Globalisation: cheap labour, cheap products

The international textile and garment subcontracting chain is well known and researched. In brief the chain has evolved and work has become more precarious (or flexibilised) since the 1970s, when Transnational Corporations (TNCs) opened their own factories in Hong Kong, Taiwan, Singapore and South Korea and they directly employed workers.

In the late 1970s and early 1980s brand label TNCs moved to a more decentralized system, contracting manufacturing out to factories that they did not own and this system, with some changes, is currently in place. Producing countries were forced to open up their economies, to export orientated growth, under World Bank and IMF Structural Adjustment Programs (SAPs). This occurred firstly in the Philippines, Indonesia, Thailand, Malaysia and China and later in India, Bangladesh, Pakistan and Sri Lanka and more recently in Laos, Nepal and Vietnam. It was also during this period and under SAP programmes that free trade or export processing zones were opened as a way of facilitating export orientated growth. Zones provided numerous incentives and infrastructure to entice foreign investors and were generally militarized with access strictly controlled and trade unions prohibited. Long standing campaigns, some supported by ExChains, have opened up some space for organising in various Free Trade or Export Processing Zones (FTZs, EPZs).

Under this model, brand label TNCs no longer directly employed workers and maintained that the wages and conditions of workers were not their responsibility. It also enabled TNCs to maintain design control of the label, hold onto the majority of profits generated by the label and the research and marketing functions. At the same the subcontracting system enabled production to be shifted to countries that offered the lowest price (including low wages) with the best value for production of their goods.

Current trends in the garment industry suggest there will be a consolidation of power between the transnational manufacturer, their subsidiaries or partners, which supply raw materials and logistics (including transportation) and the manufacturing factories. There will also be a much closer relationship between the transnational manufacturers and the biggest global buyers. Leading to increased competition between governments to keep TNC subcontracted production in their countries. In terms of campaigning the reduction in the number of global buyers lends itself to fewer and more clearly defined targets for lobbying.
While TNCs enjoy increased legal protections against governments, workers rights are being continually undermined through deregulation. Workers throughout the entire sub contracting chain are experiencing work intensification and their work is becoming more flexibilised or precarious. According to an Oxfam (2004) report:

“it is no coincidence that the rise of the ‘flexible’ worker has been accompanied by the rise of the female, often migrant worker...[Corporate rights are becoming stronger] while..[workers rights] rights….are being weakened and women are paying the social costs”.

This is as true for retail workers in the north as it is for the mostly women workers who produce the goods.

The buying or purchasing practices of TNCs throughout the subcontracting lack transparency and contribute to the exploitation of workers. Tight deadlines, low (in real terms) unit prices for goods being produced, often short term contractual relationships, lack of disclosure of supplier lists and lack of transparency to unions at the factory level of pricing information are passed onto workers by local managements. This business model lowers wages, intensifies work and if unions do exist, means that unions have inadequate information to collectively bargain effectively. This model is not conducive to workers claiming their human rights and ignores that labour costs are a very small part of production costs and that productivity can increase when unions are present in the factory.