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Further reading 369

course, the rebalancing process currently under way also has serious implications for the
OECD economies; although the focus of the book is on developing countries, it provides
much food for thought on sustainable economic growth and corporate competitiveness in
developed countries as well. The OECD is undertaking different activities to investigate
the impacts of GVCs on national economies and their implications for government pol-
icies. More detailed analysis needs to be conducted both to examine the position of coun-
tries within global production networks and to explore which policies they pursue to bene-
fit from the new international organization of production. Overall, existing data and
indicators fall short of capturing the impact of GVCs, hence the need for developing more
and better policy evidence.
Naomitsu Yashiro and Koen De Backer
OECD, Directorate for Science, Technology and Industry (DSTI) 1

Labour in global production networks in India. Edited by Anne POSTHUMA


and Dev NATHAN. New Delhi, Oxford University Press, 2010. 373 pp.
ISBN 978-0-19-806413-8.

A particularly rich vein in the expansive literature on globalization in recent dec-


ades has involved contributions on the dynamics of global production organization. This
has led to a number of cognate analytical frameworks, from global commodity chains and
global value chains to global production networks (Henderson et al., 2002; Gereffi, Hum-
phrey and Sturgeon, 2005; Coe, Dicken and Hess, 2008). While this is not the place to dis-
cuss the specificities of these distinct frameworks, much of the literature that has emerged
focuses on how firms organize globally dispersed production systems, how they engage
with local suppliers and how such production arrangements are spatially embedded.
There has been a great deal of concern over the implications of these process relationships
for the governance of production, for the ability of local firms to upgrade, and the conse-
quences for the distribution of gains across value chains or production networks.
A critical shortcoming, however, has been the failure to throw much light on the
consequences for labour engaged in global production networks (GPNs). This includes
the role of labour standards in the governance of GPNs, the challenges and potential gains
facing workers in their engagement in GPNs, the possibly unequal distribution of such
gains, and the spaces for labour to exercise agency in order to access labour rights and
maximize labour welfare (Nadvi, 2008; Coe and Jordhus-Lier, 2011). There is now grow-
ing academic interest in the relationship between the economic upgrading that takes place
in global value chains and GPNs, on the one hand, and social outcomes in terms of en-
hanced employment, rising wages and skills, improving working conditions, and wider im-
provements in terms of better and more sustainable livelihoods, on the other (Barrientos,
Gereffi and Rossi, 2010; Milberg and Winkler, 2010; Nadvi, 2011). This has also fed into
the policy agenda through the International Labour Organization’s efforts to promote
what it refers to as “Decent Work”.
Labour in global production networks in India contributes to filling the research gap
in this area. It is an excellent and timely collection that is likely to have an impact on cur-
rent debates. One of the world’s leading emerging powers and now the fourth largest
economy, India has become a critical global supplier across a range of sectors, from
labour-intensive agro-foods, garments and footwear to capital-intensive automobiles and

1 The opinions and arguments expressed in this review are those of the authors and do not necessarily re-

flect the official views of the OECD or of the Governments of its member countries.
370 International Labour Review

knowledge-intensive software. In some sectors, Indian firms have also begun to graduate
from being mere suppliers to becoming global lead firms in their own right. While still a
relatively poor country, with high levels of income poverty and inequality, India’s growing
middle-class consumers are now an important market for Indian and global consumer
goods. A study focused on Indian engagement in GPNs was thus much needed. In add-
ition to three broad conceptual chapters and a comparative study on India and China, this
volume offers ten sector-specific case studies that assess in particular the implications of
GPN engagement for Indian labour.
The book identifies three distinct questions that it seeks to address, namely, does
engagement in GPNs result in technological upgrading for local Indian firms, and
does this upgrading also extend to smaller producers? Does upgrading result in higher-
skilled and “better” jobs with improving working conditions and greater knowledge re-
quirements? Do such gains for Indian workers, and local firms, improve when they are
located in geographically distinct industrial clusters?
The introductory and conceptual chapters set out the landscape for the subsequent
empirical studies. Dev Nathan’s contribution provides a broad-brush overview of the im-
plications of growing global inequality both for global demand and for local firms in terms
of the skills they require to address the shifts in global demand. He underlines the signifi-
cance of the Lewisian turning point – already being observed in parts of southern China
with rising wages and labour shortages – and how this relates to Polanyi’s notion of the
“great transformation”. The implication for India, and across the other emerging econ-
omies for that matter, is that we are beginning to observe an economic growth narrative
which is not too dissimilar from that seen in the post-war era in the developed world. How-
ever, current developments call for new forms of global governance to address the chal-
lenges raised by distinct types of expanding inequality. Posthuma’s chapter picks up on the
subject of governance by outlining how public – and, critically, now also privately moti-
vated and implemented – regulatory interventions have resulted in sharper distinctions
between the enclaves of the formal economy and the informal sector. Yet global produc-
tion arrangements often do not observe these distinctions. In fact, as some argue, they sys-
temically require engagement with informalized and marginalized labour – often referred
to as “unfree” – as a means of ensuring flexibilities in production arrangements and maxi-
mizing competitive gains (Phillips, 2011). As Posthuma notes, this calls for a radical shift
in regulatory arrangements, a new “inflection point” that requires not only a strengthen-
ing of public regulation and inspection regimes, but also new forms of participatory and
“consultative” approaches conducive to more effective engagements between public, pri-
vate and civil-society interests in improving labour outcomes and labour rights.
Nathan and Posthuma thus individually raise critical considerations with respect to
the core questions addressed in this volume, while also providing useful summaries of
current debates. Knorringa’s contribution goes further in identifying a new research
agenda. Using the lens of corporate social responsibility (CSR), he considers what drives
responsible production – which then results in better outcomes for workers. From this
perspective, he looks at the roles of the State, civil society organizations and private
firms, but also, importantly, he questions how the world’s emerging powers may affect
these dynamics. This calls for a deeper understanding of the behaviour of emerging-
economy firms (especially Chinese and Indian) in their engagement with CSR values
within their systems of production organization. It also calls for a sharper focus on the
behaviour of emerging-economy consumers and the implications of the choices they
make for the agenda of responsible production. Knorringa’s chapter is thus particularly
useful because it begins to chart out the terrain for new research on how the rise of
Further reading 371

today’s emerging powers (predominantly, but not only, in Asia) will affect policy debates
on labour standards and labour outcomes in GPNs.
The volume’s major contribution and, potentially, its greatest impact rest in the rich
variety of empirical case studies that it marshals together. These include studies on GPN
labour in the Indian garment industry (Barrientos, Mathur and Sood; Tewari; Hirway;
Gereffi and Güler); the agro-foods and non-timber forest products industries (Singh; Kel-
kar, Alhuwalia and Kumar); leather tanneries (Damodaran); the automotive industry
(Suresh; Awasthi, Pal and Yagnik; Gereffi and Güler); and the software and IT industries
(Upadhya; Sarkar and Mehta; Gereffi and Güler). Rather than addressing each of these
contributions individually, this review draws out some of their more general findings and
then focuses on a few chapters to highlight critical implications for the volume’s core re-
search agenda, namely, does engagement in GPNs lead to better outcomes for workers
and, if so, how?
While the book brings together a diverse range of sectoral studies, from low-wage
labour in garments and non-timber forest products to high-wage labour in software, a
common thread is that workers’ gains from engagement in GPNs may often be far smaller
than one would expect. Moreover, particular categories of labour engaged in GPNs may
be especially disadvantaged or vulnerable. Based on their study on the implementation of
the ETI base code amongst Delhi garment suppliers, Barrientos, Mathur and Sood argue
for a sharper focus on vulnerable workers, especially temporary and contract workers,
who are unable to obtain statutory benefits and are often used to maintain labour cost
flexibilities for firms. Contract workers are at the low end of the labour hierarchy in terms
of access to rights, and they also tend to be from marginalized groups including scheduled
castes, religious minorities, migrants and women workers. Hirway’s study on female gar-
ment workers further emphasizes the widening gap between workers in the organized and
unorganized sectors. This is characterized by clear gender polarities and large wage gaps,
with unorganized home-based female workers being the least remunerated. Such gender
inequality is also sharp in agriculture and agro-based processing. Kelkar, Alhuwalia and
Kumar show that the engagement of very poor indigenous women in GPNs through ex-
port gum production did lead to real economic gains (including better household diets),
but they also highlight intra-household gender disparities and the vulnerabilities of such
women workers. Damodaran observes that despite India’s major role in the global leather
market, workers’ gains are limited. Moreover, casualization and gender inequalities com-
pound firms’ “low road” strategy, in which limited upgrading in the industry has not
resulted in better outcomes for workers.
Such forms of adverse incorporation into GPNs are not restricted to labour-
intensive and low-skilled manufacturing. In Tamil Nadu’s high-growth auto and auto-
components industry, pressure to reduce costs has, according to Suresh, led to a greater
propensity to sub-contract, use lower-paid trainees and “interns”, and rely on irregular
contract workers as the basis for a “flexible labour regime” to drive firms’ competitive-
ness. Even in the relatively high-tech and more knowledge-intensive IT sector, labour
flexibilization is a central plank of the business model. As Upadhya shows, this includes
the extensive use of temporary contract workers (especially through the practice of
“body-shopping”), long working hours and highly stressful working conditions.
These detailed and well-researched empirical studies make the point that while
engagement in GPNs can lead to higher levels of employment, better wages and im-
proved livelihoods for some groups of workers, there is also increasingly marked differ-
entiation between groups of workers. Labour flexibility has been the flip-side of GPN
engagement, especially through growing reliance on temporary, unorganized, and highly
372 International Labour Review

flexible contract workers, many of whom come from the more marginalized and vulner-
able segments of Indian society. The need to focus on adverse incorporation in GPNs, a
widening concern amongst researchers working on this topic (see Phillips, 2011), is thus
a core conclusion emerging from this volume.
But that is not the only conclusion. Another important observation that appears
through some of the empirical studies is the need to recognize how workers exercise
agency, including through various forms of collective action undertaken by themselves
and through intermediaries. In this regard, one of the most interesting chapters is Te-
wari’s, which notes that social upgrading, reflected in better wages and working condi-
tions, is not necessarily an outcome of economic upgrading by local producers linked into
GPN relationships. More significantly, her contribution – on the role of “footloose” cap-
ital in labour-intensive and low-wage manufacturing in the textiles and garments sector –
stresses two key points. The first is that attempts by firms to upgrade and develop new
competitive niches can result in “productivity-driven improvements in working condi-
tions” especially when they operate in tight labour markets with pressures on the avail-
ability of skilled labour. The importance of “tight” labour markets is also evidenced in the
software and IT sectors (see the chapters by Upadhya, and Sarkar and Mehta) where
labour shortages in particular segments of the market have resulted in significant wage
growth. Indeed, the Lewisian turning point that Nathan refers to may well be nearing in
some segments of the Indian labour market. The second key point Tewari makes is that
new forms of worker organization – which she calls “novel forms of hybrid institutions” –
can play a critical role both in channelling worker agency and in promoting worker and
community welfare through new and innovative approaches to “collective bargaining”.
Her example of the cross-sectoral New Trade Union Initiative (NTUI) suggests that when
workers’ collective organization is geared to promoting livelihoods, as opposed to labour
rights alone, it may result in stronger, community-based initiatives that more effectively
engage the corporate sector and produce better outcomes for workers, households and
their wider communities. The importance of labour organization is also observed in
Suresh’s account of the Tamil Nadu auto components industry. The example of the
Visteon labour dispute indicates that traditional forms of trade union activism can, even-
tually and after much contestation, result in positive outcomes for workers.
These two points – namely, tight labour markets and new forms of labour activism
– may thus be especially significant in attempts to secure wider gains for labour from eco-
nomic upgrading and insertion in GPNs, and therefore require further investigation.
Another issue which is not so closely addressed in this volume and requires more explor-
ation is the role of the State in labour regulation and labour inspection (a point touched
upon by Posthuma). In South Asia, labour inspection and labour regulation have been
replete with evidence of ineffective and corrupt public governance. Yet studies on Latin
America have shown that labour inspection regimes can be utilized effectively to protect
labour rights and strengthen the basis for economic upgrading (Piore and Schrank, 2008).
What some of this work highlights is that productivity-led approaches that build on the
“high road” version of flexible specialization can, at times, generate both economic and
social gains, including improvements for workers.
Where then does this leave us? At the outset, this volume raised three critical ques-
tions: First, is there evidence of economic upgrading in Indian engagement in GPNs? Sec-
ond, does this economic upgrading translate into gains for workers and forms of social up-
grading? Third, does location in clusters assist in this process? The focus of the empirical
studies is largely on the first two questions, especially the second. On the first question,
there appears to be evidence of economic upgrading, albeit uneven, across a range of in-
Further reading 373

dustries in India. The overarching conclusion on the second question is that economic up-
grading in India is largely driven by a “low road” strategy reflected in the tendency to opt
for greater labour flexibility as the basis for cost competitiveness. Reliance on contract
labour is growing, as is the vulnerability of marginalized segments of the urban and rural
labour force, resulting in more differentiated outcomes. In contrast, productivity-led strat-
egies are uncommon, although not absent. Moreover, productivity gains do not automat-
ically translate into gains in real wages. Significantly, where labour markets tighten, pro-
ductivity-led approaches that result in efficiency gains as well as wider social gains may
emerge. Furthermore, where workers are able to exercise agency, especially through new
forms of community-based and inter-industry collective action, the likelihood of such
gains may well be strengthened. The issue of clustering remains an open question. With
the notable exception of the chapter by Awasthi, Pal and Yagnik, few contributions focus
on the role of cluster dynamics and how local cluster-based governance (including social
networks and embeddedness) might help mediate an agenda that combines economic and
social upgrading. This calls for further investigation, as do the broader issues of spatial em-
beddedness and local governance in the shaping of contestation for labour gains from en-
gagement in GPNs.
At a time when so much international media attention and academic work centre
on the hype of the “emerging powers”, particularly on the case of “India Rising”, this ex-
cellent collection provides thoughtful empirical insights into how India’s engagement into
GPNs results in quite differentiated gains for Indian workers, small firms and small
farmers. This poses significant challenges for both Indian and international policy-makers
concerned with the goal of “Decent Work”. It also raises further critical questions about
how emerging powers such as India (but also China and Brazil) are likely to begin to shape
the “rules” that govern global production in the future, and the implications that arise
from this for workers and small producers in India and in the wider developing world
(Henderson and Nadvi, 2011).
Khalid Nadvi
School of Environment and Development,
University of Manchester

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