Homeworkers in Value Chains

BOOK REVIEW

to argue for the need to address both economic and social policies for the betterment of these workers.

Given the above context the authors locate the theoretical framework for this study in the macro/meso theories of small and medium enterprise (SME) theory of clustering and the development of human capabilities at the micro level. The SME theory on clustering indicates that the local system can have two paths of development: A low road that is positive but not dynamic and a high road which is competitive and innovative in its evolution. One of the keys to the high road of development is continuous upgrading of capital. The authors, however, suggest a third road to development in many developing countries, the “dirt road”. This is the case of the cluster that involves industrial outworkers without giving them any social protection. While such homework is often connected to national and international value chains, without public and collective action this would be the lowest way accompanied by exploitation.

The authors draw on the human capabilities approach to link to the meso-level analysis. Policy interventions to create two synergies between intervention in basic services and women and child achievements and between the increase in incomes and better health and education outcomes have their impact on homeworkers. They lead to a virtuous circle of growth in the households from generation to generation. Overall growth of per capita incomes in the country does not guarantee human development. The authors make a case for why policies should focus on the informal sector and homeworker clusters if we are concerned with the quality of economic growth. With this framework the authors argue that in economies with a large informal sector, to trigger the second synergy the policy package addressed to homeworkers should include human endowments and economic endowments. While the links between the two theories are not very explicitly made, the framework on human capabilities helps to place focus on the need for both social and economic policies for the homeworkers.

Case Studies

It is not possible to get a listing of homebased workers in any country, hence the design of the sample had to use information available locally to identify large clusters and use the advice of experts on which sectors to choose. The sample size itself was based on a priori information of the share of economically active children. The first criterion led to the choice of sectors in which a large proportion of home-based workers were likely to be engaged. This together with the second criterion led to the choice of mainly traditional sectors in most of the countries with a large proportion of women home-based workers. The new phenomenon of home-based work is that it is growing in the non-traditional sectors such as electrical, electronics and the chemical industry and there has been a growth of male home-based work. The sampling design by and large precludes the choice of such sectors. Hence the nature of changing

august 30, 2008

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subcontracting methods in the dynamic industries is not captured in the study.

The poor socio-economic conditions of the homeworkers and their households are brought out very clearly in chapter 4. The share of homeworkers’ households living below the poverty line is large and their housing conditions are poor, which is a major concern since the home is the workplace as well for these workers and their health was a concern. The working conditions were poor, they worked for long hours due to the low piece rate wages and many of these activities were seasonal. A regression analysis of the determinants of homeworker earnings brings out that higher education and membership in a women’s association of homebased workers improved her productivity.

The issue of child labour is discussed in chapter 5 where the child is a victim of intergenerational transfer of poverty and child labour also becomes the conduit of this transfer. Child work is compared in homeworker households with a control group of households that are not engaged in such work and the former were found to have a higher incidence of child labour. The work of the children was most often crucial to the economic activity of homeworkers, except in Thailand. Child work existed even in the countries where schooling was almost universal. The education of the mother, higher per capita income, being a member of an organisation and being upper caste in India improved the chances of the child going to school rather than working full time.

The case studies of homeworkers in the four countries are valuable since there are very few studies that focus on this bottom most segment of the workforce. Sudarshan in the Indian case study calculated that for Rs 100 paid by the consumer only Rs 15 in zardosi, Rs 17 in bidi and Rs 2.3 in agarbathi industries was obtained by the homeworker. While there are four intermediaries in zardosi and five each in bidi and agarbathi, the trader receives high shares in zardosi while the manufacturer does so in bidi and agarbathi. This discussion is a little misleading since some of these activities of manufacturing and trade are essential to the production and distribution of the goods. It is not clear what is the manufacturing activity carried out in the bidi and agarbathi industry other than the work of the homeworker and how essential

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that activity is. It might be useful to separate the production and distribution chains and compute what the homeworker gets within the manufacturing activity. A detailed explanation of the nature of the activity and the role of each segment in the chain would have been useful. The other country studies only present a diagram of the value chain but do not work out the relative shares of the various segments, except in one or two industry groups. A clearer and detailed value chain analysis of the sectors would have been useful for identifying the shares and the nodes where policy focus would be useful.

Policy Implications

The most interesting section of the book is the third one which discusses the policies. Chapter 11 discusses the economic policies associated with clusters as a strategy to raise the productivity and incomes of homeworkers, while the last chapter discusses social policies to better the lives of these workers and their families. These two sets of policies follow from the theoretical framework set up earlier and the empirical discussions in part two of the book.

The authors “stress the need to change the coordinates of thinking ‘from per capita GDP to local well-being’”. In this context they make five observations: informal activities should be considered forming part of a wider economic structure and central to the development process; need to study the “non-successful” clusters and integrate them in upgrading of clusters and local systems of development; the latter requires both economic and social policies; national industrial policies are under pressure from global systems but they still have a role which needs to be reclaimed for integration of the informal segments and finally it is true that not all clusters can be upgraded to the virtuous path of development, but all of them can take the first steps to local development and poverty alleviation.

‘Dirt Road’

The theoretical framework introduced the “dirt road” to development, other than the low and high roads. The theoretical discussion on the shift from the dirt road to at least the low or even the high road assumes a strong local government or local collective action. However, in most countries the central governments remain suspicious of the local governments. This is the political economy of development and the authors point out this divergence between theory and practice. The macro policies suggested are the need for inclusion in the broad industrial strategy, credit, fiscal and tax incentives, removal of discretionary regulation, market access, technological management, education and skill upgradation and organisation of small producers and homeworkers.

The final chapter on social policies makes a bid for the need for social insurance for the informal and homeworkers. National governments in Asian countries have paid greater emphasis to provision of public health, public education and they see extension of social insurance as a burden on the employer that may reduce economic and employment growth. The theoretical framework of the book argues that social insurance can generate quality growth. The authors argue for a social insurance scheme that would provide the minimum securities of health benefits, old age pension, life insurance and childcare facilities as it would help move from the dirt road to at least the low road of development. The idea of social insurance with a minimum burden on the workers as opposed to public care for the poor is a long debated issue and the reason and need for this shift is not clearly articulated in the book. The political economy of development that the authors showed awareness of, while discussing economic policies at the local level, would operate in the case of social insurance as well. In fact, the Indian experience with the introduction of a social security bill for informal workers is a classic case of the operation of such a phenomenon. It would have been useful if the authors had spent some time discussing how to circumvent these hurdles to the introduction of social insurance in these countries faced with balancing economic growth and human development.

Overall this is a very readable and informative book and a must read for academics, policymakers and groups engaged in furthering collective action among the informal workers. It also adds to the scarce literature on informal workers and particularly home-based workers.

Email: jeemolunni@yahoo.co.in