This lady rolls one thousand cigarettes like this every day. She sells them for 15,000 Kyats. Of that, she gets to keep 2,500. That’s just over $2.
It takes her around 25 seconds to roll one cigarette. Every one hundred she has to stack and wrap, and every so often she has to prepare new leaves, order her tools, set aside new filters, manage supplies. That’s aside from family duties. So using 30 seconds per cigarette on average for the entire day, that’s eight and a half hours of repetitive work a day. For $2 per day, she’s making just under 25 cents per hour, about one-third of the price of a regular cigarette in the UK.
She is the final assembly segment of the value chain. That means, she’s a worker. No rights, no unions, no capital, no paid holidays, sick leave or insurance, never mind pension. What prevents her from rising up the value chain and capturing more of the margin is primarily a lack of access to capital:
Currently, she is supplied with the materials needed and produces one thousand cigarettes per day which she delivers to a vendor who in turn takes care of distribution. He receives the difference between the 15 Kyats per cigarette and market price, which can be two or three times that by the time it’s labelled and hits the shops (street vendors mainly). To buy the supplies directly, she would have to buy a larger amount, probably a month’s supply, of chopped tobacco, betel leaves for the filter, and leaves for the wrapping of the cigarette. At most, the cost per daily supply is 15,000 less the 2,500 Kyats she receives, so 12,500, which over a month is less than 400,000 Kyats or $350. If she can retain one of the two dollars she makes every day, it would take her a year to save for this. If we assume the supplier makes a profit of only 2,500 Kyats per day of her work, that would still double her income if she managed to capture this part of the value chain. The additional $50 per month could easily cover a 10% monthly interest charge on a loan for $350, which is probably what microfinance initiatives would charge, though say she found someone willing to lend at 5% (which is still 60% annualised!), she would increase her income by over $30 per month, or 50%, or a dollar a day. On the other hand, should there be issues with the supplies she buys, or if these spoil or get lost or stolen for example, she is at risk for $350, with 5% monthly compounding interest, a perfect debt trap. So would she take the risk for this dollar a day?
An alternative could be to form a commune, still working from home, but sharing the monthly supply with a few other workers, thus reducing the value of supplies at risk.