Trade, labour & the role of Multinational Corporations

“[G]arments worn in the West are still made by humans — nearly all of them women, working exhausting hours, with few legal protections and little chance of advancement, for some of the lowest wages in the global supply chain.” (Ellen Barry)

Only weeks after the fifth anniversary of the collapse of the Rana Plaza garment factory building in Bangladesh that killed 1,134 people and left thousands injured, the question of working conditions in lowest wage labour countries stays ever more pressing. Over the last decades specific changes in the production and accumulation patterns of global corporations have made them major players not only in global political but also local economies.

As outlined by Brian Roach “[t]he modern multinational corporation (MNC) is an economic, political, environmental, and cultural force that is unavoidable in today’s globalized world. MNCs have an impact on the lives of billions of people every day – often in complex and imperceptible ways.” This is exactly what the concrete case of an Indian government program that has drawn young female trainees from rural areas shows: how global capitalism arrives in traditional structures and radically transforms them. In this particular program, young women are being recruited as labourers from remote villages “to help factories […] meet the global demand for cheap garments”. In this particular case, the Indian government extracts rural labour to be included in the global modes of production and, thus, not only confounds traditional hierarchies and the way of life in traditional societies but also transforms small-scale economies (and introduces capitalist accumulation) on a whole new level at the same time.

This example shows the enhanced international mobility of modern MNCs quite vividly. Compared to early transnational firms, today’s MNCs especially differentiate in how they seek low-cost inputs for production to increase their competitive advantage. As “low-cost foreign inputs are increasingly achieved through contracts with external suppliers” (Brian Roach). International mobility closely linked with an economies of scale approach – which results in lower per-unit production costs of a single good by producing in greater quantity – has the potential to drastically monetise and exploit labour, especially in countries with a low average wage. This is especially the case if corporations are able to continuously find ways of mobilising ever cheaper labour – be it internationally (e.g. Asian labour in GCC Countries) or locally as outlined by Ellen Barry’s insight on the working conditions in Bangalore’s garments factories and the underlying socio-political processes transforming social hierarchies and gender relations.

Therefore, employment opportunities offered by global corporations or local proxies do not necessarily empower marginalised segments of society. On the contrary, marginalised groups within society often stay marginalised although the focal point shifts from families or the village to the factory. Most of the time states are too weak to counter the power of MNCs and their patterns of exploitation of local communities. Partly this can be attributed to weak international and national regulations, to lacking transparency or the impossibility of applying local civil society pressure.

Against this background, the current trend that shows a shift from regional and international trade agreements – which guarantee at least a degree of regulating MNCs – is concerning because it could offer MNCs loopholes and niches to manoeuvre laws and regulations protecting vulnerable labourers.

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