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

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Industrial Relations in a Global Production Network

What Can Be Done

Industrial Relations in a Global Production Network

Lead firms in today's global production networks control production by suppliers, monopolise the capture of rents, and affect the possible labour market outcomes in supplier firms. But as buyers, and not employers, they have no legal culpability when tragedies occur in units that are links in global chains, like the recent one in Bangladesh. It is time to expand the traditional mechanism, with representatives of employers, workers and the government, to include the key player, the buyers.

The recent tragic factory building collapse near Dhaka brings to the forefront the question of dealing with poor working conditions in garment factories in Bangladesh. In a recent study of garments workers in Bangladesh (Ahmed and Nathan 2013) it was suggested,

Given the importance of buyers and the prices they offer to suppliers, one might ask whether this tripartite body [of employers, workers, and the government] should be made a quadripartite body to also include buyers’ representatives.

In this short note, I would like to elaborate this point. The Bangladesh garment factories are not standalone units, producing and selling in world markets. Rather they are cut-make-trim (CMT) units that form parts of the global production networks (GPNs) of global lead firms, which comprise large retailers, such as Walmart, Tesco, and Marks and Spencer, and apparel bands, such as Van Heusen and Tommy Hilfiger, or sportswear labels, such as Nike and Adidas. The buyers, lead firms of GPNs, are not direct employers of the workers in the CMT factories. The employers are the largely local owners of these factories, though there are also some international employers in the foreign direct investment (FDI) units in the export processing zones (EPZs). The employers of garment workers are the proximate players in fixing wages and determining work conditions. Another player is the Bangladesh government, which is supposed to implement the various laws of the land, including building regulations. The fourth player in the garments industrial relations scenario is workers. In collective bargaining, it is usual to have a tripartite body involved, with representatives of employers, workers, and the government. The International Labour Organisation (ILO) supports such tripartite bodies for action on workers’ issues. Such a tripartite body, however, assumes that the employers are the only players on the demand side of the equation. This could be appropriate in autarchic national economies. It could also work in a situation where multinational corporations (MNCs) undertake FDI to set up units they control in investment destinations. MNC branches would then enter into negotiations on wage and work conditions in the same manner as domestic players. But in the contemporary situation of GPNs, buyers exert substantial influence over the labour employing firms, but do not participate in the collective bargaining process.

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