May 21, 2013
With Responses From
May 21, 2013
4 Min read time
Richard Locke highlights the many challenges of trying to improve working conditions and labor standards in a world dominated by global supply chains. Using sophisticated research designs and unparalleled access to corporate audit reports, Locke shows how both the compliance model of private, voluntary regulation and the alternative capability-building approach have serious limitations. And he advocates a renewed emphasis on government intervention and public regulation to transform the situation of workers in a more sustainable way.
I largely agree with Locke’s conclusion that the most effective way to better global working conditions probably requires linking public, private, and social forms of governance. But his analysis tends to shortchange the shifts that have been occurring in both global supply chains and the private governance regimes to which they have given rise. These need to be taken into account more fully.
Today’s leading multinational firms are doing things differently than they used to. They are seeking a much smaller number of larger, more capable, and strategically located suppliers. Supply chain production hubs are concentrating in big emerging economies, both because of their abundant supply of workers and local manufacturers and also because of their expanding domestic markets. And South-South trade, especially since the 2008–2009 global economic recession dramatically slowed exports to advanced industrial markets, is growing.1
Governments in big emerging economies can pressure foreign companies.
Because of these trends in the structure and dynamics of global supply chains, the information and power asymmetries that characterized “buyer-driven” chains2 have diminished. In addition, the principal countries in which these supply chains are concentrated—such as China, India, Brazil, Indonesia, and South Africa—now have greater capacity to pressure foreign companies for changes that benefit local interests.
The private governance regimes that Locke discusses have also taken on new characteristics over time. Corporate codes of conduct have evolved since the early 1990s, when companies such as Levi Strauss and Nike unilaterally declared their own. We no longer need rely on that “first-party certification.” There are now more elaborate mechanisms, including second-party certification led by industry or trade associations, such as the chemical industry’s global Responsible Care program; third-party certification, involving an external group, often an NGO, imposing its rules and compliance methods on a particular firm or industry; and fourth-party certification, in which government or multilateral agencies, such as the United Nations’ Global Compact or the International Labour Organization’s Better Work Program, list environmental, labor, and human rights principles for companies to follow.3 Each of these private governance regimes has in turn given rise to monitoring and reporting schemes that incorporate a broad range of NGOs, public auditing firms, and other civil society organizations. Host countries are now better able to identify and respond to problems raised by global supply chains operating within their borders.
In the context of these changes, a new wave of research is exploring how economic and social upgrading in global supply chains might come together and be mutually reinforcing.4 This work clearly shows how in today’s highly competitive global economic environment, socially responsible behavior requires government willingness and capacity to act, along with sustained social pressure.5
A telling example is the Apple and Foxconn case in China. Despite repeated complaints and several exposés about the treatment of workers in Foxconn’s giant assembly plants for Apple’s iPhones and other products, Apple refused to act. Then, in early 2012, Foxconn announced significant wage increases, opened its factories to a camera crew from ABC’s Nightline, and brought in the Fair Labor Association to audit and report on working conditions. This change did not come about because of corporate codes of conduct or any other single factor, but rather through what could be termed “synergistic governance.”6 Codes of conduct by Apple and Foxconn were supplemented by the active involvement of the Chinese government, which has mandated minimum wages; the persistent pressure exerted by international NGOs; and, not least, a more aggressive stance by Chinese workers in Foxconn’s factories who asserted their demands in multiple ways, including a well- publicized spate of worker suicides.
While extreme, the Foxconn experience is not unique. It speaks to the kind of coordinated efforts that are required to improve labor standards in the global economy.
Notes (please click the footnote number to return to your place in the text):
1) See Olivier Cattaneo, Gary Gereffi, Sebastien Miroudot, and Daria Taglioni, “Joining, Upgrading and Being Competitive in Global Value Chains: A Strategic Framework,” World Bank, Policy Research Working Paper 6406, April 2013; and Gary Gereffi, “Global Value Chains in a Post-Washington Consensus World.” Review of International Political Economy, forthcoming.
2) Gary Gereffi, “International Trade and Industrial Upgrading in the Apparel Commodity Chain,” Journal of International Economics 48, 1 (1999): 37-70.
3) Gary Gereffi, Ronie Garcia-Johnson and Erika Sasser, “The NGO-Industrial Complex,” Foreign Policy, 125 (2001): 56-65.
4) Stephanie Barrientos, Gary Gereffi and Arianna Rossi, “Economic and Social Upgrading in Global Production Networks: A New Paradigm for a Changing World,” International Labour Review 150, 3-4 (2011): 319-340. See the website for the Capturing the Gains project for working papers and policy briefs related to this topic, http://www.capturingthegains.org/
5) Frederick Mayer and Gary Gereffi, “Regulation and Economic Globalization: Prospects and Limits of Private Governance,” Business and Politics,, Vol. 12: Iss. 3, Article 11 (2010).
6) Frederick W. Mayer, “Leveraging Private Governance for Public Purpose: Evolving Roles for Business, Civil Society, and the State in Labour Regulation,” forthcoming in Nicola Phillips and Anthony Payne (eds.), Handbook on the International Political Economy of Governance, London: Routledge.
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May 21, 2013
4 Min read time