1. Global Labour Flashcards
Spatial Fix Definition (Harvey 2011)
“Spatial displacement through opening up new markets, new production capacities, and new resource, social and labour possibilities elsewhere”
Why do companies find a spatial fix?
Competition eventually becomes fierce in one place
Labourers demand better wages and conditions
Forces profits to shrink
Opportunities to produce elsewhere cheaper and with less competition
Merk 2011 labour intensive industries:
When wages start to increase and/or workers gain power companies may safeguard profit
- by relocating to where workforce can be found with no experience or unions
External solution for emerging profitability crisis and labour control
Example of a company that undertook spatial fix
Nike knee wages were lower in Asia, first mover 1980s
Puma and Adidas still manufacturing in high wage European counties, Nike overtook them in market share
- by 1990s copied Nike
Geopolitical context of spatial fix
Cold War
US led capitalism vs soviet led communist powers
Offshoring initiatives took place within alliances
What is a vassal state?
Subordinate to a superior state
South Korea was a vassal to US, impact on economy of South Korea?
Export led industrialisation
Late 1980s footwear exports accounted for 5% of annual exports for South Korea
20% shoe production globally
Reebok and Nike sourced 55% from South Korea
What leads to Sweatshops?
Rapid industrialisation = terrible working conditions
Management in factories (sweatshops)
Authoritarian Patriarchal Strong arm management = High productivity
Dictatorship and repressive labour laws
Barred trade unions
The Great Labour Struggle 1987 South Korea
Industrial action
Push for democratisation
Strikes and protests
South Korea by early 1990s
2/3 fully unionised
Had higher wages and safer conditions
South Korea become more expensive and profits fell due to
Labour shortages
Growing wages
Stronger unions
After South Korea what other countries provided opportunities for relocation?
Alternative sources of supply
China
Indonesia
Taiwan
Taiwan followed South Korea
Didn’t result in massive strikes or protests
Taiwan labour shortages and wage rises resulted in profit squeeze
Labour reforms introduced aiming to recuse Taiwan’s trade surplus
US government pressured Taiwanese government
Reduce US firm reliance upon Taiwanese Spatial Fix
Where did Taiwanese manufacturers turn to?
China, exporting to south China coast
China working conditions
Less organised
Less able to demand higher wages
= greater productivity
How is productivity enabled
Poor working conditions
Disorganisation of labour
Taiwanese movement to China simpler because
Fewer linguistic, ethnic and cultural barriers to overcome
Controlled by Taiwanese capital
Indonesia spatial fix
Entry into production was rapid
Why was Indonesia’s entry into production rapid
Increase scales of operation, larger manufacturing sites, better resist low cost demands from buyers
Greater flexibility, timeliness and accuracy
Speed up design to market time, design themselves
Learn to resist management consequence
Less productive
Vietnam Doi Moi 1986
Legal reform to attract foreign investment
Nike 1995 sourcing in Vietnam
Even lower wages than China
Spatial shift pattern
South Korea
Taiwan
China
Indonesia & Vietnam
Retail dominated/buyer-driven commodity chains result of:
Logistical integration made possible by revolution in IT transport technology
Neoliberal restructuring of rules of global economy
Pressures to relocate China
Shareholders demanding greater return on investments (Milberg 2008)
Global retailers in China
Has facilitated US expansion of low wage, import dependant retail sector
Huge export manufacturing boom in coastal China
Why have retailers gained power in relation to brands since the 1990s?
Taken advantage of its monopoly of information about changing consumer preferences
Relationship of global labour and retailers?
Affects relationship between capital and labour in east Asia
Buyer driven commodity chains are a result of?
Logistical integration made possible by revolution in information and transport technology
Neoliberal resourcing of rules of world economy
Buyer driven commodity chains facilitate
US expansion of low wage, import dependant retail sector
Huge export manufacturing boom in coastal China
- driven by shareholders demanding greater return on investment (Milberg 2008)
Huge export manufacturing boom in costal China driven by
Shareholders demanding greater return on investments (Milberg 2008)
How do retailers gain a more precise understanding of demand?
Track consumer behaviour and transmit customer preference down supply chain
New IT collects POINT OF SALES (POS) data
- relays electronically down supply chain to initiate replenishment quickly at minimum cost
Retailers goal?
Procure goods consumers want to buy not what suppliers find convenient and profitable (Applebaum & Lichenstein 2006)
Walmart is
The worlds largest retailer
Because Walmart is the worlds largest retailer they can
Make markets
Define shopping environment
Set everyday low price
Specify rules of conduct and standards for thousands of global suppliers (Applebaum & Lichenstein 2006)
China can capitalise on market growth whilst exporting its DEFLATIONARY POWER
Low wage labour = reduced price of products sold
Don’t need same wage to live as costs lower in countries
What is deflationary power?
Low wage labour = reduce prices of products sold
Neoliberal politics and the Rise of China
- Neoliberal ideas and free trade
- US 1970s stagflation and 1980s collapse of minimum wage
- Liberalisation initiated in China 1979
- US labour law hollowed out: trade unions weakened
- East Asian competitiveness, NAFTA and Chinese liberalisation (make Asia competitive)
Impact of Walmart ‘World Purchasing’ HQ in Shenzhen China
Turned 3000 Chinese suppliers into powerless price takers
Had to battle against one another
Walmart defeating prices
Yue Yuen Industrial supplier labour force
80% women
Heavily reliant on migrant from outside region
Walmart CSR contribution
Factory certification programme following 1992 NBC documentary on child labour in Bangladesh
Audit all suppliers once a year
Why does Walmart have a poor record?
Drive for low prices conflicts CSR efforts
Difficult to control/audit sub-contractors
Delegated CSR
How are workers starting to gain power in China?
Exploding demand
Shop-floor labour shortages
International labour standards regulated by
International Labour Organisation
Includes UN Human Rights
Why may the ILO advantage firms?
Weakens role of trade unions
Employers often regard labour rights as `
Aspirational, implemented when and if they become `economically sustainable‘.
Why is the ILO visibly impotent?
Moral leadership, but without enforcement power to sanction labour-standards violators.
Walmart and IKEA rely on global sourcing networks
Yet are sensitive to consumer norms through their retailing establishments, avoid scandals
IKEA is more flexible so
More successful in internationalising its concept to more counties
Both Walmart and IKEA have strong corporate cultures
Organised around narratives about their home countries (Sweden and USA)
IKEA global presence
37 countries with stores, 139000 directly employed workers in 44 countries.
Wal-Mart global presence
Largest firm and retailer in the world. 1.3 million direct employees, 3400 stores in US.
IKEA claims that poor worker treatment results from
Poor management.
IKEA cost reduction strategy accomplished through
High volume production and innovation in materials, transport and packaging
IKEA part of philosophy is to demand decent labour conditions from its suppliers
Claimed to derive from prevailing norms and institutional relationships in Swedish welfare capitalism
According to IKEA there is no supposedly inherent conflict between maintaining good working conditions
and maintaining profitability
IKEA philosophy gives unions and NGOs instruction to
monitor and address specific problems to ensure laws are followed
KEY conflict IKEA
The systematic cost-reduction strategy of IKEA is at odds with upholding high labour standards of IKEA way.
IKEA Response to conflict between labour standards and cost reduction
Sustained contracts rather than high short-term profits
followed by costly setting up of new contracts
Long-term relationships as a route to cost-effective production
Established quiet and controllable resolution mechanisms, avoiding damage to the public image.
Struggles to self-monitor, even when it is in its own interest to do so.
Remaining incentive for suppliers to cheat the IKEA way.
How to explain Wal-Mart’s Strategy and Uneven Success?
Its international subsidiaries appear to perform better in markets where there is:
Weaker labour organisation and union autonomy
Weaker labour regulation enforcement
Wage bargaining is towards the individual end of the collective-individual axis
Lifetime job tenure/security is highly unusual
Culturally inflexible (Durand and Wrigley, 2009).
Wal-Mart’s Code of Ethics
Seeking to detect public relations problems arising from poor supplier labour relations before unions.
Rather than work with suppliers to resolve labour relations issues, it ends its buyer relationship, and disassociates itself from the supplier.
IKEA vs. Wal-Mart Summary
Both have adopted cost-reduction strategies with labour exploitation an inevitable outcome.
Wal-Mart adopts a strict legal approach, keeping trade unions and NGOs at arms-length distance, severing ties with contractors upon breach of CofC.
IKEA works closely with trade unions and NGOs to be able to sustain long-term relationships with contractors.
IKEA does not have enough control to institute concrete protections among their suppliers when faced with national conditions in which labour rights are not respected.
Remaining incentive for suppliers to cheat IWAY.
Recent example in news
iwannabeaspicegirl T-shirt’s to raise money to ‘help champion equality for women and girls here in the UK’ comic relief
Produced by women expected to work 16 hours a day in Bangladesh
