No. 68, June 2017

No. 68 (June 2017)

Neoimperialism and Labour Compression

-- S. Pratap and A.J.C. Bose1

Neoimperialism, by way of a new international division of labour, has emerged in the shape of ‘global value chains’ over the last two to three decades. Taking advantage of increased openness of developing countries to foreign investment, transnational corporations based in the developed countries have fragmented production processes across different low-wage locations. Only a negligible share of the value is captured in the developing countries, and the rest is captured in the developed countries, the lion’s share by the transnational corporations. The widespread labour protests in Asia clearly testify to the reality of compression (degradation and repression) of labour in these chains.


A value chain refers to all the value-adding activities in production and distribution, linked together in the making and selling of a commodity. A production chain, as a subset of the value chain, refers to the value-adding activities in the production of a commodity. Various firms in the production chain are linked through contracting and subcontracting relations, as also arm’s-length ‘purchase’ transactions, and these firms can be classified into a minority of lead firms and a majority of supply chain firms. Value chains exist within and across countries, and it is impossible to track down all the firms/producers and workers in the production chains (Bose and Sinha, 2012a; JCB, 2013).

Neoimperialism or neoliberal-imperial globalization, governed by supra-national institutions such as the WTO, World Bank, IMF and OECD, has increasingly institutionalised international capital mobility. That is, increasingly governments have removed restrictions on flows of capital in and out of their countries. This has provided a stable base for a new international division of labour that has taken shape in global value chains (GVCs). It is no wonder that, over the last thirty years, a voluminous literature on GVCs or global production networks (GPNs) has accumulated. This literature gives an industry-centric view of economic globalization that highlights the linkages between economic actors, and across geographic space.  Sydor (Undated) gives a nice and brief definition of a GVC thus: “A global value chain describes the full range of activities undertaken to bring a product or service from its conception to its end use and how these activities are distributed over geographic space and across international borders”.

As Helper and Krueger (2015) point out, we are here referring, more concretely, to how in recent decades,

“economic activity has become fragmented in a variety of ways, with different phases of production often located far away from each other. A GVC links companies, often in multiple industries and multiple locations, to design, produce components, assemble and distribute a final product (such as a car or a computer). A canonical example is Apple’s iPod. Apple designed the product largely in the US, but does not manufacture it. The iPod’s parts come from the US, Japan (hard disc drive from Toshiba), Korea (memory from Samsung), and China (small parts from anonymous companies). The manufacturing is overseen by Taiwanese companies with factories in mainland China”.

The nature of international division of labour that the massive GVCs literature has unravelled to us, from the viewpoint of work and workers, is such that the low value-adding, highly labour-intensive links in the value chains are performed in the developing countries. The transnational corporations (TNCs), mainly based in the developed countries, which do this outsourcing,  are able to capture the major share of profits by their effective control on high value adding R&D intensive operations of the value chains and their monopoly on markets and finances (see Chang et al., 2012;  Cattaneo et al., 2010; Garwood et al., 2014).

Apple, for example, captures about one-third of the total value added; the value added in China from assembly, testing, and packaging is just about three per cent or less of the output price. Studies of tablets, mobile telephones and laptops suggest a similar division of activities and value in global production, in which advanced nations specialise in capital and high skilled labour, capturing most of the value added (see Helper and Krueger, 2015). The paper by Kraemer et al. (2011) is an excellent study of this, perhaps for the first time, in respect of Apple’s iPad and iPhone. TNCs even capture the “value added” in T-shirts, where there is no R&D; and hence the importance of the role of neoimperialism as a system needs to be recognised, which Smith (2015) stresses, and stresses so well.

In the following, we draw a bit on Pratap (2014).

1. GVCs and TNCs
The process by which within-country value chains progressively spread across countries is reflected in the expansion of operations of transnational corporations across the globe. In 1990, the foreign affiliates of the top hundred non-financial multinationals of the world accounted for about one-third of their total assets and less than half of their sales and employment, but by 2008, they accounted for about 60 per cent of their total assets and employment and a far greater share of total sales. This was largely achieved through mergers and acquisitions, that increased at an alarming rate, reaching an all-time high of $4.38 trillion in 2007. The stock of foreign direct investment  increased from 7.0 per cent of world GDP in 1980 to about 30 per cent in 2009. Currently, the revenues of the top 500 global corporations  equal about 35-40 per cent of world income. By and large these corporations control all the GVCs.

As the product passes through different links of the chain, it moves from country to country. Thus the expansion of GVCs is also reflected in an overall increase in trade among developing countries, and particularly in the increasing share of parts and components in manufacturing trade. In Integrating Asia, the share of parts and components (PCT) in the manufacturing trade increased from 24.3 per cent in 1996 to 29.4 per cent in 2006. PCT trade among ASEAN countries increased from 35 per cent of manufacturing trade in 1996 to 43 per cent in 2006.  Integrating Asia includes 10 members of ASEAN (Brunei Darussalam, Cambodia, Lao People’s Democratic Republic, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) plus China, Hong Kong, India, Japan, South Korea and Taiwan.

There are relatively developed value chains across East and Southeast Asia (see Pratap and Bose 2015a), with China as the hub of these networks. By comparison, South Asia’s integration into GVCs has been delayed and slow, as is reflected in the near absence or very weak regional network of value chains. However, this applies more to those industries where the regional network of value chains has emerged as major strategy of profit maximisation (e.g. the electronics GVC). In other industries, such as textiles and apparel, in which regional networks of value chains do not matter much, the South Asian countries are increasingly integrated in GVCs. Similarly in the automobile industry, in which the main assembly plants are required to be located in the vicinity of markets and a major section of supplier networks are required to be located in the vicinity of main plants, India has emerged as an important production centre.  And even in a situation of lack of a regional value chain network, India is gradually emerging as one of the hubs of electronics industry by virtue of its growing market. Currently Indian industries, particularly in electronics and automobiles, are integrating more with East and Southeast Asia, rather than expanding their value chain networks in South Asia. This is reflected in the fact that ASEAN countries accounted for more than 10 per cent, and East Asian countries more than 34 per cent, of India’s manufacturing imports. It is expected that with integration of South Asian economies, their integration with GVCs may also be accelerated and India may emerge as a regional hub of these value chain networks.

The nature of the GVCs in Asia is such that the TNCs based in developed countries (North America, Europe and Japan) dominate and occupy the Own Brand Manufacturer (OBM) positions. For the most part firms from the newly industrialised countries (Hong Kong, Taiwan, South Korea, Singapore, and also Malaysia), along with the TNCs of developed countries dominate at the Original Equipment Manufacturer  (OEM) and Original Design Manufacturer  (ODM) positions. And the developing countries of Asia are typically placed at low value-adding, highly labour-intensive positions of the GVCs.

In the 2000s, however, some significant changes emerged in the Asian structure of GVCs. South Korea increasingly moved up the value chain with the emergence of a significant number of globally competitive OBMs (along with greater specializations at the OEM and ODM levels), and Taiwanese firms consolidated their position as ODMs, with high technological capabilities. Hong Kong and Singapore gradually emerged more as trading and financial centres than manufacturing centres, and they moved further up in the value chains and acquired the positions of managers and financiers (service providers) of the GVCs. Recently, Malaysia also has entered the group of newly industrialised countries and moved up the value chains to mainly the level of OEMs and ODMs, and with some OBMs in certain sub-sectors of electronics and automobiles.

Mainly by virtue of their huge economies with huge home markets, many Indian and Chinese firms have moved up the value chains to the level of OEMs whereby a number of firms were able to emerge as competitive brands in their local markets, and a few emerged as globally competitive OBMs. However, the upward movement in the value chains in China and India is unlike that of the newly industrialised countries wherein the whole economies moved up the value chains and the lower ends of the value chains were transferred to the under-developed, low-wage economies in the region. Both in China and India, where there are huge regional disparities (inbuilt in the process of capitalist development) in level of socio-economic development as well as in wages, there is immense scope for retaining their position as production hubs for exceptionally longer periods by shifting the low ends of the value chains to low wage locations within the country. In China, therefore, even if in the overall picture the major trend remains that the industries in major special economic zones have moved up the value chains, the labour intensive operations have been outsourced to low wage locations in hinterlands. Increasing employment opportunities in hinterlands have thus significantly reduced the flow of migrant workers to major zones,  creating a shortage of labour. This in turn has put further upward pressure on wages in major zones such as the Pearl River Delta, and further compelled the industries to shift to other low wage locations. In recent years, with the increase in wages in China, orders worth tens of billions of dollars have shifted from China to various countries, mainly in Southeast Asia. Increasing amounts of garment orders were shifted from China to Cambodia and Bangladesh, and some labour-intensive firms in electronics were closed down. This gives a clear signal that China is compelled to move up the value chain in terms of specializing in OEMs, ODMs and OBMs, and in general it may lose in low value-adding manufacturing industries, such as garments and labour intensive electronics.

Indonesia is another large economy in Asia with diversified industrial base and a strong possibility of emerging as another regional production hub in general but with a major focus on electronics industry. The opening of production facilities of many global electronics brands, OEMs and ODMs including Foxconn, in Indonesia as well as India clearly indicates that these countries may emerge as new production hubs of the electronics industry. Thailand is emerging mainly as an automobile production hub for the sub-region, and it is decisively moving up the value chain in this particular industry. Countries such as Sri Lanka, Bangladesh, Pakistan, Vietnam and Cambodia, along with India and China are emerging as major centres of textile and apparel value chains.


2. War against Working People
The export-led growth models in the Asian countries which have condemned themselves to neo-colonial status, combined with international mobility of capital under the aegis of neoimperialism, have created dynamics in which all the developing countries are competing with one another for a greater share of FDI and exports, and this competition ultimately takes the form of waging a war against the working people in their own countries. Amendments of labour laws in favour of capital, denying rights to organise and collectively bargain, large scale informalisation (contractualisation/casualisation) of employment, and repression of trade unions and labour movements, are all targeted to keep wages low and create safe havens (dreamlands) for foreign investors. All these factors drastically reduce labour organisation and the collective bargaining power of labour.

Informal/non-regular workers are increasingly making up a greater and greater share of the workforce in almost all countries and all industries. For example, in the Indian context, analysts of NSSO data on employment and unemployment have shown repeatedly that a large majority of non-agricultural workers (77.1 per cent) have no written job contract in the labour market and close to 70 per cent do not enjoy social security (Shyam Sundar, 2016). In his field work, Bose (2012a) had found non-regulars in the range of 70 to 85 per cent in the lead factories, and almost 100 per cent in most of the supply chain factories. According to a union called Honda Motorcycle & Scooter 2F Kamgar Samuh, recently this brand or lead company threw out the regulars at Tapukara and replaced them with 100 per cent contract workers. Suzuki India now, as Maruti workers say, unabashedly runs its Manesar plant with cent per cent informalisation. In such a milieu as this, which is almost universal, the collective bargaining power of labour at the firm level has declined drastically. Furthermore, the minimum wages are becoming maximum for most workers, irrespective of experience and seniority. Minimum wage legislations and Minimum Wage (MW) Boards periodically revise the minimum wages to adjust them for inflation, but a wage increment policy is not included in MW legislation in any country. MW in most of the countries is actually below the amount that one arrives by the accepted methods of MW determination, and the process is never transparent, with the break-up for different items that make up MW never disclosed.

The other side of the same dynamics  can be seen in the developed countries. Shifting of industries from these countries has led to serious unemployment problems.  Informalisation of workforce, along with cuts in social security benefits, has increased their vulnerabilities manifold. The cumulative impact is felt in the declining collective bargaining power of labour.  Recurrent capitalist crisis is another important factor that increases the vulnerabilities of labour both in South and  North. The workers in countries more dependent on exports suffer the worst. This was reflected in the 2008 global financial crisis, when millions of workers in Asian developing countries lost their jobs, including those in India, Pakistan, China, Malaysia, Cambodia, Vietnam and elsewhere.

All in all, the whole development based on export-oriented growth has benefitted only a small section of people in developing countries, who are engaged in managing and facilitating the GVCs. These include enterprise owners, managers, engineers, financiers, big traders, professionals in various services, and those running or engaged in higher positions in educational institutions, bureaucrats and politicians. On the other hand, this pattern of development increases the precariousness of the majority of the working population. The pattern of economic development has no doubt changed the composition of GDP from agrarian to urban/industrial, but this change is not reflected in the structure of the workforce. Therefore major sections of workforce are compelled to survive on tiny agricultural holdings or in precarious informal sectors. This economic development was also accompanied with large scale dispossession of the people from their means of livelihoods. The cumulative impact of the appropriation of the resources of the small producers has been exceptional expansion of the reserve army of labour. This process is well discussed in historical perspective by Patnaik (3014-15), who uses the term ‘primitive capitalist accumulation’ to describe it. This is also analysed as accumulation by dispossession, or development by dispossession (see Bailey, 2014-15; Bhaduri, 2015).

The nature of economic development on the above lines has also led to emergence of strong monopoly corporations controlling the economies of nations and thereby also decisively impacting the politics and policies of these nations. For example, in South Korea, the five largest chaebols, i.e., Samsung, Hyundai Motor, SK, LG and Lotte, accounted for about 55.7 per cent of South Korea’s GDP in 2010. Samsung alone accounts for more than 20 per cent of the GDP of Korea. These chaebols, especially Samsung, play a decisive role in framing South Korea’s economic policies and politics in general, and this dynamics is always reflected in the state’s policies in terms of the dominance of ‘profits over the people’. Similar situations are emerging in many developing countries as well where a few bigger corporations are dominating the economy and influencing the politics and policies.

Moreover, a supranational institution such as the WTO, that has emerged as essentially an instrument of the leading imperialist countries, “is not prepared even to consider questions concerning human rights, labour rights, the use of natural resources, or the environment…In a free trade world, politics stops at the cash register” (Brockway, 2001), so to say. Besides,  with a broad consensus among most parliamentary parties on neoliberal-imperial globalization in almost all the Asian countries, the power of working people to influence policies in their favour, is minimised to a large extent. The implications of this are felt in democracies virtually getting reduced to formal democracies, wherein people may elect and change the governments, but this does not bring about any change to the politico-economic regime of predatory exploitation and expropriation.


3. Labour Protests
It is against this backdrop that a new kind of labour movement has emerged in almost all Asian countries. The year 2010 was, in fact, dubbed as the year of labour protests in China/Asia.

In the advanced economies of Asia, the major issues of the labour movement are related more to shifting and closure of firms, the privatization and sale of firms, the retrenchment and downsizing of the workforce, the downgrading of social security benefits, the rise in non-regular workers, the violation of trade union rights, the shrinking space for collective bargaining, and stagnant or declining wages. In the relatively underdeveloped countries of Asia, the major issues are related to low wages, minimum wages becoming maximum wages, excessive working hours without any rest, the alarming rise in occupational health and safety problems, very minimal or no social security benefits, very limited or absolutely no scope for collective bargaining, and brutal forms of repression of workers and trade unions (Pratap and Bose, 2015b and 2015c; Pandita et al., 2013; Tarzen and Sabet, 2013; Chen et al., 2013; Bose, 2012a).

Among the advanced Asian economies the hot spot of the labour movement is clearly emerging in South Korea, and this is reflected in a number of strikes involving factory occupations, and in exceptionally large-scale demonstrations, such as during the recent railway workers’ strike against privatisation. It is also reflected in the large-scale and very lethal forms of repression unleashed on the Korean workers’ movement.

In East Asia, China and Vietnam have clearly emerged as hot spots of the labour movement. In recent decades, the labour movements here have been able to achieve some kind of collective bargaining rights, even if the legal situation remains by and large the same with the monopoly presence of official trade unions.

In Southeast Asia, Indonesia and Cambodia have emerged as hot spots of the labour movement. In Cambodia, the labour movement is centred in garments. In Indonesia it appears as a general phenomenon and is reflected in the massive general strikes in 2012 and 2013.

In South Asia, India, Bangladesh and Pakistan are emerging as major flash points of the labour movement. In Pakistan this is more focused in the textile industry and in Bangladesh it is centred in garments. It appears more as a general trend in India, but it is very much focussed in some sectors such as automobiles, electronics, food and textiles.

It must be noted all the same that many intense struggles of workers in the underbelly of ‘Make in India’ have gone almost unnoticed, as, say, the struggle of the Honda workers from Tapukara. Labour activists point to parallels between the historic workers’ mobilisation in Maruti Suzuki’s Manesar car plant in 2012 and the recent upheaval at Honda’s Tapukara motor cycle plant in Rajasthan adjacent to Haryana. The brutalisation of the managements, their goons/bouncers and the state machinery that one witnesses in such struggles need not be described here. Such bloody struggles by the workers at the higher end of the production chains come into the open now and then, and they show how even protracted struggles may fail to achieve any modicum of justice to workers (see Pratap and Bose, 2015d). Most of the workers in the lower tiers of the production chains have neither unions nor staying power to fight even in the short run. The currently ruling NDA government is about to legalise and expand contract labour, much to the delight of the local and foreign industrialists, even as the established trade unions  seem to be not strong enough to resist such moves (Sampath, 2016a and 2016b).  Little wonder that the Chinese manufacturers of, for example, mobile phones are shifting their production chains  to seek sizeable “labour arbitrage” out of  the  informalisation and repression of labour in India (see India Today, 2016).


4. Concluding Remarks: Industrial Upgradation, Labour Degradation
Surely, “all is not well” in GVCs, from the viewpoint of development with worker welfare.

Two perspectives can be distinguished. According to the “multinational-led development” perspective, GVCs can play a key role in economic development if trade policy facilitates the actions of the MNCs that lead to these value chains. This perspective professes that stakeholders in all parts of the value chain do best if trade agreements and national policies focus on ensuring lead firms a return on their investment in building supply chains, by promoting a smooth flow of goods and services, low tariffs, and strong protections for intellectual property and other investments. The second perspective is that, while GVCs do not automatically promote development, a combination of trade agreements that protect worker rights and allow space for national development, as also complementary domestic policies  that help establish and upgrade productive eco-systems, can bring about desirable developmental outcomes (see Helper and Krueger, 2015).  

Our own studies (JCB, 2013; Bose, 2012b) contradict both the above perspectives.

The widespread labour protests in Asia clearly testify to the reality of degradation of labour in these chains.  Raw labour recruitment, neo-Tayloristic/Fordist labour processes, macho  labour management styles and unequal inter-firm power relations in these chains militating against labour welfare have been documented (see Bose, 2012b; Bose and Sinha, 2012b). A recent book on labour in GVCs in Asia in a variety of sectors ranging from labour-intensive ones like garments, fresh fruits, tourism, to medium and high technology ones like motor vehicles, electronics and telecom, and knowledge intensive ones like IT software services, points to the underside of participation in GVCs: the continuation of sweatshop conditions in several sectors; the persistence of child labour in many parts of GVC manufacture; the appearance of new forms of Taylorism in call centres; the high incidence of precarious employment in low-knowledge tasks, and so on (Nathan et al., 2016). The contributions in this volume have covered a number of countries across Asia such as Bangladesh, Cambodia, China, India, Indonesia, Sri Lanka and Vietnam.

In the light of our discussion above, we list some issues for further research.

The first and foremost researchable issue is as follows.  For a long time, a shamefully under-researched area has been why ‘low road’ exploitation of labour continues (resulting in labour disputes), despite technological and organisational innovations used in GVCs to bring out quality products at competitive cost. There are widely disseminated theories of HRM (Human Resource Management) and the like about ‘worker empowerment’, and good incentives for ‘total employee involvement’ in order to facilitate technological and organisational innovations like automation, just-in-time production and inventory control, total quality management (including total preventive maintenance), six sigma, value engineering, business process engineering, ISO certification and the like fads and fashions of management (Furnham, 2015). It is claimed that these are deployed for manufacturing excellence in workplaces of value chains. But it is clear that these do not have empirical validity (Bose and Kumar, 2012; Bose and Sinha, 2012a and 2012c). How high quality products are produced without quality of employment in these value chains has, therefore, been a topic that factory engineers and managers have shunned. As such, business school professors and students must address and unravel this inside-the-firm issue instead of singing the power-and-glory lullabies of HRM which has nothing but a euphoric-doping-effect in the classrooms.

Leibenstein (1989) had  goaded his fellow mainstream economists to do analysis of inside-the-firm dynamics, but economists have been useless in this regard, as most of them do not know, and do not want to know, the nitty-gritty details of how inputs are converted into outputs on the shopfloors, and the associated incentives/disincentives,  human relations and politics of production. Unlike the anthropologists or sociologists, the “show me your model” variety of economists do not value fieldwork-based research as they ought to (see Helper, 2000; Coppola, 2016).

Besides, as the Marxist Perelman (2011) makes it clear, mainstream or neoclassical economics is blatantly wrong. It ignores or distorts the most fundamental aspect of the reality that the vast majority of people must, out of necessity, labour on behalf of others, and be transformed into nothing but a means to the end of maximum profits for their employers. The nature of the work working people do and the conditions under which they do it profoundly shape their lives. And yet, both of these factors are peripheral to mainstream economics. By sweeping labour under the rug, mainstream economists hide the nature of capitalism, making it appear to be a system based upon equal exchange rather than exploitation inside every workplace. Perelman describes this illusion as the “invisible handcuffs” of capitalism and traces its roots back to Adam Smith and his contemporaries and their disdain for working people. He argues that far from being a basically fair system of exchanges regulated by the “invisible hand” of the market, capitalism handcuffs working men and women (and children too) through the very labour process itself. Neoclassical economics attempts to rationalize these handcuffs and tells workers that they are responsible for their own conditions. What we need to do instead, as Perelman suggests, is to eliminate the handcuffs through collective actions and build a just society that we direct  ourselves. But this solution may come about in the long run when we are all dead, so to speak!

There is now a belated inquiry into why there is economic/industrial upgrading without social upgrading in GVCs  (see Barrientos et al., 2011; Milberg and Winkler, 2013). Unfortunately, labour process analysis is missing in this research. Funded by the befuddled  ILO, much of this research has only babbled about the “decent work deficit” (i.e. lack of social upgrading by way of improvements in the wages, conditions, rights, gender equality and economic security of workers) in the presence of mass poverty and inequality in developing countries in conjunction with “global governance deficit”!  Note that the ILO’s ‘decent work’ accommodates temping (informalisation) and does not have open-ended, written employment contract as a component, which we think is a pre-requisite for any improvement in other conditions of work. We believe, as Freeman and Li (2013) do and many labour activists too do, that formal contracts are essential to enforcing workers’ rights.

Coming back to the question of industrial upgrading without social upgrading, if quality products can be churned out with technological and organisational innovations or engineering and managerial innovations associated with garbage labour contracts (temping) and labour rights deficits, i.e. without quality employment, then it is certainly a bad portent for workers. Recent studies in the West and in China and India, for example, confirm this news with respect to textile, garment, LED lighting and automobile industries (Yates, 2001; Butollo, 2014; Zhang, 2015; Bose, 2012a).

Consider, for instance, the very fascinating findings of Butollo (2014) who has assessed the impact of  upgrading strategies on skill requirements, employment patterns and wages in the LED lighting and textile and garment-making factories in the Pearl River Delta in Guangdong province that has indeed become representative of China as the ‘factory of the world’.
In the strategic emerging industry of LED lighting, most companies have increased their technological strength by continuously improving products and processes. They have also undertaken functional diversification and launched their own brand products. However, high-tech manufacturing processes are combined with very low-skilled and low-paid labour. A very young, low-skilled and poorly paid temporary migrant workforce constitutes the majority of line workers at the bottom of the occupational hierarchy. Most of these line workers are young women. They are assigned low-paying repetitive tasks. At the top of the hierarchy, there exists a minority of highly paid, skilled project managers, that is, managers with technical proficiency. In the middle are the technicians and sales people who are young university graduates or staff from technical schools. These people accept low wages and long working hours due to the prospect of advancing to a higher position. Such a prospect is denied to the line workers as their jobs do not require formal education.

The textile and garment industry is composed of the knitwear, fashion and textile (fabric-making) industries. In the knitwear enterprises, there is functional upgrading towards brand manufacturing. Additionally, there is also process upgrading through automation (i.e., using computer (or computerised) numerical control (CNC) machines). The former has enhanced demand for a small number of highly skilled workers in design and administration. The latter has reduced the number of manufacturing workers and deskilled them. A most fascinating finding with regard to the CNC machines is that even illiterate workers, guided by visual elements, can oversee their faultless operation; the manufacturers of these machines deliberately make them with a view to deskilling the machine operators. The fashion enterprises have undergone upgradation in terms of strengthening their capacities in product design and marketing resulting in the polarisation between creative and marketing functions requiring higher-skilled staff on the one hand, and low-skilled manufacturing functions on the other. It is clear that the growing sophistication of marketing and designing does not require skill upgrading at the level of production. In some cases, a growing sophistication of the production process in the name of ‘lean production’ has had adverse effects on the skill requirements and wages of workers engaged in sewing. There is product upgrading among the textile units, but this has not affected the work of the weavers who do low-skilled and very repetitive tasks. There is demand for skilled workers in the R&D departments and in the operation of sophisticated dyeing and finishing equipment.

Everything considered, industrial upgrading in the LED lighting and textile and garment industries has not resulted in social upgrading for the majority of workers who also work excessive hours with increasing work intensification. Technological change certainly does not in itself give rise to social upgrading. On the contrary, when firms upgrade, there is polarisation between knowledge-intensive work and basic manufacturing work. Most workers are engaged in the latter category of work and so do not benefit from industrial upgrading. This is the case with the leading firms in the industry. Since most firms are involved in basic manufacturing work, their workers do not benefit from any kind of skill upgradation. There is as yet, in general, no end to cheap labour and cheap working conditions in value chains.

Butollo’s final conclusion is therefore as follows:

...the present study highlights that companies in the Pearl River Delta have little interest in voluntarily improving workers’ employment conditions. The central and the provincial governments, on the contrary, do show a motivation to harmonise labour relations, but the close bonds between enterprises and state officials that developed on the local level in the course of China’s reform era, as well as the ineffectiveness of mechanisms for an effective regulation of labour relations, mean that such efforts often end in talk. International institutions have placed their hopes mainly in voluntary initiatives for Corporate Social Responsibility (CSR), which may have contributed to curb some excessive instances of exploitation, but which suffer from a lack of accountability and enforcement mechanisms. They are often undermined by competitive pressures as well as downward pressures exerted by the very international brands that at the same time urge suppliers to improve their CSR practices...In concrete terms, the critical issues concerning social upgrading in China include the question of democratic representation of workers and their right to organise, the implementation of effective collective bargaining systems, and the determination of basic standards concerning the conditions of employment and wage systems in collective contracts...the coming years will see a further proliferation of labour conflict in this region which during the last decade has constituted the epicentre of labour unrest in the last analysis, workers agency needs to play a prominent role in aligning economic development in a way that allows workers to reap its rewards (pp. 360–2).

The second researchable issue, thus, concerns workers’ agency. Efforts at coordination among the labour movements in different countries need to be researched and documented (see, for example, Chan, 2016 and 2015). Owing to unprecedented labour unrest, the Chinese Communist Party had recently passed a law specifying longish formal labour contracts. History testifies to the fact that the State and employers do not, on their own, create good employment conditions without pressures from the employees and the bitter struggles of the underdogs.  

All in all, for those interested in a just society, as we are, the above research concerns are of utmost importance.  After all, the working people are the foundation of our economy and society. Newsome et al. (2015) have made a right beginning in addressing for the first time the question thus: What does life look like for the GVC workers who make the goods which global markets thoughtlessly consume? The contributors to this book have examined this question in relation to the GVCs concerning digital entertainment, parcel delivery, e-waste, apparel, garment and electrical, call centre, apple ecosystem and app developers, etc.. And we have examined the same in relation to garment, electronics and automobile chains. There is no ‘high road’ treatment of labour. There is nothing but the ‘low road’ stretched out for most of the workers who dislike and resent it in very many ways    (Pratap 2011a and 2011b; Pratap and Bose, 2015e).

As such what do industrialists and their top managers really mean by their cacophony of “worker empowerment”, “total employee involvement” and “cooperative labour relations”? This needs to be empirically researched and deciphered, preferably by those HRM ideologues  who have generated HRM theories of innovative capitalism improving the lot of the workers inside workplaces through, inter alia, “long term relations”,  “information sharing”,   “gains sharing”, “union-free fair grievance redressal mechanisms”, “skill upgradation”,  “empowerment” and the like. This is the third researchable issue about the ‘revealed preferences’ of the bourgeoisie and their petty-bourgeois agents, including the intellectual elites directly or indirectly working for them, so to speak. The political scientist Weissberg (1999) had remarked that “empowerment” as the immensely popular remedy for all social and economic ills (including labour relations problems) was after all a fictitious promotion made by academics so that their careers might flourish from publications about uplifting!

To finally conclude, we may say that in the absence of grassroots pressures for global and local institutions supporting workers, economic development in terms of firm-level upgrading in GVCs in the context of unlimited supplies of rural-urban migrant labour in Asian countries will amount to nothing but continuation of labour compression (i.e. degradation of work and employment relations and repression of labour)  that have been known since the beginning of capitalist development.

What still holds good is the Marx’s thesis, which is also Braverman’s thesis, about the tendency towards the polarisation of working conditions under capitalist development, that is, concerning the degradation of work for the vast majority of workers and the upgrading of work only for a relative few (Braverman, 1998). This is the theory and this is also the praxis of labour process that is unbeatably valid under capitalism of all variants that we have known since long.

As for the dynamics of the labour movement to bring about the downfall of savage capitalism, it continues to be an enigmatic topic of frustrating dead ends as also hopeful forward moves, especially by the informalised cheap workers (of the bargain-basement economy, so to say) who now constitute the overwhelming majority of the working people (Kahle, 2014-15).



1. Surendra Pratap is with the Centre for Workers Education, New Delhi ( A.J.C. Bose teaches at Shri Ram College of Commerce, Delhi ( (back)


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