema agreed that if Riaz Masih would work in place of his son, he would release the child, Gill said. When Gill, Dawood Masih and Riaz Masih went to Cheema’s farmhouse, however, the landowner went back on his word and refused to hand over the boy.

Contacted by Compass, Cheema said that no such boy works at his farm or fields, and that “someone must have misled you.”

Besides the court recognition of the abduction, however, Gill and other credible sources assert that Danish Masih works from dawn to dusk under a sizzling summer sun without any break or meal.

At press time local Christian leaders had petitioned the deputy superintendent police of Wazirabad to recover Danish Masih.

Report from Compass Direct News


Pakistani Muslims Allegedly Poison Christian Employees to Death

Two brothers die, third in critical condition, after complaining they were not paid.

GUJRANWALA, Pakistan, December 15 (CDN) — Muslim employers of three Christian sanitation workers at a banquet/wedding hall here allegedly poisoned the three workers yesterday, killing two of them; at press time the third was struggling for life in intensive care.

The father of the three workers, Yousaf Masih, said the owner of the hall, along with the manager, poisoned his sons because they were Christians who had dared to ask for pay owed to them.

Imran Masih, 29, and Irfan Masih, 25, died at the Ferozewala Pul Banquet & Marriage Hall after being forced to drink something that was heavily poisoned, Yousaf Masih said. The third worker, 23-year-old Aakash Masih, was in critical condition at the Intensive Care Unit of Civil Hospital Gujranwala, in Punjab Province.

“It appears from the position they were in that they were forced to consume some kind of poisoned drink, or a drug, and they were left there to die,” Yousaf Masih said. “The administration of the banquet and wedding hall did not call a hospital or take them to a hospital – instead they called us after the death of two of our loved ones.”

The Peoples Colony police station has registered a murder and deception case against Imtiyas Warriach, owner of the Ferozewala Pul Banquet & Marriage Hall, and hall manager Abid Virk. At press time they remained at large.

The chief of the Peoples Colony police station was not available for comment, but an officer told Compass that the two suspects would be arrested soon.

The family learned of the deaths when another of Yousaf Masih’s sons, 21-year-old Javed Masih, received a telephone call at home from the owner, Warriach, saying that his older brother Imran Masih was lying dead on the floor of the wedding hall.

Because they had not been paid, the three brothers had left the hall to work elsewhere before returning this past weekend. Javed Masih said he spoke by telephone on Friday (Dec. 11) with Warriach, when the owner called asking for his three brothers to return to work.

“The owner and manager of the wedding hall called me in the early morning of Dec. 11 and pleaded for my three brothers to rejoin and start working,” Javed Masih said. “They promised to reimburse their previous outstanding wages, as well as pay them a Christmas bonus and overtime. At this my brothers agreed and went to work the next morning.”

When Yousaf and Javed Masih were summoned to the wedding hall yesterday, they found Imran Masih and Irfan Masih dead. Aakash Masih was alive but lying still on the floor, they said.

Yousaf Masih said his sons had long told him that owner Warriach and manager Virk refused to pay their daily wages, and that the managers and staff members at the hall spoke derogatorily to them for being Christians.

“On demand of their daily wages, the owner and manager had threatened them that they would continue to work without payment or face the dire consequences,” Yousaf Masih said. “After my sons rejoined as sanitation workers, both Warriach and Virk started to make fun of them for leaving the job previously. Both the Muslim men mocked my sons for being Christian and called them by pejorative names such as ‘Choohra.’”

Yousaf Masih, 47, told Compass at the Sargodha offices of human rights group Rays of Development Organization that his sons had worked at the same wedding hall since the day it opened in 2005. Sobbing, he said that the owner and manager had never paid them their full wages during that time, so they had begun looking for other work a few weeks before the Islamic festival of sacrifice, called Eid-ul-Azha.

Muslims refrain from marrying during the Islamic month of Muharram, so in the small window of time between the start of that month and the end of the Eid-ul-Azha festival, wedding halls thrive and require all available help, he said.

Javed Masih said the bodies of Imran Masih and Irfan Masih were moved to the morgue at Civil Hospital Gujranwala for autopsy.

Report from Compass Direct News