GLOBALISATION, FIRM UPGRADING AND IMPACTS ON LABOUR

Peter Knorringa and Lee Pegler

Tijdschrift voor Economische en Sociale Geografie, 2006, vol. 97, issue 5, 470-479

Abstract: The question that drives this paper is: When can we expect firm upgrading by developing‐country suppliers in global value chains will lead to improvements in labour conditions? To deal with this question we, (a) position firm upgrading in the global value chain approach, (b) investigate existing evidence and conceptualisations on how economic globalisation impacts on labour, and (c) develop some hypotheses on when we can expect firm upgrading and improvements in labour conditions to go together. We conclude that firm upgrading in developing‐country suppliers in global value chains as a rule does not lead to improvements in labour conditions. Instead, the much broader and more forceful process of immiserising growth makes it very unlikely that workers in such relatively low‐skilled production activities will enjoy improvements in labour conditions. Ethical sourcing may lead to improvements in labour conditions of core workers in final product manufacturers and key supplier firms, but it is as yet unclear to what extent such a business model can and will be disseminated. More generally, even though economic globalisation does selectively create new jobs, even labour conditions of core workers may be under pressure while the overall proportion of core workers appears to be declining.

Date: 2006
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