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
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.