Abstract
This review considers two publications, both of them concerned with the interaction of governments, business and workers and with the ways in which standards might be set and behaviour formalized and regulated. The first of these publications, by Berliner et al. (2015), is international in scope. It deals with the interaction of global companies, their local suppliers, workers and governments. The second, by Williams (2014), is focused on Europe and on national level policies to bring wage payments into full compliance with tax law. This short review deals with the two books in turn. Underlying both of these studies is a critical question. How can national governments and policy makers confront the power of global business? When governments are competing for inward investment, how can they set standards that will carry credibility and be accepted by domestic populations?
The Rana Plaza disaster in 2013 cast a spotlight on the ways in which high street brands in North America and Europe impact on the working conditions and lives of workers of major suppliers. Companies such as Primark, Mango and Gap were implicated in the tragedy when a commercial building in Dhaka, the base for garment manufacturing for suppliers of major international brands, collapsed, resulting in 1129 fatalities and a further 2515 injured (Berliner et al., 2015). The disaster highlighted the exploitative conditions suffered by the workforce, many of them young women, and drew comparison with the Triangle Shirtwaist factory fire in New York City, just over 100 years before, when the workers – again many young women – were locked into the factory and died in the fire (Motlagh, 2014). Following the Rana Plaza collapse, after a slow and evasive series of responses from the Bangladesh authorities, local employers and the international brands doing business in Dhaka, two associations, divided in perspective between EU-based companies and those that are largely of North American origin, were formed to establish and implement standards on factory and building safety. The major brands remained in Bangladesh and, although it seemed that there had been a seminal moment, with realization of the importance of worker health and safety, this was illusory and there is little evidence of a fundamental shift in attitudes or behaviour.
Disasters of this type are too quickly forgotten and so the publication of a study concerned with labour standards in international supply chains is important in drawing attention to the universal issues underlying this case. Daniel Berliner and his co-authors set out to identify the ways in which the interests of brands and their suppliers, governments and consumers might be aligned with workers in global supply chains. Their focus is on clothing, footwear and consumer electronic brands, and the book offers case studies of four very different countries – the United States (US), where labour rights are in decline as trade union organization diminishes; Honduras; Bangladesh; and China. The authors’ interest is in opportunities for leverage – how is change effected and how can worker rights be established and protected? Four clusters of actors are identified: first, supply chain workers and their allies; second, governments; third, business (including both the brands and their suppliers); and finally consumers.
Key themes are concerned with business resistance to change, the weakness of core labour standards and problems in their implementation. In the US, domestic union and worker influence has diminished, wage disparity has increased and corporate decisions have shifted jobs overseas. The campaigns cited by Berliner et al. are examples of effective international solidarity with US-based consumer support for workers elsewhere who work, often indirectly, for American brands. In Honduras, for example, workers and the CGT union in the Nike supply chain appealed to the US-based Worker Rights Consortium and the Fair Labor Association for support in their struggle against employer abuses. The issue was pushed onto university agendas in the US, since universities were major corporate clients of the companies in question, able to impact on commercial contracts and in this way to influence decision takers in the brands affected.
The question of reputational management is significant for major brands and in rare cases – Levi Strauss is one example cited – this leads to clear standards on work and employment with sub-contractors and suppliers. Apple, fearing reputational damage because of events at their biggest supplier, Foxconn, were prompted to give closer attention to overwork and compliance with Chinese labour law.
Two factors stand out in the discussion in this book. The first is the general weakness in the application of international labour standards, which too often appear to provide the rhetoric but not the substance of compliance. One of the labour codes is particularly important – that is, the right to freedom of association and collective bargaining (ILO Conventions 87 and 98). This deserves more attention and support from consumer groups as worker activists themselves pursue this issue, often in the face of repressive government behaviour.
Berliner et al. have produced a significant study that enhances our understanding of the ways in which the international supply chain shapes work and working conditions globally. The case studies in this text are, arguably, uneven in the depth of coverage that they offer and the gains for supply chain workers and improvements in working conditions are all too often only temporary. In considering leverage, it is the global supply chain itself that is the origin of poor working conditions, and more attention to the role of trade unions, especially international trade union federations with the capacity to co-ordinate action across international borders, might have offered another dimension to the notion of leverage and challenge to abusive practice.
A second publication dealing with the formalization of behaviour in work relations is that of Colin Williams (2014). The focus here is largely on Europe, and the policy approaches at national level that might constrain or discourage use of the shadow economy.
Central to the discussion is the contrast between the effectiveness of two different approaches to the shadow economy. On the one hand, governments may seek to penalize those who engage with it in a bid to eradicate it. On the other, they may try to facilitate participation in the visible economy by making declared work easier. This, essentially, is the route that is advocated in this study and it is argued that governments could strengthen the psychological contract between the state and citizens and more actively encourage early stage entrepreneurs. The author has provided authoritative comment over many years on the effect of tax laws and recognizes the complexity of the informal economy, arguing that it is not solely the sphere of sweatshop employment but also includes emerging entrepreneurs, directly employed workers who receive a part of their wage as cash in hand, plus those who work on an undeclared basis within their own community networks when other work is not readily available.
How, in practice, can the researcher be confident in determining the size of the shadow economy? Williams argues that survey methods are surprisingly effective and that respondents will reveal information about whether and to what extent they have used or participated in shadow work. Using the 2013 Special Eurobarometer No. 402 Undeclared Work in the European Union he shows the shadow economy to be larger in east-central and southern Europe, with tax compliance being greater in western and Nordic countries. Over time, he suggests, the shadow economy is diminishing.
This is an authoritative study that acknowledges the importance of cultural norms in shaping attitudes to personal taxation. The benefits of the approach taken include a tight focus on reasons for individual engagement with the formal economy or avoidance through the shadow economy. The disadvantages are that there is no acknowledgement of the inequity in policies that have permitted some global companies legally to pay very little tax when the individual employee or the small business owner may be charged more heavily. Are there implications for the psychological contract between the state and the individual citizen when there are highly publicized tax breaks for global companies and when multinationals such as Google, Amazon and Starbucks have benefitted from tax avoidance arrangements (Khan, 2015)? Corporate tax issues may seem to be outside the scope of this book since the focus is concerned with shifting shadow work into the formal economy. However, equity theory suggests that the credibility of the arguments presented depends, in some measure, on the wider perception that citizens may have of their own treatment as against the treatment of other, more powerful players. At a time when controversy surrounding global business tax breaks continues, it would be interesting to consider this research in that wider context.
Both of these publications deal with the challenges facing national governments in formalizing labour rights and conditions within a framework of law. Governments themselves, competing for the attention of multinational companies, may maintain the rhetoric of commitment whilst condoning breaches in practice. In their quest to avoid unionization, companies may re-locate or effect plant closures. In dealing with the shadow economy, official policies may pursue the individual but neglect the structure and the supply chain within which that individual is operating. These perceptive and effectively researched publications give us new insights into the complexity of these relationships although, ultimately, there is little in the research and accompanying analysis of either to suggest optimism.