Globalization affecting Labor-Rights: 4 interdisciplinary perspectives

Jonh Sokol | March 2024 | 15 min read

Globalization affecting Labor-Rights:
4 interdisciplinary perspectives

Introduction

The discourse on the effects of globalization remains central in international political economy. While recently questions on the environmental sustainability of global-value-chains and the possibility of regionalization and de-growth have gained a lot of traction, the effects of globalization on labor-rights, has not been on the forefront of the debate for a long time.

Globalization is defined by American economists Joseph Stiglitz (2002) as the closer interconnection of countries and peoples of the world brought about by huge reductions in transportation and communication costs, and the removal of artificial barriers to the unimpeded cross-border flow of goods, services, capital, knowledge, and (to a lesser degree) people. It consists of a broad variety of processes and effects, that all share the continuous increase of interdependency between countries at the respective lowering of costs by way of ultimately Smithian division of labor (Sen & Rothschild, 2006).

Especially since the COVID-19 pandemic, the debate mostly seems to concern the potential instability of these networks and production chains in times of crisis and shifting power dynamics. Much less focus is however put on the effects globalization has had on the fate and circumstances of workers all around the globe. As this has so far not presented as an actual problem or hindrance for economic growth, (quite the opposite) mentions of labor-rights have been reduced to the rare remark, that with overall rising productivity and wealth, the conditions for workers would ultimately rise as well. This, of course, ignores, that neither is the overall growth of national wealth, as measured by GDP per capita, representative of an actual increase in the standard of living of all inhabitants, nor does rising productivity necessarily mean improved conditions.

In the following essay, four theoretical approaches will be outlined, which describe how globalization has been, still is and can be detrimental to labor conditions and workers rights. These will include topics from institutional economics, economic geography, and labor sociology within and throughout production chains. First a more general examination of the changing economic conditions affecting labor will be conducted, employing the concepts of Growth-Models and Secular Stagnation. Then observations of frameworks on the weakening of Nation-State and de-industrialization in developed economies of the West will be made. The first cases represent results of pressures exuded by global market forces, which also serve in disempowering national labor-movements. The third and fourth sections are more sociological in nature and pertain to the de-socialization of communication-chains and the case of invisible labor. In this way the author hopes to show more conclusively how globalization negatively affects labor rights, than by just presenting one problem or theory.

Shifting Growth-Models and Secular Stagnation

Globalization, the increased integration and interdependence trade, investment, and the flow of people and ideas, has had a profound and calculable impact on the world economy. While it has inarguably had benefits, including increased growth, access to new markets and greater availability and competition between goods, it has also equally measurable negative effects on the rights, conditions, and livelihoods of workers in many countries. Elementary to understanding the negative effects globalization has had, is to understand the nature of international competition, meaning a race to the bottom in terms of taxation and welfare, but also and more importantly of labor standards and wages. As companies tend to move their operations to countries with lower labor costs, workers in more developed countries are left with fewer job opportunities and reduced bargaining power and a decrease in wages, benefits, and job security (Wilborn, 2013).

A study by International Labor Organization (ILO) shows the negative impact of globalization on labor rights, and they suggest that the key to protecting workers rights in this era of globalization is through international cooperation to establish and enforce minimum labor standards and promoting policies that support the rights of workers to form and join unions (ILO, 2020). The latter is especially prescient when looking the research of Lucio Baccaro and Jonas Pontusson (2016) and their development of their “Growth-Model Perspective” (2016). They argue how countries like Germany have increasingly focused on exports as a driver for economic growth. In consequence, the strong labor-unions in those sectors relevant for export-manufacturing, have compromised with employer-associations on an overall deregulation of worker’s rights and wages, in favour of retaining the quality of just their wages and conditions. This has, again lead to an overall stagnation of wages, including those in those secure sectors (Baccaro & Pontusson, 2016).

As a result, many countries have seen a severe stagnation of wages and their share in aggregate demand, either due to higher unemployment, which itself lead wages to stagnate, or implementing policies of deregulation and purposeful stagnation, a phenomenon referred to as “Secular Stagnation”, a term coined by current president of Harvard-University Lawrence Summers (2021). A related effect is that normally in cases of high levels of employment, wages rise due to an increase in bargaining power of workers. Within globalization however, employers tend to lobby for increased competition for jobs, particularly low-skilled jobs by actively recruiting immigrant workers willing to work for lower wages and increase the pool of employable persons, thereby lowering employment overall (Kalecki, 1971). Thus, globalization not only allows multinational companies decrease their labor costs by moving their operations around the world in search of cheaper labor, but also allows smaller national-scale firms to use free movement of goods, services, and people to the same end.

Conversely, in developing countries, globalization has meant that government need to keep their newfound “advantage” of low-cost production and companies use their leverage to demand lower labor costs (ILO, 2017). Overall, competing for production-sites, has assuredly been detrimental to workers’ rights.

Negative Effects of De-Industrialization

The second theory on the negative effects of globalization on workers' rights is that it has led to a process of deindustrialization in developed countries. In relation to some of the points mentioned in the last section, this argues that as companies move their operations to developing countries, manufacturing jobs are lost in developed countries. This can lead to unemployment, social dislocation, and a loss of leverage and thus bargaining power for workers, as the share of low skill jobs in the service sector increase and other skills lose value.

The theory of deindustrialization has been studied by many economists and sociologists, with the seminal work being “The Condition of Postmodernity" by economic geographer David Harvey (1989). In it he examines the social and economic effects in the emergence of a post-Fordist economy characterized by flexible accumulation and the increasing mobility of capital. Harvey writes that deindustrialization is a key component of this process, as manufacturing jobs are shifted from developed to developing countries, leading to a decline in industrial employment and the rise of precarious and low-paying service sector jobs with usually worse conditions (Harvey, 1989).

Other scientific authors who have studied the effects of deindustrialization on workers include late sociologist, Zygmunt Bauman. In his book "Work, Consumerism and the New Poor" (2004), he describes ways in which deindustrialization has led to a widening gap between the rich and poor, and the rise of a precariat class of workers with insecure and poorly paid jobs. This has especially affected the middle-class in developed countries in the West, which used to be heavily built on well-paid manufacturing work. It should be noted however, that certain developed nations, most notably in East-Asia, such as South-Korea and Japan, but also nations like Sweden and Austria, have managed to mitigate these effects somehow, through increasing specialization of their industrial sector (Baumann, 2004; Tomaskovic-Devey et. Al., 2020).

Neoclassical economics has also contributed some ideas and conceptualizations to the debate. Fitting to the observations made by Harvey and Baumann mentioned above, Serbian economist Branko Milanovic made headlines in 2013 when he, together with his colleague Christoph Lackner, published a visualization of developed countries’ middle-class income decline as part of rising inequality. The curve, originally titled “Lackner-Milanovic-Curve” which has since been renamed “Elephant-Curve”, shows how the increase in income in developing nations, especially China, has come at the expense of workers in Europe and the United States (Lackner & Milanovic, 2013).

Anthony D'Costa has come to similar conclusions when studying the process of industrial resettlement as a part of restructuring, because of globalization. In relations to working conditions and labor rights, he notes how these newfound production-regimes hardly come with the same level in protections and benefits, as their predecessors (D'Costa, 1999). De-Industrialization has thus not only meant a worsening of conditions for workers in developed countries, but also not fulfilled its promise of improving them elsewhere.

De-Socialization of Global-Communication-Chains

The society of the globalized economy is in a certain sense the world society. As a regulatory basis for the economy, however, it is still largely inexistent and offers the image of a disorderly collection of multinational companies, each exclusively pursuing individual or sectoral interests. The world market does have social structures and patterns of action, as well as networks between multinationals that cooperate globally, effectively unregulated.

At this stage, it seems important to mention the anti-Keynesian revolution and subsequent triumph of neoliberalism and the reemergence of a dogmatic emphasis on free trade starting in the 1970’s. A development which framed the contemporary debate within the field of political economy away from a class-struggle and towards the question of the market versus the state. In a globalized world the role of state is now defined not in its tasks of distribution and creation of equity, but by its success of regulating the market. This being achieved, simply by the reduction of the State's share in the economy (Mattei, 2022).

Less of an openly discussed issue, however, is the impact of international production chains and multinational corporations on labor networks and the ability of workers to voice their needs. According to Jörg Flecker (2012), a social scientist working at the Institute of Sociology at the University of Vienna, the increasingly complex geographical distribution has become the norm for organizing and managing economic activities in many industries. Flecker explains how this restructuring is leading to far-reaching changes in the quality of work and the employment conditions of large numbers of workers worldwide. In his extensive research on the topic, he speaks of a "fragmentation" of the workforce (Flecker, 2012).

In this context, the long chain of interconnectedness that separates companies and workers from each other may be a catalyst for the lack of potentially necessary inter-hierarchical communication. Another German economist and labor sociologist by the name of Dieter Sauer (2013), explains how global market mechanisms change internal company structures and value chains in a similar way. Most noticeably in the service sector, companies, as they often hand over the helm to market forces and to the financial market, they simultaneously relinquish responsibility for what happens within the company. As a result, intermediate and harmonizing levels within hierarchies are outsourced or removed all together and managers can now justify decisions, by transferring any responsibility to the abstract construct of the omniscient market or back onto the worker (Sauer, 2013). The employees, who are left to their own devices within the framework of this so called indirect control, are apparently helplessly at the mercy of this type of decision-making and forced to behave selfishly and “self-responsibly” (ibid.).

If an employee now has a problem, there is no direct higher-up they can talk to, as the next instance in the hierarchy might be an algorithm or someone on an entirely different continent. This also affects the potential of an effective representation via a union, as communication is still de-humanized, even for a representative. The company as a social construct disappears and with increasing social isolation of individual employees, employer is the only one who wins.

The Case of Invisible Labor

While digital consumption of all kinds of everyday necessities seems incredibly easy and simple, the work involved in delivering them on time is anything but. To make this possible, completely new fields of activity have emerged in the digital sector that are almost entirely based on so-called "invisible labor”.

Invisible labor is meant to describe the different kinds of service work that never encounter consumers and often even other workers. The restructuring of value chains in and between companies has led to a massive increase of such jobs in the last decades. This ranges from the nightly cleaning crews in office buildings, warehouse-workers for online-retailers and even so-called “virtual janitors” meaning the armies of content editors on social media, tasked with winnowing out pornographic or violent content. Thanks to this behind-the-scenes work, computer users, online-shoppers, and many other consumers nowadays, have an incrementally improved experience without ever actively being forced to realize that the work has even taken place (Cherry, 2016).

The fact that these workers are, so-to-speak, hidden unfortunately means that they’re paid badly with long-hour contracts that don’t include any provisions on legal protection, healthcare, or other rights. Additionally, this also concerns many jobs which entail hard or stressful work, often to keep up the illusion of one-day-delivery, or pornography-free websites to be automatic givens. While this is of course also an example of how technology has influenced the labour market, the invisibility of these activities is decisively influenced by the relationship of countervailing power, between power and counter-power in the companies and company networks, first coined by Robert Gailbraith (2017).

These trends, also termed “virtual work”, are sometimes presented as evidence for the emergence of new ways of work through globalization, as usually not taking an honest look at the quality of jobs being created. Classic example of invisible labor such as the large number of warehouse workers involved in the package shipping, or the online-content moderation. Likewise, the form of employment is in many cases seasonal and by no means secure, so that the well-being of the workers is further deteriorated (Flecker 2012).

Furthermore, these industries are primarily located in the countries of the so called Global South, although there are also exceptions to this, for example in the form of Russian online workers or some warehouses, as these obviously do not constitute exceptions when it comes to relative quality of work (Cherry, 2016).

The problems of isolation and the lack of possibilities for social-communication within value-chains mentioned in the last section most probably affect most areas of invisible labor. This combination, therefore, makes for a large amount of these jobs, not only being hard and uncomfortable for workers and paid badly, but workers also have little to no way of communication their wishes or problems to their employer. Add this to the large number of already underpaid industries with bad conditions such as sailors on containerships or agricultural workers, which could arguably be called the traditional forms of invisible labor and it becomes obvious how globalization and technology have not benefitted these workers.

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