Updated: May 4, 2010 00:14 IST

Study on global production networks

Debdas Banerjee
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The global production networks (GPNs) are the worldwide networks of ‘suppliers' interlaced by transnational corporations with direct investments and international outsourcing taking advantage of the WTO that blurred the nation-state boundaries. They account for one-third of world trade. GPN, however, is not a novel phenomenon; outsourcing existed before neoliberal globalisation and the imports of ‘other semi-manufactures' were significant in the U.S. and Europe even in the mid-1970s. But‘decent work' did not face challenges then as it does in contemporary globalised environment.


Although it is called ‘global network', not even half the countries in the world have notable participation in it, since technology diffusion from the North remained restricted until very recently. However, the innovative part is the export of whole production-line to the South. Cheap labour in the developing countries is alluring, as in the apparels and electronics sectors. It is noteworthy that most of the industrial jobs outsourced to the South are jobs that are more unionised in the North. Besides, various domestic regulations are forcing the polluting industries to export the entire production chains to the South where pollution control mechanisms are either weak or ineffective. Hence, industries like steel, cement, and petrochemicals are at the top of the priority list of outsourcing. Perhaps because the book did not intend to guide us to ‘post-development' with such sensitive issues as environmental catastrophe, there is no article on it. Nor is there one on the extraction industries. As a result, the ‘decent work' study is only partial. The GPNs are of three kinds: typical low-technology buyer-driven chain (e.g., apparel); medium-technology product in producer-driven value chains (e.g., automotive); and, the information technology (IT) sector, representing high-technology goods and services.

These industries have undergone significant changes over the past decade, witnessing a rapid expansion of global outsourcing and movement of jobs, notably to India and China. Gereffi and Güler relate the GPNs to a more flexible workforce of contract labour, a large segment of which is generally made up of female and migrant workers. Women workers are losing out to men and this widens the gender gaps in labour market outcomes (Hirway). So, the ‘race-to-the-bottom' is evident.

Barrientos, Mathur, and Sood tell us more about the use of vulnerable labour in the GPN and argue that the monitoring of codes of labour practice have had little impact on freedom of association and non-discrimination, despite the fact that the corporate buyers and their suppliers put their resources in them. Damodaran argues that India has been progressively losing its share in various segments in the international market — for instance, in leather and leather products — in spite of its pro-GPN strategies and policies.

Work pressure

As for advanced technology, the informal sector is steadily expanding in the IT. The disparity in earnings increased within the formal ICT sector more than in non-ICT sector, at least up to 2004-05, according to Sarkar and Mehta. Based on the findings of a 2006 survey, Upadhya argues that, for some reason, there is a high level of job dissatisfaction among engineers in software. Only 50 per cent of the respondents said they would like to remain in the IT profession. The answers of one-third of the respondents were: the job had a negative impact on personal life; work not satisfying; excessive work pressure, and so on. The general message that comes across is that rising formal employment in many upgraded firms is complemented by the use of casual, contract, and other such informal work arrangements that offer poor wages and give no social protection. Firms continuing in the low value-added segments or in lower tiers of global value chains have more modest profits and pay lower wages to workers and often operate with poor working conditions (vide Nathan and Posthuma). Can consumer resistance in the North — witness the pressure from domestic consumers resulting in GAP Inc. stopping its import from India ofapparels made by employing child labour — be a counter-measure? On the whole, this volume will be found useful by those scholars and others interested in this area and may well put the contributors to the international research network in GPNs. The workers in the GPNs may, it is hoped, ultimately land on the right side of bargaining.

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