TOWARDS UNDERSTANDING INDUSTRY AND LABOUR IN THE POST-M FA REGIM E:

LESSON 41: TOWARDS UNDERSTANDING INDUSTRY AND LABOUR IN THE POST-M FA REGIM E:

CASE OF THE INDIAN GARM ENT INDUSTRY-M . VIJAYABASKAR

understanding accumulation processes in sectors where production and distribution functions are dispersed across the world. 1[2] In a period when nation states are losing their importance in economic decision-making, it is less fruitful to analyse the capitalist system in terms of linkages of nation states. It is obvious for instance, that integration of a national economy, especially one as large as India, with the world market would lead to territorially and sectorally differentiated outcomes. It becomes important therefore to analyse how specific industries are organised globally and to discern the mechanisms of surplus extraction at various points and of co-ordination of dispersed labour and exchange processes. A commodity chain, as defined by Hopkins and Wallerstein (1986, 159), refers to “a network of labour and production processes whose end result is a finished commodity.” To construct a commodity chain, first, the various production processes required for the final product needs to be delineated. E ach of these processes constitutes a node in the chain. In relation to each node the following properties may be looked into:

• the geographic loci of the node • commodity flows to and from the node, and those perations

that occur immediately prior to and after it • relations of production within the node • dominant organisation of production, including technology

and scale of the production unit (pp 160-163). Gereffi views the globalisation process as one organised by two

distinct sets of economic actors. Manufacturing Transnational Corporations (TNCs) who source their components and labour intensive processes of their production from less industrialised regions constitute one set. These sectors are mostly technology and skill intensive and offer substantial economies of scale (automobiles, computers, aircraft, electrical machinery, etc). Profits are derived from scale, volume and technological advances. These constitute producer driven commodity chains (PCCs). Gereffi distinguishes such commodity chains from buyer driven commodity chains (BCCs), which are controlled by big merchandisers, retailers, and trading companies that co- ordinate decentralised production networks all over the world. The third world manufacturers produce finished goods and not components. The buyers normally involve in design and/or marketing, deriving profits from a mix of research, design, sales, marketing and financial services. They are less likely to own production facilities.

In PCCs, the transnational corporations exercise control through command over raw material and component suppliers, as well as forward linkages into retailing. BCCs on the other hand, since they are design and marketing intensive, create high barriers to entry at the brand name merchandising and retail levels where ‘firms invest considerable amount in product development, advertising and computerised store networks to create and sell these items’. Whereas core firms at the point of production control PCCs, control over BCCs is exercised at the point of consumption. The latter production organisation can

be best described as one of contract (or specification contracting) manufacturing where the finished consumer goods output of local firms is distributed and marketed abroad by trading companies, branded merchandisers, retail chains or their agents.

The distinction also helps to understand the kind of trajectories that firms need to take to move up the value chain.

E ven within low-income economies, Gereffi stresses the need to differentiate the role played by each region in the world economy. Focusing on export production, he outlines five basic international economic roles that peripheral regions may fulfil: (a) The commodity export role (b) the commercial subcontracting role (c) the export platform role (d) the component supplier role and (e) the independent exporter role. There is thus a suggestion of a possible progressive movement from extreme dependent production to one of an independent exporter of manufactured goods. It is also clear that industrial relations and labour market outcomes would be influenced by the kind of roles that peripheral economies/regions play in the global division of labour. The commodity chains perspective thus, offers the possibility of understanding the production organisation patterns in specific regions in terms of their location in the global division of labour.

Next, we need a framework that links up changes in output markets with changes in labour markets. In this regard, the works of industrial organisation theorists like Sabel and Piore, and labour market theorists like Peck would be useful. They are primarily concerned with contemporary changes in global output markets and the possible implications for labour markets as mediated by other institutional factors. Increasingly, it is felt that competition in global markets relies more on innovative capability and an ability to shift from one process or product to another without loss in efficiency. Such ‘flexibility’ in output markets may be derived through deployment of flexible technologies and/or through use of flexible labour. Flexibility in labour use may be obtained either through employment flexibility or through development of functional flexibility among the workers, which may in turn depend on many institutional factors. Hence, these perspectives are useful to relate contemporary changes in global product markets to changes in local labour markets.

b.M ethod

The study is largely based on secondary literature and published data sources. Statistics published by the Apparel E xport Promotion Council, by garment industry associations, and by multilateral agencies would be used for the purpose apart from studies done in this area by others. To overcome the gaps in secondary literature, we undertake a few interviews with key informants like members of garment producers’ associations and trade union members actively involved in this sector. In this however, we confined to only one region, Tiruppur, which has revealed remarkable dynamism in the export of garments.

In order to understand the national specifities of garment production and its interactive dynamic with the world market , in the following section, we delineate the key characteristics of the Indian garment industry with emphasis on its exports.