Globalisation is enhancing the role of the private sector as an engine of pro-poor growth (PPG) and source of paid employment in developing countries; many jobs are indeed created via international outsourcing from global and regional buyers to networks of supplier firms. These Global production networks (GPNs) involve increasing commercial inter-linkages between firms and their expansion[1] is changing trading patterns through the impact of sourcing strategies. Integration into GPNs provides countries with an important avenue for expanding output and employment[2]. To harness this development potential both economic[3] and social[4] upgrading are needed: on one hand, achieving economic upgrading that supports export promotion can shift the country up to a higher level of economic growth and development; on the other, achieving social upgrading ensures improvements in both the quantity and quality of employment, promotes well being of workers’ households and contributes to greater economic empowerment of women workers, and more sustained poverty reduction.
These pressures compel supplier firms to adopt segmented employment strategies. They often hire a core set of regular workers who provide quality and consistency of output, enjoying good employment conditions, rights and employment protection. They are often complemented by casualised workforce that enables the supplier to handle surges in orders and ensure just-in-time output at low cost, with minimal overhead expenses. They consist mainly of female and migrant labour, often hired via third-party labour contractors and drawn in from poorer rural areas. For them conditions of employment are poor and do not ensure a route out of poverty.
On one side, the emerging body of information is based on isolated studies. In addition, existing tools for the collection and analysis of data on national output and international trade often fail to identify how GPNs are emerging as powerful drivers of growth and development; how the dynamics of private sector engagement are changing and what their impacts upon the scale and quality of jobs created is. On the other, many private sector firms have responded to new pressures from consumers, trade unions and NGOs over unfair trading practices in the South. Unfortunately, these experiences are often fragmented and their relationship to government regulation and enforcement is not always clear. If the expansion of GPNs is to lead toward economic and social upgrading, then new policy tools and multi-stakeholder governance structures are required. How can the emerging approaches combine to support producers through economic upgrading that also enhances decent work for the most vulnerable workers through social upgrading?
Significant knowledge gaps must be addressed in relation to existing conceptual frameworks, availability of statistical data and empirical evidence. Cross-sectoral and country studies are needed to better understand the common features and dynamics of employment in GPNs. No single researcher or institution is able to effectively undertake such research alone.
Building on a first phase[5], where a research network was assemble through workshops hosted by the ILO International Institute in Labour Studies (IILS), the research envisaged in this phase will contribute to support the scope of the new forms of currently uncoordinated “niche initiatives” in governance that are being forged to support the sustainability of economic and social upgrading; and eventually extend them into the mainstream of global development (for more details on phase 1 and 3, see annex 1).
[1] Transnational companies and their outsourcing are estimated to account for around two-thirds of total world trade.
[2] This has provided new avenues for female employment (80% of waged workers in garments and 40% in agriculture).
[3] Moving into skill-intensive, higher value-added tiers and controlling more sophisticated/profitable functions in the VC.
[4] Providing jobs that are stable, pay a living wage operate in safe working conditions, with social protection and respect for national and international labour standards, in line with the goal of promoting decent work that has been included as a new target under Goal 1 of the Millennium Development Goals (MDG) agenda.
[5] The main outputs of phase one include: bringing together the initial research network through a conference held in Geneva and the holding of regional workshops in South Africa, China and India. These have scoped out the issues, identified research partners and facilitated drafting of the current proposal to advance the research programme.
