Value chain fragmentation and working conditions
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Jobs in Global Value Chains WTO Public Forum, Geneva, 2 Oct 2015
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Value chain fragmentation and working conditions
- 1. Value chain fragmentation and working conditions Jan Drahokoupil Senior Researcher European Trade Union Institute, Brussels Jobs in Global Value Chains WTO Public Forum, Geneva, 2 Oct 2015
- 2. jan drahokoupil © etui (2015) value chain fragmentation and working conditions2 Available at www.etui.org 1. A bird-eye picture on outsourcing/offshoring in Europe 2. Impact on working conditions • WORKS project order-processing in logistics and food, customer service in public services, IT departments in health) • Call centres in telecoms • Public services • Construction, meat processing, ship building (posted work) 3. Establishing worker voice mechanism in fragmented value chains • Telecoms • Parcel delivery • Construction (posted work) • Automotive (agency work) • Metal (bargaining in MNCs)
- 3. Outsourcing, offshoring, and global value chains jan drahokoupil © etui (2015) value chain fragmentation and working conditions3 Source: Drahokoupil (2015, Table 1), adapted from Sako (2005) and Olsen (2006)
- 4. Outsourcing/offshoring and working conditions: Key mechanisms undermining job quality and pay ● Impact on existing worker representation structures and collective bargaining institutions ● Moving jobs outside of the scope of existing firm-level institutions (domestic outsourcing) ● A shift to different regulatory regimes (offshoring) ● Concession bargaining ● Employing migrant workers in fact similar avoidance effects to offshoring (labour-market intermediaries) ● Institutions may mediate outcomes, but little Q evidence ● Encompassing LM institutions (equal pay/conditions etc.), collective bargaining, and ability to mobilize across production network key ● Targeted TU campains, sectoral bargaining ● International worker voice institutions (EWCs, EFAs) jan drahokoupil © etui (2015) value chain fragmentation and working conditions4
- 5. Outcomes country-specific: Crucial role of domestic institutions in shaping also decisions 5 Source: Kirschner (2015, Figure 1) in Drahokoupil (2015)
- 6. Outsourcing/offshoring and working conditions: Key mechanisms 2 ● Restructuring of the labour process to allow decoupling a major factor (negatively) influencing job quality both in sending companies and in outsourcing destinations jan drahokoupil © etui (2015) value chain fragmentation and working conditions6 Source: Drahokoupil (2015, Table 2), adapted from Gospel and Sako (2010)
- 7. Conclusion ● Crucial not to focus just on employment, but also on working conditions and job quality ● Effective worker involvement key precondition for satisfactory outcomes for workers; also crucial for the success from the business perspective ● Worker voice can also prevent abuse of the Single Market institutions (e.g. posted work), but institutions to cover firm and national boundaries lacking ● EU level: tools to address these issues (e.g. agency work directive, transfer of undertakings, I&C), but implementation poor in many countries, yet make a difference in some (e.g. ToU in the UK) ● Some sectors call for entirely new institutions: e.g. Danaj & Sippola, 2015: a European construction workers union jan drahokoupil © etui (2015) value chain fragmentation and working conditions7
Editor's Notes
- Shifting focus from employment to working conditions
- Outsourcing an aspect of GVC fragmentation, a shift from making in-house to market-based coordination International comparative case study evidence on
- As many aspects of discussing trades, includes many things, including a focusing by firms on a narrower set of activities A distinction offshore/domestic Quant evidence on offshoring (interest as transfer of jobs abroad): inequality enhancing consistent with theo prediction that return on skills rises, also evidence negative impact on low-skilled pay and employment, some recent papers negative effects also on high skilled in services, evidence on overall demand inconclusive (other papers in this panel?) we focused mainly on domestic Focus on outsourcing of primary value creation activities within core business areas (i.e. strategic outsourcing) Includes unbundling of business support processes such as IT and consumer services Also through: agency work and self-employed Also some offshore, but considering also impact on jobs in sending/client companies All within (Western) Europe, hence a very conservative focus in terms of being able to find any negative impacts
- Outsourcing often motivated by circumventing national and firm-level institutions Role of mediating factors under-studied Milberg/Winkler: LM protection expenditure positive impact on share of employee compensation, LMP institutions no effects, union density positive impact everywhere except for the Mediterannean (interaction with other factors) Undermining worker representation institutions (also conc bargaining) -> declining pay and working condiitions (telcoms) Public sector: avoidance of CB the major motivation Auto: concession bargaining backfired
- Manufacturing ICT construction outsources the most, but national differences even if controlled for sectors and firm size
- Centralization to capture economies of scale and/or specializaiton benefits Job quality, risk of stress (ability to solve problems) Less satisfying job content and fewer opportunities for learning
- Enforcing regulations of agency work and self employment typically require functioning trade unions on the company level