speri.comment: the political economy blog

The underbelly of the global economy

Labour exploitation is the rotten root of the global economy, and we need a broader and tougher approach than is currently on the cards to deal with it

Nicola Phillips, Professor of Political Economy, University of Sheffield

Nicola Phillips

Nicola Phillips

Few can have failed to notice the slew of stories in recent weeks on a common theme: the prevalence of labour exploitation within the global economy.

The stories are harrowing. They include the deaths of well over 100 workers in a fire in a garments-producing factory in Bangladesh, supplying firms which are household names for the world’s consumers; the discovery of trafficked workers employed in the UK by Nobel Foods, a company supplying eggs to many major supermarkets and retailers; the admission by Ikea that it knowingly used forced labour in its supply chain in East Germany during the 1980s; the escalating strikes by farm workers in the Western Cape of South Africa in protest against appalling conditions of work.

All of these cases – among many more – add depressing substance to what we already know: that the global economy rests on the exploitation of cheap labour on a vast scale. We’re reminded almost daily, as well, that the problems go beyond ‘bad jobs’ or ‘poor working conditions’ to encompass the very worst forms of exploitation associated with trafficking and forced labour.

The incidence of these problems in global supply chains is becoming increasingly well documented. Recent examples include a series of excellent reports by the labour standards monitoring group Verité on forced labour across a wide range of sectors, and a highly important report by the high-profile NGO Anti-Slavery documenting forced labour in the manufacture of garments for UK high street brands. Academic research has also begun to pick up on the theme, including my own work, currently funded by the Leverhulme Trust.

Political recognition of these issues has been slow in coming. But the topic of trafficking for labour exploitation has lately become much more fashionable in global policy debate, as well as among governments in countries like the UK and US.

One of the flagship strategies in this respect has been developed in California, in the form of the California Transparency in Supply Chains Act, which entered into force on 1 January 2012. The Act seeks to encourage firms doing business in California to take the issue of trafficking in their supply chains seriously, and oblige them to report on the steps that they are taking in this direction.

Interestingly, similar bills have been brought before the UK House of Commons, most recently by Michael Connarty MP, following Prime Minister David Cameron’s stated ambition of making the UK a ‘leader’ in the fight against human trafficking. The supply chains approach was also central to President Barack Obama’s major statement on trafficking in September 2012.

This new attention to supply chains is welcome and long overdue, and indispensable in considering how to address the issue. But can legislation like the California Act make the slightest difference? Do these initiatives really get to the heart of the problem?

It’s still too early to identify any concrete changes arising from the California legislation. But its shortcomings have been amply exposed.

It applies only to large firms with annual revenues in excess of US $1 million. It stipulates no more than a requirement for companies to disclose the nature of their efforts to deal with trafficking and forced labour in their supply chain, relative to the company’s own standards for ensuring adequate labour conditions. It imposes no direct penalty for non-compliance, relying instead on large firms’ concerns about protecting their brand. Most importantly, firms that encounter problems of trafficking and forced labour in their supply chain are required only to provide assistance to the identified ‘victims’.

It is, in essence, a licence for business as usual, with a bit of extra reporting and a bit of extra mopping up after if you get caught out.

But the problems run deeper than the fact that the legislation is largely toothless. The supply chains approach, as it has been articulated thus far, is a run-of-the-mill appeal to corporate self-regulation as a means to ensuring better labour standards in the global economy. It runs straight into the uncomfortable truth that a reliance solely on private self-regulation and corporate social responsibility (CSR) has been tried and tested, and has been revealed repeatedly to have failed.

Unfortunately, though, it’s difficult to imagine any other kind of approach emerging in a context where market fundamentalism remains so deeply entrenched as the foundation of the global economy, essentially unchallenged by political leaders or parties on either left or right.

In this context, it’s surely hopelessly far-fetched to imagine a political initiative that seeks radically to change the way that large firms do business, or even intervene in a more heavy-handed manner through intrusive regulation.

This brings us to a broader problem: that the supply chains approach addresses itself to the symptoms of the problem rather than its root causes. There’s little space in this approach for acknowledging, let alone addressing, how and why it is that forced labour and trafficking occur and persist in the global economy in the first place.

Acknowledging this entails opening up all sorts of difficult – and politically uncomfortable – questions about what sort of global economy has been constructed and how it functions, how wealth is generated through supply chains and for whom, the consequences of ultra-flexible labour markets that remain central to the mantra of competitiveness, how particular patterns of consumption drive labour exploitation, how and why people become vulnerable to trafficking and forced labour … and so on.

We therefore need a wide-angle political economy lens to understand the problems of trafficking and labour exploitation in the global economy, and public and private strategies to address them that go far beyond the limited, too heavily CSR-focused initiatives that have emerged thus far.

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