ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Globalisation of Labour

The article discusses the implications of the entry of labour from China, India and Russia into the global labour force. It looks at global demand requirements for the absorption of this labour force and the possibility of bargaining for improved working conditions within globalised production networks. The article concludes with the global conditions of action to build an international countervailing power.

Globalisation of Labour

The article discusses the implications of the entry of labour from China, India and Russia into the global labour force. It looks at global demand requirements for the absorption of this labour force and the possibility of bargaining for improved working conditions within globalised production networks. The article concludes with the global conditions of action to build an international countervailing power.


his article deals with problems created by the globalisation of the labour force, more specifically, by the entry of labour from China, India and Russia (as a proxy for the former Soviet Union) into the global labour force. In what way can we talk of the globalisation of the labour force, despite the obvious fact that labour, unlike capital, remains largely confined within national boundaries? These sections of labour were somewhat outside the global capitalist market, even if they were within particular types of capitalist markets of their own till the 1980s (China) and 1990s (India and Russia). But the opening up of these economies to the global market, has brought this vast number of workers, by some estimates 1.4 billion [Freeman 2005] into the global capitalist network of production and consumption.

The first condition in which the globalisation of labour has to be considered is that of the mobility of capital. The importance of the mobility of capital, even with relatively immobile labour, is that it is able to shift or threaten to shift the location of production, utilising what Hirschman labelled the exit option [Hirschman 1970; Beck 2005]. The context here is that of different national sections of labour, with capabilities that are increasingly becoming uniform, even while the wages and other conditions of employment vary vastly (historically) between these different national sections of labour.

The pressure on global labour, however, is exerted not only by the mobility of capital. The increasing openness of economies means that enterprises (including those of self-employed small producers) that do not produce for export have to face international competition even within national markets. Here, trade in commodities takes the place of factor mobility. Further, with globalisation of production networks, trade in commodities is increasingly not just inter-industry trade, but intra-industry trade [Milberg 2004].

In the context of mobility of capital, openness of economies and globalisation of production, three important propositions have been made with regard to their consequences for labour. One, is that the entry of 1.47 billion workers form China, India and Russia has effectively doubled the size of the “world’s now connected workforce” [Freeman 2005, p 1]. But since these new entrants brought relatively little capital with them, Freeman estimates that the global capital/labour ratio has been cut by 55 per cent to 60 per cent of what it would otherwise have been. This has shifted the balance capital and labour in favour of capital and against labour, and will reverse or is already reversing the post-second world war shift in the distribution of income in favour of wages [Glyn 2002 and 2006].

Glyn, in the short op-ed piece (2006), states the propo sition in a second way: that of “Marx’s reserve army of labour going global”, again shifting the balance of power sharply in favour of capital in the rich countries. “The bargaining chips would be in the hands of capital to a degree not seen since the industrial revolution. Fluctuations in labour’s share being in the range of 65 per cent – 75 per cent could disappear too, with Marx’s rising rate of exploitation re-emerging, a century and a half after he first predicted it” [Glyn 2006].

The third, related proposition is that, low-skilled labour and small producers in the developing countries are caught between the pressure of global capital (in the form of global retailers/ buyers) to reduce prices, and competition in labour and product markets from new entrants [Kaplinsky 2005].

One should add a fourth proposition to the above. It is not only workers and producers at the low end who face competition from new entrants; there is such pressure even at the high end. With strong systems of higher education, China and India are developing capabilities of labour, management and research even at the high end in manufacturing, office and professional jobs. In some areas of high tech and high skill activities, including research, the developed countries are losing their former monopolies. While out-sourcing began with low-end manufacturing, it has shifted to both parts of high-end manufacturing and office and professional services, leading, for instance, to a pressure on US earnings similar to that from mass migration [Samuelson 2004, p 144].

Bringing in Demand

While the above-mentioned analysts have drawn attention to some important trends, a major problem with their analyses is that they are incomplete. They look at the supply side alone and do not take account of the demand side. An exception is Kaplinsky (2005) who does consider the demand side. He argues that while any one country can increase its production of traded commodities, there is no assurance, rather that it is unlikely that there will be sufficient global aggregate demand to absorb all of the increased production. With competitive cost cutting pressures, wages will be pushed down. For each firm this may be a profitable strategy, but in the aggregate, it can lead to a shortfall in demand. This is a crucial market failure.

Along with the above cost-cutting tendency of competition, it may be pointed out that we are currently in a phase of an increase in productivity, due to the application of information technology, which is a general purpose technology. To sustain the resulting increases in productivity would itself require an expansion of the market.

There are three sources for an increase in demand. First, is the pressure of competition which forces capitalists to increase investment, in order not to lose competitive position in the market. Second, is increased consumption by workers. Fordism is not only mass production, it is also mass consumption to sustain the increases in production. But all of this may still be insufficient to sustain the market for the increased volume of production. A third source of the increase in demand is the extension or widening of the capitalist market into new areas. The importance of capitalism extending its frontiers, was recognised by Rosa Luxemburg (1968) as a crucial factor in the sustainability of capital accumulation. Market expansion, however, is not only achieved through the export of goods and capital but also through national accumulation in developing countries. “The best promise of massive market expansion would seem to be in the incorporation of more and more countries to global growth, investment, production and consumption. Growth in the larger countries of the developing world, together with China, Russia and the ex-socialist group of eastern Europe, could serve as a first tier to pull the others forward. It is quite obvious that these potentially huge markets are a very long way from stagnation” [Perez 2002, p 167].

In the current scenario, the expansion of global demand is crucially dependent on the US payments deficit. This, of course, cannot continue for ever. But does this mean that any self-diffusion of capitalism must come to a halt, as argued by Patnaik (2007)? No, what it does mean is that in order to sustain the continued diffusion of capitalism, the international financial system will have to undergo a change. A change of order in the global financial system is needed to continue the expansionist course. Such a change has occurred before – from the Gold and the Gold-Sterling standard during the British empire to the Gold-Dollar and then, perhaps a Dollar-Oil standard after the 1970s, during US hegemony. The growth of Asia is now increasing pressure for another change in the world’s financial system.

How this change will come about, whether in the nationalcapital manner of the first half of the 20th century, or with the transnationalisation of capital itself holding sway in the formation of appropriate institutions of global capital, or with an altogether new different type of economic system, is something that remains to be seen. And whether such institutions of global regulation will be set up without the intervention of a grave depression and/or a trade war also remains to be seen.

What is clear is that there is currently a grave deficit in global institutions, which are lagging behind when compared to the globalisation of the economic system. The Keynesian market failure of insufficient aggregate demand can and does occur on a global scale. But there is no global Keynesian authority. Other than through markets themselves, right now global economic issues are managed through consultations between the Triad (US, EU and Japan), or between the G-8 countries. More recently, China and India have been added to the list of countries with whom these consultations are conducted. But this is still an ad hoc form of decision-making, with power residing with the major economies and, importantly, struggles between them. As Lance Taylor points out, “…the policy function is driven by an exclusively G-10 consensus” [Taylor 2002, p 75].

The main point from the above is that the role of demand in creating the global conditions for an absorption of some of the increase in the global labour reserves, has been neglected by analysts (Freeman and Glyn) or its possibility underestimated (Kaplinsky). These analyses also underestimate the importance of capital accumulation in the developing countries. Freeman writes, “These new entrants to the global economy brought little capital with them. Either because they were very poor or because the capital they had was of little economic value” (2005, p 1). It is certainly true that Chinese and Indian workers have relatively less capital per worker than, say, Euro-American workers. That is the very basis of their comparative advantage. But the amounts of capital with which they have made a dent in the manufacturing base of the world, are not negligible, and not that much of it is due to export of capital from the developed countries, even if the exported capital holds certain key positions in the economy.

Thus, the developing countries are not only suppliers of labour that tilt the balance against labour. They are also sites of capital accumulation – China’s savings rate is in excess of 40 per cent. They are also large markets for a number of commodities, accounting for about 20 per cent of world demand. As Ajit Singh points out, “Their demand side effects have already led to expansion in several countries, both developed and developing [including China’s role in pulling Japan out of recession]” [Singh 2007, 26]. But finally what needs to be stressed is that there is no automatic mechanism assuring adequate global demand, whether through deepening of demand in the developed countries or through widening of demand in developing countries. A new world financial regime will, at some point of time, be needed to maintain the momentum of the expansion of capitalism, including a new system of reserves and a global authority to manage the curr ency expansion required.

The above deals with the global macroeconomic conditions for utilising globalisation of capital and production to improve the conditions of labour. We now turn to an analysis of changes in industry-based conditions.

Bargaining in Global Production Networks

Production is increasingly being organised in global production networks. Buyer-driven or retailer-driven chains dominate in areas of simple manufacture. The buyers/retailers are able to utilise their market position to reduce the shares paid to developing country supplying firms. Semi-skilled labour and small producers face competition from newer entrants into the global labour force.

Since capital is mobile and many countries’ labour forces possess the requisite skills, capital is able to hold out the threat of exit, or relocation. Both low-skilled labour and small producers are caught between the rock of global retailers’/buyers’ pressure to reduce prices, and competition in labour and product markets from newer entrants [Kaplinsky 2005]. As a result, there is a squeeze both on wages and on prices paid to small producers.

While the earlier analyses worked at the macroeconomic level, to deny the possibility of adequate global demand to sustain capitalist expansion, this analysis turns to the industry-level to deny any scope for labour to bargain within the growing production networks.

Is there scope for increasing the share of wages and of small producers in global production chains? When production is undertaken on an international network or chain basis, bargaining explicitly comes in to determine the distribution of surplus or rent among different sections of the chain. Thus,

Economic and Political Weekly September 29, 2007

in a large part of international trade, bargaining – rather than market-based allocation, is the manner in which the surplus is distributed. At the same time, economic models of bargaining would suggest that bargaining results would fall within bands set in competitive markets [Wood 2001], but where the price is set within that band, it is determined by the factors that influence bargaining strength.

What influences the outcome of the bargaining? Here the Nash analysis of cooperative games points to the crucial role of the next best alternative or fall back position, in determining the distribution of gains from cooperation. The analysis needs to be extended to the level of international trade.

There are two factors operating that need to be considered here. First is the ability of firms from developing countries to get a higher share of value produced within the network. Second, is the share that workers or small producers can get of that which accrues to developing country firms.

In a preliminary fashion one can identify some influencing factors. Afirm which supplies its products to a number of buyers can refuse a bad deal and thus could get a better deal, as compared to a firm that has one exclusive buyer. Monopolistic or oligopolistic buying power when faced with competition among sellers, would strengthen buyers and weaken sellers. And so on. Factors of competition, ease of entry and specificity of assets, among other factors influence the outcome of the bargain.

Developing country firms can use and have used a number of strategies to increase their share, e g, supplying on largerscale, in order to utilise economies of scale, or upgrading to full-package supply, e g, incorporating design into garment manufacture, complex parts with IT-embedded design in auto motive components, shifting from supplying personnel to offshore work in IT, etc [for details see, for example, Nathan and Kalpana 2006; Tewari 2006].

An increase in the share of developing country firms, how ever, does not necessarily translate into better working con ditions for workers/small producers within developing countries. That requires action by other agencies (government regulators, and, most of all, unions) to utilise the opportunity to secure some share of the benefits for workers and small producers. Even where developed country buyers have paid larger amounts to developing country firms, and that too specifically for meeting certain labour standards, this only occurs when the collective actions of unions comes into play. Of course, an increase in the share of developing country firms, and large-scale employment, both create conditions in which the workers can press their demands for improved labour conditions.

Before China and India, South Korea, along with Taiwan, also went the route of taking up labour-intensive manufacture and that too under very repressive labour conditions. Both were under forms of dictatorships and labour rights were denied – in order to build export competitiveness. But the very process of building large-scale manufacture for export, also created the conditions wherein labour could combine and take up its struggle for improving labour conditions, as part of the overall struggle for democracy. As Silver and Arrighi point out, “Although corporations were initially attracted to particular Third World sites because they appeared to attract cheap and docile workers (e g, Brazil, South Africa, South Korea) the subsequent expansion of capital-intensive mass production industries created new and militant working classes with significant disruptive power. This tendency is particularly evident if we focus on the leading industries of so-called Fordism such as the automobile industry, but can also be seen in less propitious environments such as electronics” (2001, p 60).

The disruptive power of working classes has been even more enhanced by the globalisation of production networks. If just one factory produces radiator caps for most GM cars, even if that product accounts for a miniscule portion of the value of a car, any disruption in its supply would affect GM worldwide. Integration in global production networks multiplies the disruptive power, and thus increases the bargaining power, of sections of workers far beyond their contribution to total revenue or value of production.

Since there is a large amount of substitutability in labour employed (between countries, through out-sourcing, use of contract or casual vs regular/permanent labour, home working, etc) income in the next-best alternative is important in determining the bargaining power of labour. This depends on the nature and specificity of the type of labour. The more general the capabilities of labour, the less will be the difference between its earnings in alternate employments. But a very specific type of labour could have a big difference between earnings in alternate uses. The specificity of labour, and mobility are factors that would enter the equation in affecting its bargaining power.

At the bottom of the wage scale, this substitutability means that labour earnings would depend on the social minimum available in the country. For this, there is an important role of national action – in providing a social minimum (for example, China’s access to land and India’s rural employment guarantee). Thus, there is an important role for state action. The social minimum can be achieved at various national levels, particularly for the large economies, which can more easily take unilateral action.

Social Minimum

There, however, is a difference in the effects of different ways of achieving a social minimum. A land reform or land distribution, as in China or as could be attempted elsewhere, has the merit of being an asset distribution or redistribution. The redistribution (transfer from state to community and/or private assets) or creation of assets, as argued by Bowles and Gintis (1998), would link income with labour and investment in producing the necessary goods for sale. This kind of egalitarian or equality enhancing measure that is asset and not income based, is likely to increase productivity, since the measure depends on the productive use of the resource.

Further, increased assets have a positive effect on risktaking ability. Bardhan, Bowles and Gintis (1998) show that “those with higher levels of wealth choose higher levels of contro llable risk, so increasing the wealth of the less wealthy will promote higher levels of risk-taking” [Bowles and Gintis 1998, p 49]. Women, for instance, with their lower ownership of assets have often been known to undertake less risky, but also less productive activities, than men, who own more assets.

Avoidable or controllable risk is that which individuals choose in their economic pursuits, as against uncontrollable risk, for which they have no choice. Similar to the positive effect of higher wealth ownership, a reduction of unavoidable risk, for instance by controlling prices of inputs or reducing business volatility, will increase the level of controllable risk that individuals adopt. “Universal and adequate health insurance has the same effects” [Bowles and Gintis 1998, p 49].

Savings too have a positive effect on the adoption of risk. Savings provide a cushion with which to tide over shortfalls in income due to taking up more risky but more productive economic activities. The well known aversion of the poorest to take up microfinance is related to their weak risk-taking capacity. Savings enables them to smooth over income shortfalls, and, thus, can contribute to their taking up more risky, but higher return activities that can increase well-being.

Assured income for a period of time, like India’s Rural Employment Guarantee, also provides a cushion for that can enhance risk-taking capacity. Experience in Bangladesh shows that assured income/employment for about 100 days a year over a period of three to four years, coupled with compulsory savings in that period, is able to lift those women into the category of those who can take the risks of micro-credit loans [IFAD 2005].

But, when compared to a land redistribution, India’s rural employment guarantee, has both a continuing fiscal burden and does not come along with an incentive effect to utilise the labour to increase productivity. At low levels of income, an assured income might itself have a positive effect on labour productivity. But there is a good chance that the labour itself might be wastefully employed, even in Keynesian digging and filling of holes. All in all, a land-based social minimum would be superior to a wage income-based social minimum.

It should be emphasised that the opening to international trade makes it imperative to devise interventions that increase productivity and increase the risk-taking ability of producers. Civil society actors, whether trade unions, small producers’ associations, or the like, also need to place their justified demands for employment and income security in the context of the changed economic environment. It will not do to think that a mere political mobilisation is sufficient to bring social security measures into place.

As against the neoliberal, or market fundamentalist, argument that market processes will themselves yield the desired improvements in the quality of life, we cannot have the equally fundamentalist argument that political will is all that is needed [Campero 2002] to bring that about. Civil society organisations too need to place their demands in the context of the need for development and growth and thus of integrating the need for decent work with that of utilising the opportunities opened up by international trade.

Why does openness require such a linking of workers’ demands for decent work with the issue of productivity? In a closed economy, firms can utilise a “cost, including wages, plus profits equals price” method of pricing to deal with an increase in wage claims [D’Souza 2002]. But in an open economy, with international competition, firms have to take prices for granted. They have to manage within a “price minus costs, including wages, equals profits” situation. In this case, in order to accommodate wage demands, either profits will have to go down, or productivity go up. In any case, in order to remain competitive in the market, and this holds even for those firms that are not exporting but are subject to import threats (i e, all producers of tradables), there is the pressure to increase productivity, lest the firm be overtaken by some other competitor.

Besides action in setting up a social minimum, are there any specific and changed measures that unions can take? One of the continuously posed demands of capitalists is that for greater flexibility in employing labour. Capitalists, of course, would be glad to have no or a minimum of regulation of their methods of employing workers. But it is also necessary that laws and union attitudes change to see that the burden of seasonality, etc, are not all passed on to the workers, usually to the non-core workers, who are employed as temporary or casual workers. Instead of merely lamenting the fact that permanent workers are being displaced by temporary workers, unions need to see how to draw these normally non-unionised workers, including women, into their fold. Scandinavian unions have successfully drawn all categories of workers, including women and men, home workers and part-time workers, permanent, temporary or casual, and dealt with various factors of gender inequality and exclusion.

Further, “If… it is stipulated that irregular workers have to be paid the same wages as permanent workers doing comparable work, with pro rata facilities (paid off-days, holidays and crèches) benefits (healthcare, retirement benefits, bonus, etc) the temptation for employers to use irregular workers in the place of regular ones would be much reduced. Their argument for using irregular workers is flexibility, and if this is the real reason, there should be no objection to spending as much on these workers as on permanent ones” [Hensman 2004]. Papola makes a similar proposal that labour laws should be changed to provide equal remuneration to workers of all categories and thus eliminate the incentive employers now have to increase employment of those categories of workers, such as casual or contract workers, who are paid less than other, regular workers [Papola 2006].

Market for Labour Standards

While it is true that cost-cutting pressures of competition among suppliers, reduces margins and this tends to be passed on to workers, is there any offsetting factor in the developed country markets that can be of benefit to workers in developing countries? There is what has been called a “market for labour standards” [Elliott and Freeman 2003], which can be of benefit in linking sales of globally-produced commodities with the labour standards under which they are produced. The market for labour standards, however, is asymmetric. Non-compliance with labour standards can lead to targeted boycotts of products and thus be costly. On the other hand, compliance with labour standards may not yield quite the same benefit. But the threat of loss though consumer boycott is always there, and can be a factor in forcing the powerful retail corporations to accept some minimum labour standards (though not necessarily equal labour standards) in all production locations.

In providing positive incentives for improving labour standards, there is the now well known example of the US-Cambodia Textile and Apparel Agreement which offered Cambodia the incentive of increasing its export to the US by 14 per cent per year if working conditions in the Cambodia textile and apparel sector were to substantially comply with local law and the Inter national Labour Organisation’s (ILO’s) core labour standards.

Economic and Political Weekly September 29, 2007

Implementation of labour standards was monitored by the ILO and made public in a transparent manner, including naming factories in the reports. Over time there was an improvement in labour standards in the Cambodian garment industry, including the establishment of a minimum wage of $ 45/month. Since 1997 unions were organised in 75 garment factories. With the background of the agreement it was the pressure of the trade unions that played a key role in its implementation [Elliott and Freeman 2003]. Implementing factories also benefited, as buyers used the ILO reports to identify factories with better labour conditions.

The above account brings out an important point: with the agreement establishing some corporate responsibility for labour standards, it is the pressure of the unions that is crucial in securing a degree of compliance with the agreement. A study of a Reebok-supplying factory in India, brings out the same point: the importance of the union in securing whatever compliance there was with the agreement [D’Mello 2003]. In fact, it is likely that the Indian factory was being paid for the higher costs involved in better labour standards but was not passing on these benefits to the workers. It was only union pressure that got some compliance with standards agreed between the supplier and the buyer. A study of the “limits of corporate codes of conduct in Asia”, concluded that “… rather than pressurising brand names to implement the codes in supplying factories, assisting workers to organise in workplaces largely managed by ATNCs [Asian Transnational Corporations] is the sustainable way to improve labour conditions in Asia” [Daeoup Chang 2006, p v].

Such compliance with labour standards has become important for various actors along the value chain because of the growing pressure of consumers. As in the case of child labour, there is a concern of consumers of Nike or Reebok shoes, etc, to know that the products they buy have been made under reasonable labour conditions.

Pressurising brand names is the strategy that concerned consumer organisations can adopt in the buying/developed countries. Organising workers in the factories is the strategy in the Asian (or other developing country) workplaces. The two are not alternate strategies, rather they go together and support each other in building a global countervailing power [Beck 2005] to capital. Without the pressure from consumer unions to create the “market for labour standards” it would be more difficult for unions in the developing countries to press for an improvement in labour standards.

Consumer movements utilise the same exit option that capital uses against labour. Consumers too can boycott purchase from a targeted company and hurt it. “Much like capital, the global consumer possesses the global power of refusal, of non-purchase. Much like capital, the political consumer can enact this policy of refusal as a calculated side-effect of economic action… Just as transnational capital breaks the power of the territorialised state through a politics of refusal, so the political consumer breaks the power of transnational capital by buying this product instead of that product” [Beck 2005, p 237]. This power of the consumer can be allied to the cause of workers’ standards.

The support that workers’ struggles for improved labour standards can get from this market for labour standards was seen during the May-June 2006 wave of garment workers’ struggles in Bangladesh. With workers on strike for demands like payment for overtime work, the right to form unions and revision of the minimum wage (which had been set 20 years ago), the representative of the EU in Bangladesh made a statement that non-compliance with such labour standards could have negative repercussions on the market for Bangladesh garments in Europe.

Labour standards are now being introduced into “Fair Trade” support as part of the conditions for support. For instance, the support from European “Fair Trade” movements for India’s Darjeeling tea has as one of its conditions the implementation of the Plantation Labour Act (personal communication with Sharit Bhowmick). Further, internationally coordinated action by a group of the major players in the market is likely to be more effective than actions by individual nations in this regard. Once again the need for globally coordinated action to achieve higher labour standards is a necessary concomitant of the globalisation of production systems and the mobility of capital.

In the pressure for bringing labour standards into trade, one cannot deny the protectionist intent of many of the developed country actors. Owners of industries affected by competition from developing countries, and unions of workers in them, have both been part of these campaigns. But such kinds of stands by owners and workers in industries under threat of relocation are to be expected. Further they are nothing new in industrial history. In the late 19th century as British textile mills faced competition from the new mills of India, it was the British mill owners who first complained about the misery of the Indian workers, had reports prepared on the topic and then got the first labour legislations enacted in India. Neither the nascent organisations of Indian capitalists nor of Indian nationalists took the lead in this matter. Should the support for such legislation from colonial capitalists whose own industries were facing competition be grounds for rejecting such legis lation and insisting on the right of local, national capitalists to exploit their workers in any manner possible?

There will, of course, be economic implications of implementing labour standards. Even core labour standards, so-called non-monetary standards, do have a cost. The very right to form a union will, over time, lead to an assertion by workers of the strength they get from unions. If not immediately, there will be economic costs after some time. This is where the developing market for labour standards, with some gains for achieving them and greater losses for not achieving them, comes in to provide some incentive to developing country capitalists to implement improved labour standards. The improvement of labour standards, in any case, remains an objective of trade or any other kind of economic development, valued for itself. What we need to do is to link this improvement in labour standards with the productivity requirements of international competition.

The ILO’s “decent work” norm recognises its link with increased productivity. Literature in India too now draws attention to the necessity of linking labour improvements with advances in productivity. A study of workers in cashew processing shows their poor remuneration and other conditions of work, but also points out, “Action at the national level…should not…raise labour costs to the point where competitiveness is lost and jobs may be lost” [Harilal et al 2006, p 34]. This statement is a recognition of the changed situation, whereby labour demands, however legitimate, cannot be merely stated as a matter of attaining justice, but have to be related to global conditions. Better jobs, approaching decent work, are only possible if linked to increases in productivity; otherwise jobs themselves may be lost. Though, of course, increases in productivity do not automatically mean improvements in labour conditions; they, however, create the conditions in which labour can press for an improvement in labour standards.

Global Action

Confining one’s attention to the national level seems to close options for action, whether it is in the sphere of fiscal and monetary policy or of labour action for improving labour standards. But when attention is shifted to the global level, then new opportunities for action arise. Of course, to utilise those new opportunities requires that the actors, trade and consumer unions and other civil society organisations, see themselves, or, imagine themselves as global actors [Beck 2005] .

Labour is becoming more and more globally social, cooperating in productive networks. The inter-connectedness of different parts of social labour means that the remuneration of these sections of labour is again related to each other. Initially the connection seemed to work only at the national level, so that the level of productivity in agriculture, for instance, set a floor to the level of wages in industry. Unions tried to protect their members against pressures to reduce wages where owners used the competition from the unemployed, from the so-called reserve army. The mobility of capital, however, has extended such competition among sections of workers to the global level. Labour costs in India or China now figure in conflicts with labour in North America or Europe. There is now a link between workers’ conditions in different countries, as also between conditions of workers and other producers, whether in agriculture or the so-called informal sector.

Consequently, the floor at the bottom affects the height of the ceiling for workers, though not for the owners of capital, and not as much for internationally mobile as for immobile workers. In the 19th century, and through the first half of the 20th century, this relationship between different sections of producers, worked within a country. It is the basis of the Keynesian model of social welfare, which as Nancy Fraser (2005), points out, works with the Westphalia model of the nation state, to produce the Keynes-Westphalia model of national social welfare. But the mobility of capital and the development of various national sites where capital can find workers with the required knowledge, has extended this relationship between different sections of producers and capitalists to the global level and brought the Keynes-Westphalia model of social welfare under increasing stress.

This has important implications for organising to secure minimum conditions for working people. The struggle for such a minimum, for minimum labour standards, must now extend to all parts of the globe. It is not enough for workers in the developed countries to try to defend their gains. The availability of adequately-skilled workers in other parts of the world, for whom it is still an improvement to be working for much less than workers in developed countries expect, leads to an inevitable relocation of capital. As a consequence, workers in developed countries will have to look beyond their borders, and even beyond the boundaries of the developed countries, to combine with workers in other parts of the world if labour standards are to be maintained.

Similarly, the threat to workers in any industry comes not only from outsourcing to another country, but also from the possible outsourcing of large parts of relevant labour to producers in the informal sector, who again might be willing to do the work for less than what the factory workers are paid. In many sectors of global production, e g, garments, handicrafts, leather, a large number of workers are either outside the factory system in the informal sector, or are contract or casual workers within the factory system. This substitutability between formal and informal labour, in turn, requires that the ambit of labour organisations extend beyond the conventional factory or even industry union to include producers in the non-factory or informal sector. As the form of existence of labour itself is becoming globally social, encompassing not just conventional workers, whether producing material or immaterial products, but also those providing various forms of reproductive labour, and as commodity chains link agricultural and informal sector producers with those in the formal sectors, the forms of organising need to become networks that span all connected chains. As workers conditions in any one country are affected by the conditions of workers in other countries, and by the conditions of those in agriculture, the informal sector and domestic service, the workers’ minimum wage has to be transformed into a citizens’ minimum standard, one that is even global in scope.

A citizen’s minimum standards was more or less accomplished in the developed countries in the post-second world war period. Most developing countries, however, have yet to develop the capacity to provide such a minimum, or if such capacity does exist, there is not a sufficiently strong lobby of the poor to press for such a citizen’s minimum. Latin America is somewhat more advanced in having some kind of citizen’s minimum (other than for the indigenous peoples), but Asia, as the late 1990s Asian crisis showed, has not put such social welfare mechanisms in place, rather it still largely relies on women’s rural labour to serve as a cushion in times of crises [Nathan and Kelkar 1998]. In Africa and the indigenous peoples’ regions of Asia and Latin America, traditional forms of social welfare have either collapsed or are in the process of collapsing, while new forms of state-based social welfare have yet to come up.

The shift from focusing attention on conventionally called workers to all working people and the necessity of linking or networking working peoples across countries – these are

Economic and Political Weekly

Available from

Star News Agency

Mahendra Chambers Magazine Market 146, D N Road Mumbai - 400 001

Economic and Political Weekly September 29, 2007

changes in the forms of organising and the goals of organising that can accompany the globalisation of the forms of existence of labour that goes along with the globalisation of production chains and the mobility of capital.

In a system of unrestrained movement of capital, with equal treatment for capitals, irrespective of their origin, there is no escaping the conclusion that only a global working people’s response, a global New Deal, or a global social contract [Castells 2000, p 253] which could lead to a global social minimum, can be the only alternative to a race to the bottom. This surely will be difficult to achieve. But it is the only response that can move beyond the interests of particular segments of the working class in order to deal with workers globally. Amartya Sen (2000) and Naila Kabeer (2004) make a related point about the necessity of taking account of workers globally. As against the global power of capital, it is necessary to build a global countervailing power of labour and movements [Beck 2005]. This global countervailing power does not exist, but has to be brought into being.



[Earlier versions of parts of this paper were presented at the ILO-IGIDR-IHD Seminar on a ‘Research Agenda for Labour Issues’ in August 2006 and at the ICSSR-CASS-IHD Joint India-China Seminar on ‘Emerging Issues in Labour Markets in India and China’ in March 2007. The first paper was jointly written and presented with V Kalpana, whose able and energetic research assistance is acknowledged. My thanks to various participants in the two seminars who commented both favourably and unfavourably, on the positions taken. Work on this paper was done at the Institute for Human Development (IHD), where frequent discussions with Alakh Sharma, Sandip Sarkar and other staff of IHD have been of great help. Most of all, my thanks to Govind Kelkar, in conversations with whom the ideas in this paper were developed. The usual disclaimer applies.]


Beck, Ulrich (2005): Power in the Global Age: A New Global Political Economy, Cambridge, Polity Press. Bowles, Samuel and Herbent Gintis (1998): Recasting Egalitarianism: New Rules for Communities, States and Markets, Verso, London.

Campero, Guillermo (2002): ‘Trade Union Responses to Globalisation: Chile’ in A V Jose (ed), Organised Labour in the 21st Century, International Institute for Labour Studies, Geneva.

Castells, Manuel (2000): The Rise of the Network Society, Second Edition, Blackwell Publishers, Oxford. D’Mello, Bernard (2003): ‘Reebok and the Global Footwear Sweatshop’, Monthly Review, Vol 54, No 9, February.

D’Souza, Errol (2002): ‘Financial Markets, Human Resource Policies and Flexibility’, Economic and Political Weekly, February 23.

Dae-oup Chang (2006): ‘Preface’ in M Wong, A Leong and J Yimprasert (eds), Limits of Corporate Conduct in Asia, Asia Monitor Resource Centre, RECORD&XC=/ dbtw-wpd on 7-11-2006.

Elliott, Kimberley Ann and Richard B Freeman (2003): Can Labour Standards Improve Under Globalisation, Institute for International Economics, Washington.

Fraser, Nancy (2005): ‘Reframing Justice in a Globalising World’, New Left Review, p 36, November-December.

Freeman, Richard (2005): ‘What Really Ails Europe (and America): The Doubling of the Global Workforce’, The Globalist, June 3, http://www.

Glyn, Andrew (2002): Capitalism Unleashed, Oxford University Press, Oxford.

– (2006): ‘Marx’s Reserve Army of Labour Going Global’, The Hindu, April 6.

Harilal, K N, Nazneen Kanji, J Jeyaranjan, Mridul Eapen and Padmini Swaminathan (2006): ‘Power in Global Value Chains: Implications for Employment and Livelihoods in the Cashew Industry in India’, International Institute for Environment and Development, London,

Hensman, Rohini (2004): ‘Globalisation, Women and Work: What Are We Talking About?’, Economic and Political Weekly, March 6.

Hirschman, Albert O (1970): Exit Voice and Loyalty: Responses to Decline in Firms, Organisations, and States, Harvard University Press, Cambridge, Mass.

IFAD (2005): Market Infrastructure Development Project for Charland Regions, Bangladesh, Appraisal Report, International Fund for Agricultural Development, Rome.

Kabeer, Naila (2004): ‘Globalisation, Labour Standards and Women’s Rights: Dilemmas of Collective (In) Action in an Interdependent World’, Feminist Economics, Vol 10, No 1, pp 3-35.

Kaplinsky, Raphael (2005): Globalisation, Poverty and Inequality: Between a Rock and a Hard Place, Polity, Cambridge.

Luxemburg, Rosa (1968): The Accumulation of Capital, with an Introduction by Joan Robinson, Monthly Review Press, New York and London.

Milberg, William (2004): ‘The Changing Structure of International Trade Linked to Global Production Systems: What Are the Policy Implications’?, Working Paper No 33, Policy Integration Department, World Commission on the Social Dimension of Globalisation, ILO, Geneva.

Nathan, Dev and Govind Kelkar (1998): ‘Agrarian Involution, Domestic Economy and Women: Rural Dimensions of the Asian Crisis’, Economic and Political Weekly, May 8-14.

Nathan, Dev and V Kalpana (2006): ‘Issues in the Analysis of Global Value Chains and Their Impact on Employment and Incomes in India’, paper presented at ILO-IGIDR-IHD Seminar on ‘Research Agenda for Labour Issues’, Mumbai, August.

Papola, T S (2006): ‘Employment Policies’, paper presented at ILO-IGIDR Workshop on Agenda for Labour Research in India, Mumbai, August.

Patnaik, Prabhat (2007): ‘A Model of Growth of the Contemporary Indian Economy’, Economic and Political Weekly, Vol 42, No 22, June 2 and 8.

Perez, Carlota (2002): Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages, Edward Elgar, Cheltenham, UK and Northampton, USA.

Polaski, Sandra (2004): ‘Cambodia Blazes a New Path to Economic Growth and Job Creation’, Carnegie Papers, No 54, www.CarnegieEndowment. org/pubs.

Samuelson, Paul A (2004): ‘Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalisation’, Journal of Economic Perspectives, Vol 18, No 3, Summer.

Sen, Amartya (2000): ‘Labour and Work’ in International Labour Review, Geneva.

Silver, Beverly J and Giovanni Arrighi (2001): ‘Workers North and South’ in L Panitch and Colin Lays (eds), Working Classes, Global Realities: Socialist Register, The Merlin Press, London.

Singh, Ajit (2007): ‘Globalisation, Industrial Revolutions in India and China and Labour Markets in Advanced Countries: Implications for National and International Economy Policy’, paper presented at ICSSR-IHD-CASS, India-China Joint Seminar on ‘Labour Markets in China and India: Experiences and Emerging Perspectives’, New Delhi, March 29 and 30, 2007.

Taylor, Lance (2002): ‘Global Macroeconomic Management’ in Deepak Nayyar (ed), Governing Globalisation: Issues and Institutions, Oxford University Press, Delhi.

Tewari, Meenu (2006): ‘Is Price and Cost Competitiveness Enough for Apparel Firms to Gain Market Share in the World after Quotas? A Review’, Global Economy Journal, Vol 6, Issue 4, Article 5.

Wood, Adrian (2001): ‘Value Chains: An Economist’s Perspective’, IDS Bulletin, Vol 32, No 3.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Back to Top