For many decades the dominant narrative in academic and political circles regarding the challenges of industrial relations was that of the relocation threat. In a world of international capital mobility with constantly decreasing barriers to trade, capitalist firms – usually in the form of multinational companies with ties in foreign countries – have the upper hand in negotiations with their workers, leveraging their flexibility and/or their viable threat to relocate their production facilities to countries and regions with significantly lower wage levels and labour standards.
This global search for low labour-cost countries has been one of the fundamental mechanisms that has led to the organisation and control of the global economy by complex configurations of Global Value Chains (GVCs), with production fragmented into numerous links of dependent suppliers located around the world governed by powerful multinational corporations. Within this context, wage determination frameworks have become more flexible in favour of employers, labour rights more elastic and industrial relations more precarious, both in the Global North/West and the Global South/East. Unemployment and underemployment, instead of transitory phenomena reflecting the turbulences of the business cycle, have become permanent characteristics of the labour market.
Recent research on labour unrest and resistance in the Global South presents an interesting alternative for the future of work and resistance, highlighting the ability of local suppliers to wield power from their critical position in global supply chains, even in sectors traditionally characterised by low bargaining power for workers and significant dominance by mega-buyers. An illustrative case is the two-week strike in the factories of the global footwear mega-manufacturer Yue Yuen, in the Chinese province of Guangdong in April 2014. This strike occurred within the footwear sector, which is predominantly ‘buyer-driven’ with major market power held by mega-buyers like Nike and Adidas. Despite the power dynamics favouring the buyers, the suppliers managed to absorb the costs of the strike, leading to workers gaining concessions.
How can we explain this paradox? Why did the powerful multinationals that control the GVC of footwear production not relocate their production to another supplier either in China or in another low labour-cost country?
Part of the answer can be found in Karl Marx’s analysis of the process of socialisation of production. According to Marx, capitalist production is not a socioeconomic activity that involves a few individuals, but an expanding social process requiring the mutual cooperation and coordination of highly specialised labour tasks within the firm and of complex divisions of labour across industrial sectors (the technical and social division of labour). Therefore, as capitalism grows at an expanding scale and smaller capitals consolidate into larger units to finance new production (centralisation of capital), the production process becomes more and more interconnected, interdependent and thus socialised.
However, such a production process is also highly vulnerable to even small disruptions and interruptions. As the Italian sociologist Luca Perrone noted in his seminal work on the relationship between positional power and the strike activity, ‘interdependence relationships allow small groups to interrupt productive processes and/or services far beyond the group’s immediate job concern’. Thus, in today’s highly interconnected production networks, understanding workers’ bargaining power and potential requires not only looking at trade unions’ organisational capacity but also taking into account how the power to disrupt a value chain can also empower workers. Following this logic, trade unions located in strategic industries threatening system-wide disruptions are more likely to win concessions.
Indeed, empirical research focusing on mapping labour’s bargaining power within countries shows that workers in sectors that are central for the operation of a domestic economy are capable of gaining – on average – higher wages compared to workers in sectors that are less crucial to their respective economies. What differentiates the two is how much disruption a strike can cause to the broader value chain. Consequently, even the threat of going to strike can be a major lever of pressure against employers. More recent research expands this idea to the contemporary geographically fragmented Global Value Chains and production networks. Evidence from recent data from global input–output tables shows that the bargaining power of workers within a domestic sphere is indeed intrinsically tied to the sector’s position in the global production process. And this is reflected in significant differences in wages for workers living in areas where the employers occupy a central position in their respective global production network.
This observation speaks directly to the overarching problematic of the future of work and opens new paths for the global labour movement and for radical scholars. While GVC and the process of globalisation are in a transitory phase, it is imperative for trade unions and campaigners to open a dialogue about empowering workers and redesigning resistance strategies in this highly globalised environment.
Very central to these strategies should be to strategically exploit the vulnerabilities arising from GVC complexities and interdependencies. Developing innovative strategies for the global labour movement in the direction of more cooperation and strategically synchronised actions across geographical regions and parts of the value chain is a necessary counterbalancing act to the exploding economic, political and ideological power of highly mobile, transnational capital. In this regard, it is fundamental for global and local unions as well as international trade union congresses, like the ETUI and ITUC, to identify such central sectors in both domestic and global production networks where the positional power of workers is higher and build on that in order to expand associational power across workplaces in all segments of the value chain.
Crucial in this respect is the establishment of global union networks at the level of multinationals or Global Value Chains that would link together labour associations beyond the traditional national, sectoral and occupational boundaries that have historically divided working places. Such networks aim not only to exchange information between trade unions within a multinational, but more importantly to nurture a common approach to the protection of labour interests.
Takis Iliopoulos is a researcher at the Faculty of Economics and Business at KU Leuven and a member of the Research Group Leuven Economics of Education Research (LEER).
Image credit: Kiyoshi Takahase Segundo via Alamy Stock Photo