Does glob­al­i­sa­tion hurt poor work­ers?

The Myanmar Times - - Views - LAYNA MOSLEY newsroom@mm­

POLITICAL econ­o­mists have long de­bated whether glob­al­i­sa­tion started a “race to the bot­tom” through­out the de­vel­op­ing world – that is, a low­er­ing of labour and en­vi­ron­men­tal stan­dards as govern­ments fiercely com­pete to at­tract multi­na­tional cor­po­ra­tions and sup­ply chain con­tracts.

The ev­i­dence that this is the case, how­ever, is de­cid­edly mixed. In some cases, glob­al­i­sa­tion can worsen labour stan­dards, and in­ter­na­tional in­vest­ment agree­ments can some­times shift bar­gain­ing power to­ward multi­na­tional firms and away from de­vel­op­ing coun­tries’ govern­ments. But in other in­stances, glob­al­i­sa­tion of­fers mech­a­nisms to im­prove the con­di­tions faced by work­ers. More­over, the sources of poor work­ing con­di­tions are of­ten as much do­mes­tic as they are in­ter­na­tional.

Trade and in­ter­na­tional in­vest­ment agree­ments – along with the lib­er­al­i­sa­tion of do­mes­tic fi­nan­cial sec­tors – make it eas­ier for com­pa­nies to move be­tween coun­tries. This al­lows firms to seek more ef­fi­ciency in their pro­duc­tion; to di­ver­sify their lo­ca­tion to guard against political and eco­nomic risk; and to source in­puts from the low­est-cost pro­duc­ers. But at the same time, most work­ers – par­tic­u­larly less skilled work­ers – have fewer op­tions, es­pe­cially in coun­tries with a labour sur­plus.

If govern­ments, ac­tivists or work­ers in­sist on bet­ter work­ing con­di­tions, profit-seek­ing multi­na­tional firms could cred­i­bly threaten to re­lo­cate. Work­ers, with lim­ited voice rel­a­tive to cap­i­tal, are left with lit­tle choice but to ac­cept glob­al­i­sa­tion on cor­po­ra­tions’ terms. But is the sit­u­a­tion re­ally so bleak?

Cer­tainly, tech­nol­ogy and trans­porta­tion in­no­va­tions serve to en­hance cross-na­tional com­pe­ti­tion for in­vest­ment, for sub­con­tracts and for mar­ket share. But even in a world of mo­bile cor­po­ra­tions and re­gional and global sup­ply chains, the races aren’t al­ways to the bot­tom, and the win­ners aren’t al­ways (only) cor­po­ra­tions.

Multi­na­tional firms of­ten care not only about costs but also about the qual­ity of their fin­ished goods and labour force; about rep­u­ta­tion with share­hold­ers as well as con­sumers; and about good gov­er­nance in host economies. Sig­nif­i­cant ev­i­dence sug­gests that multi­na­tion­als pay a wage pre­mium rel­a­tive to do­mes­ti­cally owned em­ploy­ers. And, all else equal, de­vel­op­ing coun­tries that at­tract more di­rectly owned multi­na­tional pro­duc­tion of­fer more pro­tec­tion to work­ers.

The vast ma­jor­ity of em­ploy­ment re­lated to global mar­kets, how­ever, does not take place in the di­rectly owned sub­sidiaries of multi­na­tional firms but rather in firms that sub­con­tract pro­duc­tion. Some sub­con­trac­tors, such as Fox­conn and For­mosa, are them­selves large and multi­na­tional. But many sub­con­trac­tors – es­pe­cially in com­plex and long sup­ply chains – are small, ge­o­graph­i­cally dis­persed and fo­cused on min­imis­ing costs. In such lo­ca­tions, it is dif­fi­cult even for well-in­ten­tioned firms and so­phis­ti­cated rights ad­vo­cates to mon­i­tor re­spect for labour stan­dards. Pri­vate and pri­vate-public reg­u­la­tory ini­tia­tives can help work­ers cap­ture gains un­der th­ese cir­cum­stances, but their suc­cess is not based solely on strong labour in­spec­tors and hu­man re­sources man­agers, or even from the at­ten­tion of con­sumers and share­hold­ers on poor work stan­dards. They must also achieve buy-in from lo­cal and na­tional govern­ments. Pri­vate reg­u­la­tion of­ten com­ple­ments – rather than re­places – public gov­er­nance.

If we want to in­crease the au­ton­omy of de­vel­op­ing coun­tries and their work­ers, we need to pay at­ten­tion to pol­i­tics within those coun­tries as well as trade and in­vest­ment ne­go­ti­a­tions at the in­ter­na­tional level. Do­mes­tic labour laws – and their im­ple­men­ta­tion in prac­tice – make a ma­jor dif­fer­ence. Re­press­ing work­ers can serve not only the in­ter­ests of for­eign firms but also the de­sires of lo­cal elites, who might pre­fer to avoid political chal­lenges and eco­nomic de­mands from labour unions and abun­dant, but less skilled, work­ers.

Chang­ing govern­ments’ in­cen­tives is key: If multi­na­tional firms and their home coun­try govern­ments are will­ing to link labour- and hu­man rights-re­lated op­por­tu­ni­ties with in­vest­ment and trade op­por­tu­ni­ties, and do so sin­cerely – rather than as a veil for pro­tec­tion­ism at home – we can be­gin to right the im­por­tant bal­ance be­tween do­mes­tic cap­i­tal­ists and do­mes­tic work­ers.

Work­ing con­di­tions in many parts of the world are far from ideal. Glob­al­i­sa­tion and tech­no­log­i­cal changes have made it eas­ier to find and pub­li­cise in­stances of forced labour, child labour, poor work­ing con­di­tions and lim­its on work­ers’ ca­pac­ity to or­gan­ise and bar­gain. But for many work­ers, the al­ter­na­tive – mar­riage and ru­ral work at a very young age – may be worse than the sup­ply chain sta­tus quo: an ur­ban fac­tory job that pro­vides a mod­icum of au­ton­omy.

The trick, then, is to iden­tify the con­di­tions that al­low de­vel­op­ing coun­tries to par­tic­i­pate in global pro­duc­tion net­works, but to also en­sure that th­ese coun­tries can re­claim some voice with re­gard to for­eign cor­po­ra­tions and do­mes­tic elites. While this out­come is far from au­to­matic, it is not im­pos­si­ble. – Wash­ing­ton Post

Layna Mosley is a pro­fes­sor of political sci­ence at the Uni­ver­sity of North Carolina at Chapel Hill.

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