Where the Low Road and the High Road Meet: Flexible Employment in Global Value Chains

Abstract

This article examines production organisation and employment patterns in the export-orientated centres of Denizli (Turkey) and Tiruppur (India). It argues that Denizli and Tiruppur's involvement in global value chains has resulted in segmented production patterns and insecure employment arrangements. Larger producers use sub-contractors as a strategy to mediate the instability of international contracts and pass the uncertainty in their global linkages on to smaller firms and their workforces. Such flux, then, has become a regularised feature of manufacturing work within the ranks of sub-contractors. Employers have solidified these production arrangements by recruiting rural and female workers. The article sheds light on the relationship between new production forms and rising employment insecurity.

Key Words:

• Apparel
• global value chains
• labour
• employment conditions
• India
• Turkey

Acknowledgement

This article draws on data and fieldwork supported by Fulbright-Hays Doctoral Dissertation Research Abroad and Boren Fellowships for research in India and Turkey. An earlier version of the paper was presented at the “Multiple Flexibilities: Nation-States, Global Business and Precarious Labour,” working group at the Social Science Research Council's International Conference on Inter-Asian Connections, 21-4 February 2008 in Dubai. Thanks go to the workshop directors, Kevin Hewison and Arne Kalleberg, and the workshop participants for their valuable comments and the larger theoretical discussions that informed the reworking of the paper. In addition, thanks go to Kiren Chaudhry for ongoing intellectual stimulation and support, Pradeep Chhibber, Richard Walker and Jonah Levy for significant insights and feedback in earlier stages of the project, and Carolina Bank-Muñoz, Karen Miller and Celina Su for their support and careful reading. All remaining errors are the author's.

Notes

¹ There is a robust debate about the best approach to the study of global production patterns, as well as the most appropriate terminology, be it global production networks, global value chains or commodity chains. For reviews of the key distinctions among the approaches, see Bair (2005), Hess and Yeung (2006) and Coe et al. (2008).

² There has been significant discussion about the varied forms that upgrading can take: firms can make better products (product upgrading), can improve their production processes (process upgrading), or can move into additional activities with greater value-added (functional upgrading). Bair (2008: 5) adopts a broader definition of upgrading that includes firm movement along the value chain so as to gain greater benefits, including security, profits, technology, or knowledge transfer. Humphrey and Schmitz (2002; 2004) and Schmitz and Knorringa (2000) find that both prospects for and the type of upgrading depend on the nature of the relationship between buyers and local producers.

³ The Multi-Fibre Arrangement was established in 1974. The quotas effectively divvied up European and US markets for clothing and textiles by placing limits on the number of exports from any particular producer. Quotas prompted some industrial upgrading among producers, as they sought the greatest “buck” for their limited quota allocations. They also contributed to relocations of production, as companies in countries for which competition for quota allocation was fierce would set up production facilities or contract with producers in other countries, as a mechanism for avoiding quotas. In 1995, the major textile importers agreed to phase out quotas on textile and apparel products over the course of the next ten years. The end of the quota regime, then, was assumed to benefit countries with established capacities in textiles and apparel at the expense of smaller countries who had maintained their access to US and European markets through the assured, albeit limited, allocations guaranteed to them under the quota regime (UNCTAD, 2005; USITC, 2004). China, in particular, and India, to a lesser extent, were presumed to benefit from phasing out the MFA quotas. Debates over Turkey's position were more mixed in their prognoses (see Riddle and Rehman, 2005).

⁴ This has been cast in more general terms as a debate about the extent to which “functional upgrading” or the addition of greater value-added activities, including retailing and brand development, is possible as such functional upgrading would involve local producers moving into the niches occupied by global buyers themselves (Schmitz and Knorringa, 2000).

⁵ Both Turkey and India are widely cited as two of the most prominent exemplars of post-World War II import-substituting industrialisation (see, for example, Waterbury, 1993), and both adopted programmes of economic liberalisation and export-orientated industrialisation, in 1981 and 1985, respectively. Both are frequently referenced as examples of the next generation of newly industrialising countries (see, for example, Amsden, 2001) and emerged as major global textile and apparel producers in the 1990s. The Turkish and Indian textile and apparel industries, moreover, have been comparatively successful in managing the heightened competition that has accompanied the phasing out of quotas associated with the MFA. According to the World Trade Organisation, as of 2007, Turkey and India were, respectively, the fourth and sixth largest clothing exporters (in value terms) and the eighth and seventh largest exports of textiles in value terms (WTO, 2008).

⁶ It is not uncommon for accounts of Indian economic policy, particularly those in the popular media, to identify 1991 as the crucial turning point in Indian economic policy because the reforms were more extensive than previous liberalisation efforts. I date the reforms to Rajiv Gandhi's liberalising reforms in 1985, as policy changes reduced industrial licensing requirements, promoted exports and included a new textile policy. For discussions of the content of the 1985 reforms, see Denoon (1998) and Tewari (2006a).

⁷ The material in this article derives from two years of interview- and observation-based field research on Turkish and Indian industries. I conducted open-ended interviews in Denizli and Tiruppur with firm managers, factory owners, business association leaders, trade union representatives, workers, and local political party members and municipal officials during six weeks of fieldwork that centred on Denizli and Tiruppur during 2000-02.

⁸ Turkey is divided into a series of provinces, each of which is administered by a governor, who is appointed by the centre. Provinces, in turn, are divided into a series of districts. Denizli is a province and the city of Denizli serves as its capital.

⁹ The supportive relationship did not hold for all periods, as the factory provided competition for local producers in the 1960s, when it began producing cloth.

¹⁰ In 1995, Denizli firms held 64 of 339 investment incentives, coming in second only to Istanbul in terms of overall numbers.

¹¹ Statistics on the growing number of exporters within the town need to be viewed with caution, as many companies register as exporters in the hope of entering into export production. As such, figures on the number of producers provide an exaggerated picture of the success of the industry (interview large exporter, 8 December 2000; Pinarcıoğlu, 2000: 232, 242).

¹² The cap was subject to periodic increases and stood at Rs. 1 crore (Rs. 10 million) in 2000. Woven garments were de-reserved (or removed from the category of industries affected by the small-scale industry policy) in 2002, and cotton knitwear was de-reserved in 2005.

¹³ Such practices parallel the “Sumangali system” used by employers in the textile mills in neighbouring cities and districts, including the nearby city of Coimbatore (Frontline, 2007).

¹⁴ Child labour has been a controversial issue, particularly in Tiruppur, as foreign buyers, often in response to media reports, have raised the issue of children employed in sub-contracting units. Although most international retailers have “codes of conduct” that forbid the use of child labour, and the Tirupur Exporters Association requires that all members of the organisation comply with a “no child labour” policy, it is harder to ensure compliance with such policies in the smaller units that are part of the city's sub-contracting networks.