Trade, Labour and Transformation of Community in Asia

Trade, Labour and Transformation of Community in Asia

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Trade, Labour and Transformation of Community in Asia Edited By Michael Gillan and Bob Pokrant

Editorial and selective matter © Michael Gillan and Bob Pokrant 2009 Individual chapters © Contributors 2009 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2009 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries ISBN-13: 978-0-230-22249-6

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This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalogue record for this book is available from the Library of Congress. 10 18

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Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne

Contents List of Tables, Figures and Maps

vii

Acknowledgements

viii

List of Contributors

ix

Part I

Economic Integration and Social Transformation

1

1

The Social Impact of Trade and Production Networks on Labour and Local Communities in Asia Michael Gillan and Bob Pokrant

3

2

Globalization and Economic Change in Bangladesh John McGuire

24

3

International Trade and Business Investment in Myanmar: Scope, Strategic Development, and Social Implications Htwe Htwe Thein and David Pick

36

Part II

Global Trade and Commodity Production

69

4

Work, Community, Environment and the Shrimp Export Industry in Bangladesh, India and Thailand Bob Pokrant

71

5

From Marginalized Worker to Impoverished Entrepreneur: The Globalization of the Trade in Crafts and Its Impact on Indian Artisans Timothy J. Scrase

102

Part III

Labour Organization in Transforming Economies and Societies

127

6

Industrial Restructuring, Trade Union Strategy, and Social Transformation in Australia and Asia Michael Gillan and Rob Lambert

129

7

Governance, Labour and Uneven Development: The Political Economy of the Port Sector in South and South-East Asia Douglas Hill

157

v

vi Contents

8

Women Workers Organizing in the Free Trade Zones: Collective Action and Community Janaka Biyanwila

Part IV 9

Emerging Trade and Labour in Asia: The Information Technology Sector

182

209

Linking and Legitimizing Knowledge-based Economic Development: India-Singapore Collaboration in the Information Technology Sector Faizal bin Yahya

211

10

Difference in a Transnational Organization in Australia: The Case of Transient Indian Information Technology (IT) Professionals Salim Lakha

234

11

Envisioning Futures in Work and Career in Large Transnational Call Centres in India Jennifer Jarman

257

Index

281

List of Tables, Figures and Maps Tables 3.1 4.1 5.1 5.2

5.3

6.1 9.1

Affiliates of TNCs in Myanmar, 1990–2002 Top ten aquaculture producers of food fish supply, 2004–2006 Handicrafts in India: Basic statistics Statement showing provisional export figure of handicrafts during the period April–March 2006–2007 compared to the corresponding period of April–March 2005–2006 Statement showing provisional export figure of handicrafts during the period April–October 2007–2008 compared to the corresponding period of April–October 2006–2007 Global sales (by volume) of whitegoods Historical overview of IT industry in Bangalore

47 75 106 107

108

132 220

Figures 3.1 3.2 3.3

Myanmar – Inward FDI, 1989–2002 (millions of dollars) Myanmar – FDI by Industry, 1999–2001 (millions of dollars) Myanmar – Approved FDI Inflows by Geographical Origin, 1992–2002 (millions of dollars)

42 43 46

Maps 4.1 4.2

Chakoria Sundarban, 1975 Chakoria Sundarban, 1988

89 90

vii

Acknowledgements This book is the result of a collaborative research symposium organized by three research groups based in the Indian Ocean Region: the South Asia Research Unit at Curtin University of Technology, the South Asian Studies Program at the National University of Singapore and the Australian Global Studies Research Centre at the University of Western Australia. The symposium Global Trade, Labour and the Transformation of Community was held in October 2005 at Curtin University of Technology Perth, Australia. The event was supported by a ‘liveable communities’ grant from the Division of Humanities at Curtin University. The editors would like to thank Amanda Hamilton, Alec Dubber, and Gemma Papageorgiou from Palgrave Macmillan for their assistance with the editing and production of this book. Michael Yeats and Shirley Tan also assisted the editors with proof reading the chapter contributions. An earlier version of Chapter 2 was previously published as: McGuire, J. (2003) ‘Theorising Bangladesh’s place in the global economy’, South Asia: Journal of South Asian Studies, 26 (3), pp. 467–480 – and the editors would like to thank Ian Copland, the editor of South Asia, and the South Asian Studies Association for their permission to republish this contribution.

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List of Contributors Janaka Biyanwila is a lecturer, tutor and researcher in the area of labour studies at the UWA Business School, University of Western Australia. His research mainly focuses on South Asia, with particular interests in issues of nationalism, social movements, gender and civil society. His most recent publication was a book chapter titled ‘Sri Lanka: Contradictions of women in labour organizing’ in Women and Labour organizing in Asia, eds Kaye Broadbent and Michele Ford (2008). Michael Gillan is Lecturer in employment relations at the UWA Business School, University of Western Australia. His current research interests include trade union responses to globalization and industry restructuring, regulation of collective bargaining processes, and the political economy of liberalization and labour in India. He has published in a wide range of national and international journals including Economic Geography, Economic and Political Weekly, Asian Studies Review, South Asia, and the Journal of Industrial Relations. Douglas Hill is Lecturer in Development Studies at the University of Otago, New Zealand. His research focuses on comparative political economy with particular reference to South Asia. In the past he has published on rural development, the geopolitics of water resources and the restructuring of the port sector. With Adrian Athique, he is also the co-author of The Multiplex in India: A Cultural Economy of Urban Leisure, which will be published in September 2009. Jennifer Jarman is an industrial sociologist working in the Department of Sociology at the National University of Singapore. She was educated at the University of Toronto and Cambridge University. Her interests are in understanding contemporary labour market issues and in particular transformations in the service sector. She is particularly interested in the impacts of rationalization and of globalization. Her current research focuses on understanding the implications of the call centre industry’s spread across the globe. Salim Lakha is a senior lecturer and coordinator of the Development Studies Program in the School of Philosophy, Anthropology & Social ix

x List of Contributors

Inquiry at the University of Melbourne. His research and teaching interests include globalization, democracy and governance, political economy of development, and transnational migration. His regional area of expertise is South Asia, especially India. He is the author of Capitalism and Class in Colonial India: The Case of Ahmedabad (1988) and co-editor of Wage Labour and Social Change: The Proletariat in Asia and the Pacific (1987, 1992). Rob Lambert is Winthrop Professor at the University of Western Australia. His research interests are globalization, its impacts on society and responses to restructuring. This is captured in his recently published co-authored book, Grounding Globalization: Labour in the Age of Insecurity (2008). He is Co-Director of the Australian Global Studies Research Centre at the University of Western Australia and is the Co-ordinator of SIGTUR, a networked movement of democratic unions in the global south. John McGuire is Adjunct Professor at the University of Western Australia. He has held visiting fellowships at a number of universities in Australia, Canada, India and the United Kingdom. He has sat on the editorial board of a number of journals. He has published widely on colonial and postcolonial South Asia, having recently co-edited Evolution of the World Economy, Precious Metals and India (2001) and Hindu Nationalism and Governance (2007). David Pick is Senior Lecturer in Management at the School of Management, Curtin University of Technology. His research interests focus on public policy and management paying particular attention to examining the influences and effects of neoliberalism and globalisation. Bob Pokrant is Professor of Anthropology in the School of Social Sciences and Asian Languages at Curtin University of Technology, Perth. He is Director of the South Asia Research Unit (SARU) and management board member of Curtin’s Centre for Advanced Studies in Australia, Asia and the Pacific (CASAAP). His main research interests are sustainable coastal management, adaptation to natural and human-induced hazards, the global food system, and the relationship between climate change and development. His main regional interest is South Asia, particularly Bangladesh. Tim Scrase is Associate Professor of Sociology and Director, ARC Key Centre for Asia Pacific Social Transformation Studies (CAPSTRANS),

List of Contributors xi

University of Wollongong, Australia. He has published five books and numerous articles and book chapters on globalization and development in India. His most recent book (co-authored with R. GangulyScrase) is titled: Globalisation and the Middle Classes in India: The Social and Cultural Impact of Neoliberal Reforms (2008). Htwe Htwe Thein is senior lecturer in International Business at the School of Management, Curtin University of Technology, Perth, Western Australia, where she teaches Asian Management and Cross-Cultural Communication. She has an ongoing research interest in the economy of Myanmar. In particular, her writings on Myanmar explore market entry and business development strategies of international businesses in Myanmar. Since 2006, she has contributed an annually updated essay on ‘The Economy of Myanmar’ to the Europa Regional Survey of The World, The Far East and Australasia. Faizal bin Yahya is Assistant Professor in the South Asian Studies Programme, National University of Singapore and his main research interest is interregional economic cooperation between South and East Asia. His recent two monographs are Economic Cooperation between Singapore and India: An Alliance in the Making? (2008) and New ‘Temples’ of India: Singapore and India Collaboration in Information Technology Parks (October 2008). His third co-authored book with Arunajeet Kaur is on The Migration of Indian Human Capital (forthcoming 2010).

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Part I Economic Integration and Social Transformation

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1 The Social Impact of Trade and Production Networks on Labour and Local Communities in Asia Michael Gillan and Bob Pokrant

A crucial aspect of globalization is the impact of international trade and global production networks on local business organizations, workers, and wider communities in which these activities are embedded. Conceptualizations of ‘community’ have always been subject to considerable debate in the social sciences, particularly in the disciplines of anthropology, sociology, and cultural studies. These debates have recently been reengaged with reference to the transformation of various forms and meanings of community through globalization. One key area of inquiry is the impact of globalization on local, regional and national communities and the questioning of traditionally place-focused notions of the bounded geographical community (Gupta and Ferguson 1997; Held et al. 1999; Xavier and Rosaldo 2002). Paralleling this interest in the transformation of community is a growing body of research from economic geographers, political economists, and labour studies scholars on how global trade and production networks are reshaping local economies, forms of social and legal regulation, politics, the organization of work, and the individual and collective agency of workers. This volume brings these debates and research streams together by considering the transformation of identity and community in Asia alongside studies of economic and workplace level restructuring and the response of workers and labour movements to these transformations. Contemporary discussions of global trade and production systems conceptualize these as dense interlocking networks of social, political and economic relationships that cross time and space. These global trade and production networks are assessed in this volume with reference to general patterns of national socioeconomic development and key industries (manufacturing, ports, 3

4 Trade, Labour and Transformation of Community in Asia

information technology and ‘knowledge’-based industries, small to medium scale commodity production) in or across various locations in the region (India, Bangladesh, Sri Lanka, Malaysia, Singapore, Thailand, Myanmar, Australia). Doing so allows for empirically grounded (although varied in scope, method, and disciplinary approach), assessments of the extent to which global trade integration and production networks have transformed local community formations, labour organization, and material conditions. This chapter introduces these concerns by means of a brief overview of recent scholarship and debates relevant to our core keywords and concepts: trade and production networks, community, and labour organization. While our discussion of each is circumscribed, doing so provides context and a point of departure for a comparison and critical assessment of the analytical and theoretical implications of the various studies in this volume.

Trade, production networks, and social transformation in Asia As suggested above, ‘trade’ can be conceived of in relational terms and with regard to various forms of networks at multiple geographic scales. More prosaically, the term international trade relates to description of the exchange of goods and services, typically measured via aggregate data referring to specific industry sectors or national, regional or global levels of economic activity. A central strand within the literature on economic globalization has emphasized intensified global trade flows and facilitation of ‘freer’ trade via the multifarious interventions of transnational corporations, key state actors and global institutions. A modification to this approach has been analysis that repositions the interactions between global, regional, national, and local scales as central to developing a grounded and contextualized understanding of the dynamics of social and economic transformation. In Asia, it is evident that the trade agenda is increasingly being played out in the regional and national (via institutional actors primarily operating and embedded in the particularities of these scales) as much, if not more than, the global. In particular, there has been well-recognized shift from the pursuit of trade agendas through global multilateral trade agreements (under the aegis of the World Trade Organization) to regional or bilateral trade agreements to govern the relative terms and forms of economic engagement between nations in the region.1

Michael Gillan and Bob Pokrant 5

The significance of regional economic flows and trade relationships are also evidenced by recent macro-economic analysis. Analysis published by the International Monetary Fund (IMF) in 2008 suggests that intra-regional trade accounted for 51.9 per cent of all trade in Asia in 2006 and that while ‘trade flows in the rest of the world roughly tripled between 1990 and 2006, inter-regional trade involving emerging Asia rose by five times, and intra-regional trade within emerging Asia increased by 81/2 times’ (Gruenwald and Hori 2008: 3).2 These enhanced trade flows included a significant contribution from the intra-regional relocation of manufacturing plants (especially assembly operations) from older industrialized export oriented economies to economically ‘emerging’ (lower cost) nations such as India and China (Gruenwald and Hori 2008).3 These shifts of investment and trade flows were accompanied by the emergence of integrated regional production networks in various industry sectors, although these networks were, notably, geared towards exports to developed economies in the global North (the EU and the USA) rather than distribution and consumption within the region itself (Gruenwald and Hori 2008). As Dicken (2007) has noted, quantitative data on aggregate flows of trade and investment at regional or global level need to be balanced by qualitative assessments of economic transformation. In particular: …in the case of international trade, what matters are not so much changes in volume – although these are important – as changes in composition. There has been a huge increase in both intra-industry and intra-firm trade, both of which are clear indicators of more functionally fragmented and geographically dispersed production processes (Dicken 2007: 7–8). Deeper understandings of industry-based patterns of competition and concentration and the multi-scalar scope of corporate production networks, strategies, and investment, are seen as crucial to capturing the complexity of trade and the uneven geography of economic development and integration. According to Coe et al. (2008) this requires a willingness to ‘incorporate the complex actions and interactions of a variety of institutions and interest groups – economic, political, social, cultural – which operate at multi-scalar levels and territorialities and through dynamic and asymmetrical power relationships’ (Coe et al. 2008: 271). For these scholars, this involves a shift towards the description and theorization of ‘global production networks’ (GPN) as a conscious attempt to transcend the limitations of ‘global value chain’ and

6 Trade, Labour and Transformation of Community in Asia

‘global commodity chain’ analysis by adopting a network-based approach which seeks to incorporate a broader range of social relations and actors than the firm centred approaches (Coe et al. 2008: 271). Moreover, while the GPN approach is concerned with material transformations and production processes it is also held to be conscious of how these processes constitute (and are constituted by) the natural environment and the cultural ‘lifeworlds’ of humans. According to Dicken (2007: 15–19) GPNs are characterized by three core dimensions, which are dynamically interrelated: governance, spatiality, and territorial embeddedness. The complex interactions between these dimensions of GPNs are seen as producing uneven and highly variable outcomes. Thus, scholars adopting a GPN perspective on debates and contemporary research on the relationship between production networks and regional patterns of social and economic development, emphasize the ‘multi-scalarity of the forces and processes underlying regional development’ (Coe et al. 2004: 468) and the need for attention to ‘how the strategic coupling of global production networks and regional assets may (or may not, depending on the context) facilitate the processes of the creation, enhancement and capture of value upon which regional development ultimately depends’ (Coe et al. 2004: 469). While not formally adopting the language and conceptual terrain of the GPN approach, several chapters in this collection point to the ‘multi-scalar’ character of production networks, the wide range of social relations and actors they encompass, and the possibilities (and constraints) of various forms of social agency and collective action. Chapter contributions from Biyanwila and from Gillan and Lambert explore labour regimes and the agency of workers and trade unions in ‘world factories’ that are deeply embedded in specific localities and yet tightly integrated into global manufacturing production networks. Hill explores the port sector as a key node within the global economy and regional trading networks and notes that, as a consequence, ports as local spaces are the object of intense ‘reform’ initiatives led by the nation-state and international institutions such as the World Bank. Chapter contributions from Scrase and from Pokrant examine the articulation between various forms of commodity production (handicrafts, shrimp) and global distribution and consumption networks, considering various forms of governance and regulation within these networks. Scrase’s chapter on the commodification of craft production provides evidence of the precarious economic position of artisan producers supplying western consumers with differentiated products mar-

Michael Gillan and Bob Pokrant 7

keted as, among other things, authentic examples of ‘tradition’ or of a ‘world we have lost’. It shows how the meaning of craft objects change as they pass through several cultural as well as economic networks and the role played by producers, NGOs and consumers in this management of meaning. Pokrant shows how the shrimp export industries in Bangladesh, India and Thailand are the result of the globalization of systems of food production, distribution and consumption over the past 50 years and how the products and production processes of these industries are subject to increasing regulation and surveillance by international and national public and private governance agencies in order to satisfy rich country consumer demands for contamination-free shrimp. While it can signify various forms of economic networks, the keyword ‘trade’ also has a strong contemporary association with the notion of an unprecedented global expansion of markets and the hegemony of neoliberal ideology. Held et al. (1999) have suggested that debates over the conceptualization of ‘globalization’ can be categorized into several dominant tendencies: ‘hyperglobalizers’ (global convergence), globalization ‘sceptics’ (tenacity of institutions and the significance of other levels of action), and ‘transformationalists’ (global integration and the extent of economic, political, cultural flows are unprecedented but are also contingent and not predetermined processes that are replete with contradictions). Especially, but not exclusively, within ‘hyperglobalist’ thinking and the rhetoric of state policy makers, the conceptualization of globalization and the assumption of its ‘inevitability’ can be seen to mask ideology and the contingent politics of various forms of structural change. Kiely (2006: 107), for instance, suggests that: ‘globalization theory can all too easily accept the political parameters established by the victory of neoliberalism in the 1980s, which argued for the primacy of market forces, free trade, liberalized finance, and open competition. This neoliberal globalization is neither inevitable nor desirable.’ The Asia region has figured large in globalization discourse and debates over the social impacts of intensified trade flows and production networks. For some scholars and political actors, the region represents a contemporary economic ‘miracle’ and an optimistic account is accordingly provided of economic integration and liberalization with an emphasis on expansion of trade and aggregate economic growth. For instance, Rondinelli and Heffron (2007: 1–2), acknowledge that ‘globalization’ requires painful economic and social ‘adjustments’ on the part of states and citizens in the Asia Pacific region but, nonetheless, a positive account

8 Trade, Labour and Transformation of Community in Asia

is presented of regional transformation with reference to technological development, intensified socio-political interdependence, improved ‘transparency’ in governance, rising incomes, and aggregate economic growth. In this regard, there is qualified agreement with the ‘advocates’ of globalization who ‘argue that open market economies hold benefits for countries at all levels of development.’ (Rondinelli and Heffron 2007: 4) Alternately, counter perspectives on trade flows and economic integration in the region emphasise the uneven distributional and social outcomes produced by common processes and forces. Kiely (2006: 105), for instance, suggests that the promise of neoliberal ideology and neoclassical economics of mutually advantageous, rapid, and generally distributed economic development across the global south as a result of ‘free’ trade in fact ‘abstracts from the unequal basis on which countries trade’. From this and similar perspectives, neoliberal ideology, and associated global institutional actors, serve to obscure benefits for established economic powers from ‘free’ trade regimes and negate alternate development pathways premised on combining international trade with selective policies of industrial and social protection or controls over financial flows (Kiely 2006: 105–106; Chang 2008). Similarly, proponents of bilateral and multilateral free trade agreements (FTAs) suggest that mutually beneficial economic development stems from intensified inter- and intra-regional trade flows. Arnold (2006) presents a counter perspective on the rapid growth of these bilateral trade instruments in Southeast Asia, arguing they promote wealth inequalities and unsustainable patterns of economic development within participating nations and serve to perpetuate a tendency for state and capital to ‘suppress and maintain authoritarian control over labour and trade unions in order to maintain “investor confidence” and FDI inflows’ (Arnold 2006: 196). More recent world-systems theory has examined North-South trade as an example of unequal ecological exchange as rich countries externalize the environmental costs of resource extraction and internalize their benefits through value-adding processes along the commodity supply chains (Anderson and Lindroth 2001; Bunker 1985; Jorgensen 2006). Several contributors to this collection offer direct criticism of the intellectual assumptions, supporting institutions, and practices of governance associated with neoliberalism. McGuire, in particular, suggests that the centrality of international competition and unimpeded capital accumulation within neoliberal ideology obscures consideration of uneven distributional outcomes and alternative perspectives on what

Michael Gillan and Bob Pokrant 9

constitutes economic development. In his study of global economic integration and economic change in Bangladesh, McGuire also emphasizes the crucial need for nuanced historical analysis to inform an assessment of economic development, distributional outcomes, and the failures of local institutions. In a similar vein, Dymski (2007: 21) has recently suggested that cross-border economic and financial flows are centuries old and linked to the emergence of modern nation-states, and therefore, can only be understood with reference to broader structural political conditions produced by imperialism and colonialism (Dymski 2007: 21).4 Other contributors suggest the significance of specific state formations and governing elites as determinants of the consequences of international economic integration and development outcomes. Thein and Pick in their analysis of foreign investment flows, international business operations, and social development outcomes in Myanmar note that ‘external’ measures such as the much discussed trade sanctions on that nation have had an impact in all three areas. Their analysis nonetheless suggests that the overriding factor that has conditioned investment and trade flows, shaped business strategies, and precluded improved social development outcomes, has been the parasitic and technically incompetent character of the governing elite in that nation. Recent improvements in investment inflows, foreign exchange earnings, and rates of aggregate economic growth through the exploration and development of the oil and gas and mining sectors in that nation seem to confirm a ‘resource curse’ hypothesis in that these earnings may serve to consolidate this elite with little prospect of developmental gain for the broader citizenry. Similar concerns with governance, state policy and social contestation as to the legitimacy of economic restructuring, trade policy, and economic development strategies are evident in the contributions to this book from Douglas Hill and Faizal bin Yahya. In Hill’s chapter, initiatives in Malaysia and Bangladesh to restructure key ports are seen to lead to divergent processes and outcomes. In the case of Malaysia, Hill argues that the state was able to achieve a relative balance between consent and coercion to achieve the goal of restructuring the port. The relative cohesion of the state and its developmental strategy, while not eliminating all forms of resistance to restructuring, nonetheless provided a sufficient degree of political legitimacy to this project. In contrast, Hill argues that the fractured class composition of the state in Bangladesh, the lack of an effective ‘developmental elite’, and a general tendency towards corruption and coercive intervention in both the

10 Trade, Labour and Transformation of Community in Asia

operation of the port and in politics, prevented the restructuring of the port in a consensual manner and precluded its transformation via more ‘economically, politically, and socially sustainable’ methods. Faizal bin Yahya’s chapter details growing trade and investment linkages between Singapore and India in the Information Technology (IT) sector, with special reference to the development of IT parks in Southern India. He argues that Singaporean trade and investment with India in this sector is in alignment with characterizations of Singapore as a ‘developmental state’ that designs and pursues strategic economic interventions to secure sustained economic growth and development in the city-state. In the case of the Indian IT sector, investments by corporations linked to the Singaporean state served the over-arching strategic initiative of ‘regionalization’: the diversification of trade and investment networks throughout the region. It is argued, however, that counterpart governments in India who sought to promote IT investment, parks, and infrastructure as a central component of economic development were confronted with a serious crisis of political legitimacy. The unevenness of economic development in the south Indian states of Karnataka and Andhra Pradesh sparked an electoral backlash against economic policies perceived as narrowly favouring urban (especially IT sector) development and consequently neglecting the problem of rural deprivation. Thus, while Yahya argues that Singapore-India collaboration has provided real and significant mutual gains for both parties, most especially for India with regard to the development of sophisticated IT infrastructure, the aforementioned context of political contestation and uneven economic development will continue to be significant and will require ‘policy implementation that would benefit both urban and rural dwellers’. Aside from governance and state policy, there are crucial aspects of trade flows and economic integration in the region that are of such magnitude and complexity that they are perhaps best considered in separate collections of scholarship. Certainly, the studies in this collection only examine indirectly the relationship between financial flows and material trade and production networks. In the midst of the global financial crisis of 2008–2009 it is now apparent that the globalization of finance capital and associated heightened intensity of speculation and risk have profound implications for regional socio-economic development and change. Prior to the onset of the crisis, it was noted by several critical observers and heterodox economists that ‘financial practices are penetrating ever more deeply beyond national borders and into the homes and workplaces of people around the world’ (Dymski 2007: 35).

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With this increase in scope and intensity, such critics saw little evidence of developing nations in regions such as Asia demonstrating ‘successful adaptation to the onset of financial globalization’ (Dymski 2007: 36), especially when financialization meant that even ‘core’ economies such as the USA were ‘prone to asset bubbles, speculation, and heightened volatility’, inadequate supply of credit for productive investment, and increases in income and wealth inequality (Dymski 2007: 36). Labour migration within the region is also of great significance for a holistic understanding of trade flows, production networks and labour in the region. This important aspect of economic and social networks in the region is not considered in any detail in this collection. However, Pokrant draws attention to the role of both national and crossborder migration in supplying cheap, often female, labour to shrimp farms and processing plants in Bangladesh, India and Thailand. Thailand, in particular, has had a pro-migrant labour policy in order to fill the gaps left by Thais who no longer want to work in low-skilled and arduous jobs such as shrimp farming and processing. Their place has been filled by Burmese and Laotians often working in poor conditions and subject to ethnic and gendered discrimination. Similarly, Hill notes in his examination of labour relations and restructuring in Port Klang, Malaysia, the increasing use of temporary migrant workers drawn from Nepal, Southern India, and Bangladesh who are non-unionized, receive substantially lower wages than local workers, and are denied access to various forms of social protection. In contrast, Lakha examines skilled (IT sector professional) Indian migrant workers in Australia, where his special concern is identity construction and the visibility of these ‘intra-organizational’ migrants as a distinct transnational community. Finally, the consequences of these processes and transformations for the natural environment are especially significant. Pokrant’s chapter examines the environmental impact of the shrimp trade in Bangladesh, India and Thailand. He points out that an aspect of international trade often neglected in scholarly debate is the reliance of Northern consumers on the transfer of ecological goods and services from the resource-rich South. Unequal ecological exchange theory seeks to show how the rich countries shift environmental costs to poorer ones and use up poorer country environmental spaces, both processes contributing to their continued underdevelopment (Bunker 1985; Hornborg 1998; Rice 2007). He also suggests that such unequal energy and raw material transfers are not inevitable as international and national social and environmental movements, grassroots activists and local fishers, farmers and landless labourers seek to reduce poor countries’ ‘ecological deficits’ through calls for

12 Trade, Labour and Transformation of Community in Asia

changes in the economic and environmental terms of trade between rich and poor countries.

‘Community’ transformation in Asia Of the core concepts, community is the most difficult to define. The concept has been a central one in the intellectual development of social science disciplines, particularly anthropology, political science and sociology, in their attempts to understand the relationship between capitalist development, modernity and the structure of everyday life worlds. The early classical sociologists such as Marx, Weber, Durkheim and Toennies dealt in detail with the ways in which European capitalist industrialization led to the decline of old forms of community and the rise of new bases for social interaction organized around individual self-interest and private property, occupational specialization, legal-rational contractual and legal systems and the spread of market relations within and across countries. This tradition was followed by what became known as the Chicago School made famous by its detailed ethnographic studies of urban communities and neighbourhoods in the USA from the late 1920s to the 1940s, which sought to provide micro-accounts of urban and rural dwellers changing lives (Burgess and Bogue 1964; Wirth 1928; Zorbaugh 1929). In the UK, several ethnographic-cum-survey studies were carried out on industrial and occupational communities in the 1950s and 1960s just at the point when such communities were to be fundamentally changed by the shift to policies of economic liberalization in the west (Dennis et al. 1970; Stacey 1969). Many early 20th century anthropologists such as Firth, Evans-Pritchard, Malinowski and Nadel focused on understanding the cultural, social and environmental logic of pre-modern societies, which were facing extinction or fundamental transformation under settler and non-settler forms of colonial rule. The study of the transformation of place-based communities remains strong within Anthropology but the conceptualization of such transformation has changed as researchers engage in multi-sited research and draw on more complex conceptual frameworks than those of an earlier period (Eriksen 2003; Xavier and Rosaldo 2002). Arguably, ‘traditional’ conceptualizations of community have focused on shared and clearly demarcated social bonds of identification and social exchange between people fixed in specific locations. This then leads to narratives whereby modernity and/or capitalist globalization are seen to lead to the dissolution or ‘loss’ of community, which can be conceived

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in both psychological (reduced social interaction/association and a consequent increase in individual alienation) and territorial (reduced identification with place) dimensions (Driskell 2006). Bauman, in examining the relationship between the keyword ‘community’ and his notion of ‘liquid modernity’, suggests that its prominence in public discourse is related to various manifestations of insecurity and often serves as a ‘cryptonym for the zealously sought yet elusive “identity”’ (Bauman 2000: 171). For Bauman: sociologically speaking, communitarianism is an all-too-expectable reaction to the accelerating ‘liquefaction’ of modern life, a reaction first and foremost to the one aspect of life felt perhaps as the most vexing and annoying among its numerous and painful consequences – the deepening imbalance between individual freedom and security (Bauman 2000: 170). Globalization, therefore, as an extension of modernity, is said to undermine local placed-based community and replaces it with virtual communities, communities of voluntary organizations or political association within civil society, diaspora communities, imagined communities, elective communities, social networks and the like which are held together by ties of trade, political interest, and new transnational identities which transcend place and territory. Other approaches suggest that local communities refashion global influences to serve local ends, a phenomenon known as glocalization. Thus, transnational identities centred on ‘diasporas’ do not so much transcend place and territory but incorporate these notions into refashioned community identities (Appadurai 1996). Such identities are maintained by regular two-way travel, electronic communication, and financial investment in local, place-based communities. Castles (2002: 1157) also suggests global economic integration, migration, and the compression of time and space gives rise to transnational communities where ‘identity is not primarily based on attachment to a specific territory’ and where individuals hold multiple identities in multiple forms of ‘community’. Appadurai captures this idea of place as ‘locality’ when mobile or displaced peoples imagine a homeland that they may never actually visit or reside in. The most constructive approach to community, therefore, may be to see it as a set of variables which are not tied to particular place-based groupings but rather as qualities of social interaction, which can be found across widely dispersed groupings. Thinking about community thereby shifts from viewing community as a type of

14 Trade, Labour and Transformation of Community in Asia

fixed social structure to a set of relations which underpin particular forms of social interaction and generate new forms of identity (Brint 2001). Significantly, with the emergence of new forms of work and industries, most especially in the production and dissemination of knowledge and information, there are new associated work identities and transnational community forms. As Lakha suggests in his contribution to this collection, work organizations are ‘an important site of cultural transactions, social interactions, and the construction of identities’. This study of ‘transient’ Indian IT workers in Australia allows for insights into these interactions, and the construction of transnational identity. In particular, Lakha analyses the visibility of these workers as identifiably different within their new intra-organizational location (Australia) and the fluidity and multiplicity of their sense of identity and notions of community. He shows that while identities may be fluid and forged through diverse life experiences, the workplace is an anvil of experience, which makes its mark on persons as workers, whatever their national or ethnic backgrounds. Jarman’s contribution to this book also examines skilled workers in an emerging information-based industry but in this case the workers are located in India in ‘high-end’ call centres that provide specialized technical services to external clients. Jarman notes the generally youthful and educated middle class constitution of the workforce in these centres of emerging labour but class or gender analysis is not at the centre of the discussion. Instead, the chapter attempts to move beyond existing studies that focus on the exploitation of workers in low-end (high employee turnover) call centres to encompass the increasing diversity and heterogeneity of the industry. The chapter is especially concerned to explore the workers’ sense of agency and identity, and notes that, in most cases, they conveyed a sense of optimism about the future of the sector or even pride in their status as participants in a growing and dynamic segment of the Indian economy. There was also evidence of identification with the work as a form of ‘career’ with opportunities for progression and personal development, although it is also noted that these findings must be understood with reference to the participants’ location within particular urban geographies and high-end call centre firms. As noted previously in this section, there has been a close link between the established conceptualization of community and the local in that community is often conflated with the ‘local’. In fact, communities exist at many temporal and spatial scales and the social dynamics of commu-

Michael Gillan and Bob Pokrant 15

nity formations at the local scale are complex and far from uniform. More recently, the concept of community (as the ‘local’ scale) has been central to debates in development studies on community participation and development, with many earlier criticisms of the idea of community resurfacing. Pokrant takes up this question in his discussion of the impact of shrimp farming on community, noting that the term often serves as a synonym for the local. A substantial literature has grown up in recent years around the notion of community management as a viable alternative to state and market-driven regimes of natural resource management and is now part of development orthodoxy. ‘Community’ is often used to legitimize claims for the devolution of power and the greater participation of local people in the management of their affairs. This may lead to ‘elite capture’ of local development initiatives and the renegotiation and refashioning of development policy. On the other hand, grassroots activists, NGOs, and local people can and do mobilize support around the idea of community empowerment and are often willing to fight and even die to retain control of local common-pool resources such as fisheries and forests. Rather like the idea of caste in an earlier time, local understandings of community can be reimagined and used to challenge neoliberal discourses of community as aggregations of social capital-bearing individuals. Pokrant also argues that in the case of local peoples dependent on natural resources for a livelihood, it is useful to consider human communities and so-called natural environments as mutually constitutive, something captured imperfectly by the term ‘social-ecological systems’. In an era of rapid environmental deterioration and climate change, such an approach allows us to rethink the idea of community as something that also incorporates the non-human world. Some scholars have noted how global agents such as corporations and international aid agencies draw on local practices in order to reshape communities to serve corporate and aid agendas, while others have noted that patriarchy and dominant propertied economic elites are often embedded and reinforced in local community formations. Biyanwila, for instance, explains in his contribution to this collection how women workers in the export processing zones of Sri Lanka are embedded in local communities which reproduce relations of patriarchy and subordination. In this view community at local level is a site of oppression and subordination as much as it is a potential terrain of countervailing mobilization and the construction of collective power. The implication is that calls for devolution of power to ‘community’ level can (but need not necessarily) result in a deepening of social and

16 Trade, Labour and Transformation of Community in Asia

economic inequality and a further deterioration of local ecological systems.

Labour and transformation in Asia Intensified regional and global trade flows and the formation (or reconfiguration) of production networks have transformed the economic environment in which labour and labour movement organizations assert agency and seek to establish bargaining power. As discussed in several papers in this collection, this poses a series of dilemmas for workers and labour movements. First, there is the extent to which trade unions can reconfigure themselves organizationally and strategically to match the networked, mobile and ‘multi-scalar’ form of contemporary capitalism and avoid a situation whereby ‘weakening marketplace bargaining power undermines associational power and vice versa’ (Silver 2003: 14). Second, there is the question of worker identity and the constitution of class and collective consciousness in workplaces integrated into global systems of production, distribution, and consumption. Finally, there is the complex articulation of workers and workers movements with, in various forms and at multiple levels of action, political actors, social movements, and communities. As noted by Gillan and Lambert in their contribution to this collection, a prominent line of sociological and political argument suggests profound pessimism as to the capacity of labour organizations to transcend these various challenges. Alternately, however, there have been counter perspectives that have sought to explore the reconstruction of collective identity and network-based movement building. One strand within this literature, often framed within neo-Polanyian or neo-Gramscian theoretical perspectives, has been the potential renewal of the social and political agency of workers and workers movements by forging coalitions with social movements and community-based organizsations to develop a ‘countervailing power’ to resist commodification and unfettered market power. Munck (2003), for instance, argues that a ‘new, more internationalist, as well as objectively “globalised”, labour movement is emerging with a strong social movement or community orientation’ (Munck 2003: 174). Following on from Karl Polanyi, globalization is represented as ‘the new “great transformation” of our time’ (Munck 2003: 1) whereby the expansion of market relations and individualism leads to the commodification of labour and nearly all social relations. In this view, markets are ‘disembedded’ from social regulation but this ultimately acts to erode the social

Michael Gillan and Bob Pokrant 17

and the natural environmental foundations upon which economies are built. Consequentially, this gives rise to interventions from various political and social movements (of diverging political hues) to protect society and ‘re-embed’ market actors (corporations) institutions, and market operations in society (Munck 2003).5 Wallerstein (2006) presents a view of the agency and bargaining capacity of workers and workers movements that is grounded in a global and long-term historical perspective, arguing that: What one can say is that, over time, in any given geographical/ sectoral locality, the work force will seek to create some form of syndical organization and action that will enable them to bargain more effectively, either directly with the employer or indirectly via their influence on the relevant political machinery. While no doubt such political strength can be set back in given localities through political counter-offensives of capitalist groups, it is also true that the longrun ‘democratization’ of the political machineries throughout the history of the modern world-system have served to make the curve of the political strength of the working classes an upward one over the longue duree in virtually all states in the world-system (Wallerstein 2006: 76). The implicit optimism of this view is, nonetheless, tempered by a recognition that the rising political capacity of workers and labour movements can be limited by ‘the relocation of given sectors of production to other zones of the world-economy that are on the average lowerwage areas’ (Wallerstein 2006: 76). Indeed, the emergence of globally integrated production networks and the enhanced capacity to relocate production or source components from a variety of suppliers in lower cost (lower wage) locations is a much remarked on aspect of the supposed weakness of labour in relation to capital in the era of ‘globalization’ (Dicken 2007). Nonetheless, this perspective has been challenged by the emergence of ‘labour geography’ scholarship which contests the construction of workers and workers movements as passive victims of restructuring and relocation and reasserts the capacity of labour to shape the geographies of globalization.6 Moreover, while recognizing that capital flight has damaged workers and eroded bargaining power in established sites of investment and production, Silver (2003: 5) argues that the shift of productive investment to new zones in the world economy is seen to lead to the emergence of ‘powerful new labor movements’ in various nations (most especially Brazil, Korea, and South Africa) which

18 Trade, Labour and Transformation of Community in Asia

have mobilized to demand improved wages and work conditions, social infrastructure, and democratic reform. Such perspectives challenge the assumption that labour and labour movements are necessarily and always weakened by expanded global trade and economic integration but they must also be tempered by avoidance of overly deterministic analysis. There is the risk of presuming that commodification and markets disembedded from society necessarily give rise to counter movements; and that globally mobile capital necessarily gives rise to strong labour organization in the places where it fixes. There is also the need for critical appreciation, grounded in empirical analysis, of the structural obstacles that stand in the way of revitalized labour movements and effective multi-scalar labour networks. Certainly, there is a growing body of scholarship that describes and critically assesses the various experiments and strategic developments in the construction of transnational organizing and bargaining initiatives and union/worker recognition and rights-based campaigns. Various Global Union Federations (GUFs) have sought to pursue workers’ rights and interests by bargaining with global corporations for ‘global framework agreements’ to regulate global/regional production networks, although there are real concerns on the limited scope and practical effect of these instruments (Reed and Yates 2007). New forms of union internationalism and campaigning have also been evident in sectors such as manufacturing and transport in order to ‘reassert control over labour markets and competition’ (Anner et al. 2006: 7). However, such initiatives have confronted difficulties of coordination across trade unions operating and embedded in specific geographic scales and industry sub-sectors (Anner et al. 2006). As one group of scholars have put it, ‘promoting transnational labour rights and improved employment conditions at the global scale is an aspiration of most union actors, but this is inevitably compromised by different subject positions in relation to broader processes of capital accumulation’ (Cumbers et al. 2008: 369). Moreover, trade unions have also contended with ‘competition for moral authority’ (Reed and Yates 2007) from voluntaristic, yet uneven in effect, codes of conduct campaigns mounted by NGOs and international agencies, alongside various forms of corporate self-regulation such as internal codes of conduct, ethical audits and monitoring of supply chains. For some observers, competition for moral authority and the difficulties of mounting effective international labour campaigns given the uneven and ‘fractured capacity’ of trade unions across space suggests a need to direct resources towards ‘re-territorializing’

Michael Gillan and Bob Pokrant 19

capital by primarily pursuing labour standards and regulation at the national scale (Reed and Yates 2007: 47). For others, there is instead the unrealized potential of ‘new’ labour internationalism to build durable and yet flexible labour networks capable of contesting in ideology and practice the notion of ‘self-regulating’ markets (Lambert 2007). As with general discussion on globalization, trade, and development, Asia figures large in debates on labour rights and standards and the uneven strength of labour movements. While there are important distinctions that can be made between the historical trajectory and institutionalization of labour movements in the region, the role of the state has been highly significant in most instances. In particular, the pursuit of capitalist economic development has often entailed the incorporation of trade unions within state or ruling party structures and, in many instances, active efforts to suppress independent unionism. Notably, and as discussed in the chapter by Gillan and Lambert in this collection, one of the more significant examples of new labour internationalism emerging from the region seeks to challenge authoritarian modes of governance and reassert the principle of democratic independent unionism. The response of workers and trade unions to restructuring is another key theme that emerges from two chapters in this collection. As noted previously, the contribution from Hill in this book analyses the restructuring of ports in Bangladesh and Malaysia with special reference to labour. Hill examines the process by which the Malaysian state, in collaboration with private sector capital, achieved labour restructuring through a mixture of coercive and consensual interventions. In Bangladesh there was no equivalent strategic or political cohesion and Hill argues that the inability to achieve the restructuring of the port in an ordered, negotiated, and equitable manner, led it to resort to a highly coercive, authoritarian intervention to realize this goal. In their contribution Gillan and Lambert track the erosion of labour’s bargaining power in sectors such as manufacturing in established sites of production within global production networks. The chapter does so by tracking restructuring (closures, retrenchments, casualization, changing production systems and forms of bargaining) in the Australian whitegoods manufacturing industry over several decades. The authors note that the industry in Australia is now close to extinction and that, within the production networks of the global corporations, the new zones of investment and production (in particular, China) often pose severe difficulties for independent union organizing and representation of worker interests.

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Arguably, there is an implicit danger that such analysis can merely confirm an assumption that workers and organized labour are passive, lacking in any form of agency, merely ‘acted upon’ when their places of work, and by extension the local communities in which these sites are embedded, are confronted with relocations or restructuring initiatives. To counter this view, the final section of Gillan and Lambert’s contribution notes the emergence, although tentative and incipient, of alternative strategic thinking within national/locally scaled trade unions about new ways of engaging with social movements and community organizations and the gradual construction of ‘multi-scalar’ labour networks that seek to contest corporate restructuring and defend and extend worker rights. Similarly, Biyanwila shows in his chapter contribution how women workers in Sri Lanka’s free trade zones have built alliances between their unions and local social movements (for instance, women’s and migrant worker organizations) and strengthened local campaigns for labour rights and improved working conditions by forging connections with regional and global networks of labour activists. As Biyanwila states in his chapter, this is suggestive of the significance and real effect of ‘alliance building with a range of activist organizations and networks to enable interventions at many levels, thereby transforming communities and women workers’ identities in many spaces and places’.

Conclusion Collectively, the chapter contributions in this book provide grounded analysis of the social implications of trade and production networks in specific places, industries, and worksites, and (either implicitly or explicitly) argue against overly-generalized and de-contextualized representations of trade flows and production networks. Accounts that lack this social context often fail to acknowledge the contingent and political dynamics of trade and economic integration in the region and their multiple, contradictory, and sometimes polarizing social consequences. Although the various contributions provide insight into the emergence of various forms of economic networks which both shape, and in turn are shaped by, social actors and community formations, two unresolved issues raised by this collection stand out. One is how best to conceptualize the interrelationships between work, the construction of community identity, and social contestation over profound economic transformation at different scalar levels. Another is the transformative effect of global trade and production networks on the networks of ecological systems which sustain life on the planet.

Michael Gillan and Bob Pokrant 21

Notes 1 The changing institutional architecture of trade agreements and governance and the shift towards bilateral and preferential trade agreements has been tracked by international relations/international political economy scholars and it is not the intention of the editors to restate these debates and nor do the papers in this volume consider in any detail these undoubtedly important developments. For recent analysis of regional, bilateral and preferential trade agreement making processes see Dent (2007), Rajan (2005) and Ravenhill (2003). 2 Overall, up to one-third (34%) of global trade flows in 2006 emanated from the ‘Asia’ region. The IMF definition of ‘Asia’ refers to ‘emerging Asia’ plus ‘industrial Asia’. Emerging Asia encompasses China, India, Hong Kong, Korea, Singapore, Taiwan, Indonesia, Malaysia, Philippines, Thailand and Vietnam whereas ‘Industrial Asia’ includes only Japan, Australia, and New Zealand. 3 In 2007 flows of global Foreign Direct Investment (FDI) at the highest level ever recorded by the United Nations Conference on Trade and Development (1.5 trillion dollars). South, East and South-East Asia attracted 224 billion dollars in FDI in 2007 or 14.6 per cent of total global flows. China and Hong Kong attracted the greatest share of FDI flows (a combined 121.7 billion dollars or more than half of FDI flows in the region), while Singapore recorded 36.9 billion and India 15.3 billion (UNCTAD 2008). 4 In particular, he argues that ‘nations chronically struggling to meet debt burdens and revive their structurally constrained economies have almost invariably, in the past, been subordinated in colonial and neocolonial empires’ (Dymski 2007: 22). 5 Munck revises this frame of analysis to draw attention to complex transitions in the political authority and salience of nation-state formations (deterritorialization and re-territorialization) and, with special reference to labour, the growth of ‘informal’ (casual, contractual, and relatively unprotected) in both the global North and South. 6 For a concise discussion and critique of labour geography perspectives with special reference to global production networks, see Coe et al. (2008: 285–286).

References Andersson, J.O. and Lindroth, M. (2001) ‘Ecological Unsustainable Trade’, Ecological Economics, 37: 113–122. Anner, M., Greer, I., Hauptmeier, M., Lillie, N. and Winchester, N. (2006) ‘The Industrial Determinants of Transnational Solidarity: Global Interunion Politics in Three Sectors’, European Journal of Industrial Relations, 12 (1): 7–27. Appadurai, A (1996) Modernity at Large: Cultural Dimensions of Globalization, Minneapolis: University of Minnesota Press. Arnold, D. (2006) ‘Free Trade Agreements and Southeast Asia’, Journal of Contemporary Asia, 36 (2): 195–216. Bauman, Z. (2000) Liquid Modernity, Cambridge: Polity Press. Brint, S. (2001) ‘Gemeinschaft Revisited: Rethinking the Community Concept’, Sociological Theory, 19.

22 Trade, Labour and Transformation of Community in Asia Bunker, S.G. (1985) Underdeveloping the Amazon: Extraction, Unequal Exchange, and the Failure of the Modern State, Urbana: University of Illinois Press. Burgess, E. and Bogue, D.J. (eds) (1964) Contributions to Urban Sociology, Chicago: University of Chicago Press. Castles, S. (2002) ‘Migration and Community Formation under Conditions of Globalization’, International Migration Review, 36 (4): 1143–1168. Chang, H.J. (2008) Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity, London: Random House Business Books. Coe, N.M., Dicken, P. and Hess, M. (2008) ‘Global Production Networks: Realizing the Potential’, Journal of Economic Geography, 8 (3): 271–295. Coe, N.M., Hess, M., Wai-chung Yeung, H., Dicken, P. and Henderson, J. (2004) ‘‘Globalizing’’ regional development: A Global Production Networks Perspective’, Transactions of the Institute of British Geographers, 29: 468–484. Cumbers, A., Nativel, C. and Routledge, P. (2008) ‘Labour Agency and Union Positionalities in Global Production Networks’, Journal of Economic Geography, 8 (3): 369–387. Dennis, N., Henriques, F. and Slaughter, C. (1970) Coal is Our Life, New York: Barnes & Noble. Dent, C. (2007) ‘Full circle? Ideas and Ordeals of Creating a Free Trade Area of the Asia-Pacific’, The Pacific Review, 20 (4): 447–474. Dicken, P. (2007) Global Shift: Mapping the Changing Contours of the World Economy, 5th edition, New York and London: The Guilford Press. Driskell, R.B. (2006) ‘The Impact of Globalization on Local Communities’, in Samir Dasgupta and Ray Kiely (eds) Globalization and After, New Delhi: Sage Publications. Dymski, G.A. (2007) ‘Global Financial Integration-II: Exclusion, Vulnerability and Systemic Fragility’, in Amiya Kumar Bagchi and Gary A. Dymski (eds) Capture and Exclude: Developing Economies and the Poor in Global Finance, New Delhi: Tulika Books. Eriksen, T.H. (ed.) (2003) Globalization: Studies in Anthropology, London: Pluto Press. Gruenwald, P. and Hori, M. (2008) ‘Intra-regional Trade Key to Asia’s Export Boom’, IMFSurvey Magazine, IMF Asia and Pacific Department, 6 February, available at http://www.imf.org/external/pubs/ft/survey/so/2008/CAR02608A.htm, accessed 10 June 2008. Gupta, A. and Ferguson, J. (1997) Culture, Power, Place: Explorations in Critical Anthropology, Durham: Duke University Press. Harvey, D. (2005) A Brief History of Neoliberalism, Oxford: Oxford University Press. Held, D., McGrew, A., Goldblatt, D. and Perraton, J. (1999) Global Transformations: Politics, Economics and Culture, Cambridge: Polity. Hornborg, A. (1998) ‘Towards an Ecological Theory of Unequal Exchange: Articulating World System Theory and Ecological Economics’, Ecological Economics, 25: 127–136. Jorgenson, A.K. (2006) ‘Unequal Ecological Exchange and Environmental Degradation: A Theoretical Proposition and Cross-National Study of Deforestation, 1990–2000’, Rural Sociology, 71 (4): 685–712. Kiely, R. (2006) ‘Business as Usual or Radical Shift? Theorizing the Relationship between US Hegemony and Globalization’, in Samir Dasgupta and Ray Kiely (eds) Globalization and After, New Delhi: Sage Publications.

Michael Gillan and Bob Pokrant 23 Lambert, R. (2007) ‘Self Regulating Markets, Restructuring & the New Labour Internationalism’, in Andrew Gamble, Steven Ludlam, Andrew Taylor, Steven Woods (eds) Labour, the State, Social Movements and the Challenge of Neo-Liberal Globalization, Manchester: Manchester University Press. Munck, R. (2003) Globalization and Labour: The New ‘Great Transformation’, Delhi: Madhyam Books. Rajan, R.S. (2005) ‘Trade liberalization and the New Regionalism in the AsiaPacific: Taking Stock of Recent Events’, International Relations of the AsiaPacific, 5 (2): 217–233. Ravenhill, J. (2003) ‘The New Bilateralism in the Asia Pacific’, Third World Quarterly, 24 (3): 299–318. Reed, A.J. and Yates, C. (2007) ‘Fractured capacity in regulating international Labour Standards: The Perils of Voluntary Self-regulation and Competition for Moral Authority’, in Andrew Gamble, Steven Ludlam, Andrew Taylor, Steven Woods (eds) Labour, the State, Social Movements and the Challenge of Neo-Liberal Globalization, Manchester: Manchester University Press. Rice, J. (2007) ‘Ecological Unequal Exchange: Consumption, Equity, and Unsustainable Structural Relationships within the Global Economy’, International Journal of Comparative Sociology, 48: 43–72. Rondinelli, D.A. and Heffron, J.M. (2007) ‘Adjusting to Globalization: Change and Transformation in Asia’, in Rondinelli, D.A. and Heffron, J.M. (eds) Globalization and Change in Asia, Boulder: Lynne Rienner Publishers. Silver, B. (2003) Forces of Labor: Workers’ Movements and Globalization since 1870, Cambridge: Cambridge University Press. Stacey, M. (1969) ‘The Myth of Community Studies’, British Journal of Sociology, 20. UNCTAD (United Nations Conference on Trade and Development) (2008) ‘FDI Surged to Record Levels in 2007’, UNCTAD Investment Brief 1, 2008, available from http://www.unctad.org/Templates/Page.asp?intItemID=3336&lang=1, accessed 10 June 2008. Wallerstein, I. (2006) ‘Globalization or The Age of Transition? A Long-Term View of the Trajectory of the World-System’, in Samir Dasgupta and Ray Kiely (eds) Globalization and After, New Delhi: Sage Publications. Wirth, L. (1928) The Ghetto, Chicago: University of Chicago Press. Xavier, J. and Rosaldo, R. (2002) The Anthropology of Globalization: A Reader, Malden: Blackwell Publishers. Zorbaugh, H.W. (1929) The Gold Coast and Slum: A Sociological Study of Chicago’s Near North Side, Chicago: University of Chicago Press.

2 Globalization and Economic Change in Bangladesh1 John McGuire

Introduction When we talk of terms such as economic reforms, deregulation, structural adjustment, and growth and stability, we are employing the language of neoliberal economics. While that needs no justification in a logical sense, at least in terms of the parameters within which it operates, it nonetheless tends to exclude other schools of thought that have been central to the debate on capitalist development. In particular, it ignores matters relating to development as opposed to growth. For example, it defines the state in terms of indicators that relate to ‘stability’ without acknowledging how the state is defined by the nature of the relations of production that is reconstituted, on an ongoing basis, in terms of class, gender and ethnicity. When the advocates of this view identify questions such as labour standards with regard to issues such as child labour, occupational, health and safety, wages and human rights, they tend to do so with little concern for the conditions that give rise to such a situation. Instead, they seek to locate nation-states, at different stages of capitalist growth, within an international market economy, that is standardized according to certain rules of economic behaviour, whereby the ultimate outcome will be the development of all nation-states to a level reached by advanced industrialized countries. While the management of this process of change is assumed by the nation-states themselves, it lies, in fact, with the agencies of the advanced industrialized states, especially the USA. Through advice from agencies such as the Asian Development Bank, the World Bank, and the International Monetary Fund (IMF), a programme of economic reforms is introduced, which will ostensibly 24

John McGuire 25

provide the means through which the national economy will be transformed. Economic incentives and disincentives are built into this programme to ensure that states do not deviate from the defined course of action. Again, regime changes are encouraged and supported in those instances where the prevailing government fails to abide by this process. Costs, whether they be in lives, family incomes etc., are rationalized as necessary and are designated as short or medium term. The long term is somehow a utopian notion that will be realized sometime in the future. Underpinning this process is the ongoing restructuring of ‘different thresholds’, which are used as a guide for inclusion in, and graduation from, the current list of Least Developed Countries (LDCs). Such thresholds are measured by composite indexes based on level of income, human resources, and the extent of economic diversification (UNESCO 2007). In all of this, Bangladesh stands out as a perfect case study. Classified as a Least Developed Country (LDC), its position has hardly changed since it claimed nationhood in 1971. Yet, successive national governments in Bangladesh from the late 1970s have embraced the new economic policy in the hope that it would bring about the promised changes. For example, in the case of labour standards, there have been some limited gains in the emerging industrial sector insofar as working conditions are concerned. However, the situation in the agriculture sector, which employs the largest percentage of workers, remains highly exploitative. In what appears to have been mislaid hopes, successive Bangladesh governments have been accused by the Bank and associated bodies of failing to pursue the reforms with enough vigour. In dealing with globalization and economic change in Bangladesh, then, we need to specify what these terms mean. What, for example, does globalization mean? How can it be conceptualized as a process? What role does the state play in the process of globalization? How can history facilitate an understanding of globalization? Answers to these and other questions provide the means through which we can begin to establish the relationship between globalization and economic change in Bangladesh.

What does globalization mean? Central to our understanding of globalization is the issue of ideology. While, more often than not, it is assumed that the meaning of the term is a given, there can be little argument that such is not the case and that all definitions are socially constructed and are defined by the

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underlying perceptions that shape the differing theoretical positions adopted. In their book, Empire (2000), Hardt and Negri highlight the complexity of the term globalization and the extent to which it is ideologically driven across a wide spectrum, ranging, at one end, from the idea that once state intervention is rejected, globalization ‘somehow rises up spontaneously out of interactions of heterogeneous global forces, as if this order were a harmonious concert orchestrated by the natural and neutral hidden hand of the world market’, to the other end of the spectrum, where the idea of globalization is ‘dictated by a single power and a single centre of rationality transcendent to global forces, guiding the various phases of historical development according to its conscious and all-seeing plan, something like a conspiracy theory of globalization’ (Hardt and Negri 2000: 3), in which free markets are imposed by organizations such as the IMF and World Bank from the top down. In its earlier formation, the term has come to be variously described as a progressive force by the advocates of a market-driven society, especially since the collapse of the Soviet Union and communist Eastern Europe and the supposed victory of the west and its philosophy of economic and political liberalism (Hardt and Negri 2000: 3); and, in the latter, a negative force by those who perceive the economic ills of society to be directly attributable to it, and who have protested against it around the world from Seattle to Genoa (Hopkins 2002: 1). Yet, while the latter view has gained some ground, from the late 1990s onwards, the former continues to remain the dominant discourse (Archarya 2002). Broadly the neoliberal idea that informs this approach suggests that globalization can be measured according to a range of variables that relate to growth in cross-border activity and the level to which markets, both national and international, are integrated. The performance of nation-states, such as Bangladesh, in the broader global economy is then assessed in relation to one another. For example, in an ongoing series of reports which have sought to define and measure global competitiveness, a recent report titled ‘Competitiveness and Stages of Economic Development’, has been the subject of much discussion at the World Economic Forum. Compiled by Michael Porter (Institute for Strategy and Competitiveness, Harvard Business School), Jeffrey D. Sachs (Centre for International Development, Harvard University), and John McArthur (the Centre for International Development, Harvard University), the Report assessed the ‘current [2001–2002] productive potential’ of 75 countries one of which was Bangladesh. Employing both micro- and macroeconomic indicators, they ranked Bangladesh alongside the other

John McGuire 27

countries according to three indexes which provide an overall index of growth competitiveness, and two indexes which provide an overall index of current competitiveness. With the exception of one index, Bangladesh was close to last on all lists, readily falling into the role of one of the least developed countries (LDCs) (Porter et al. 2001). Significantly, such indexes were continually reviewed, extended and employed to assess shifts that might occur in the performance of the listed countries. In the case of Bangladesh, it struggled to become something more than a LDC, as, for instance, in 2005, when it was ranked, according to the Growth Competitiveness Index (2004–2005) at 110 out of 117.

How can globalization be conceptualized as a process? In the face of such conclusions, we need to move beyond the neoliberal version of globalization to a broader historical notion that reflects an organic process, within which it is possible to describe and explain the position of Bangladesh in other ways. For example, in the case of the agrarian structure we can identify a set of relationships that define the way that a large majority of the population in Bangladesh work and live. In part, we can explain this process by reference to the manner in which Bangladesh links up to the global economy. In order to understand this conjuncture of forces, however, we need to conceptualize globalization as a process and view it in terms of time as well as space. Indeed, as David Harvey argues, the global tendencies of capitalist time are to ‘create the world market and to reduce spatial barriers’ (1990: 232). Here, we are concerned with the process of capital accumulation, which is characterized by the ongoing expansion, and integration of the global economy. Defined by an uneven movement that operates at different levels of time and within different spaces, the development of a global economy is shaped by upward and downward shifts as the rate of profit either tends to rise or fall. There have emerged various explanations as to how this process manifests itself. For example, Ernest Mandel has argued in its broadest form, the process began in the late 18th century, and is marked by long economic slumps of approximately 25–30 years duration that are interspersed with shorter term ‘business’ or ‘industrial’ cycles. Slumps follow booms, both in the short and long term, when what is produced cannot be valorized (Mandel 1980). While different discourses emphasize different elements of this process, they generally agree that, in the rise of capitalism, there have been at

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least two distinct periods of globalization when there was a significant transformation in the global economy: the early 1870s through to 1914 and the early 1970s through to the early 21st century. Of these two periods, it has been the latter that has popularly been associated with the idea of globalization. During this time, we saw the restructuring of states in relation to the movement of capital; the changing balance of forces transnationally towards financial capital; and the increasing orientation of nation-states to external trade (Gowan et al. 2001). One manifestation of this shift has been the tendency towards the deregulation of the market, at both the national and international level, so that capital can operate more effectively and with appropriate labour in the cheapest and most efficient form. Significantly, Bangladesh’s life as a nation, 1971–2007, spans this period. During this time, Bangladesh has been incorporated in a range of ways into the global economy, the results of which have given rise to shifts in relations of production. While the newly constituted government initially nationalized key industries and imposed strict control over foreign trade as a means of generating growth and alleviating poverty; by the latter part of the 1970s Bangladesh moved away from a highly protected, public-oriented economy to one in which investment in the private sector was gradually given priority (Hossain and Rashid 1996: 123–4). By the early 1980s, this shift accelerated as Bangladesh, in return for financial aid, adopted a range of liberalization policies as defined by the structural adjustment guidelines of the IMF, the World Bank and other international donor organizations (Rogaly et al. 1999: 26). As result of these and other inputs, Bangladesh experienced a number of changes in its agrarian structure. Generally, while the country has seen a long-term growth trend in agricultural production since the 1970s, it has been uneven, varying according to the regional location and the sector (Porter et al. 2002). In fact, since the 1970s, the impact of globalization has been felt in different ways across the different regions. For example, the north-west region of Bangladesh has been characterized by investment in irrigation which has been associated with accumulation by the rich peasant, giving rise to rapid agricultural growth and local prosperity. By way of contrast, in the south-east region, where there has been little investment in the land by the cultivating peasants, stagnation prevails and the surplus has been appropriated by the landlords and traders (Crow 1999: in Rogaly et al., 147–176). In this way then, it can be seen how local factors may impinge on the national and international accumulation process. Similarly, when the agricultural sector

John McGuire 29

is broken down according to commodity categories and sub-categories, different patterns of growth can be observed. For instance, in the late 1980s, the production of high-yielding varieties of rice grew rapidly as a result of the deregulation of import duties on irrigation pump sets and their location, but then stagnated in the early 1990s (Rogaly et al. 1999: 200). The reasons for this are a matter of ongoing debate, which highlights the danger of simple, monocausal explanations.2 Overall, however, with a few exceptions, the agricultural sector – which accounted for around 30 per cent of GDP and 65 per cent of the labour force by the late 90s – has tended to stagnate. It has been argued that, while the economic reforms have resulted in technological inputs into the production of rice and a consequent significant rise in output, they have not alleviated the living or working conditions for the large majority of Bangladeshis. It has been suggested that there has been a worsening of the distribution of income among the peasantry within Bangladesh’s rural society.

What role does the state play in the process of globalization? Central to this broader process of globalization is the role of the nation-state which secures labour and the money system, as well as mediates between the different fractions of capital. Indeed, while international state formations have increasingly emerged, their capacity to assume sovereignty from the nation-states has yet to be established (Hobsbawm 1995: 430). Indeed, the relationship between the process of the ongoing globalization of capital and the role of the state has varied significantly across national borders. Certainly, it is clear that some states exercise a great deal more political power than others in facilitating particular forms of globalization. Clearly, the position of Bangladesh demonstrates this point. While it has a population of around 150 million, which is in excess of most nations, it exercises very little influence in shaping global governance and the global economy. For example, between 1986 and 1992, in response to requests by the large donor agencies for structural adjustments to the Bangladesh economy, the Bangladesh government implemented a number of deregulatory policies, two of the most important being those that related to irrigation and fertilizers. While this led to a wider range of cheaper equipment in the case of irrigation, it saw a rise in the cost of fertilizers. However, whereas access to cheaper irrigation equipment appeared conducive for the generalization of production based on

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irrigation among the peasantry, the low price of HYV boro rice during this period limited the profitability of such production for the poor peasants. Instead, it was the richer peasants, operating on a larger scale, who invested in this capital input. If the poorer peasants could dispense with irrigation equipment on the grounds of profit, they could not do without fertilizers. Yet, the increase in cost, which was due in large part to the profits appropriated by the traders in fertilizers, in the context of the unregulated market, reduced the poorer peasants’ access to this input (Adnan 1999: 219). It was a situation that was compounded by constraints on credit. While the larger peasants were able to utilize banks and cooperatives, the poorer peasants remained tied to the money-lender, a link that brought with it higher interest rates and the need to sell their product regardless of the price (Adnan 1999: 198–201). In short, the incorporation by means of structural adjustment policies of the Bangladesh agricultural sector into the global market had accentuated problems that such policies were supposed to alleviate. It has intensified differentiation among the peasantry; has enhanced the profits of the richer peasantry; and has done little to improve the income or the working conditions of the poorer peasantry and landless labourers, that is, the large majority of workers in Bangladesh, 40 per cent who are either unemployed or under-employed. How then can we locate Bangladesh’s place within the world economy during this period? As an LDC, Bangladesh’s share in the growth of world trade has declined as a proportion of the total. According to the Fund/Bank nexus, the problem lies with the Bangladesh government, which, it argues, has yet to address problems such as high fiscal deficits, a fall in foreign exchange reserves and static tax revenues. Again, the inability of the state to raise public revenue for development purposes and an undisciplined financial sector, where ‘patronage rather than commercial viability’ prevail, has seen the early optimistic predictions about Bangladesh’s future by the Fund/Bank nexus give way to expressions of concern in the 1990s (Sabhan 1991: 3). The lack of progress, such voices argue, can also be attributed to inadequate infrastructure, excessive regulations, and the resistance of labour, all of which discourage foreign investment (World Trade Organization (WTO) 2000). Ironically, of course, the resistance of labour has been the result of the lack of ‘economic reforms’, which are supposed to have provided an improvement in labour standards in Bangladesh. What these critics fail to acknowledge is that the conditions that have given rise to such problems cannot be transformed until there has

John McGuire 31

been a significant change in the relations of production that characterize them. Indeed, a crucial question that we need to address in relation to Bangladesh’s place in the global economy is the extent to which there has been a shift in the agrarian structure. Certainly, while there has been identifiable agricultural growth during this time, it remains, as we have seen, a matter of ongoing debate as to how the agrarian structure has actually been transformed, in terms of the relations of production that underpin it. Nonetheless, what is clear for Bangladesh as a whole is that the number of landless labourers has tended to grow as has the reserve army of labour. As a result, while those living in poverty have declined as a percentage of the total population (Sen 1997), the number of poor is not declining in an absolute sense. Indeed, it has the third highest number of poor people living in a single country after India and China, as well as the highest incidence of malnutrition of any country in the world. At the same time the unemployed and underemployed remain at around 40 per cent of the total workforce. In this context then, while the impact of globalization as defined by the neoclassical economists must be seen as complex and varied in Bangladesh; it has yet to demonstrate the large-scale benefits of such an approach. In fact, the Bangladesh state has been criticized for not providing the basic infrastructural services necessary for the implementation of reform policies, and for allowing militant unions to have succeeded in setting high wages, suggesting, of course, that higher wages do not equate with higher ‘labour standards’. Nonetheless, it is clear that the Bangladesh state is weak and that it has been since its formation in 1971, during which time it has fluctuated between two forms of government – a liberal democratic one and a military dictatorship – with neither able to assert authority or control (WTO 2000). Yet it could be argued that the most convincing explanation of the weakness of the Bangladesh state lies in its long history of oppression, which has been underlined by a process of economic globalization over 350 years that has seen Bangladesh move from a position of great strength to one of considerable weakness in terms of its place in the global economy.

How can history facilitate an understanding of globalization? The way in which Bangladesh experienced capitalist development since the 17th century has profoundly shaped the social and political relations

32 Trade, Labour and Transformation of Community in Asia

that characterize Bangladesh today, and this in turn has profoundly shaped the manner in which Bangladesh is at present being incorporated into the global economy. Between 1640 and 1760, Bengal, of which Bangladesh represents the eastern region, was the commercial centre of India and one of the most advanced economies in the world. Not only did it carry out extensive trade within the sub-continent, it also engaged in trade with countries across the globe. Known as the granary of the sub-continent, it exported rice, sugar and oil to other parts of India and to surrounding countries within the Indian Ocean. More generally, by the turn of the 18th century, it generated up to 40 per cent of the total Asian cargo that the Dutch and English East India Companies carried to Europe. As Om Prakash points out, in the 17th and 18th centuries India was a premier trading and manufacturing country in Asia, and probably the largest and most cost-competitive textile-manufacturing country in the world (Prakash 1998: 349). In particular, Bengal was by far the largest trading and manufacturing region in India, producing the largest percentage of textiles and raw silk for export (Prakash 1998: 119). A key contributor here was Dhaka, in East Bengal, which produced very fine muslins from high quality cotton grown in the immediate vicinity (Prakash 1998: 156–157). Underpinning this commodification and globalization of the economy in Bengal, and thus Bangladesh, were a number of very significant shifts. Until the second half of the 18th century there was an ongoing monetization of the economy; an increasing conversion from in kind payments to money payments in realizing revenue that in turn accelerated the development of the market and trade; the expansion of precious metals, especially silver, and banks; an increase in both the acreage and the cultivation of cash crops; and the development of manufacturing, especially textiles and silk (Prakash 1998: 315–316). In many respects then, the conditions existed for a major transformation in the form of capitalist accumulation. Of course, that did not occur. In the wake of an ongoing aggressive and violent form of colonization, Bangladesh, along with the rest of Bengal, was brought under the control of the British, first through the agency of the East India Company, and then through the British imperial state. What followed were major disruptions to the patterns of development that had emerged over the previous 150 years. In the first instance, this break down in the patterns of development was the result of outrageous levels of corruption on the part of company officials that saw the surplus appropriated for private usage and agricultural producers forced into subsistence forms of existence. Parallel with this was the collapse of the textile industry,

John McGuire 33

which was forced to compete on very uneven terms with the English textile industry. While the textile industry all but disappeared in East Bengal, small-scale agricultural commodity production expanded. It did so partly as a response to the ‘globalization’ of the world market. Indeed, as industrial capital began to displace mercantile capital in the 19th century, east Bengal, along with other regions of India, was gradually incorporated into a global economy based on capitalist development, in which it produced raw materials in return for manufactured products from Britain and other industrializing countries. In locating Bangladesh in this process of globalization, we can identify key moments when its position in the global order shifted. What is striking in this respect is the way in which at each stage the process of small-scale agricultural commodity production both remained the dominant form of surplus appropriation and intensified without ever being transformed at the point of production. In this context, agricultural production in Bengal was contextualized by the Permanent Settlement of 1793, in which property rights were embodied in rent collection, otherwise known as the zamindari system, and agricultural production was based on the jotedari system in which a highly differentiated peasantry actually cultivated the land. This gave rise to a system of small-scale commodity production in which cash crops were grown for the market (Smalley 1983: 176–197). More generally, while the form by which labour power was appropriated varied, it mostly fitted what Marx referred to as the formal subsumption of labour by capital, in which the surplus is appropriated in the form of interest owing to the money-lender who provided advances to cultivating peasants to purchase seeds etc (Banaji 1977). In the years that followed independence, East Bengal moved from a position of exploitation under the colonial regime of arguably the most powerful imperial state of modern times to that of exploitation under the guise of the new independent state of Pakistan where power lay in West Pakistan rather than East Pakistan. It followed then that, while there was slow growth, East Bengal tended to stagnate and the agrarian structure remained largely unchanged, apart from the demise of the zamindars (Karim 1994). Moreover, when the war of liberation was won by the East Bengalis in 1971, the Awami League followers were able to create a new state but not a new social structure. On the contrary, they inherited a social structure that had not been transformed in class terms in a way that was necessary for the formation of a strong modern state. As a consequence, while the Bangladeshi government might have embraced globalization policies earlier than its South Asian neighbours, it was not in a position to provide the conditions necessary to meet the

34 Trade, Labour and Transformation of Community in Asia

demands that went with this decision. Over 30 years on Bangladesh remains an LDC.

Conclusion In theorizing Bangladesh’s place in the global economy there are least four points that need to be emphasized. First, the meaning of globalization is not the sole preserve of the neoclassical economists. While such an approach has a significant amount to offer it is, by itself, limited in the way in which it might explore and explain the implications of globalization for Bangladesh, especially on matters relating to so-called international ‘labour standards’. Second, in order to understand the impact of globalization we need to view it as a process. In particular, it has to be seen as a manifestation of the capitalist accumulation process and the different forms that this may assume, at the different levels of space, and the different rates of time at which it operates. In the case of Bangladesh, any such impact that globalization has had on poverty is less important than the fact that it has accentuated class differences, with the benefits of growth falling largely into the hands of a rich peasantry and a newly-emerging bourgeoisie. By the way of contrast, the large mass of people (the poor peasants and the landless labourers), over a third of whom are unemployed, remain the victims of this accumulation process. Third, the extent to which the Bangladesh state has been able to shape this process of globalization has been determined by the fragile nature of its political regime, which lacks the capacity to implement policies, such as improved ‘labour standards’, that are in the interest of citizens generally, and which is very much subject to the dictates of larger, more powerful states and their agencies. Finally, in reviewing this third point, it is also very clear that contemporary Bangladesh can only be fully understood in the context of its history, shaped as it has been by a long period of colonialism and a shorter, but no less devastating, period of post-colonialism. Notes 1 An earlier version of this paper appeared in South Asia: Journal of South Asian Studies, New Series, XXXVI (3), December 2003, pp. 467–480. 2 See, in particular, Richard Palmer-Jones, Quazi Shahabuddin and Shapan Adnan in Rogaly et al., Sonar Bangla? Agricultural Growth and Agrarian Change in West Bengal and Bangladesh, pp. 92–146, 177–228.

References Adnan, S. (1999) ‘Agrarian Structure and Agricultural Growth Trends in Bangladesh: The Political Economy of Technological Change and Policy Intervention’, in

John McGuire 35 Rogaly et al., Sonar Bangla? Agricultural Growth and Agrarian Change in West Bengal and Bangladesh, New Delhi: Sage. Archarya, A. (2002) ‘One Result: The Retreat of Liberal Democracy’, International Herald Tribune, 17 September, p. 5. Banaji, J. (1977) ‘Capitalist Domination and the Small Peasantry’, Economic and Political Weekly, XII, Special Number, August 1977, pp. 1375–1404. Crow, B. (1999) ‘Why is Agricultural Growth Uneven? Class and Agrarian Surplus in Bangladesh’, in Rogaly, B. et al. (eds) Sonar Bangla? Agricultural Growth and Agrarian Change in West Bengal and Bangladesh, New Delhi: Sage, pp. 147–176. Gowan, P., Panitch, L. and Shaw, M. (2001) ‘The State, Globalization and the New Imperialism: A Roundtable Discussion’, Historical Materialism, 9, Winter. Hardt, M. and Negri A. (2000) Empire, Cambridge, Mass: Harvard University Press. Harvey, D. (1990) The Condition of Postmodernity: An Enquiry into the Origins of Cultural Change, Oxford: Blackwell. Hobsbawm, E. (1995) Age of Extremes, London: Viking. Hopkins, A. G. (ed.) (2002) Globalization in World History, London: Pimlico. Hossain, A. and Rashid, S. (1996) In Quest of Development: The Political Economy of South Asia, Dhaka: University Press. Karim, N. (1994) Exploitation, Domination and Alienation: The Genesis of Bangladesh, Dhaka: Osmania Library. Mandel, E. (1980) Long Waves of Capitalist Development, Cambridge: Cambridge University Press. Porter, M., Sachs, J.D. and McArthur, J.W. (2002) ‘Executive Summary: Competitiveness and Stages of Development’, Global Competitiveness Report 2001–2002, 2004–2005, World Economic Forum. Prakash, O. (1998) The New Cambridge History of India: European Commercial Enterprise in Pre-Colonial India, II (5), Cambridge: Cambridge University Press. Rogaly, B., Harriss-White, B. and Bose, S. (eds) (1999) Sonar Bangla? Agricultural Growth and Agrarian Change in West Bengal and Bangladesh, New Delhi: Sage. Sabhan, R. (1991) The Decade of Stagnation: The State of the Bangladesh Economy in the 1980s, Dhaka: University Press. Sen, B. (1997) ‘Poverty in Bangladesh: A Review’, BIDS, 1992. Available from Sustainable Development Networking Programme (SDNP) website http:// www.sdnbd.org/sdi/international_day/poverty/poverty inbd-bids. Smalley, A. (1983) ‘The Colonial State and the Agrarian Structure in Bengal’, Journal of Contemporary Asian Studies, 13 (2), pp. 176–197. UNESCO (2007) ‘UNESCO and Least Developed Countries’, available from UNESCO website, http://www.unesco.org/1dc/list.htm, date accessed 10 October 2007. WTO (World Trade Organization) (2000) ‘Trade Policy Review: Bangladesh’, May, available from www.wto.org/english/tratop e/tpr e/tpr 132 e.

3 International Trade and Business Investment in Myanmar: Scope, Strategic Development, and Social Implications Htwe Htwe Thein and David Pick

Introduction International businesses trading with, and operating in, Myanmar have attracted frequent criticism. As a result, political considerations related to external institutional actors, sanctions measures, and nongovernment organisations (NGOs), are, typically, considered to have determined the scope and the strategic development of international investment and trade with Myanmar. Due to its poor human rights record, international state actors have differed with regard to the decision to engage, or not to engage, with the repressive regime government of Myanmar. The US and the European Union (EU), have, to a large extent, adopted a policy of ‘isolation’, while Asian governments and business groups have adopted an alternate policy of ‘constructive’ institutional and economic engagement with Myanmar. Section one will provide a summation of these measures and actors, and will note that trade and investment flows cannot be understood without reference to this unique political context. This chapter will also suggest, however, that analysis of sanctions and other political measures often fail to acknowledge that such ‘external’ pressures have differentially affected Western and Asian country of origin multinational enterprises. Focusing only on sanctions and external determinants also neglects a critical analysis of how the scope and strategic development of international trade and investment has been significantly shaped by internal ‘domestic’ forces and constraints such as generalized economic and institutional underdevelopment, and business ‘risk’ related to inconsistent and ineffective state policy regimes. The second and third sections of this chapter address these concerns by providing a brief overview of the scope of international trade and investment in Myanmar and 36

Htwe Htwe Thein and David Pick 37

the market entry and operational strategies implemented by international businesses in Myanmar. Finally, the chapter will provide a concise overview of the implications for society and human development of international trade and international business investment (or lack thereof) in the two decades following Myanmar’s transition to a market economy.

Section 1: The Political Context of international trade and business investment in Myanmar In 1962, after overthrowing the democratically elected government, General Ne Win assumed complete political authority in Burma. Adopting the slogan of the so-called ‘Burmese Way to Socialism’, his government shifted the nation towards autarky and a centrallyplanned ‘command’ economy (Than 2000). Under the Ne Win regime, Myanmar’s economy declined dramatically, and the period was subsequently characterized by many critical scholars as a disastrous turning point in the economic history of modern Burma. Following the brutal repression of political dissidents in 1988, the State Law and Order Restoration Council (SLORC) took control of the nation, ending the Ne Win government’s 26-year reign. SLORC abandoned the economic system of ‘the Burmese Way to Socialism’ stating a public preference for moving the nation towards a market economy open to international trade and investment (Kyi et al. 2000). This change of policy on international trade by the SLORC government was a historic change in economic development strategy and marked an end to the selfimposed economic isolation which had characterized preceding decades. Since its assumption of power, however, the regime government has been plagued by a series of economic and political problems. Although Myanmar is rich in natural resources and was once considered to be the ‘rice bowl’ of Asia in terms of agricultural productivity, economic mismanagement during the Ne Win government, followed by the successor SLORC and SPDC (the State Peace and Development Council) governments, has severely damaged the country’s economy, and has seen Myanmar ranked among the poorest countries in Southeast Asia (McCarthy 2000). In the early 1990s, following the SLORC/SPDC’s public commitment to market reforms and trade liberalization, some analysts predicted that Myanmar would be the next Asian ‘tiger’, and would fulfil long frustrated economic potential. Other observers were sceptical that the Myanmar government’s trade policies and regulations would be effective enough to

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materialize substantial and sustained economic progress. These critics were, at least in part, vindicated when an early mini-economic ‘boom’ sparked by trade liberalization and an inflow of foreign investment turned to bust in the mid-1990s; a downturn that was attributed to ineffective macro-economic policies (Business Asia 21 April 1997). The Myanmar regime government’s domestic and international legitimacy eroded following its refusal to transfer power or to recognize the National League for Democracy (NLD), led by Daw Aung San Suu Kyi, the daughter of the legendary nationalist hero General Aung San. In 1991, SLORC suffered a major political humiliation when the NLD achieved a landslide election victory (Business Asia 29 July 1996). Furthermore, the regime government of Myanmar has recurrently placed Suu Kyi under house arrest since 1989 and severely repressed the activities of pro-democracy activists throughout the country (The World Factbook: Burma 2003). Throughout the 1990s, the regime came under heavy criticism for its inability to demonstrate progress in implementing substantial political and economic reforms. In 2003, the ruling junta declared its plan to pursue its own roadmap to ‘democracy’ by means of a National Convention to draw up a constitution which, at an unspecified date, would purportedly lead to a general election in Myanmar. The Myanmar government represented the conference as an important step in following a seven-point road map to democracy but the plan was dismissed as insincere and illegitimate by many governments from the West and major international human rights organizations who cited the lack of participation by opposition parties and ethnic group representatives. The failure of the military regime government to restore democracy, in addition to concerns as to narcotics production and labour rights violations, have shaped and restricted Myanmar’s external economic relations for the last decade. Most notably, the internal political environment and governance in Myanmar has led to external trade sanctions. In response to escalating pressure from various human rights and pro-democracy campaigners, in April 1997 the government of the United States of America, under the Clinton administration, imposed trade sanctions on Myanmar (Finch 1997). These sanctions, however, prohibited only ‘new investments’ made by US companies in Myanmar, and applied only to US citizens and companies registered in the US (Finch 1997). In 2003, following another crackdown on political dissidents and the detention of NLD leader Daw Aung San Suu Kyi, the United States government stepped up its ‘isolationist’ policy stance by banning all imports from Myanmar to the US, and suspending all US

Htwe Htwe Thein and David Pick 39

assets controlled by the Government and individual officials associated with the regime (O’Connell 2003). The new measures also included disincentives for the provision of major loans to Myanmar, and intensified existing restrictions on granting US visas to Myanmar Government officials and their immediate family members. The US government extended sanctions measures on Myanmar for one more year in May 2007 (Agence France Presse 26 May 2007). In accordance with its strong stance against the regime, the US government attempted to place Myanmar on the agenda of the UN Security Council (UNSC). A UNSC briefing on Myanmar took place in December 2005, where the 15 Council members were presented with information concerning the Myanmar government’s use of forced labour, a looming HIV/AIDS crisis, shortages of medicine and healthcare resources, and difficulties involving food distribution in the country (Irrawaddy Online January 2006). The resolution was supported by nine members (including Belgium, France, Ghana, Italy, Panama, Peru, Slovakia, the UK and the US), but was rejected by two permanent members of the UNSC – China and Russia, and a non-permanent member, South Africa. Pro-democracy campaigners and activists around the world were infuriated by the decision (Paung 2007a). Similarly, the European Union warned of the imposition of tough sanctions on the Myanmar government, and called for the immediate release of Aung San Suu Kyi (Economist 25 July 2003). The European Union (EU) has been urged by international trade union organizations to toughen its economic restrictions on Myanmar, given the regime’s apparent lack of progress towards democratic reforms and securing labour rights in the country. In this regard, the trade unions recommended an end to European-registered businesses being permitted to operate in Myanmar. Meanwhile, the EU ‘Common Position’ on Myanmar imposes a range of restrictions including a visa ban and the freezing of assets belonging to top-ranking officials in the military regime, an arms embargo, and limiting trade with Myanmar (Oo 2005a). Although the EU continued to maintain its sanctions against the Myanmar regime government, it nonetheless appeared to be supportive of the urgent need for UN agencies and NGOs to provide humanitarian aid for the country’s poor (Islam 2005). While the political impasse within Myanmar has been a central concern for international observers and governments, international institutional actors such as the United Nations and the International Labour Organization (ILO) have criticized the Government of Myanmar for the alleged exploitation of forced labour and the perpetuation of human

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rights abuses. In particular, in a 2005 report entitled ‘A Global Alliance Against Forced Labor’, the ILO criticized the SPDC government for its lack of success in curbing the use of forced labour, and specifically highlighted the state-imposed and sanctioned nature of forced labour in Myanmar. The ILO, in 2000 and again in 2005, even called on its members to re-evaluate the nature of their business relations with Myanmar, and to impose sanctions if there was no significant progress towards eliminating forced labour in the country (Fowler 2005; Oo 2005b). The Association of South East Asian Nations (ASEAN) has adopted a different stance from the West by following a policy of economic and political ‘engagement’ with Myanmar, arguing that doing so is more appropriate and effective in facilitating steady, stable, and gradual change (Economist 5 October 1996). Despite the policy of ‘isolation’ adopted by the US government and the EU, in 1997 ASEAN made a major commitment to its policy of ‘constructive engagement’ by admitting Myanmar as a member state. In the years subsequent to Myanmar’s admission, however, ASEAN has faced pressure from other international actors to demonstrate that substantive and meaningful reforms have flowed from its ‘engagement’ policy. As a result, there has been evident concern among several key member states that ASEAN’s internal cohesion and international image are at risk. These internal and external pressures became particularly evident in regard to an agreed schedule for Myanmar to chair ASEAN in 2006. Faced with the prospect of Myanmar’s military junta leading the regional organization, the US, the European Union, and Japan, indicated that they would not attend the 2006 ASEAN meeting. Ultimately, the Myanmar government succumbed to international pressure and in mid-2005 announced a decision not to take up its position as the 2006 chair of ASEAN, citing its intention to concentrate on domestic matters including the national reconciliation process and its purported pursuit of democratic reform measures (Irrawaddy Online 26 June 2005). At the ASEAN’s 11th annual meeting in Kuala Lumpur in December 2005, the ASEAN foreign ministers expressed a strong desire and intention to pressure the Myanmar regime to demonstrate clear progress towards achieving its promised ‘road map to democracy’, following mounting pressure emanating from the US government and the EU (Yeni 2005a; Parker 2005a). In March 2006, the US Secretary of State Condoleezza Rice called for cooperation from China and India to pressure the regime government to move towards democratic reforms, stressing that it was crucial that Myanmar’s neighbouring countries join forces with the US government in the resolution of the issues (Klug 2006).

Htwe Htwe Thein and David Pick 41

While ASEAN member nations generally adhere to non-interference policy, three member nations – notably, Malaysia, the Philippines and Indonesia – have become more vocal in their calls to the military government of Myanmar to show substantial progress towards political reforms and democratization (Myanmar Tourism Statistics 2008). At an annual summit held in the Philippines in January 2007, as a response to the failure of the Myanmar government to carry out political reforms and democratization in Myanmar, nine ASEAN leaders showed interest in developing a charter relating to members’ observance of human rights and democratic norms (Cerojano 2007). In July 2007, the foreign ministers of ASEAN nations agreed to establish a human rights body. It was thought that the charter might also include a proposal giving consent to member nations sanctioning one another – a powerful license for the ASEAN members to potentially step up pressure on the Myanmar government (Irrawaddy Online 12 January 2007). The EU was much encouraged by these initiatives and expressed a hope that a charter on human rights and democracy could in time provide a regional equivalent to the EU’s Court of Human Rights (Cerojano 2007). While trade relations with Burma have been linked to the foreign policy objectives of powerful states (US) and regional blocs (EU and ASEAN) there have also been initiatives designed to discourage international investment and market participation in Myanmar that have emanated from sub-national levels of governance and from NGOs/ advocacy organizations. In 1996 the US State of Massachusetts introduced a ‘selective purchasing’ law that was designed to preclude the state government from purchasing goods and services from companies engaged in economic activity with Myanmar.1 NGOs and advocacy groups maintained active campaigns to pressure investment funds and individual corporations to withdraw from direct investment and business activity in Myanmar and indirect linkages via trade relations with suppliers or goods emanating from the country. One prominent aspect of NGO and political advocacy organization campaign activity has been the organization of international consumer boycotts directed towards prominent international businesses with trade or investment activity in Myanmar. While it is not possible to measure or accurately assess the effectiveness of various forms of external action, it is evident that state-supported trade sanctions, when combined with campaignbased social actions, have been effective in applying pressure on numerous multinationals (mainly from the US and Europe) to divest from Myanmar.

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Section 2: Scope: Trade and international business investment after the transition to a ‘market’ economy Bearing in mind the aforementioned political contention and extensive efforts by external institutional and social actors to limit engagement, how then has international trade and business investment in Myanmar developed in the decades following the regime government’s decision to abandon a closed economy and invite international investment? When the State Law and Order Restoration Council (SLORC) took over national governance from Burma’s Socialist Program Party in 1988, it initiated several measures to end the closed economy and facilitate international trade and investment. In particular, on 30 November 1988, it introduced The Union of Myanmar Foreign Investment Law (FIL), to facilitate foreign direct investment (FDI) inflows (McCarthy 2000). As Figure 3.1 demonstrates, the new policy did attract significant FDI inflows in the early to mid-1990s. Indeed, between 1996 and 1998 there was a very noteworthy surge in FDI inflows. This surge proved to be unsustainable, however, as the consequences of the Asian financial crisis took full effect on states and corporations in the region with a consequent reduction in outbound capital flows. Moreover, by 1998 the much publicized US sponsored sanctions measures were in effect

Figure 3.1

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1991

1990

Myanmar – Inward FDI, 1989–2002 (millions of dollars)

1989

1000.0 900.0 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0

Myanmar – Inward FDI, 1989–2002 (millions of dollars)

Source: ‘FDI Country Profile – Myanmar’, UNCTAD World Investment Directory online; Available at http://www.unctad.org/Templates/Page.asp?intItemID=3198&lang=1, date accessed 5 January, 2008.

Htwe Htwe Thein and David Pick 43

and appeared to work in conjunction with the Asian financial crisis to reduce significantly the appeal of Myanmar as an emerging destination for FDI. Figure 3.2 further demonstrates that FDI flows to Myanmar have not been widely dispersed throughout the economy and in fact have always been heavily concentrated in primary industries such as minerals and mining, precious stones, energy, and timber products. According to The World Factbook the top export partners of Myanmar in 2005 were neighbouring major trading economies of Asia: Thailand (44%), India (12%), China (7%), and Japan (5%) (The World Factbook – Burma 2006). The most significant export goods included natural gas, timber and agri-food items (pulses, beans, fish, rice), precious stones, while clothing products were the only significant good drawn from the manufacturing sector. China (29%), Thailand (22%), Singapore (18%), and Malaysia (8%) were the major source nations for imported goods with petroleum and oil-based products, capital goods and construction materials among the most significant imports (The World Factbook – Burma 2006). In the 1990s, in the wake of the regime government’s public commitment to a market economy and trade integration, the export performance of Myanmar was generally considered to be poor. However, according to the Myanmar government’s Ministry of

Figure 3.2

Myanmar – FDI by Industry, 1999–2001 (millions of dollars)

250 200 150 100 50 0 1999

Primary

2000

Secondary

2001

Tertiary

Unspecified

Source: ‘FDI Country Profile – Myanmar’, UNCTAD World Investment Directory online; Available at http://www.unctad.org/Templates/Page.asp?intItemID=3198&lang=1, date accessed 5 January, 2008.

44 Trade, Labour and Transformation of Community in Asia

Commerce (Xinhua News Agency 16 May 2007), for the five years since the fiscal year 2002–03, exports from Myanmar surpassed overall imports, generating trade surpluses one year after another. Myanmar’s foreign trade in the fiscal year 2006–07 (US$8 billion) was the highest since the nation opened up to international trade in 1988. Ninety per cent of Myanmar’s trading partners were Asian nations, with ASEAN member states comprising up to half of the total (Xinhua News Agency 16 May 2007). Natural gas exports were accredited as the primary contributor to the spike in trade surpluses while the agriculture, forestry, mining and fisheries sectors were also reported to have added to trade surpluses (Xinhua News Agency 16 May 2007). Garment exports, however, fell dramatically due to the impact of economic sanctions (Irrawaddy Online 23 May 2005). Since the introduction of the Burma Freedom Act in August 2003, which banned imports of garments manufactured in Myanmar into the US (Irrawaddy Online July 2005), garment exports fell from an estimated US$327 million in 2003–04 to US$216 million in 2004–05, with total exports to the US reduced by 50 per cent (Irrawaddy Online 23 May 2005). Nonetheless, there was speculation that international businesses’ that manufacture garments in Myanmar would seek to circumvent the ban by exporting to the US via other intermediate destinations (Irrawaddy Online July 2005). The Myanmar government also sought to deal with the loss of the US as a major export destination by assisting local garment manufacturing enterprises to find alternative markets in Latin America (Irrawaddy Online July 2005). It must be noted, however, that assessing the real economic potential and current export and economic performance of Myanmar has always been a complex and difficult task because of incomplete, and thus unreliable, official statistics issued by the Myanmar government. Moreover, official assessments of economic activity are unable to incorporate Myanmar’s thriving and pervasive black market, which typically includes very significant trade activities such as opium production, trade in precious stones and extensive ‘border trade’. The existence of this parallel informal economy, often considered to be of an equivalent size to the ‘official’ economy, has meant that the absence of accurate market intelligence and economic analysis is a constant source of frustration for analysts and potential investors (Business Asia 20 October 1997). In particular, the Myanmar government’s investment figures and economic statistics have been considered by some external economic observers to be understated because it failed to take into consideration

Htwe Htwe Thein and David Pick 45

the alleged role of the drug trade as a major source of national income and domestic investment. In addition, official government statistics often do not include several other sources of income or expenditure such as significant inflows of investment from China across the border into the northern states of Myanmar and cities such as Mandalay. Moreover, export/import figures, were also thought to be hugely underrepresented because they did not include items smuggled in and out of Myanmar. For example, total exports did not include items such as timber, gems, narcotics, rice and other valuable trade commodities which were frequently, and illegally, smuggled out of the country to the neighbouring nations of Thailand, China, and Bangladesh. Likewise, total imports also ignored commonly smuggled items such as consumer goods, diesel fuel and other in-demand products illegally brought in from Thailand, China, Malaysia and India. Overall, Asian businesses (originating, in particular, from China, India, Bangladesh, Thailand and Japan) have developed thriving investment and trade relationships with Myanmar (Irrawaddy Online December 2005). Investment and trade relations have also been fostered by the governments of China, Thailand, and India, who have struck a series of cooperative economic and trade agreements. Aside from servicing their domestic commercial interests, there is no doubt that geopolitical (energy security) and military strategic concerns have also driven the efforts of Myanmar’s powerful near neighbours to promote trade integration. In contrast, enterprises originating from the US and European nations appear to have been either cautious or pessimistic about investment opportunities in Myanmar, a situation, as noted previously, commonly attributed to the political ‘risk’ of sanctions, NGO campaigns and possible association with the regime government. Between 2000 and 2005, according to the Asian Development Bank (ADB), Myanmar saw foreign investment to the country reduced by 81 per cent, following the imposition of US trade sanctions and the West’s isolationist stance towards the country (Irrawaddy Online October 2006a). Figure 3.3 provides a historical comparison of FDI flows in Myanmar by region of origin and confirms the decline in FDI originating from Western Europe and North America from the mid-1990s onwards. It also demonstrates, however, that investment originating from Asia has been of greater significance over time than FDI from Western Europe and North America and that Asian origin FDI began to flow again from 1999 onwards in the wake of the Asian financial crisis. Table 3.1 illustrates the exit of American and European firms from the mid-1990s

46 Trade, Labour and Transformation of Community in Asia Figure 3.3 Myanmar – Approved FDI Inflows by Geographical Origin, 1992–2002 (millions of dollars) 2000 1800 1600 1400 1200 1000 800 600 400 200 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Western Europe

North America

Other developed countries

Asia

Source: ‘FDI Country Profile – Myanmar’, UNCTAD World Investment Directory online; Available at http://www.unctad.org/Templates/Page.asp?intItemID=3198&lang=1, date accessed 5 January, 2008.

onwards and further suggests that Asian origin Transnational Corporation (TNC) affiliates now dominate the international business sector in Myanmar. Asian investment, therefore, has remained strong and by 2005, slightly over 50 per cent of foreign investment into Myanmar was contributed by Asian nations, with ASEAN members such as Singapore, Thailand and Malaysia among the largest nations of origin of FDI in Myanmar (Irrawaddy Online December 2005). Moreover, in the 2005–06 fiscal year there was a sharp spike in Myanmar’s FDI and, according to the Central Statistical Organization, for the first time since 1988 foreign direct investment in Myanmar amounted to US$6 billion. This surge in FDI was mainly attributed to intensified investments in the energy and resources sector (hydroelectric projects, gas extraction). Thailand, in particular, committed to major investments in these sectors and

Table 3.1

Affiliates of TNCs in Myanmar, 1990–2002

Region/Economy

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Total World Western Europe North America Other developed countries Asia

22 1 3 2 16

4 – – – 4

23 3 5 2 13

28 1 2 – 25

35 5 1 2 27

39 10 6 6 17

78 15 5 10 48

56 5 3 10 37

10 1 – 1 8

14 1 – 2 11

28 3 4 – 21

7 – – 2 5

9 1 – – 8

Source: ‘FDI Country Profile – Myanmar’, UNCTAD World Investment Directory online; Available at http://www.unctad.org/Templates/Page.asp?intItemID=3198&lang=1, date accessed 5 January, 2008.

47

48 Trade, Labour and Transformation of Community in Asia

became the largest nation of origin of FDI in Myanmar and the biggest importer of goods and services (Irrawaddy Online November 2006). Moderate growth from expanded investments and revenues from the energy and resources sectors cannot disguise the generally disappointing performance of the Myanmar economy in its totality. According to the ‘Asian Development Outlook’ published by Asian Development Bank in 2005, the aggregate poor performance of the economy was related to problems with the nation’s banking and currency systems, the burden of loss-making state-owned enterprises, and lagging output in the agricultural sector which was the country’s main economic engine. External factors such as falling rates of foreign direct investment in many sectors and humanitarian aid monies were also thought to have contributed to Myanmar’s ailing economy (Oo 2005c). Similarly, according to a World Bank study which compared the economic performance of 209 countries in the year 2004 to economic development in 1998, Myanmar emerged with appalling outcomes on nearly all criteria: including political, civil and human rights; political stability; effectiveness of the state bureaucracy and public services; government trade and regulatory policies; the rule of law and corruption. Indeed, the report found that the Myanmar economy, when measured by those criteria, deteriorated during the six-year period under observation (Irrawaddy Online May 2005).

Section 3: Strategic development of international businesses after the transition to a ‘market’ economy In the Myanmar case, as noted above, political ‘externalities’ such as trade sanctions, to an unusual extent have been crucial, indeed, unavoidable, factors in the entry and operation of international businesses. Thein’s (2003) study of the strategic development of international business firms in Myanmar suggests that, after the introduction of sanctions, local managers developed strategies for insulating their firms and brands from the pressures of US trade sanctions and international consumer boycott actions. In many cases, international businesses have found a way to enter Myanmar other than via ‘standard’ entry strategies, often in order to avoid sanctions pressure and the possibility of facing consumer boycotts in ‘home’ markets. A favoured entry strategy was market entry via distributors, or in some cases, via border traders and smugglers. With respect to the latter strategy, it is inherently difficult to determine the extent of the brand principal’s acknowledgement and facilitation of this activity. International busi-

Htwe Htwe Thein and David Pick 49

nesses in the consumer goods sector also developed marketing strategies that targeted local consumers and yet minimized brand/firm exposure to international visitors and media attention. Moreover, the apparent withdrawal of some multinationals did not preclude various forms of continuing organizational and brand presence (Thein 2003). Thus withdrawals often appeared to be more ‘symbolic’ than real. International brands were available in local markets because distributors were able to source supplies from neighbouring nations, despite the fact that the relevant brands had ‘officially’ withdrawn from the Myanmar market (Thein 2003). Not surprisingly, local managers supported intensified international trade and investment engagement and pointed to the negative impact of sanctions on employment and general business activity in the country (Thein 2003). Regardless of the impact of external pressures on the business strategy and development of international businesses in Myanmar, these firms have also been shaped by the complex and multi-varied challenges and constraints imposed by the host business environment. Although Myanmar is, in various ways, the ‘last frontier’ for foreign investment in South East Asia with long-term market potential, it has intrinsic shortcomings that stem from the Myanmar government’s inability to adopt consistent policies in trade and the governance of business activity. Moreover, infrastructure is inadequate and operational difficulties have been severe. Indeed, local managers of international business firms in Myanmar indicated that internal constraints and a challenging operational environment (physical, administrative, financial, and political) were equally significant in influencing business development strategies and market entry and exit decisions (Thein 2003). These ‘internal’ constraints and conditions for international business activity have included a number of crucial aspects of governance and micro- and macro-economic policy. First, high rates of inflation in Myanmar over more than two decades have impeded economic development and shaped the operational strategies of international businesses. For instance, between 1997–98 and 2000–01, the general Consumer Price Index (CPI) in Myanmar increased by nearly 50 per cent. Subsequently, essential commodities such as rice and fuel have been subject to periods of hyper-inflation. For instance, the black market price of petrol increased by 600 per cent within less than a year in 2002 because the government was unable to purchase sufficient fuel supplies due to low foreign currency reserves (Fawthrop 2002) and the black market price of diesel experienced a two-fold increase in 2005–06

50 Trade, Labour and Transformation of Community in Asia

(Parker and Reh 2005). In early 2006, food commodity prices spiked alarmingly. Rising inflation in the country also saw the gold price jump as consumers and businesses invested in gold as a hedging strategy while the inflationary environment led to a sharp downturn in retail and trading activities (Parker and Reh 2005). For several years in the 1990s government expenditures (including high annual military expenditures) were estimated to greatly exceed total tax revenue and foreign analysts attributed the underlying causes of inflation in Myanmar to government monetary policies and persistent budget deficits (Dapice 1998: 157). The rate of inflation increased notably because the Myanmar government has sought to resolve budget deficits by arbitrarily increasing the supply of kyat notes (Guyot 1998; Crispin 1998). In 2006, inflation was also fuelled by very substantial increases in government taxes and charges for public utilities (water and electricity) and the salaries of public servants and military personnel (Irrawaddy Online October 2005; Yeni 2006). In the same year, the government further added to inflationary pressures by enforcing a sales tax law first introduced in 1990 (Irrawaddy Online 1 August 2006) which also targeted the foreign currency earnings of foreigners (15%) and Myanmar nationals (10%). Tax increases were also directed at both domestic and foreign companies operating in Myanmar’s oil and gas industry, which were to pay between 40 per cent to 50 per cent tax on profits (Irrawaddy Online October 2006b). Amidst this inflationary environment, the value of the Myanmar currency has fallen. In the year 2000, the real market exchange rate of the kyat was close to 400 for one US dollar. Following a government policy announcement on limiting illegal currency trading; in May 2005 the kyat reached 1015 to one US dollar (Jay 2005). At the end of March 2006, the kyat moved from 1250 to 1400 kyat to one US dollar in less than one week: the lowest market exchange value of the currency to date (Irrawaddy Online 29 March 2006). By the end of July 2007, the kyat had stabilized somewhat at around 1280 to one US dollar. For local managers, therefore, the fact that the Myanmar currency has fluctuated and depreciated against the US dollar has presented major obstacles for their international trading activities. In addition, international businesses engaged in trade have had to learn how to deal with a complex ‘three-tier’ exchange rate system involving a nonconvertible local currency (the kyat), FECs (Foreign Exchange Certificates), and the US dollar. The kyat is overvalued and non-convertible, allowing for a large gap between the official rate and the black market rate. While the official exchange rate has been fixed and stable (5.76

Htwe Htwe Thein and David Pick 51

kyat/US dollar in 2005), the black market exchange rate has increased annually. Exchange rate differentials have been a major impediment for international traders operating in Myanmar who have juggled between the official rate (used for ‘official’ bookkeeping purposes) and black market rates (used in actual business transactions). The dual exchange rate system also created problems for traders in that import duties and taxes were calculated based upon the official exchange rate while sales transactions occurred at the actual market rate. Clearly, there has been an urgent need to devalue the kyat but the Government has been reluctant to do so, arguing that a devaluation would increase the price of imported goods which would further fuel existing inflation problems (Guyot 1997). The government was also reported to be concerned about the political ramifications of a significant currency devaluation (Callahan 1995). International critics, however, have claimed that financial reforms have not occurred because of the self-interest of the regime government, in that state-owned enterprises have benefited from an overvalued exchange rate when they purchased and paid for imported goods and services using the official exchange rate. In addition, maintaining an artificial exchange rate that did not reflect the ‘real’ market value of the kyat provided two additional benefits to the government – the regime’s large military expenditures and an increasing budget deficit were reported officially as less than their true value (Business Asia 1 July 1996). Although there have been some indications from the Myanmar Government that it has considered realigning the kyat to reflect a more realistic market exchange rate, cushioning the devaluation process will require the help and expertise of the international financial institutions and aid agencies (Business Asia 17 April 2000). These institutions are unlikely to provide such assistance until the country’s political stalemate has been resolved (Callahan 1995) and thus trading businesses in Myanmar continue to grapple with dual exchange rates.2 In addition to problems deriving from high inflation and the exchange rate system, Myanmar has lacked infrastructure in the area of banking and finance. The banking sector in Myanmar has been relatively archaic, and directly under the close control of the Myanmar government (McCarthy 2000). In particular, the absence of a capital market in Myanmar has discouraged foreign investors (Economist 6 January 1996; Mason 1998). The Myanmar government has often carried the burden of considerable foreign debt and in 2006 Myanmar had US$1.01 billion in reserves of foreign exchange and gold while external debt was reported as US$7.162 billion. With limited domestic capital to finance

52 Trade, Labour and Transformation of Community in Asia

industrialization and modernization (Callahan 1995), the Myanmar government’s ability to seek foreign capital was constrained by the Burma Freedom and Democracy Act (BFDA), signed into law by the US government in 2003 and renewed in July 2004 (US Department of State 2008), which banned exports of financial services from the US to Myanmar. In early 2003, Myanmar’s banking sector suffered a setback when several private banks collapsed and were forced to be closed down, following alleged rumours of their insolvency and resultant rush to withdraw money by the banks’ customers, and also by the banks’ alleged involvement in money laundering activities (Irrawaddy Online September 2006).3 Another significant condition in the operational environment for international businesses in Myanmar has been inconsistency in trade policy and business governance and regulation. Executives interviewed for Thein’s (2003) study of the sector expressed a strong sense of frustration with the Myanmar government’s formulation and implementation of trade policy and frequent shifts in regulatory intervention over time. For instance, beginning in 1998, the Myanmar government has selectively and periodically deployed restrictions or total bans on imported goods. Aside from import restrictions, international consumer goods businesses have confronted difficulties in working effectively with government ministries and officials. Some of these difficulties allegedly have included an absence of effective and clearly understood rules and regulations governing various economic sectors, arbitrary government intervention, bureaucratic delays, and the heavy involvement of members of the military government in business activities. In terms of inadequate business regulation and legal frameworks to underpin market transactions, enforcement mechanisms have generally not worked well, especially in consumer protection, dispute resolution, and the control of border traders and smugglers. With regard to the latter, ‘official’ traders (importing via the Yangon port) were placed in a position of competitive disadvantage in comparison to ‘unofficial’ traders who maintained lower overheads and duty charges by engaging in border trade with neighbouring Asian countries. Corruption has also been identified as an unavoidable aspect of the business environment in Myanmar and is widely considered to be pervasive throughout business practice and most evident in the relationship between the business sector and the State.4 Finally, it can be noted that serious deficiencies in essential infrastructure have impeded economic development in Myanmar, and, clearly, have had an effect in dampening foreign investors’ enthusiasm

Htwe Htwe Thein and David Pick 53

for entering the market or extending their existing commitments. In particular, Myanmar’s transportation networks (airports, seaports, roads) are insufficient for rapid economic development and international trading activities. Moreover, Myanmar’s telecommunication network is unsophisticated and limited when compared to its Asian neighbours and the supply of power to business and residential areas is often below requirement and intermittent. Manufacturing firms in Myanmar have not only had to confront variable power supply, they have often lacked access to quality suppliers and essential raw materials. Garment manufacturers for example, had to source many raw materials for production from neighbouring Asian countries as there were not locally available materials in Myanmar of ‘export’ level quality (Business Asia 20 November 1995). A shortage of skilled labour (e.g. trained production technicians and managers) has also forced export-oriented manufacturers in industries like garments to import skilled foreign labour (McCarthy 2000; Mason 1998). It is clear, therefore, that external conditions and political pressures have not been the sole determinants of the business development of international businesses in Myanmar. As discussed above, domestic economic conditions and various aspects of internal governance (government economic mismanagement and inconsistent policy interventions, inflation, complexity of exchange systems, underdeveloped consumer markets, border trading and smuggling, and inadequate infrastructure) have shaped, and at times impeded, the strategies and operational success of international businesses in contemporary Myanmar. Both Asian and Western businesses have found Myanmar to be a complex and often frustrating environment for trade and investment, and have confronted limited opportunities for the realization of immediate profits. The scope of these operational challenges also calls into question any automatic assumption that the market exit of large international business firms (see Table 3.1) is related solely to sanctions and boycott pressure. Indeed, while many manufacturers and principals of consumer goods represented their exit as a decision to respect the call from pro-democracy and human rights activists to withdraw from economic engagement with Myanmar, some executives openly attributed such decisions to the aforementioned operational difficulties and domestic market constraints (Thein 2003).

Social implications of international trade and investment in Myanmar As stated earlier, the contemporary trend in foreign investment in Myanmar was initiated by the so-called ‘move to market’ policy, a key

54 Trade, Labour and Transformation of Community in Asia

element of which was the 1988 Foreign Investment Law. While there have been a number of foreign investment projects in the manufacturing sector (e.g. car assembly), attention has been focused on Myanmar’s natural resources, particularly gas. Indeed the natural gas industry now accounts for around 40 per cent of the nations export earnings (Associated Press 2009). This resource advantage held by the nation has positively influenced foreign direct investment – rising to US$279 million in 2006 (World Bank 2007). However, it seems that such foreign investment in Myanmar has not necessarily brought with it the benefits one might expect. Measures of economic and social wellbeing in Myanmar show a mixed picture. For example, GDP per capita has risen from US$68 in 1990 to US$232 in 2006 (IMF 2008) and primary school completion rates have risen from 74 per cent in 1999 to 95 per cent in 2006 (World Bank 2007). However, infant mortality rates (104 per 1000 live births), life expectancy (61 years), public health spending (0.3% of GDP) and poor human rights (displacement of people and threats to safety and security) are examples of problems that persist (New Internationalist 2008). Furthermore, endemic poverty, malnutrition, poorly resourced education and civil conflict are evident (James 2006). Whilst it is clear that international trade and business investment delivers much needed foreign capital and export earnings, it is not surprising that a number of concerns have been expressed about the behaviour of foreign companies in the nation and how wealth generated is used by the governing regime. Foreign corporations in the Myanmar natural gas industry has attracted attention from international NGOs and activist organizations with regard to breaches of accepted norms of human rights and environmental protection. For example, the Korean company, Daewoo International Corporation has been accused of environmental damage, use of forced labour, and forced relocation of communities during the construction of the Shwe natural gas pipeline (Reh 2005b). Similarly, the US-based Unocal and the European-based Total companies have attracted criticism because of claims that their investments in Myanmar has supported the military government and damaged the environment (Oil and Gas Journal 13 February 1995). Unocal is a joint venture partner with the Government’s Myanma Oil and Gas Enterprise (MOGE) in a US$1.2 billion project to pipe natural gas from Myanmar to Thailand, and has faced accusations that it was implicated in the use of forced labour and human rights abuses related to the construction and operation of the pipeline (Oil and Gas Journal 26 June 2000). Indeed, Unocal was sued in the US for its alleged complicity in human rights abuses committed by the regime; with the

Htwe Htwe Thein and David Pick 55

federal case against the corporation pursued under the 1789 Alien Tort Claims Act, under which foreigners are permitted to file law suit against US companies in the United States. Unocal finalized settlement agreements in the case in early 2005. ChevronTexaco Corp. which purchased Unocal in 2005 was targeted by Myanmar pro-democracy campaigners and human rights groups who argued that this acquisition has effectively made Chevron a close business partner of the Myanmar regime (Irrawaddy Online April 2005). The French oil company Total (one of the largest European corporate investors in Myanmar) also attracted criticism from exiled pro-democracy groups for its investment in the Yadana natural gas pipeline project and for its complicity in human rights abuses committed by the Myanmar regime. In 2005, the US Campaign for Burma and the UK Burma Campaign demanded that the Government of France pressure Total to withdraw from Myanmar (Reh 2005b; Parker 2005b) and called for the company’s shareholders and customers to support this demand (Oo 2005d). Total also faced legal action in 2002 in France for complicity in human rights abuses which allegedly occurred during the construction of the Yadana pipeline project, and reached an outof-court settlement of US$6.12 million in November 2005 (Oo 2005e). Total claimed that the settlement was reached because of a general commitment to corporate responsibility, and refused to admit responsibility for any of the alleged crimes. Total also attempted to deflect criticism of its continuing involvement in the project by arguing that its investment in Myanmar contributed to the country’s economic and social development (Oo 2005e). Despite these protests and court actions, Unocal and Total have continued to resist international pressure in relation to their operations in Myanmar (Energy Economist 1998). As with Western multi-national corporations in the natural gas sector, corporations in the mining sector have also been under pressure from human rights and environmental activists to withdraw from Myanmar. For instance, the Canadian mining company Ivanhoe has been accused of employing forced labour and involvement in the forced relocation of eight villages in 2000 when the company was building its mine sites near Monywa in central Myanmar (Irrawaddy Online February 2005). More generally, the Myanmar government’s 1994 mining law has been heavily criticized by external observers and activist groups for the absence of policy measures protecting workers and the environment; it has been estimated that such lax regulation has made the cost of mining gold in Myanmar some 20 per cent cheaper than any other country in the world (Large 2005). Ethical concern over

56 Trade, Labour and Transformation of Community in Asia

participation of foreign business in Myanmar remains a significant issue. Following the Saffron Revolution of September 2007, renewed calls have been made to energy and mining companies doing business in the country to engage with the Myanmar government on human rights issues using the companies’ economic ties and influence on key players in the regime (Hogue 2007). However, there are few signs of any such action being taken. It may be argued then that rather than a blessing, the abundance of natural gas and other natural resources in Myanmar is, in several ways, a curse. Understanding this apparent contradiction can be addressed by reference to the current debates on natural resource regions. Most relevant here is the ‘resource curse thesis’ that draws attention to the phenomenon of nations with large endowments of natural resources often performing worse economically than nations with fewer resources (Auty 1993; Davis and Tilton 2005; Humphreys et al. 2007a; Mehlum et al. 2006). According to Perry (2007), Myanmar is one nation that suffers from the resource curse. When one examines the case of Myanmar, with its large natural gas sector, over the period 1990–2006 GDP per capita grew 3.4 times. This may suggest some progress, but is poor when compared to the neighbouring and less resource-rich countries of Vietnam and Cambodia where growth was 7.4 times and 4.9 times respectively over the same period (IMF 2008). The purchasing power of consumers in Myanmar also remains low, limiting the extent to which markets can develop. According to the IMF (2008) the relative purchasing power in ‘International Dollars’ in 2006 was $902 in Myanmar compared to $7402 in Thailand, $2589 in Vietnam and $1626 in Cambodia. However, referring to narrow economic measures does not provide a complete picture. Malaysia, for example, is a neighbouring resource-rich nation where the resource curse is less apparent. On most economic measures, Malaysia demonstrates significant growth and development since 1990. Gross domestic product per capita has risen from $2431 in 1990 to $5943 in 2006 and purchasing power stood at $12,464 in 2006 (IMF 2008). It is not then simply the presence of abundant natural resources themselves that leads to the resource curse phenomenon. To find a causal explanation, Stiglitz (2007) and Humphreys et al. (2007b) suggest that examining a number of aspects of the resource curse and natural resource exploitation allows for a move beyond conventional economic measures to include institutional effectiveness. According to Humphreys et al. (2007a) both governments and mining companies

Htwe Htwe Thein and David Pick 57

tend to focus on short-term issues of maximizing returns from resource exploitation efforts without considering the long-term effects. Mehlum et al. (2006) identify Malaysia as being a nation with ‘good’ institutions that work to minimize this phenomenon, however it may well be that weak institutions in Myanmar means that the governing regime and its cronies have opportunities to reinforce their positions of wealth and power as mining companies focus on their ‘bottom line’. Stiglitz (2007) points out that this creates a risk of cheating by resource companies and the corruption of governments who sell mining leases for less than their real worth. As he points out, there is evidence of cheating in the USA so there must be similar opportunities, temptations and practices elsewhere, particularly in nations such as Myanmar where institutions are weaker and not transparent. Humphreys et al. (2007a) also identify risks of economic, social and cultural instability in producer regions from population pressures, dispossession of indigenous people, and leakage of wealth. The resource curse may thus be seen as a failure of political, social and economic governance that is very much in evidence in Myanmar. According to Collier (2007) governance and economic policies are important influences on economic performance, but there are diverging consequences of getting these right or wrong; good governance and economic policies significantly improve growth but bad governance and policies are likely to destroy an economy. With regard to Myanmar, poor governance is an issue that has been identified as a major issue preventing the socio-economic benefits of foreign investment flowing to the wider population. James (2005) argues that good governance is a pre-requisite and therefore institutional change is necessary for development. This means the nation needs to develop institutional frameworks that underpin a properly functioning market economy. This includes empowerment, opportunity, and participative governance practices. According to Sen (1999) the freedoms (instrumental and constitutive) of individuals are the basic building blocks of development. In Myanmar, the institutions that support instrumental freedoms (the means of development – political, economic, social, transparency, protective security) are absent or weak at best. The same applies to constitutive freedoms (about the ends of development – political participation, education, healthcare, economic growth, industrialization, etc.) that have been systematically ignored or actively suppressed by the governing regime. This has in many ways helped to trap Myanmar in a cycle of political, social and economic impoverishment that the nation shows little sign of escaping.

58 Trade, Labour and Transformation of Community in Asia

In spite of the aforementioned increases in international trade and investment in Myanmar the institutional developments and freedoms needed for the improvement of living standards generally have failed to materialize. The expected transformation of the nation into a functioning market economy have been slow at best (James 2005) and the benefits of the flow of western consumer brands have gravitated to the wealthy elite whilst the rest of the population live in fear and poverty vulnerable to natural disasters and exploitation. The question is then, if international business engagement has not delivered higher living standards to Myanmar, what will? One major international effort has been aid. The nation clearly needs emergency humanitarian aid, particularly after the devastating effects of Cyclone Nargis in 2008, but Myanmar has also been in receipt of aid aimed at economic and social development. However, the track record of reform through aid is patchy at best. In 2001, foreign economic aid to Myanmar stood at US$127 million. According to an estimate produced by the World Bank in 2003, foreign aid amounted to US$2.50 on a per capita basis. After the regime’s crackdown on political dissidents in 1988, the Myanmar government ceased to receive funding from many overseas development assistance programs (The World Factbook – Burma 2003). Although the World Bank ceased lending to Myanmar, Myanmar remained a member of the World Bank, and the World Bank has continued to monitor the economic and social situation in the country through development partners such as the United Nations and the International Monetary Fund (The World Factbook – Burma 2006). Myanmar, however, has received significant aid assistance from the Asian Development Bank (ADB). Through Myanmar’s participation in the Program of Economic Cooperation in the Greater Mekong Subregion (GMS Program), the ADB had lent to Myanmar a total of US$530.9 million as of 31 December 2004 (Asian Development Bank 2004). The loans from the ADB were used in development projects in sectors including agriculture and natural resources, industry and trade development, water supply, sanitation, waste management, and energy (Asian Development Bank 2004). The Asian Development Bank will be offering US$1.6 billion worth of loans to support the Greater Mekong Sub-region program (GMS) from 2007 to 2009. The loans were to fund programs aiming at reducing poverty as part of efforts to achieve Millennium Development Goals. Since 1992, the ADB has provided GMS with US$1.8 billion worth of loans. Now, the ADB, GMS loans remain the only source of funds accessible to the Myanmar government (Irrawaddy Online, October 2006c).

Htwe Htwe Thein and David Pick 59

Whilst economic development aid has been restricted due to political considerations, Myanmar has continued to be a recipient of humanitarian aid from several governments and institutions. According to a statement by UNICEF, US$2 million has been spent on an annual basis by the organization in order to run HIV-AIDS prevention and care programs in Myanmar (it was estimated by UNAIDS that more than 600,000 people in Myanmar were infected with HIV) (Irrawaddy Online 17 May 2005; Irrawaddy Online 23 August 2005). Before the crackdown on the prodemocracy movement by the military government in 1988, Japanese aid accounted for 72 per cent of all aid monies donated to Myanmar (Lintner 1991). In 1999 alone, Japan donated US$61.3 million in aid to Myanmar, despite a policy on Official Development Assistance (ODA), which banned assistance to repressive governments. The Japanese government defended this decision by claiming that such policy guidelines only applied to new project investments (Murakami 1992). Again, in 2005, Japan donated a US$10.8 million aid package to Myanmar (Paung 2005). Some countries have reconsidered the policy of restricting humanitarian and development aid to Myanmar. For example, in the 1990s, the Australian government initiated a limited aid program aimed at facilitating training on human rights issues and internal dialogue within the regime. In 2005, the European Union increased its humanitarian aid to Myanmar from US$2.4 million to US$9.6 million to contribute to areas such as primary healthcare, malaria control, water and sanitation services (Irrawaddy Online 13 December 2005). Similarly, Australia has pledged a 25 per cent increase (to a total of US$9 million) in its aid donations to Myanmar for 2006, with this aid to be directed towards programs to fight against the spread of HIV/AIDS, tuberculosis, and malaria (Irrawaddy Online 7 December 2005). Ultimately, governments and donor agencies that continued to provide aid monies appeared to have accepted the argument that, in a country as poor and underdeveloped as Myanmar, there was a need for ongoing global and regional engagement on humanitarian (health, education, basic infrastructure) grounds. However, the role of the government of Myanmar in the distribution of these funds and more importantly, the distinction between ‘humanitarian’ aid and monies spent on development projects benefiting local and international business interests have made for almost inevitable controversy on the issue of donor funds. Recent events in Myanmar concerning the operation of development agencies have not been encouraging. Following the removal of the former Prime Minister General Khin Nyunt from the position in October 2004, international aid agencies confronted travel restrictions imposed by the

60 Trade, Labour and Transformation of Community in Asia

regime (Parker 2005c; Yeni 2005a). For example, humanitarian workers experienced lengthy delays in gaining permission from the government to access sensitive areas such as the Wa special region. Such permission reportedly had to be granted by the Ministry of Defence (Parker 2005c). In relation to travel restrictions imposed on aid agencies, the UN world food program warned of a looming humanitarian crisis facing Myanmar. In particular, the UN food agency expressed concern as to its ability to provide food to HIV/AIDS sufferers in central Burma and to farmers in the Shan State who had previously grown poppy as a cash crop (Oo 2005f). UN officials in Yangon also expressed concern about their lines of communication with relevant government departments and officials, following the relocation of government ministries to the new administrative capital Pyinmana, 400 km north of Yangon (Parker 2005d). Citing the adverse impact of travel restrictions on aid agencies imposed by the Myanmar government, the UN Global Fund declared its decision in August 2005 to cease all assistance to fight against HIV/AIDS, tuberculosis and malaria in Myanmar. The Global Fund’s initial plan was to spend US$98 million by instalment over five years in Myanmar (Irrawaddy Online 23 August 2005; Yeni 2005b). In addition to Global Fund’s withdrawal in August 2005, the International Committee of the Red Cross (ICRC) announced in January 2007 the decision to downsize its workforce in Myanmar, following the Myanmar government’s further tightening of aid agencies’ activities in Myanmar, in particular closure of the five offices of the ICRC within the country at the end of 2006 and a ban on prison visits by ICRC staff since the end of 2005 (Paung 2007b). The situation in Myanmar may be characterized as being a mix of ingredients that together add up to continued national instability and deprivation. In general terms, these ingredients are summarized by Collier (2007) as being: greed, environmental degradation, oppression and a heroic figure. When applied to Myanmar these are: First greed, characterized by maladministration of the foreign investment and export earnings flowing into the nation. Wealth is siphoned off to enrich the small ruling class. Myanmar has been placed on an equal footing with Iraq on the Corruption Perceptions Index by Transparency International (2008); only Somalia ranks below. Second is environmental degradation in the form of destruction of coastal mangrove, over-fishing and poor mining practices that are displacing people, contaminating land and sea and reducing the incomes of farmers and fishermen (James 2005). Third is oppression by a ‘brutal military elite’ (Holliday 2005) that have formed a regime characterized by ‘brutish tyranny’ (McCarthy 2006), that applies

Htwe Htwe Thein and David Pick 61

‘repressive’ (Englehart 2005), ‘brutal and dangerous rule’ (Green and Mitchell 2007) and who have subjected the nation and its people to ‘decades of conflict, poverty and institutional failure’ (International Crisis Group 2008). Fourth, a folk-hero – Aung San Suu Kyi – is under house arrest but continues to be not only a leader for political opposition but also a national icon and touchstone for movements dedicated to resisting and eventually removing the current regime in favour of an elected government. However, as Tisdall (2008) suggests, fear prevails in Myanmar. In the wake of the failed uprising in September 2008, the atmosphere in the city of Yangon is one of intimidation. The regime has informers and plain clothes police observers, thousands have been beaten and arrested, and security is at a heightened level (Chassey 2008). The future for the vast majority of people in Myanmar remains bleak.

Conclusion As a site of international trade and business investment, Myanmar has been politically contentious as the governing regime implements ‘market’ reforms only so far as they reinforce their position of power and wealth. This has effectively trapped the nation in a cycle of deprivation and poverty. On the one hand, Myanmar can be regarded as a prime example whereby an international trade and investment climate has been shaped and restricted by ‘external’ political and policy/regulatory restrictions. On the other hand, and as detailed in this chapter, the determinants of business development and strategy (including market exit decisions) are complex and varied. An appreciation of the scope and strategic development of international trade and investment must consider the dynamic interaction between both internal and external conditions – sanctions, consumer boycotts, plus a generally poor operational environment (economic, administrative, and political). Moreover, while the opening of Myanmar’s economy to international trade and investment has led to limited growth (largely confined to extractive industries), this growth has led to intense debate as to the human and environmental consequences of trade. Evidently, there have been insufficient advances in human development and social equity throughout the two decades in which Myanmar has sought to engage international trade and investment. While it is possible to delineate both external and internal factors that have shaped international trade and investment and social outcomes, it should be noted that the underlying cause of Myanmar’s failure to transform itself both economically and politically can be located in a failure of governance. This failure has a long

62 Trade, Labour and Transformation of Community in Asia

history as the nation has been subject to British colonial rule in the 19th and early 20th centuries; however in recent times such failures may be traced back to the beginning of military dictatorship following a coup in 1962 and the annulling of election results in 1990. The past five decades have been characterized by an oppressive military rule that conforms to Dean’s (1999: 131) description of authoritarian regimes that ‘seek to operate through obedient rather than free subjects and neutralize or eradicate opposition to their authority’. Ultimately, the justification for international trade and investment in any nation is the improvements of living standards of the general population that such activities bring about. As Sen (1999) argues such development depends on enhancing freedoms and the political, economic and social commitment to bring that about. With this in mind prospects for the immediate and medium-term future in Myanmar appear gloomy and alternative options for encouraging reform limited. In spite of various efforts to engage the governing regime by UN agencies, the World Bank, IMF, the USA, The European Community and ASEAN, the ruling junta in Myanmar shows no sign of loosening their grip on the nation. Recent interventions by the United Nations have led nowhere and sanctions imposed by the EU and the USA are being systematically undermined by the Myanmar regime who have secured energy export deals with China, Thailand and India (Tisdall 2008). Given the prevailing domestic and external circumstances, enhanced international trade and investment may be to the almost exclusive benefit of the ruling military regime and their cronies. Sanctions are clearly not working and neither is aid. How then can international engagement with Myanmar proceed? Green and Mitchell (2007) suggest a broad approach to encouraging reform arguing that the USA and EU must engage on some level with the Myanmar regime, ASEAN, China and India need to reconsider their policy of non-interference and Japan needs to re-evaluate its economics-based approach. The need for compromise is pressing. Coordinated efforts by all these nations may help save the nation from descending further into isolation and desperation. As Collier (2007) suggests, trade is a key element in development but so is breaking the ‘resource curse’ and institutional reform. This will most likely require events and circumstances developing that are outside the Myanmar regime’s creation or control. Notes 1 In 2000, the selective purchasing law was challenged successfully in the US Supreme Court by the ‘National Foreign Trade Council’ a lobbyist organization representing MNCs on trade policy issues and reported to have included

Htwe Htwe Thein and David Pick 63 34 MNC members listed by the selective purchasing law. ‘Supreme Court Strikes Down Massachusetts Burma Law’, Sustainability Investment News, 28 June 2000, available from http://www.socialfunds.com/ 2 The government, nonetheless, has introduced some measures to ease the problems caused by maintaining huge differentials between the two exchange rates. The most significant policy measure was the introduction of Foreign Exchange Certificates (FECs) in 1993. The use of FECs was based on the system formerly used in China (McCarthy 2000). Locals use FECs to pay bills to government departments etc. FECs are pegged to the US dollar, and are available for use by tourists, foreigners, and locals. For some observers, this was seen as ‘de facto devaluation’ of the local kyat (Guyot 1997). 3 Since 2001, Myanmar has been named by the Financial Action Task Force on Money Laundering (FATF) on the list of ‘non-cooperative’ nations due to the Government failing to provide sufficient cooperation in the global fight against money laundering. Myanmar remained on the list in 2006, although the task force was somewhat encouraged by Government initiatives, including the enactment of the Control of Money Laundering Law in 2002 and the investigation of two private banks for their alleged links to money laundering. Myanmar came off FATF’s blacklist in October 2006. 4 Indeed, the ‘Global Corruption Report 2006’, a report produced by Transparency International, listed Myanmar as the world’s second most corrupt nation.

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68 Trade, Labour and Transformation of Community in Asia Reh, L. (2005a) ‘Burmese Exiles Mount Anti-Total Protests Worldwide’, Irrawaddy Online, available from http://irrawaddy.org, date accessed 3 July 2006. Reh, L. (2005b) ‘Daewoo Urged to Quit Arakan Gas Field Project’, Irrawaddy Online, 14 October, available from http://irrawaddy.org, date accessed 3 August 2006. Sen, A. (1999) Development as Freedom, New York: Alfred A. Knopf. Stiglitz, J. E. (2007) ‘What is the Role of the State?’, in M. Humphreys, J. D. Sachs and J. E. Stiglitz (eds) Escaping the Resource Curse, New York: Columbia University Press, pp. 23–54. Than, M. (2000) ‘Recent Developments in Myanmar: Impact and Implications of ASEAN Membership and Asian Crisis’, in E. M. R. Pedersen (ed.) Burma Myanmar: Strong Regime Weak State, Adelaide: Crawford House Publishing Pty Ltd. Thein, V. (2003) International Business Development Strategies in Embargoed Markets: The Myanmar Case, Doctoral Thesis, School of Management, Curtin University of Technology, Perth. The World Factbook – Burma (2006) available from http://www.cia.gov/cia/ publications/factbook/geos/bm.html, date accessed 17 March 2006. The World Factbook: Burma (2003) available from http://www.cia.gov/cia/ publications/ factbook/geos/bm.html, date accessed 1 August 2003. Tisdall, S. (2008) ‘No Signs of Relief for Suu Kyi or Burma’, Guardian Weekly, 12 September, p. 4. Transparency International (2008) Corruption Perceptions Index 2008 available from http://www.transparency.org/policy_research/surveys_indices/cpi, date accessed 8 February 2009. U.S. Department of State (2008) Investment Climate Statement – Burma, available from http://www.state.gov/e/eeb/ifd/2008/100832.htm, accessed 21 July 2009. World Bank (2007) ‘Key Development Data & Statistics’, available from http:// web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK: 20535285~menuPK:1192694~pagePK:64133150~piPK:64133175~theSitePK: 239419,00.html, date accessed 9 February 2009. Xinhua News Agency (2007) ‘Myanmar’s Foreign Trade Sets Record High in 2006–07’, 16 May, available from Factiva.com, date accessed 31 May 2007. Yeni (2005a) ‘Asean Urges Burma to Reform, Free Political Prisoners’, Irrawaddy Online, 12 December, available from http://irrawaddy.org/aviewer.asp?a=5273 &print=yes&c=e, date accessed 17 February 2006. Yeni (2005b) ‘HIV/AIDS Funding in Burma Cut’, Irrawaddy Online, 19 August, available from http://irrawaddy.org/aviewer.asp?a=4924&print=yes&c=e, date accessed 7 March 2006. Yeni (2006) ‘Inflation Fears Spread in Burma as Gold, Exchange Rates Fluctuate’, Irrawaddy Online, 27 March, available from http://www.irrawaddy.org/print_ article.php?art_id=5595, date accessed 28 March 2006.

Part II Global Trade and Commodity Production

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4 Work, Community, Environment and the Shrimp Export Industry in Bangladesh, India and Thailand Bob Pokrant

Introduction The international expansion of the seafood industry over the past 50 years is part of a broader process of globalization of systems of food production, distribution and consumption. This expansion has been fuelled by a growth of consumption of seafood products in Japan, USA and the EU, increased exploitation of open capture fisheries, a rapid growth in aquaculture production and the development of new processing and transport technologies. Shrimp is one of the most important seafood commodities traded internationally and is exported by over 100 countries, with a growing proportion of total supply coming from aquaculture. The shrimp aquaculture export sector has been the subject of considerable scholarly and policy debate concerning its social and environmental impacts, particularly in developing countries, which supply the bulk of farmed shrimp to the export market. This chapter examines the impact of the shrimp aquaculture export industry on labour, community, and environment in three important exporter countries, Bangladesh, India and Thailand (hereafter referred to as BIT). Section one gives an overview of current trends in the global production, trade and consumption and summarizes the key features of the shrimp industry in the three countries. Section two looks at the impact of the trade on work and labour conditions in the various subsectors of the industry in the three countries. Section three turns to the broader environmental and social consequences of the trade for local environments and communities. It illustrates the environmental impact of shrimp farming through a case study from Bangladesh. Section four summarizes the main points of the chapter. The chapter is based on secondary sources supplemented by the author’s research in Bangladesh. 71

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Section 1: Current trends in the global production, trade and consumption of shrimp Aquaculture refers to the growing of aquatic floral and faunal organisms under controlled conditions. These range from pre-industrial forms of stock enhancement to systematic intervention in the entire life cycle of the organism most commonly found in today’s semiintensive and intensive forms of commercial aquaculture. Aquaculture is a highly diverse activity with more than 220 species of fin-fish, crustacea, and seaweed farmed under a variety of production conditions in freshwater, brackish water and marine environments (Tyedmers et al. 2007: 5). Fin-fish species, especially carp, account for the largest percentage of aquaculture production, while crustacea, including shrimp, have the highest value of all food fish species produced and traded. In the face of increasing international demand for fish and fish products and stagnant or declining volumes of open capture aquatic products, it is argued that the bulk of future production will come from aquaculture, which in 2006 accounted for 47 per cent of the global supply of fish and fish products (FAO 2008: 17). Over 90 per cent of volume and 80 per cent of value of global aquaculture production came from Asia, which has seven of the top ten export countries including Bangladesh, India and Thailand. Global aquaculture production is dominated by freshwater finfish but shrimp1 is one of the main items traded internationally with over 100 countries exporting a range of high value shrimp products. Shrimp production has grown considerably in volume and value with captured and farmed shrimp accounting for almost 20 per cent of all fisheries exports of which 60 per cent comes from farmed sources (2006 figures). Eighty-eight per cent of shrimp come from Asia, with China, Thailand, Viet Nam, Indonesia and India accounting for 81 per cent of supply. Between 1987 and 2006, the global per capita consumption of shrimp increased by 92 per cent. In 2006, Bangladesh, India and Thailand were among the top ten aquaculture producers. Per capita fish consumption has grown steadily since the 1970s and demand is increasing in rapidly developing countries such as India and China. The shrimp export sectors of Bangladesh, India and Thailand illustrate well the interactive effects of social, economic, political and environmental globalizing processes, which refer to the growing interconnectedness, increased speed and spatial stretching of human activities and their impact upon local socio-ecological systems (Young et al. 2006).2 These domestic sectors lie at the extractive and production end of hier-

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archically organized and interconnected networks of functionally differentiated sub-sectors, which cross regional, national and international boundaries. They occupy a largely subordinate place in these networks, which are driven by rich country international supermarket chains, restaurant and catering activities, private and quasi-public global governance agencies, and aquaculture scientists employed in private and public institutions across the world. The main extractive, production and processing activities include open capture of shrimp, wild capture and artificial rearing of bloodstock, wild collection and hatchery production of shrimp fry, nursery and grow-out shrimp farms, and processing plants. At farm level, shrimp are grown under a variety of production systems of which the main types are extensive, semiintensive, intensive and super-intensive. These are distinguished by stocking densities, use of chemicals and drugs, water supply and aeration systems, and sources and types of feed. Farmer decisions to adopt a particular production system are shaped by supply chain pressures to increase the output of standardized shrimp products, access to capital to make the required investments, government policies and support, suitability of local ecological conditions, relations among shrimp farmers and between farmers and the wider local communities. The physical and commercial flow of shrimp larvae, fry and mature shrimp from primary extraction to processing plants is facilitated by international and domestic air, water and land transporters, local depot owners who warehouse and distribute shrimp stocks, and traders and commission agents who, acting independently or on behalf of domestic customers, buy and sell shrimp. These core activities are serviced by a range of ancillary services such as feed manufacturers and suppliers, carton and container producers, ice manufacturers, banks and money-lenders. The activities described are subject to surveillance by international public and private agencies which seek to ensure they comply with increasingly restrictive product and process conditions. International buyers demand high quality, safe, hygienic shrimp delivered quickly, reliably and in sufficient quantities to ensure a regular supply to overseas markets. Responsibility for ensuring compliance and maintaining product credence lies with BIT government technical agencies, processors, farmers and other actors in the domestic supply chain. Failure to comply can and does result in bans on exports to the rich markets of the North. In order to maximize the production of standardized commodities that meet buyer and regulatory agency specifications, the domestic industry is constantly required to upgrade its activities at

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various stages of the supply chain through greater control of and interference in surrounding ecological systems as producers seek to reduce the uncertainties of local weather conditions, water flows, and feed sources. Upgrading takes several forms. One is increased intensification of mono-cultural production and the shift from wild shrimp fry to hatchery production to increase yields of a uniform product. Other measures include preferred supplier systems, speedier and more hygienic transportation methods, introduction of faster growing and more disease-resistant species and genetically modified species, standardized feeding operations, and upgrading of processing plants to comply with internationally recognized standards such as the HACCP (Hazard and Critical Control Point system).3 Thailand has introduced what it calls ‘shrimp clusters’, something like an aquaculture version of the industrial districts model, which involve integrating various support services to ensure a regular supply of quality and competitively priced shrimp (Chanvarasuth and Indaraprasirt 2009). In Andhra Pradesh, the National Centre for Sustainable Aquaculture (NaCSA) is organising small-scale shrimp farmers into networked Aqua Societies to improve shrimp quality (NaCSA). International and national surveillance is also being extended to labour and environmental standards as importer countries respond to pressures from interest coalitions such as international NGOs with social and environmental justice agendas, politicians, international and national labour organizations and consumers opposing the use of child labour, and importer country industry groups such as shrimp trawler operators fearful of what they conceive of as unfair competition from low-cost suppliers. For the most part, these regulatory measures have been established and imposed upon domestic producers with little consultation. However, there are moves by national NGOs, grassroots activists and some shrimp farmers to play a greater role in the decision-making process and to contribute more directly to the formulation, implementation and monitoring of guidelines. Some NGOs and other social and environmental activists see corporate pressures to regulate product and production processes in the name of improved service to the consuming public as providing them with an opportunity to include labour and environmental considerations in official discourses and practices of corporate social and environmental responsibility (Hatanaka et al. 2005; Vandergeest 2007). Turning to the shrimp industry in Bangladesh, India and Thailand, over the past 30 years they have taken their place among the top ten

Bob Pokrant 75 Table 4.1 Top ten producers

Top ten aquaculture producers of food fish supply, 2004–2006 Quantity in tonnes 2004

China India Viet Nam Thailand Indonesia Bangladesh Chile Japan Norway Philippines

30 614 968 2 794 636 1 198 617 1 259 983 1 045 051 914 752 665 421 776 421 636 802 512 220

2006 34 429 122 3 123 135 1 657 727 1 385 801 1 292 899 892 049 802 410 733 891 708 780 623 369

APR % 6.05 5.71 17.60 4.87 11.23 –1.25 9.81 –2.78 5.50 10.32

Top ten producers (tonnes) 2004 Uganda 5 539 Guatemala 4 908 Mozambique 446 Malawi 733 Togo 1 525 Nigeria 43 950 Cambodia 20 675 Pakistan 76 653 Singapore 5 406 Mexico 104 354

APR growth 2006

%

32 392 16 293 1 174 1 500 3 020 84 578 34 200 121 825 8 573 158 642

141.83 82.20 62.24 43.05 40.72 38.72 28.61 26.07 25.93 23.30

Notes: Data exclude aquatic plants. APR refers to the average annual percentage growth rate for 2004–2006. Source: FA0, 2008

international aquaculture producers accounting for less than 1, 8 and 16 per cent of world shrimp exports respectively. As food fish producers, they rank sixth, second and fourth (Table 4.1) and account for 2, 5 and 16 per cent of global shrimp supply respectively. Prior to the 1970s, all three countries engaged in traditional forms of extensive aquaculture requiring few inputs and largely serving domestic and regional markets. These forms of production have been transformed over the past 30 years as the three countries developed export-oriented industries serving rich country markets and growing middle class markets in India, China and other rapidly industrializing countries. Compared with traditional production systems, these industries require greater inputs, higher stocking densities, more capital investment and greater adherence to externally imposed quality assurance and other standards. At the shrimp farm level, Bangladesh and India practise modified extensive to semi-intensive production methods while Thailand relies more on semi-intensive and intensive methods. The governments of all three countries, with the backing of global governance agencies such as the World Bank and donor countries are supportive of the sector as a source of foreign exchange earnings and employment. The Thai shrimp export industry is the fourth largest aquaculture producer in the world (FAO 2008) and is the most advanced technically when compared with those of Bangladesh and India. Thai shrimp farmers produce up to 20–30 metric tons per hectare (mt/ha) of Pacific

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White Shrimp and 8 mt/ha of Black Tiger Prawn. In 2002 there were 31,179 brackish water shrimp farms covering 74,391 ha. worked by 33,500 farmers of whom 85 per cent were running small-scale semi closed intensive farms located along the coast with an average size of two hectares. In the brackishwater shrimp farming sector as a whole, some 78,000 people are employed. During the 1990s, low-saline shrimp farms expanded inland partly as a response to increasing pressure on coastal land and resources but were banned in 1998 on environmental grounds (Flaherty et al. 1999). However, many operate illegally, their products enter the export market and debate continues about their environmental impact (Mekhora and Rice 2003). The modern industry dates largely from the 1970s when Black Tiger Prawn were cultured using wild fry. By the 1990s Thailand was the leading producer and exporter of Black Tiger Prawn but the industry began to experience disease problems and also concerns were expressed about the slow growth of Black Tiger Prawn (Monodon Slow Growth Syndrome (MSGS)). Farmers were encouraged to switch to Pacific White Shrimp (P. vannemei ) because of shorter production cycles, higher stocking densities, and lower costs of purchase by processors and exporters and by 2006 Pacific White Shrimp constituted 98 per cent of auctioned shrimp. Today over 90 per cent of cultured shrimp is exported to developed countries although there is a growing domestic market. In addition to shrimp farms, some 200,000 persons are employed in the country’s 300 shrimp and fish processing plants and there is an estimated 1754 shrimp hatcheries in the country. Overall, the Thai shrimp sector employs around 1 million persons. Recently, there were calls from some shrimp farmers to shift back to Black Tiger Prawn production due to oversupply and lower price for White Shrimp, which had replaced tiger prawn in much of the industry in the past five years and now accounts for 95 per cent of supply (http://www.bangkokpost.com/240608). The current economic downturn has led the Thai Shrimp Association and the Thai Frozen Food Association to call for farmers to reduce shrimp output by 20 per cent in 2009 to help stabilize prices (http://www.seafoodnews.com/). Thailand has invested in the development of biotechnological shrimp production which seeks to control disease and enhance shrimp growth through probiotics and other measures (Tanticharoen et al. 2008). More generally, Thailand’s shrimp industry expanded rapidly because ‘…state promotion, corporate involvement, high land prices and the ability to expropriate land led to small, intensive farms’ (Hall 2003: 321). While the shrimp industry is dominated by a small number of large companies such as the CP Group4 (Belton and Little 2008), production

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is largely in the hands of small farmers who are dependent on credit and subject to international variations in demand and prices which makes farming a high risk activity which can generate both good and poor returns. Vandergeest et al. (1999) argue that small size shrimp farms survive in Thailand because they are able to micro-manage better than larger farms as they do not rely on hired labour and have more of a personal stake in managing their farms efficiently. The advantage larger farms have lies in their privileged access to water, land and credit created by a political economy that provides better conditions for such farmers. The Bangladesh shrimp export sector dates from the 1960s but saw its main period of growth from the 1970s to the 1990s. There are two main sub-sectors, brackish water and freshwater, of which brackish water shrimp, particular the Black Tiger Prawn, is the major export accounting for 75 to 80 per cent of exports, the remainder coming from the freshwater prawn sector (Ahmed et al. 2008). There are some 142,000 shrimp farms of which over 37,000 produce Black Tiger Prawn and 105,000 produce freshwater prawn. Over 80 per cent of production is exported to markets in North America, Europe and Japan. Production methods are relatively undeveloped with almost 100 per cent of annual production originating from extensive and improved extensive shrimp farms with yields per ha. ranging from 50 to 1000 kgs. While low by global standards, yields per ha. have grown threefold since the 1980s (Rahman et al. 2006: 211). There are 130 processing factories located mainly in urban areas. Of these 130, some 65 are functioning. They employ over 30,000 workers of whom 20,000 are women. The industry suffers from core supply bottlenecks at the shrimp farm level as shrimp farms are unable to satisfy demands from processors for increased quantities and for sufficiently large quantities of particular sizes of shrimp. In India, brackish water shrimp production for export dates from the 1980s. Today, frozen shrimp account for 54 per cent in value of seafood exports and of this, over 80 per cent is from farmed, particularly brackish water, shrimp (Marine Products Export Development Authority (MPEDA)). The dominant species farmed is Black Tiger Prawn and farmed shrimp account for 76 per cent of the volume and 83 per cent of the value of shrimp exports (Rajitha et al. 2006). Farmed brackish water shrimp are grown by 92,591 farmers of whom 83,824 (90.57%) are small farmers owning less than two hectares. The total brackish water land area devoted to shrimp farming is only 13 per cent

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of the potential area and the main shrimp farming areas are in the coastal states of Andhra Pradesh, West Bengal, Kerala, Orissa, Tamil Nadu, Karnataka, Maharashtra, Gujarat and Goa. Average productivity per hectare per year is 660 kg. with the highest productivity found in Tamil Nadu and the lowest in Kerala. There are 230 EU approved processing plants of which most are domestically owned. CP Aquaculture India, the Thai-based feed supplier operates three feed mills in India.

Section 2: Work and labour conditions in the industry The shrimp industry is an important source of employment5 in all three countries. In Thailand official employment in the industry is estimated at over one million people (Office of the National Economic and Social Development Board (NESDB) 2007). In Bangladesh official and other estimates vary from 700,000 to over one million (Bangladesh Shrimp and Fish Foundation 2009; Gammage et al. 2006) while in India employment is estimated at 700,000. The largest numbers of workers are found on rurally-located shrimp farms and in wild fry collection activities, particularly in Bangladesh and India. Most processing plants are urban-based close to ports and export points. Labour research has focused on processing plants, shrimp farms and wild fry collection. Little is known about labour conditions in hatcheries, feed mills, ice plants, shrimp depots and other ancillary industries and there have been no comparative cross-national studies of work and labour conditions in the industry in the three countries. The remainder of this section concentrates on processing plants and shrimp farms. Processing plants Processing plants lie at the apex of the domestic supply chain and constitute the main interface between domestic production and international markets. In the three countries they are owned largely by domestic investors drawn from their respective business classes. Their visibility has made them a target of environmental and social activists and official agencies such as the International Labour Organization (ILO). For example, in 2008 Thailand and Bangladesh became the subject of an international campaign critical of labour conditions in their shrimp industries. A report from the Solidarity Center (2008), an international non-profit allied organization of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), provided details of child labour and poor working conditions, especially for women, in Bangladeshi and Thai processing plants. This is one of a string of

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reports emanating from various national and international NGOs and other agencies attacking the labour conditions and standards of the industry. The report provides dramatic if uneven evidence of beatings, denial of wages, overcrowded living conditions, segregation of workers by ethnicity and nationality, use of illegal migrant labour, death threats, use of child labour, and debt bondage. The report resulted in counter-arguments and evidence from the industry nationally and internationally and from the Bangladeshi and Thai governments who have vigorously defended industry practices. Industry and government responses include attacks on the quality and representative-ness of the collected evidence, concerns that such reporting damages the industry and those employed in it, and claims that labour laws and systems of inspection prevent such abuses of workers. Overseas buyers often claim they are unaware of such conditions and condemn such practices, if they can be shown to be the case. For example, Wal-Mart, named in the report, came out claiming it was unaware of any problems in its supply chain and would investigate (Bangkok Post 2008). Supermarket chains are particularly sensitive to criticism as they have committed themselves to obtaining shrimp from environmentally and socially sustainable sources. The negative image of the Thai shrimp industry was reinforced by several other reports on the trafficking of illegal labour and the use of child labour in plants. For example, a 2008 US Department of State report on trafficking in persons reported several cases of shrimp plants used as fronts to traffic hundreds and possibly thousands of illegal, usually female, immigrants from Burma (USDoS 2008). In 2006 the Thai-based Labour Rights Promotion Network claimed that illegal Burmese migrants in the main shrimp processing zone west of Bangkok outnumbered those registered and many worked in processing plants (Labour Rights Promotion Network). Legal migrants continue to be denied certain trade union rights available to Thai citizens. While abuses of the kind described in the Solidarity Center report do exist, it is unclear how extensive they are as there are no systematic cross-national studies available that allow us to make any solid generalizations about the sector. What we have instead are several countryspecific studies carried out in what are often the larger, better financed and internationally certified companies, which are conscious of the importance of reputation and reliability in the world market. These studies provide a picture of a highly feminized workforce paid less than male workers and often segregated into arduous jobs such as peeling, cleaning and de-heading (Halim 2004). They also show that both male and female workers are usually hired as casual workers through labour

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contractors who are responsible for their wages and other conditions of employment. They are often not protected by national labour laws covering more permanent and seasonal workers rather than casual workers. Employers prefer to hire people casually as they are not required to provide benefits available to permanent staff but also because the work is seasonal and they cannot afford to hire on a more permanent basis (Islam, 2008). Saha and Pal (n.d.) show in West Bengal how women are recruited by female labour contractors from villages to work in urban-based processing plants in West Bengal and Orissa. Many migrant women are married and leave their children behind, causing emotional and family disruption for both mother and child. Gopal et al. (2006) studied 128 randomly selected women working in five EU approved processing factories in Veraval, Gujarat State, India and showed that women were concentrated in unskilled ‘drudge’ jobs. Almost 90 per cent were on contract and thus not protected by Indian Labour Laws; a high proportion were young single women and over half were migrants from Kerala and a third from Tamil Nadu. While minimum wages were paid, there was little prospect for career development. Men for the most part did different jobs from women, making equity comparisons difficult. These plants were EU-approved and so subject, at least on paper, to much greater regulation of conditions of work than non-EU plants. Pokrant and Reeves (2003) showed in their Chittagong processing plant study a similar pattern of low wages, limited career prospects and contract employment, although in Chittagong the bulk of the female workforce came from southeast Bangladesh and there were few foreign migrant workers. They also report complaints of unpaid wages, poor health conditions of workers, crowded living conditions and bans on union organizing. Islam (2008), in his work on female processing plant workers in Bangladesh, has argued that despite moves by international buyers and other agencies to require processors (and other parts of the supply chain) to provide decent working and wage conditions for their workers, these are not followed through with any proper inspectorate or monitoring system. In the face of intense global competition for inexpensive shrimp, fluctuations in demand for shrimp, a domestic surplus of inexpensive labour and the prevalence of patriarchal values about the place of women in society, plant owners, managers and supervisors, and labour contractors, practically all of whom are men, are able to pay women less and provide them with jobs inferior to those of men. Women are

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aware of these differences and surveys suggest that they support improvements in wages, provision of medical benefits, better transport arrangements to and from work, and maternity leave. However, they possess no collective voice through which to seek such improvements and attempts to act collectively are met with opposition from plant management and sometimes from male-dominated official unions. There are some signs that under pressure from NGOs, importer countries and international buyers, processing plant owners and managers are beginning to take labour standards more seriously. In 2008 the Bangladesh Frozen Food Exporters Association (BFFEA), the Ministry of Fisheries and Livestock, Ministry of Labour and Employment and Ministry of Commerce agreed to develop social compliance guidelines for shrimp processing plants regarding understanding and implementation of labour laws (BQSP 2008). It is too early to say what the outcome of these actions will be. Shrimp farms The three countries contain over 100,000 shrimp farms mainly located in rural areas. Labour is required to construct ponds, prepare them for production, protect them against poachers, feed shrimp, monitor water quality, and harvest shrimp. The larger the shrimp farm, the more likely non-family labour is employed. Many jobs are casual and seasonal with a small core of permanent managerial staff, depending on farm size. The nature of employment is shaped in part by the form of production used. Thus, casual or seasonal labour fits the production cycle in single crop extensive systems compared with more intensive systems producing two or three crops per year where prospects for more permanent employment are better. Many workers alternate between shrimp employment, farming and various non-farm jobs, including temporary migration to the cities and towns. Men dominate shrimp farm work, but women play important if often supplementary roles in the three countries. For example, Resurreccion and Sajor’s study (2008) of a biotechnology-applied shrimp farming area in Surat Thani Province, which contains many technology intensive shrimp farms employing Burmese, Lao and Thai migrant workers, shows how labour practices and the migration process in shrimp farms produce particular gendered and migrant subjects. For example, many migrants are employed as couple workers receiving one wage but allowing women to live close to the farms. Some women seek work outside shrimp farming to supplement shrimp incomes; others are tied to the

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farm through bonded labour arrangements for their husbands. They conclude: …the purported ‘Kitchen of the World’ is premised not only on huge investments of capital, science and infrastructure, but equally on investments by cultural and discursive practices that steer towards profit maximization through a coherent organization of largely cheap and bonded gendered migrant labor (Resurreccion and Sajor 2008: 20). In India women in the East Godavari District of Andhra Pradesh and in parts of coastal Tamil Nadu are employed on shrimp farms for four to five months a year to construct and clean ponds, pick shrimp, and collect wild fry (Khader 2006). However, another study in four districts of Andhra Pradesh where brackish water aquaculture was practiced, women concentrated on white washing water channels, hand picking of shrimp, and pond preparation while men constructed and stocked ponds, fed and harvested shrimp (Vimala et al. 2005). Some women also worked in processing plants and shrimp depots. Pradhan and Flaherty (2008) report that on coastal shrimp farms in Orissa, India women are employed as family members to assist on shrimp farms but there was limited direct local employment for both men and women as small farmers relied on family labour or employed others for brief periods. They also found that while there was a limited amount of work on larger farms for longer periods, women were not encouraged to take up such work as they were some distance from their homes and harvesting often took place at night. In Bangladesh, there have been several changes in labour conditions and markets as a result of shrimp farming. Landlessness is prevalent across the country and historically landless labourers and their families have sought work as sharecroppers, agricultural labourers, fishers, and domestic servants. In areas of mixed rice and shrimp farming, opportunities for sharecropping have declined as rice farmers have switched to the more lucrative shrimp farming. However, there is some evidence that other employment opportunities have arisen as a result of shrimp farming and its multiplier effects on the local economy. For example, Ito (2002) reports from the freshwater prawn farming areas of Southwest Bangladesh that landless workers have secured jobs as shrimp farm guards, shrimp harvesters, shrimp farm building workers, mud snail shell breakers and traders, van drivers and transporters of prawns, fry, ice and shrimp feed. Ito argues that the availability of such work

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has strengthened the bargaining power of workers employed on traditional annual labour contracts by richer farmers. Pokrant and Reeves (2003) report from Southeast Bangladesh that many landless labourers and marginal farmers worked as shrimp farm labour, shrimp fry collectors, fishers, salt workers, petty traders, short distance transporters, rice farm labourers and sharecroppers, rickshaw pullers, snail deshellers, wood collectors and in other small-scale artisanal and petty commodity activities. A survey of 958 shrimp farms in Chakoria sub-district in Southeast Bangladesh revealed that total employment on these farms was approximately 5394 with over 80 per cent employing six or less permanent workers. Some workers alternated between shrimp and salt work, the latter being more remunerative. Women’s work on shrimp farms is restricted to pond preparation and repair, some harvesting and snail collecting, although this varies across the country. Women are more likely to be found collecting shrimp fry from the ocean, rivers and estuaries; although this work is low paying and stigmatized (Pokrant and Reeves 2003).

Section 3: Community and environment There is a considerable literature on the impact of the shrimp trade on local communities, usually considered as rural place-based groupings of people living close to centres of shrimp farming activity. The term is often used as shorthand for any local grouping which engages in or with some aspect of shrimp farming and can include NGOs which may or may not have any strong long-term connection with local peoples but who take up advocacy and other roles in defence of ‘community’. Many studies use the term descriptively while examining a range of local issues such as changes in land use patterns, household provisioning and wider livelihood strategies, gender roles, structures of local economic and political power and so on. Vandergeest (2007: 1155), in his work on community-based management in shrimp farming, suggests the term ‘community’ be used to: …refer to locality-based collective action, but with the understanding that this collective action is not based on the collective interests of a homogeneous local community, but is the outcome of local gender, class, ethnic, and power relations. Vandergeest’s approach is useful in drawing attention to the differentiated and often unequal organization of communities, which shape

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‘community.’ In addition, the reference to locality-based suggests that collective action, while rooted in particular places, can and does extend beyond spatially defined boundaries. It is of greater heuristic and explanatory value to speak of community-like social relations that may manifest themselves in particular localities but are the product of wider networks which transcend space and time. Thus, sections of one village may call upon kin, friends, work mates and others from other locations to assist in dealing with particular issues. Grassroots NGOs may work in the community but are not part of it. Also, the effects of shrimp farming extend beyond the local as such farming is part of extended networks of trade which generate their own ecological impacts. For example, up to 50 per cent of farmed shrimp feed comes from fish meal, which is derived largely from marine fisheries (Deutsch et al. 2007; Tacon 2002). Much of the literature on the impact of the shrimp trade on community and environment has treated them as separate realms of reality rather than as mutually constitutive. It is suggested here that it is more useful to speak of communities-in-environments or the co-evolution of ecological and social systems (Berkes and Folke 1998). This is particularly appropriate at the shrimp farm level as shrimp farms are embedded within and feed off local and distant ecosystem goods and services defined as the benefits obtained from ecosystems and including, inter alia, fish, shrimp bloodstock, and clean water. These goods and services become re-embedded in shrimp products as they move through the processing and trading networks to the tables of consumers. Some have referred to this broader process as ecological unequal exchange or: …the increasingly disproportionate utilization of ecological systems and externalization of negative environmental costs by developed countries and, consequentially, declining utilization opportunities and imposition of exogenous environmental burdens within LDCs [Least Developed Countries] (Rice 2007: 44). With these comments in mind, what have been the effects of the shrimp trade on ‘communities-in-environments’ or social-ecological systems? Research has largely focused on the introduction of shrimp farms into agricultural, forest and other lands as it is argued that most environmental damage is done in such areas. Soto et al. (2008: 16) summarize the potentially negative impacts of aquaculture on ecosystems as: (i) increasing demands on fisheries for fish meal/oil, major constituents of carnivorous/omnivorous species feeds, (ii) nutrient and

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organic enrichment of recipient waters resulting in build-up of anoxic sediments and modifying benthic communities, (iii) eutrophication of lakes or coastal zones, (iv) restructuring of biological and/or social environments, (v) release of chemicals used to control water conditions and diseases, (vi) competition for, and in some cases depletion of resources (e.g. water) and (vii) negative effects from escaped farmed organisms, often more relevant when exotics. Others draw attention to potential seawater seepage in inland ponds through the introduction of brackish water species (Flaherty and Vandergeest 1998; Belton and Little 2008). Also, effluent discharges from shrimp farms and from other land use practices has resulted in declining water quality and reduction in fish species availability and diversity (Singkran and Sudara 2005). Szuster (2003) summarizes the main environmental impacts of shrimp farming in Thailand’s Chao Phraya River Delta as water use conflicts, water pollution, land use conflicts, disease transmission, and species interactions. These environmental changes impact on local livelihoods as, for example, when destruction of mangroves disrupts local fisheries and those who depend on them or when low saline shrimp production is introduced into freshwater environments resulting in saline seepage into surrounding rice paddies. Fishers in all three countries report loss of fishing grounds and declining species variety as a result of mangrove clearance and the indiscriminate catching of wild fry, which destroys many non-target aquatic organisms as by-catch. Also, the ability of farmers to graze cattle and other livestock in forest and farm environments has been curtailed in Bangladesh (see below for more detail). In Thailand abandoned shrimp ponds on land previously devoted to rice farming have been taken over for industrial and urban uses rather than restored to agriculture. According to Dulyapurk et al. (2007: 2), shrimp farms in Thailand accounted for 33 per cent of the loss of mangrove forest between 1961 and 1996, 63 per cent to agriculture, urbanization, ports and harbours, and 3 per cent for resettlement (see also Barbier and Sathirathai 2004; Huitric et al. 2002). Flaherty and Vandergeest (1998: 818) argue that reduced mangrove cover deprived fish and other aquatic species of nursery grounds, increased effluent discharge reducing water quality, and increased the salinity of groundwater aquifers and domestic water supplies. In general, the destruction of mangrove forest for shrimp farms in the three countries was facilitated by the limited capacity of the relevant government departments to prevent powerful interest groups taking over common pool

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resources for private development. In some instances, departmental officials were complicit in the destruction. In Thailand in the late 1980s and 1990s, as mangroves became less attractive for shrimp farming for both technical and political reasons, shrimp farmers sought to adapt to problems of overstocking, endemic disease and other bad management techniques by closing off water cycles and reusing pond water to avoid run-off and contamination and by moving to new areas along the coast and inland. The wider industry continued to promote shrimp farming as it had invested large amounts of capital in the sector, which was more profitable than rice farming. Expansion was assisted by the availability of water infrastructure, lower costs of non-coastal land, and a lack of government control of shrimp expansion. In India, after an initial phase of relatively uncontrolled expansion of shrimp farming in the late 1980s and 1990s (Ramasamy et al. 2002), in 1996 the Indian Supreme Court ruled that coastal shrimp farms, with the exception of traditional and ‘improve traditional’ farms, could not be constructed within 500 metres of the high tide mark and within 1000 meters of Chilka Lake and Pulika Lake, except for more traditional kinds of shrimp farming. These and other measures have provided some protection to the ecologies of the coast. However, opposition to such restrictions has come from state governments and industry proponents, violations of the ruling have occurred and the application of the Supreme Court order is still in flux. Also, there are continuing conflicts between coastal resources users (Sekhar 2004; 2007) and while some have benefited from the trade in shrimp, the impact has been uneven and left many small farmers in debt as input prices rise (Pradhan and Flaherty 2008). Studies of the Bangladesh coastline illustrate the changes in socialecological systems brought about by shrimp farming and related activities (Rahman et al. 2006). The remainder of this section provides extended coverage to the impact of the expansion of shrimp farming on the Chakoria Sundarban, a once large mangrove forest located in the delta of the Matamuhuri River in Cox’s Bazar District of Southeast Bangladesh, which from the late 1970s to 1990 was almost entirely cleared for shrimp farming.6 The original extent of the forest is unknown but by the beginning of the 20th century it had been reduced in size as a result of earlier clearing for cultivation, firewood and other purposes. The British turned part of the forest into a reserve in 1903 and by 1911 the whole forest covered an area of 18,389 hectares, which had been reduced to 7252

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hectares by 1926 (Cowan 1923; 1928).7 At that time, the forest had been a common pool resource for local people. For example, forest wood was used by farmers, fishers, wood cutters, salt makers and others for house posts, fencing, fuel, fishing stakes and floats, tanning for fishers’ nets, and salt from burned ash. Other uses included fishing and buffalo grazing. There is evidence of attempts in the 19th century to cultivate parts of the forest, but settlements were destroyed by cyclones at the end of the century and it was not until the 1920s that new settlements were established, albeit on cleared land. In terms of the introduction and growth of shrimp farming in the area, the history of the forest can be divided into two periods: a preshrimp period from the 1920s to the late 1960s and a post-shrimp period from the 1970s to the present. During the earlier period, the forest was under the control of the Forestry Department, which expressed concern that the forest was being degraded by illegal wood collection, the impact of wood cutting during World War II, cattle and buffalo grazing, hunting and dams created by fishers. Recommendations were made in 1954 (Ghani 1954) to rest the forest for ten to 20 years or, because of the fear of opposition from local people, to stop wood exports and restrict felling for local uses such as domestic cooking and salt manufacture. In addition, restrictions were proposed on dry firewood collection, buffalo grazing, fishing grounds, and tree species to be cut, except for fishers who had permits to use them for fishing stakes. In 1969 (Chaudhury 1969) further recommendations were made to close the forest for timber felling for the period of the plan and that mangrove restoration and river bank tree planting be done to hasten the process of regeneration. Apart from timber cutting, over grazing and over fishing were blamed for the poor state of the forest and proposals were made to introduce rotational grazing over a five year cycle for local residents only and to ban dam building in creeks and canals, to cease issuing permits for fishing stakes and dry firewood, and to confine fishing to the use of nets in main rivers and canals only. All these efforts came to nought as in the late 1970s the Bangladesh Government transferred the forest from the Forestry Department to the Fisheries Department and to the Land Ministry (one of the most powerful ministries in government) as part of the move to create a shrimp export sector. It spelled the end of the Chakoria Sundarban as an intact ecosystem and the activities of those who depended upon it for a living. The pressures on the Bangladesh government to earn foreign exchange, the power of local landlords and urban business interests,

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the shift towards a more open export economy and the existence of international donor agencies, such as the World Bank and Asian Development Bank, ready to promote a large-scale expansion of shrimp farming, resulted in a rejection of the Forest Department’s argument for the development of alternative rural livelihood strategies rooted in long-standing local practices. During the first part of this second period from the 1970s to the late 1980s, shrimp cultivation across Bangladesh expanded from 20,000 ha to 94,000 ha. Much of this was on private land but the Chakoria Sundarban was government (‘khas’) land and was leased out to private investors, many of them absentee landlords. By 1994 Siddiqi et al. (1994: 31) reported that: ‘The entire Chakoria Sundarbans is now an open area’, with only 200 remaining healthy trees. Maps 1 and 2 show the Chakoria Sundarban before and after the expansion of shrimp farming. A 1987 report prepared for the Ministry of Planning on rural industries in Bangladesh (Planning Commission 1987) focused on Chakoria sub-district and showed the sub-district to be an agricultural surplus area with high volumes of rice cultivation, potatoes, mustard, chillies and other vegetables and fruits. It was also described as an important centre of salt production. The report strongly recommended the expansion of shrimp production in the area through intensive and extensive methods. The intensive methods proposed included increasing the minimum size of shrimp ponds to be ‘…economically feasible’, removal of all plants that could disturb the shrimp, elimination of all predator fish, killing of mud lobsters, levelling and asphalting of shrimp beds to exclude predator fish and mud lobsters, and establishment of fry hatcheries to reduce dependence on wild sources. The extensive methods proposed were to use all fallow land, including the bulk of the remaining Chakoria Sundarban mangrove forest. The report dismissed Forestry Department objections that this would ‘…disturb the existing ecological balance of the locality and increase erosion of the hilly regions covered with forest’ (Planning Commission 59). The report claimed that removing the forest would have ‘microscopic’ effect on the ecology as the forest was covered in prickly plants and swamp. It went on to claim that ecological conditions would improve through planting coconuts in rows along shrimp farm embankments. The report referred to the Chakoria Sundarban as unutilized land, reminiscent of the British colonial reference to ‘waste lands,’ thus demonstrating its ignorance of all previous work on the forest which showed that it contained a range of plants and trees which were used extensively by local fishers and by local people for housing and other purposes.

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Map 4.1 Chakoria Sundarban, 1975 Turning point after which destruction of the forest began. C = mangrove Adapted from Habib, 1998

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Shrimp farms Scattered bush ( jup) Mangrove (Adapted from Habib, 1998)

Map 4.2

Chakoria Sundarban, 1988

The clearing of the Chakoria Sundarban resulted in a decline in a complex ecosystem supporting a variety of users to a simplified system with limited use and subject to exploitation by private entrepreneurs; a decline in availability of wild post-larval shrimp; increased risk to cyclones and storm surges; a rise in land values and increased concentration of land ownership; and increased local control of land and

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water by better-off farmers, business people, politicians and others, many from outside the district. More generally, shrimp farming expanded beyond the Chakoria Sundarban into forested areas along the coastal strip and offshore islands (Das 1995). This expansion saw a decline in traditional occupations, which had a more severe impact on landless workers and marginal farmers than the wealthier landowners and business people who became the main shrimp farmers, money-lenders and employers of labour in the area. Among the occupations that declined were wood and honey collecting, creek and river fishing, cattle grazing and rice farm sharecropping. The decline in water buffalo and other livestock, once depended on by rich and poor, was caused by a lack of fodder as grazing lands were converted to shrimp farms and as water salinity levels increased. Also, the use of power tillers instead of draft animals resulted in a decline in the use of cattle. As fodder became scarce, further pressures were placed on farmers to use tractors or power tillers. Rearing cattle was regarded as time consuming, expensive, too labour intensive and only available to the better-off, including successful shrimp farmers. A recent study in Cox’s Bazar revealed that shrimp farmers who alternated shrimp with salt earned higher gross and net incomes than those who produced rice only or who alternated shrimp with rice (Islam et al. 2003). The enclosure of common pool resources that accompanied the destruction of the mangrove forests deprived many of access to fish, fodder, building materials and plant vegetation and increased their reliance on earning cash and the market economy, forced some to migrate to Chittagong and Cox’s Bazar, and pushed some in-shore fishers into deep sea fishing. The author studied one village in Mognama Union in Chakoria sub-district in 2003, which revealed that between 1975 and 2002 the amount of land devoted to agriculture declined from 65 to 20 per cent and salt and shrimp production grew from 25 to 70 per cent. Fifty four per cent of all households were involved primarily in shrimp or salt production and trade with only 4 per cent of households in farming. A large number of households (18 per cent) worked in boat building, repair and transport of salt. However, many residents had secondary jobs in agricultural labouring and other activities and some travelled locally in search of labouring work during the farming season. Villagers purchased over 80 per cent of vegetables, meat and rice from local markets. The Mognama example is mirrored across much of rural Bangladesh as rural households engage in two or three occupations, which is becoming a necessary condition of survival in a labour surplus economy (Toufique and Turton 2002).

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Up to the early 2000s, the single largest ‘employer’ of labour in the shrimp sector along the coast was wild fry collecting but this is now being phased out as a result of government prohibition and competition from hatcheries. Government proposed creating alternative kinds of work to assist fry collectors, although there is little evidence of this happening at present. Government bans on wild fry collecting also affected terrestrial transport as the growing number of hatcheries shifted to air transport to supply shrimp-producing areas in the country’s southwest (Pokrant and Reeves 2003). During the 1970s and 1980s in Chakoria and other sub-districts there were local protests against forest clearance as well as attempts at land grabbing (Pokrant and Reeves 2003). Several land movements were organized to obtain public land from government for paddy cultivation. In particular, there was opposition to the government’s policy of allocating public land from the mangrove forest to wealthier local and outsider interests. In one instance, a group of Hindu fishers had managed to obtain the lease of over 100 hectares of land for shrimp farming which they farmed themselves and leased out (illegally) to others. They were unable to pay the lease money on time and the local District Officer reallocated the land to a local politician (Uddin 1996). While there are no accurate data on the incidence of land grabbing in the area, newspaper reports and interviews with local informants point to a continuing pattern of land appropriation up to the present day by the politically powerful, including government MPs. In general, land movements in rural Bangladesh have been concerned with protecting landless labourers’, marginal farmers’, and fishers’ control over land, fishing grounds, employment opportunities and other resources. These have been sporadic and focused on single issues rather than promoting a broader agenda of environmental or coastal protection as specific discursive and material spheres of political agitation. However, in seeking to protect their lands and waters from shrimp farming, farmers and fishers have sometimes brought about through their actions what others call environmental objectives such as the protection of particular types of vegetation, plants and rural landscapes. Author interviews with the leaders and members of various land movements in the Southeast suggest that farmers, fishers and others did not themselves define these aspects of rural life as having environmental value in the sense of being worthy of protection for their own sake or to realize some larger biospheric agenda. Rather, they were seen as part of their way of living and the means by which they could meet their subsistence needs.

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These protests took place at a time when the state, donor agency and NGO intervention into Bangladesh rural life grew considerably. In Cox’s Bazar District, most of this intervention has been sectoral, aimed at particular groups of people, usually the poor, and at selected economic activities, particularly shrimp farming. In the shrimp sector, NGO involvement has taken two forms. The majority of NGOs such as CARE, Caritas, BRAC, and Grameen Bank work with the international donor agencies and the Bangladesh government within an ecological modernization framework to promote better environmental, social and economic management of shrimp farms. Their main focus is the improvement of shrimp farmer performance, financial and technical assistance to farmers, gender-based programmes aimed at raising women’s awareness of, and participation in, work opportunities in the non-domestic sphere, and assistance to fry collectors in methods of fry collection which do not result in destruction of non-shrimp aquatic organisms. A minority of more radical NGOs do not share the reformist objectives of mainstream NGOs, instead they work with the landless and marginal farmers in shrimp areas to raise their consciousness about the environmental, economic and social impacts of shrimp farming, to present alternative models of development practice, to gain control over public land and to represent their views at international and national fora. There are NGOs such as Nijera Kori, Uttaran, which operate mainly in the southwest, and UBINIG (Unnayan Bikalper Nitinirdharoni Gobeshona or Policy Research for Development Alternatives), which has two major projects in the south east, and until recently, the Coastal Development Partnership (Upokulio Unnayan Shahajogy). Their approach can be characterized as a defence of what Escobar (1998) calls biodemocracy against bioimperialism. These more radical NGOs see the problem of environmental destruction, declining biodiversity, and increased vulnerability of coastal and other communities to mainstream development policies, as caused by Northern consumer and industry demands for high quality foodstuffs. They argue that the best way to improve the working and living conditions of coastal communities is to move away from industrialized shrimp farming to more environmentally benign forms based on organic farming methods, double-rice cropping, minimum or no use of artificial chemical and biological inputs, community control of resources and a less commodified exchange system which is local and regional in spread. Put in other terms, these NGOs are promoting more integrated development strategies which combine environmental and agrarian goals in which sustainable livelihoods depend, inter alia, upon protecting

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biodiversity and other environmental values. These include proposals to limit brackish water shrimp farming to high saline areas, to expand mixed rice-shrimp-finfish culture and to allow rice farming and other activities to take place elsewhere. It also includes replanting of mangroves and saline-resistant grasses to allow cattle grazing and local mat weaving and encouragement for planting saline and flood resistant rice varieties to provide food and protect Bangladesh’s rice gene pool. They also promote greater small farmer participation in shrimp farming by restricting shrimp farm size to give them a personal stake in protecting land from over-use. Underlying these suggestions is a shift away from shrimp monoculture for export towards a more polycultural system rooted in local ecosystems. The impact of these more radical NGOs is limited, particularly in the Southeast region. For example, UBINIG’s Naya Krishi Andolon (New Farming Movement) aims at creating small farming communities devoted to more organic farming methods, including the planting of mangroves. However, UBINIG does not engage in advocacy politics as much as other local NGOs and avoids any direct confrontation with industrial shrimp farming. In 1997 the EU banned the importation of Bangladeshi shrimp as part of a wider global crackdown on the export of poor quality and unhealthy shrimp (Alam and Pokrant 2009). This resulted in upgrades of processing plants, the expansion of shrimp hatcheries, restrictions on chemical and anti-biotic use on shrimp farms. There was also investment in better testing of shrimp products and, at the global level, new private and public certification schemes were established to regulate quality (Busch and Bain 2004). More recently, these schemes have widened their scope to cover labour and environmental matters, although as discussed earlier, their implementation has been the subject of considerable debate and progress is slow.

Section 4: Summary and future directions Aquaculture is one of the fastest growing food industries in the world and shrimp farming is central to that growth. This chapter has discussed the impacts of the global trade in shrimp on work, community and environment in Bangladesh, India and Thailand. In its early years there was little social, economic and environmental regulation of the shrimp industry, which resulted in its relatively unplanned expansion into coastal agricultural and forested areas, benefiting some and disadvantaging others. Criticism of this expansion came from two sources.

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At the global level, importing country governments expressed concern over the health and safety risks of farmed shrimp and introduced quality assurance schemes as a condition of trade. Opposition also came from within exporting countries from rice farmers, landless labourers, fishers, marginal farmers, and local NGOs who were concerned about loss of farming land, forests and the many ecological services they provided, the unequal spread of the economic benefits of the trade, and its disruption of traditional social security systems underpinning local livelihoods. Also, many shrimp farmers who had benefited initially from a boom in exports were hit by the spread of shrimp diseases which wiped out crops. As a result of consumer, NGO and some farmer pressure, as well as a realization by the industry that a largely productionist approach to shrimp farming was likely to be both socially and environmentally unsustainable, importing countries began to regulate global supply chains and subjected exporting countries to new governance regimes on product quality and safety, which extended later to wider environmental and social considerations. Global and national industry groups developed principles for responsible aquaculture, exporter countries invested in new testing and quality assurance facilities, and shrimp processors and farmers were required to upgrade their operations and change their farming practices. Currently, at the global level the Food and Agriculture Organization of the United Nations (FAO) is developing a set of principles for an ecosystem approach to shrimp farming, which arises out of the shift towards more sustainable development strategies (Soto et al. 2008). At farm level, industry practices aimed at reducing environmental impacts include polyculture, integrated culture, crop rotation, water retention ponds, water filtration and closed recycling systems, which prevent both water and nutrients escaping to the wider environment (Balasubramanian et al. 2004; Ravishankar et al. 2005; Yuan et al. 2004). Initiatives are being taken by governments and some companies to present a greener more organic image of shrimp farming. For example, in 2004, SIPPO (the Swiss Import Promotion Program) began a pilot project in Southwest Bangladesh to see if shrimp could be produced using traditional methods free of artificial compound feed, chemicals, and fertilizers. In 2009 a Thai company received certification from Germany’s organic farmers’ association, Naturland, to export the country’s first batch of organically produced shrimp. Rubicon Resources LLC, a US company that supplies shrimp to Wal-Mart, bought and upgraded roughly 150 Thai coastal shrimp farms.

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These initiatives belong to what Vandergeest (2007) refers to as transnational environmental regulatory networks run by the global shrimp industry, international NGOs, research institutes and other global actors. They are paralleled at the local level by community groups, grassroots NGOs, local government and national government agencies. A key concern among critics of the industry is that if producers are expected to meet the cost of conforming to the new principles of responsible aquaculture, this will discriminate against small farmers as they lack the resources to meet such principles. Vandergeest proposes that to counter this possibility, it is necessary to enhance community involvement in the governance of the shrimp industry by breaking down the arbitrary distinction between social and environmental standards; providing for greater decision-making power in standard setting and implementation to be devolved to local communities; and supporting local communities in adapting standards to meet local social and environmental conditions. While these proposals do not address directly the situation of processing plant workers and others in the industry, they do offer potential benefits for the largest sub-sector of the industry, which employs the largest number of people and is responsible for the most environmental impact. The initiatives and proposals described here contribute locally and globally towards more sustainable linkages between the international trade in shrimp, local production systems, and the communities which depend upon them.

Notes 1 The term ‘shrimp’ will be used throughout this chapter to refer to both shrimp and prawn except where the distinction is relevant to the discussion. 2 Young et al. define globalization as: a dynamic process within SESs [socio-ecological systems] characterized by increasing speed of interactions, intensification and multiplication of the linkages among elements of the system, a stretching of human activities to the global scale, and a homogenizing process that produces declines in both ecological and social diversity (Young et al. 2006: 308). 3 HACCP is one of many systems of process management in the food industry. 4 Charoen Pokphand Group (CP Group) was founded in 1921 and today engages in agribusiness, retail and telecommunications markets. It employs more than 250,000 worldwide and had sales of US$ 14 billion (2006) (http://www.cpthailand.com/Default.aspx?tabid=216) 5 Precise figures on total employment in the industry are difficult to determine due to poor reporting, illegal use of labour, and seasonal variations in employment patterns. The figures given are probably conservative estimates of total direct and indirect employment.

Bob Pokrant 97 6 For the early pre-shrimp period, the discussion is based on archival sources obtained from local forestry departments in the southeast of the country. The three key sources are Cowan 1928; Ghani 1954; Chaudhury 1969. 7 This figure excludes the area of rivers and canals within the reserve.

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98 Trade, Labour and Transformation of Community in Asia Dulyapurk, V., W. Taparhudee, R. Yoonpundh and S. Jumnongsong (2007) Final Report of Work Package 1: Multidisciplinary Situation Appraisal of Mangrove Ecosystems in Thailand. Faculty of Fisheries, Kasetsart University, Thailand. Escobar, A. (1998) ‘Whose Knowledge, Whose Nature? Biodiversity Conservation and the Political Ecology of Social Movements’, Journal of Political Ecology, 5: 53–82. FAO (2008) The State of World Fisheries and Aquaculture, Rome: FAO Fisheries and Aquaculture Department, Food and Agriculture Organization of the United Nations. Flaherty, M. and P. Vandergeest (1998): ‘“Low-Salt” Shrimp Aquaculture in Thailand: Goodbye Coastline, Hello Khon Kaen!’. Environmental Management, 22 (6): 817–830. Flaherty, M., P. Vandergeest and P. Miller (1999) ‘Rice Paddy or Shrimp Pond: Tough Decisions in Rural Thailand’, World Development, 27 (12): 2045–2060. Gammage, S., Ken Swanburg, Mubina Khandkar, Md. Zahidul Hassan, Md. Zobair and Abureza M. Muzareba (2006) A Pro-poor Analysis of the Shrimp Sector in Bangladesh, Office of Women in Development, USAID. Ghani, Q. (1954) Working plan for the forest of the Cox’s Bazar Division. For the period 1950–51 to 1959–60 (1950–51 to 1969–70). Compiled by the Working Plans Division, East Bengal. Dacca, Superintendent, Government Printing, East Bengal Government Press. Gopal, N., V. Geethalakshmi, G.R. Unnithan, L.N. Murthy and, P. Jeyanthi (2006) Women in the Seafood Processing Sector in the Post Globalization Scenario – An Analysis, Cochin, India: Central Institute of Fisheries Technology. Habib, J. (1998) Chakoria Sundarban and Modern Fishing. Chittagong, Bangladesh: Device Publications Ltd. In Bengali. Halim, S. (2004) ‘Marginalization or Empowerment? Women’s Involvement in Shrimp Cultivation and Shrimp Processing Plants in Bangladesh’, in Kazi Tobarak Hossain, Muhammad Hassan Imam and Shah Ehsan Habib (eds) Women, Gender and Discrimination, Rajshahi: University of Rajshahi, pp. 95–112. Hall, D. (2003) ‘The International Political Ecology of Industrial Shrimp Aquaculture and Industrial Plantation Forestry in Southeast Asia’, Journal of Southeast Asian Studies, 34 (2): 251–264. Hatanaka, M., C. Bain, L. Busch (2005) ‘Third-party Certification in the Global Agrifood System’, Food Policy, 30: 354–369. Huitric, M., C. Folke and N. Kautsky (2002) ‘Development and Government Policies of the Shrimp Farming Industry in Thailand in Relation to Mangrove Ecosystems’, Ecological Economics, 40 (3): 441–455. Islam Md. S. (2008): ‘From Pond to Plate: Towards a Twin-driven ComModity Chain in Bangladesh Shrimp Aquaculture’, Food Policy, 33: 209–223. Islam, M.S., M. Serajul Islam, M.A. Wahab, A.A. Miah and A.H.M. Mustafa Kamal (2003) ‘Impacts of Shrimp Farming on the Socioeconomic and Environmental Conditions in the Coastal Regions of Bangladesh’, Pakistan Journal of Biological Sciences, 6 (24): 2058–2067. Ito, S. (2002) ‘From Rice to Prawns: Economic Transformation and Agrarian Structure in Rural Bangladesh’, Journal of Peasant Studies, 29 (2): 47–70.

Bob Pokrant 99 Khader, V. (2006) ‘Role of Fisherwomen in Coastal Ecosystem of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu – An Overview’, Association for International Agricultural and Extension Education Florida: AIAEE 2006 Annual Conference www.aiaee.org Accessed 30/02/09. Labour Rights Protection Network. http://www.lpnrights.org/indexeng.php. Accessed 4 April 2009. Mekhora, T. and L. McCann Rice (2003) ‘Rice versus Shrimp Production in Thailand: Is There Really a Conflict?’, Journal of Agricultural and Applied Economics, 35: 143–157. NaCSA (National Centre for Sustainable Aquaculture). http://www.nacsa.org.in/ aquafarmersocn.aspx. Accessed 15 March 2009. Office of the National Economic and Social Development Board (NESDB) (2007). Planning Commission (1987) Studies on Rural Industries Development: Chakoria Upazila. Dhaka: Bangladesh Institute of Development Studies. Pokrant, B. and P. Reeves (2003) ‘Work and Labour in the Bangladesh Brackishwater Shrimp Export Sector’, South Asia: Journal of South Asian Studies, 26 (3): 359–389 Pradhan, D. and M. Flaherty (2008) ‘National Initiatives, Local Effects: Trade Liberalization, Shrimp Aquaculture, and Coastal Communities in Orissa, India’, Society & Natural Resources, 21 (1): 63–76. Rahman, A., L. Ali and D. Mallick (2006) ‘An Overview and Perspectives of the Bangladesh Shrimp Industry’, in A. Atiq Rahman, A.H.G. Quddus, Bob Pokrant and Md. Liaquat Ali (eds) Shrimp Farming and Industry: Sustainability, Trade and Livelihoods, Dhaka: UPL Press. Rajitha, K., C.K. Mukherjee and C.R. Vinu (2006) ‘Applications of Remote Sensing and GIS for Sustainable Management of Shrimp Culture in India’, Aquaculture Engineering, 36 (l): 1–17. Ramasamy, C., C. Sekar and S. Selvan (2002) ‘Impact of Modern Shrimp Farming on Common Property Resources in Coastal Zones of Tamil Nadu’, in Marothia, D.K. (ed.) Institutionalizing Common Pool Resources, New Delhi: Concept. Ravishankar, T., C. Sarada and M. Krishnan (2005) ‘Diversification of Fish Culture and Exports among Major Shrimp-Producing Countries of Asia: A Spatial and Temporal Analysis’, Agricultural Economics Research Review, 8, July–December: 187–195. Resurreccion, B.P. and Edsel E. Sajor (2008) Reconstituting Thailand’s TechnologyIntensive Shrimp Farms Through Gendered Migration, http://dlc.dlib.indiana.edu/ archive/00004173/01/Resurreccion_153301.pdf. Accessed 12 March 2009. Rice, J. (2007) ‘Ecological Unequal Exchange: Consumption, Equity, and Unsustainable Structural Relationships within the Global Economy’, International Journal of Comparative Sociology, 48: 43–72. Saha, N. and P. Pal (n.d.) Marine Product Exports and its Impact on Female Employment: A Case Study from West Bengal. Commonwealth Secretariat. http://www.genderandtrade.org/gtinformation/164419/164436/asia/. Accessed 30 March 2009. Sekhar, N. U. (2004) ‘Fisheries in Chilika Lake: How Community Access and Control Impacts their Management’, Journal of Environmental Management, 73 (3): 257–266. Sekhar, N.U. (2007) ‘Social Capital and Fisheries Management: The Case of Chilika Lake in India’, Environmental Management, 39: 497–505.

100 Trade, Labour and Transformation of Community in Asia Siddiqi, N.A., M. Shahidullah and A.K.F. Haque (1994) ‘Present status of Chakoria Sundarbans – The Oldest Mangrove Forest in the Subcontinent’, Bangladesh Journal of Forest Science, 23(1): 26–34. Singkran, N. and S. Sudara (2005) ‘Effects of Changing Environments of Mangrove Creeks on Fish Communities at Trat Bay, Thailand’, Environmental Management, 35: 45–55. Solidarity Center (2008) The Degradation of Work. The True Cost of Shrimp. How Shrimp Industry Workers in Bangladesh and Thailand Pay the Price for Affordable Shrimp, Washington, DC: Solidarity Center. Soto, D., J. Aguilar-Manjarrez and N. Hishamunda (eds) (2008) Building an Ecosystem Approach to Aquaculture. FAO/Universitat de les Illes Balears Expert Workshop. 7–11 May 2007, Palma de Mallorca, Spain. FAO Fisheries and Aquaculture Proceedings. No. 14. Rome, FAO. Szuster, B.W. (2003) Shrimp Farming in Thailand’s Chao Phraya River Delta: Boom, Bust and Echo. International Water Management Institute (IWMI), Colombo, Sri Lanka. Tanticharoen, M., T.W. Flegel, W. Meerod, U. Grudloyma and N. Pisamai (2008) ‘Aquacultural Biotechnology in Thailand: The Case of the Shrimp Industry’, International Journal of Biotechnology, 10 (6): 588–603. Tacon, A.J. (2002) Thematic Review of Feeds and Feed Management Practices in Shrimp Aquaculture. Report prepared under the World Bank, NACA, WWF and FAO Consortium Program on Shrimp Farming and the Environment, Rome. Toufique, K.A. (2002) ‘Community Responses to environmental Degradation Due to Shrimp Aquaculture in Bangladesh’. Presented at ‘The Commons in an Age of Globalisation,’ the Ninth Conference of the International Association for the Study of Common Property, Victoria Falls, Zimbabwe, 17–21 June 2002. Toufique, K.A. and C. Turton (2002) Hands not Lands: How Livelihoods are Changing in Rural Bangladesh, Dhaka and London: BIDS and DFID. Tyedmers, P., N. Pelletier and N. Ayer (2007) Biophysical Sustainability and Approaches to Marine Aquaculture Development Policy in the United States. A report to the marine aquaculture task force. School for Resource and Environmental Studies, Dalhousie University. Uddin, Md. K. (1996) Environmental and Socio-Economic Impacts of Mangrove Destruction in Chakaria Sundarban, Bangladesh. A thesis submitted in partial fulfillment of the requirements for the degree of Master of Science, Asian Institute of Technology, School of Environment, Resources and Development, Bangkok, Thailand. US Department of State (2008) Trafficking in Persons Report 2008. http://www.state. gov/g/tip/rls/tiprpt/2008/105389.htm. Accessed 2 April 2009. Vandergeest, P., M. Flaherty and P. Miller (1999) ‘A Political Ecology of Shrimp Aquaculture in Thailand’, Rural Sociology, 64 (4): 573–596. Vandergeest, P. (2007) ‘Certification and communities: Alternatives for Regulating the environmental and Social Impacts of Shrimp Farming’, World Development, 35 (7): 1152–1171. Vimala, D., C. Deboral, M. Sarada, M. Kumaran, M. Krishnan and P. Mahalakshmi (2005) Gender in Shrimp Farming – Issues of Parity. Technology Transfer, Socioeconomic Aspects and Informatics in Brackish Water Aquaculture, Chennai: Central Institute of Brackish Water Aquaculture.

Bob Pokrant 101 Young, O., F. Berkhout, G. Gallopin, M. Janssen, E. Ostrom, S. and Vanderleeuw (2006) ‘The Globalization of Socio-Ecological Systems: An agenda for Scientific Research’, Global Environmental Change, 16 (3): 304–316. Yuan, D.R., Y. Yi, J.S. Diana and C.K. Lin (2004) ‘New Paradigm in Farming Freshwater Prawn (Macrobrachium rosenbergii) with Closed and Recycle Systems’, in J. Burright, C. Flemming and H. Egna (eds), Aquaculture Collaborative Research Support Program Twenty-Second Annual Technical Report, Corvallis, Oregon, pp. 62–80.

5 From Marginalized Worker to Impoverished Entrepreneur: The Globalization of the Trade in Crafts and Its Impact on Indian Artisans Timothy J. Scrase

Introduction How can we comprehend the immense impact of the globalization of trade on local producers? What links are established by re-fashioned trade relationships between local producers and local and global consumers? These are two of the questions I had in mind when commencing research in 2003 on the impact of globalization on Indian artisans. The globalization of production in the world economy has opened up the markets of Asia to global competition and exchange. Artisans and craft workers in India, who come from some of the most marginal and impoverished communities, are fast losing their traditional jobs and becoming displaced, unemployed and further impoverished. This chapter provides both the evidence and explanation for what can be seen as the largely negative impact of globalized trade for marginal communities and the way some members of these communities respond. The response generally can be seen in terms of meeting market demands and consumer expectations, but with a need for many artisans to fundamentally change the nature of their labour and the craft production process itself. Also, artisans are driven by the sheer necessity to survive to become increasingly entrepreneurial by attempting to create market niches, adapt their craft styles to meet fluctuating consumer demands, and compete with others in the neoliberal world of the ‘free’ trade in handicrafts. Artisan labour is precarious (Scrase 2003), as is their daily lives and that of their families and communities. This chapter is organized into three sections. In the first section I provide a brief overview of the state of artisanal labour in the context of globalization, highlighting the similarities of experience faced by artisans around the globe. The current trade of Indian crafts is also 102

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examined. The second section, based on fieldwork conducted in New Delhi,1 describes and analyses the numerous problems encountered each day by artisans and documents the various survival strategies they employ in order to continue making a living. Interviews with artisans, and with consumers, reveal several problems ranging from corruption and labour exploitation, to the copying of designs and crafts. The third and final section of the chapter presents a critical analysis of how Indian crafts are now being marketed on the internet. Here, among other things, I explore the nature of the marketing message, the framework by which crafts are advertised, and the stereotypes employed to sell handicrafts. For example, ‘ethnic branding’ is an important marketing feature of a craft item as are the use of highly contentious terms like ‘traditional’, ‘natural’ and ‘primitive’. Underlying my analysis and interpretation is the notion of the commodification of poverty – the ways marginalized labour, and peoples themselves, are exploited for commercial gain. The chapter thus highlights the contentious and problematic relationship between the globalization of markets, the marketing of third world craft goods in terms of ‘fair’ trade, and consumption practices more generally.

Artisan labour and exploitation around the globe Despite major shifts in production and manufacturing over the past two decades, it is important to note that artisan production is highly localized and, in many instances, confined to homes or villages. Artisan production nevertheless remains an extremely contested and antagonistic form of production. The relentless commodification of craft production, inherent gender segregation and discrimination against women and girls, coupled with a generational divide in many instances, are evident throughout studies of artisan communities. The increasing commodification of craft production is indicative of the globalization of production more generally. Various studies have described the ways artisan communities have attempted to reorganize and adjust to changing global economic circumstances and market demands. One body of literature, for instance, explores this process of internationalized craft commercialization in terms of commodity chains that link artisans, wholesalers and department stores across the globe (Nash 1993b; Steiner 1994; Tice 1995). The trade in artisanal goods from the developing world is largely dominated by a handful of importing countries – namely Germany, the USA, the UK and France – illustrating that the industry is largely subject to the demands and

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policies of dominant, first world corporations and trading regimes (Kathuria 1988). Other scholars have reported on artisan communities that seek market niches or develop flexible specialization in their manufacturing of crafts in order to survive (Chibnick 2000; Wood 2000). The extent to which global capital transforms artisan communities is neither uniform nor consistent but varies according to local historical developments, experiences and levels of global economic integration. For example, Korovkin (1998) provides detailed evidence concerning recent economic and cultural changes confronting the artisans of Otavalo in Ecuador, which, she argues, led to a transformation in, rather than disappearance of, the local Quichua culture. As she writes: ‘Not only did the market expansion in Otavalo fail to destroy the community institutions but it also gave rise to an indigenous intelligentsia whose members redefined Indian identity in accordance with new cultural and economic realities’ (Korovkin 1998: 126). We see a similar pattern of cultural survival and market reorientation among weavers on the Lao-Burma border (Kusakabe 2001). Ethnographic studies of the localised effects of the commercialization of craft production show complex and subtle social changes in artisanal production. For various reasons, artisanal production is an important industry for the employment of women. Several studies of women’s home-based, subsistence production in various settings in the Asia Pacific reveal the unique ways women are exploited by both their class and gender and even, in some specific cases, their religious affiliations (Kaino 1995; MacHenry 2000; Nakatani 1999). For example, Wilkinson-Weber (1997) analyses the way the embroidery (chikan) industry in Lucknow, India, has changed over time. Once famous for producing highly intricate and expensive embroidery, it has become an industry making mass-produced goods made from coarse and cheap materials largely for local consumption. In an important shift in the gender division of labour, this industry was once dominated by highlyskilled male embroiders. However, many of these men are mostly now the agents or middle-men responsible for obtaining the goods from the artisans and shifting them into the markets. Today, the chikan industry is dominated by semi-skilled Muslim women, the majority of who work from home in their villages. This has the effect of keeping these women ‘invisible’ and out of the public gaze, hence reinforcing their social ostracism. Moreover, as an ‘invisible’ form of production, it makes the industry difficult to regulate in terms of wages and other workplace conditions. Comparative, inter-country research reveals conclusively that women lack control over the distribution and marketing

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of crafts, exacerbating their inequality within the industry. Moreover ‘womanly’ traits like docility, dexterity and obedience are crucial factors in selecting workers, subsequently denying similar opportunities to those women who do not fit the ‘feminine, obedient worker’ stereotype. Ideas of domesticity and the ‘ideal’ role of women intersect at various levels in the craft production process, meaning that many women remain at home, having to mind children, cook and clean as well as produce craft goods when demanded and for low rates of pay (Kaino 1995: 9–11). Moreover, the feminine domestication of craft production intersects with patriarchal perceptions of women’s sexuality where, in a case described from the Philippines for example, menstruating women are prohibited from the site of dyeing (Guillermo 1995). Finally, the domestic nature of women’s craft production means that it is not only impossible for them to form craft unions, but also difficult for them to develop strategies to overcome entrenched patriarchal structures embedded within artisan industries. The exploitative nature of craft production is not confined solely to gender discrimination. Much of the industry is piecemeal, repetitive, and based on an intensive and prevailing division of labour defined by both class and gender. Wilkinson-Weber’s (1997) study also revealed that, because the artisan is paid per piece, and as the market is demanding more, the artisans themselves are becoming de-skilled, only bothering to learn one or two popular stitches. Even urban artisans in Lucknow were bemoaning the work of rural-based embroiders whose work was the most basic and simplistic. Kathuria et al. (1988), in a comparative study of artisan labour in India, the Philippines and Indonesia, described the persistent and enduring inequalities found in the industry throughout the developing world. Craft workers tend to have little formal education and are rarely organized, subjecting them to a range of exploitative work conditions such as poor safety, low wages and lack of formalization of their craft skills. Milgram’s (1999) study of craft and household production in the northern Philippines indicates that craft production indeed supplemented total household incomes; yet most artisans were required to borrow money from support groups, and households without land were unable to accumulate financial reserves or meet everyday needs. Moreover, certain individuals, particularly brokers, continued to exploit artisan households and reap the greater amounts of profit from the localized craft industries. Findings illustrate that not only social, economic, gender, and class inequalities persist in artisan communities, but they also face a range of health and environmental problems (see details in: Imhoff 1998; MacHenry 2000).

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The global trade of Indian crafts The precarious and marginalized status of Indian artisans is illustrated by the fact that, according to the United Nations, between 1960–1990 the numbers of artisans in India declined by at least 30 per cent. The result is that many artisans now find themselves employed as casual wage labourers, mostly in the informal economy (Seth 1995). In Table 5.1, below, we see that estimates of the number of artisans in India as at 2001 are approximately 8.6 million. The table also reveals quite starkly the income inequalities from craft work. Based on estimates, we can see that while handicraft workers made up approximately 20 per cent of the manufacturing workforce in 1995, their income share was less than 6 percent for all workers in that sector. Further, recent estimates of the global trade and size of the Indian handicrafts sector have been made by the Indian government’s Export Promotion Council for Handicrafts (see Table 5.2). According to the provisional data available, over a 12 month period from 2005 exports of handicrafts have increased from Rs.14,526.85 to Rs.17,288.14 crores; an increase of Rs. 2761.29 crores or 19.01 per cent. In dollar terms, exports have increased by 16.11 per cent or US$528.70 million over the period 2005/6–2006/7 (http://www.epch.com). Table 5.2 also includes data and trends for specific types of handicraft. However, in the period 2007–08, and detailed in Table 5.3, provisional data for the exports of handicrafts show a decrease of Rs.1018.32 crore rupees, from Rs.7768.40 to Rs.6750.08 crores; a decrease of 13.11 per cent in rupees terms. In dollar terms, exports have decreased by US$18.42 million, that is, by 1.09 per cent over the similar period in 2006–07. These global, market-demand fluctuations impact directly on

Table 5.1

Handicrafts in India: Basic statistics

1994–95 2000–01 Number of employed Value of output Income Exports As percentage of manufacturing: Employment Income Source: Liebl and Roy (2004: 54)

8.3 million US$4.6 billion US$2.5 billion US$1.3–US$2 billion

8.6 million US$6.1 billion US$3.3 billion US$1.9–US$2.4 billion

19.7 5.7

n.a. n.a.

Table 5.2 Statement showing provisional export figure of handicrafts during the period April–March 2006–2007 compared to the corresponding period of April–March 2005–2006 US$ at the rate of * Items

Art metalwares Woodwares Handprinted textiles & scarves Embroidered & crochetted goods Shawls as artwares Zari & zari goods Immitation jewellery Misc. handicrafts Total

Rupees in Cr. (April–March) 2005–06 3662.98 853.06 2053.70 4711.45 110.23 347.05 274.86 2513.52 14526.85

2006–07

Increase in % over 2005–06

US$ in millions (April–March) *44.26 2005–06

*45.37 2006–07

Increase in over % 2005–06

4135.06 1180.02 2465.18 5860.35 216.82 392.45 386.09 2652.17 17288.14

12.89 38.33 20.04 24.39 96.70 13.08 40.47 5.52 19.01

827.70 192.76 464.07 1064.62 24.91 78.42 62.11 567.97 3282.56

911.60 260.14 543.46 1291.94 47.80 86.52 85.12 584.68 3811.26

10.14 34.96 17.11 21.35 91.89 10.33 37.05 2.94 16.11

Source: Export Promotion Council for Handicrafts; accessed: 12 November 2007; http://www.epch.com/EXPORTData.htm

107

108 Table 5.3 Statement showing provisional export figure of handicrafts during the period April–October 2007–2008 compared to the corresponding period of April–October 2006–2007 US$ at the rate of * Items

Art metalwares Woodwares Handprinted textiles & scarves Embroidered & crochetted goods Shawls as artwares Zari & zari goods Immitation jewellery Misc. handicrafts Total

Rupees in Cr (April–October) 2006–07

2007–08

2526.58 438.64 1198.46 2014.75 107.34 149.28 130.38 1202.97 7768.40

2115.04 373.45 936.16 1757.41 115.62 153.68 140.90 1157.82 6750.08

Increase/ Decrease %

US$ in millions (April–October) *45.92 *40.34 2006–07 2007–08

Increase/ Decrease %

(–) 16.29 (–) 14.86 (–) 21.89 (–) 12.77 (+) 7.71 (+) 2.95 (+) 8.07 (–) 3.75 (–) 13.11

550.21 95.52 260.99 438.75 23.38 32.51 28.39 261.97 1691.72

(–) 4.71 (–) 3.08 (–) 11.08 (–) 0.71 (+) 22.58 (+) 17.19 (+)23.04 (+)9.56 (–)1.09

524.30 92.58 232.07 435.65 28.66 38.10 34.93 287.01 1673.30

Source: Export Promotion Council for Handicrafts; accessed: 12 November 2007; http://www.epch.com/EXPORTData.htm

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artisans producing for export markets, reinforcing the insecurity and piecemeal nature of their employment status. During the period 2006–07 to 2007–08, the exports of art metalwares, woodwares, handprinted textiles and scarves, embroidered and crocheted goods, and miscellaneous handicrafts, showed a decreasing trend but shawls (as artwares), zari and zari goods, and imitation jewellery, increased by 7.71 per cent, 2.95 per cent and 8.07 per cent respectively. Handicrafts increased by 22.58 per cent, 17.19 per cent, 23.04 per cent and 9.56 per cent respectively. According to the Export Promotion Council for Handicrafts (EPCH), ‘…the reason for the decrease in exports is due to the impact of rupee appreciation, rising interest rates, low realization on export proceeds and cancellation of order’ (www.epch.com). From these data, we can identify some distinctive trends for Indian handicrafts in terms of global trade and export demand, and these trends are likely to persist into the near future. On the one hand, the Indian handicraft industry has designated growth and demand in areas associated with the international fashion industry, particularly in regards to imitation jewellery, shawls, and zari goods. On the other, we see a notable decline in more ‘traditional’ craft goods for local consumption such as handprinted textiles and scarves, and various woodwares.

Craft production, markets and allied industries There is an intrinsic relationship between various industries and artisan production. For example, trends in clothing fashion means certain artisanal items like jewellery and shawls have greater or lesser demand over a period of time. A similar demand fluctuation exists between the tourism industry and handicraft production (Yu and Littrell 2003). The recent growth in international tourism is matched by an equally high increase in tourist handicraft production of various kinds – ranging from simple trinkets and small mementos, to intricate and elaborate art works, carvings and pottery. The tourist handicraft industry is seasonal and fluctuates between various sites depending upon the market, advertising, government support and other factors (Brohman 1996). This is apart from the fact that the handicraft market remains tightly controlled by a few agents, is highly exploitative and can earn relatively little for the individual artisan (Helu-Thaman 1993). In terms of global fashion, the fluidity and precarious nature of third world artisan production is exemplified in the case of the ‘rise and fall’

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of Guatemalan textiles in the early 1990s (Imhoff 1998). In this case, increased demand in the USA and Europe for colourful and exciting designs meant that Guatemalan artisans competed with each other to the point of market-saturation, over-supply and an eventual decline in both prices and market demand. This is despite the attempts of Guatemalan artisans to change strategies by lowering their prices and adapt to market conditions by offering a range of different products. The integration of Latin American artisanal products into USA and global markets faces a number of problems including dominance of the markets by TNCs and large monopoly retail businesses; changing fashion styles and trends; and general market corruption and unreliability (Nash 1993a). The intricacies of craft work on the Asian periphery is succinctly analysed in a paper by Kusakabe (2001) where she describes the ways in which women weavers on the Laos-Thailand border experience the highs and lows of producing for a market that is rapidly being subject to liberalizing forces. While opportunities are closed-off for some (the ‘old’ or ‘traditional’ weavers), others who are better organized or have more support reap the benefits of a commercialized weaving scene. Other alternatives for survival by artisans competing in the global marketplace, such as small producers binding together and subcontracting their wares, rarely offer long-term gains. In the case of Albay artisan subcontractors in the Philippines, it was found that those that were initially successful preferred to invest their profits in fast-moving, high-yielding ventures rather than re-invest in the craft enterprises where the market remains insecure and fickle (Rutten 2002).

Crafts: Styles and consumption The success of artisanal crafts within wider national and international markets largely depends on the whims of global consumer demand. We can distinguish between artisan crafts for everyday use – ‘quotidian crafts’ – and those that are fundamentally for status consumption – ‘elite crafts’. In terms of a globalized cultural market, following Bourdieu (1984), we can delineate a status distinction in the types of crafts produced and consumed. Artisanal crafts that are seen to be of high quality or rare, with great artistic beauty or intricate construction have a specialized and elite consumer market. These elite consumers are most likely to be able to relate tales concerning the craft involved, where the item is from, the location of and specific details about the artisan community, and so on (Nakatani 2001). On the other hand, there circulates a veritable variety of everyday craft goods like women’s

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cloth bags, backpacks, leather wallets and handbags, wall hangings, floor rugs, and dress jewellery, which are largely for global mass consumption. At the local level, quotidian crafts are under threat. For instance, cheap plastic sandals are replacing leather ones that, in turn, are displacing indigenous leather shoemakers in countries such as India (Ganguly-Scrase 2001; Knorringa 1999). Likewise, clay pottery items are being replaced by plastic or aluminium plates, bowls, jugs and cups. Cotton weave is substituted by synthetic cloth, with the advantage that it is lighter, cheaper and rarely needs ironing. There are numerous examples where a traditional craft is subsumed by mass-produced items. However, artisans themselves are more than aware of this and many develop strategies to accommodate fluctuating global markets and interests in their crafts. For example, interviews we conducted with several artisans in New Delhi reveal their awareness of the need for change: Interviewer: What changes have come in styles of craft? Artisan response: During my grandfather’s generation there was no style and they worked to pass the time. Colouring was also not popular. They were very poor. But we brothers changed our traditional craft into a new style. Interviewer: Where do you get your ideas from? Artisan response: Ideas are very natural to the craftsmen. But if anyone gives an order for a new design I can perfectly do it. Another artisan, when asked about designs and how they get changed, responded by saying that: ‘NGOs are supporting us to enrich our designs. Like the new style of Jou-Lakh [pottery] crafts that do not get spoilt by water. NGOs are trying to give a little support in ideas and colour concepts’. Studies show that artisans, by themselves or with NGO support, can quite readily adapt and change, often producing inferior crafts for a global market that have little resemblance to the meaning-rich, specialized crafts reserved for ceremonies or local consumption (Grimes and Milgram 2000; MacHenry 2000; Nash 1993a). Additionally, while artisans recognize the need for modification of craft styles to suit changing market demands, there is a certain inevitable consequence of design copy, with eventual market saturation. As one artisan put it, after attending a workshop on ‘Design Development’: Everything spreads in the market. An instructor from NID (National Institute of Design) gives a series of training workshops in five places and the same design gets popularized in the market in the

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same period of time, thus becoming too common and of no value. There is no profit in such training. Instead, our traditional designs are much better – the horse, Mother Goddess – these are uncommon to the terracotta craftsmen from other states … Traditional and our own designs are the best for earning profit from the market. The preservation and continuation of ‘traditional’ styles may indeed be a more secure route for the survival of, in this case, terracotta artisans. In the opinion of others, however, artisan survival must come through change. One buyer noted the fluidity and interchange between traditional and modern styles that can give a certain aesthetic appeal to everyday office wear. Interviewer: You also talked about changing market conditions – do you think the artisans should also do something to change their styles? Respondent: Absolutely. They are doing it. They are extremely savvy. If you go and see artisans at Dilli Haat – there is nature bazaar! You will see mirror work. Originally this was done on lehengas [traditional mirrored skirts] by the women of Kutch. They used to wear 80 kalis lehenga [i.e. extremely heavy] that nobody could wear in an urban centre. But the very fact that it is now being done on kurtas [long shirts] that women can wear to their office means that these artisans have developed. For this consumer, traditional styles interwoven with modern ones certainly have a place in the contemporary world of the fashionable, Indian middle and upper class professional – it invokes a sense of being at once modern, stylish and traditional, giving one a visible, Indian identity. As another consumer remarked: ‘I think heritage is not something that is static. For it to even remain as heritage, it has to constantly evolve. Tradition is not static and conservative’. With the emergence of ‘ethnic chic’, the hybridization of fashion, and a return to ‘earthy’ and ‘natural’ forms and colours in interior design, third world craft goods and patterns have become popular, both in the West and in the local country. Note the following exchange: Interviewer: Why do you think that crafts are fashionable? Respondent: Well, I don’t know why – the trends of fashion that are created are definitely in two directions – one is the ultra modern

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and the other is ultra traditional. That has been the fashion for those creations. I don’t know why that has happened but it has happened. ‘Ethnic’ is also fashionable. It is definitely because of its uniqueness and also because of its boldness. There is certain bold quality to most ethnic crafts. The colours are mostly primary. They are bold. The materials used are bigger, larger. Somehow there is boldness attached to it. That inherent quality makes it an interesting fashion. There is a commonly held, international appeal of contemporary crafts. They are advertised and promoted in commercial, as well as non-profit shops, catalogues and websites, to a broader global consumer seeking a product with qualities of difference and uniqueness, or as a ‘fair-trade’ good, or most usually both. I present a critical review and analysis of these fair-trade crafts below.

Government and NGO support for artisans Specialized government agencies and various non-government organizations (NGOs) have aimed to preserve the range of crafts unique to their nations. In the case of state policies, notwithstanding their good intention to preserve ‘traditional’ crafts, there is nevertheless an underlying paternalism in such policies when the very same state is pursuing a broader global industrial and manufacturing agenda that competes with, and will ultimately lead to the marginalization, or even complete demise, of local artisan industries. Government policies and bureaucracies, set-up to promote artisan industries in various third world countries, have been criticized for their failure to properly recognize and promote the needs of craft workers (Suratman 1991). The failure to recognize ‘on-the-ground’ local knowledge and incorporate this into employment policies and planning indicates a fundamental neglect of the skills and knowledge artisans hold. This gives them a low priority in national economic planning, reproducing the failures of top-down policy making indicative of ill-conceived, developmentalist policies. Moreover, who decides what activities are worth supporting and what specific crafts are considered unique to a nation and its peoples, and why, is a significant question to pose. In this sense, the state involves itself in a process of what I term ‘selective traditionalizing’, a process which can assist some communities to survive but may condemn others to further marginalization.

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Indian artisans themselves were often highly critical of government support. In particular, petty corruption was at the forefront of their complaints, as the following account reveals: Interviewer: What other support is there from the government? Artisan response: To get to a fair we have to give money then only do we get an approval letter. Again we have to pay money to the officers at the fair. Interviewer: How much? Artisan response: For a letter it is 1500–5000 rupees. Interviewer: Receiving the letter confirms your participation in the fair? Artisan response: No. To get information about the fair we have to pay more money. We are ready [willing] to pay to get to a fair. Government organizes fairs free of cost yet we still have to pay the officers. We are also entitled for TA/DA [travel and dearness allowances] but that money goes to officers’ pockets in addition to the other money we pay. If someone else gives more money than us then the [approval] letter will be issued for him and not for us. So even if we pay bribes, our participation in a fair is not confirmed. Corruption is not just confined to participation in fairs but is found in virtually all stages and levels of the display and marketing of crafts. Interviewer: Do the wholesalers send crafts to Manjusha or Tantuja [various state government emporiums]? Artisan response: If you know any officer in the cottage emporium then you can enter your crafts by bribing them. They are all corrupted. You also have to bribe the 4th class staff to display your crafts so that a sale can possibly take place, especially as the manager is not going to help you. Payment is on the sale basis and you earn a check every month. If no craft item is sold then they will return it to you after 3–4 years. Interviewer: Are societies [NGOs] more helpful in getting information and reciprocation for fairs? Artisan response: Artisan societies are there. But now all the channels are corrupted. To make a society 10–15 members are needed and are fulfilled by own family members and friends. Whatever money is sanctioned by the NGO or other public/private organizations is then put into personal pockets. Unlike state-supported systems, the situation at the non-governmental level is somewhat different. While the support of various NGOs, the

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establishment of artisan cooperatives, and the emergence of various fair-trade schemes are welcome, there remains a sense of hopelessness as artisans employed by these various NGOs have to compete in a global market. For example, a 1997 report by the United Nations Development Fund for Women (UNIFEM) on women artisans in India describes the rise of artisan sweatshops where NGO staff on good salaries, with leave and other job benefits, supervise the work of women who are struggling to survive on a subsistence income. In one case, orders for Belgian lace were rejected on the grounds of poor quality. The income from sales, more than ten times the cost of its manufacture, is largely shared by the charity and the NGO that buys it, with only a subsistence level of wages trickling down to the artisans. The various fair-trade bodies, with their focus on a fair price, are also criticized for failing to ensure that the artisans are accorded just and reasonable wages and suitable employment conditions and rights (UNIFEM 1997). Moreover, the fickle nature of the global marketplace means that various crafts come in and out of fashion leading to problems of dwindling markets and oversupply. Another way in which artisan labour has the potential to survive, with both government and NGO assistance, is through the imposition of intellectual property rights. The globalization of production has given rise to several well-known cases of copyright and patent violations in relation to medicines, music and literature. However, one of the key problems that have emerged is that artisanal crafts and skills are shared, owned and practiced by a community and so stand in stark contrast to the Western view of knowledge as a commodity owned by an individual or an incorporated company. Furthermore, it is not uncommon for other marginalized groups to use similar craft patterns or designs to enter the marketplace. Riley and Moran (2001) also raise the point that it is extremely difficult for an artisanal group to hold onto its intellectual property when businesses from another country decide to use the same patterns and designs. Simply put, there is virtually no copyright protection in international law with regards to crafts. As most artisans remarked during their interviews, the problem of copying designs and then mass-producing them cheaply is rife in India.

Crafts in cyberspace: Websites and catalogues analysed Apart from overseas travel, it is largely by way of catalogues and visits to ‘fair-trade’ stores that enable Western consumers to purchase ‘authentic’ artisanal products. Internet websites have also become

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important promoters of third world artisanal goods. In this context, Hendrickson (1996) analyses the portrayal of Mayan and Guatemalan clothing and handicraft items in a range of mail-order catalogues circulating in the USA. She reveals the various ways these catalogues construct the ‘natural’, ‘traditional’ and even, in some cases, ‘primitive’ images of Guatemalan life that are used to appeal to consumers. Western consumers sometimes ‘… are made more aware of the situation in that country and Maya do earn money from these businesses’ (Hendrickson 1996: 118; orig. emphasis). But, in each case, products have to be tailored to suit the foreign audience, the ‘horror’ stories of certain communities are toned-down, and the fact that the crafts marketed overseas are produced according to strict quality control measures is never revealed. ‘Fair-trade’ shopping, which involves the marketing of third world artisanal crafts and produce, with the intended aim of linking first world consumers to third world producers, has been critiqued in terms of it being a viable alternative to mass consumerism. Johnson (2002), for instance, critically explores how fair-trade discourse, despite its good intentions, constructs various understandings of development, consumerism, and social justice, and what these discourses reveal about issues like over-consumption in the industrialized cores and globalized structural inequality. Significantly, she also points out that fair-trade discourse, rather than providing or stimulating any serious discussion of structural inequality, instead supports a more liberal, depoliticized vision of cultural difference. In this context, ‘ethnic branding’, ‘traditional’, and ‘authenticity’ become important features in the marketing of crafts. To illustrate this trend, Lynn Stephen (1993) reports on the integration and ‘ethnicization’ of Mexican rugs in the North American consumer markets, showing how the ‘branding’ of ethnic identity is an important marketing tool despite the revelation that the majority of ‘Mexican’ rugs are now made in India. While there are definite problems with some aspects of ‘fair-trade’, artisan communities can still make a living from the opening-up of global markets. However, it does require cooperation, the identification of market niches, and market planning and flexibility (Grimes and Milgram 2000; Stephen 1993). In this context, writing on India, Strawn and Littrell (2006) demonstrate that artisans who work under fair-trade and cooperative practices can indeed become relatively successful entrepreneurial businesses, and pass down their skills and experiences to form new business opportunities. As they conclude (2006: 212): Development organizations may express reluctance to invest in artisan organizations. This case study of three artisan enterprises,

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however, identified artisans who had the opportunity to work under socially responsible, fair-trade business practices. Each had taken newfound capabilities to the next level and formed new business organizations. This case study appears to illustrate [Amartya] Sen’s model in demonstrating that an individual’s opportunity to apply capabilities corresponds to the freedom to lead the kind of life the person values. One key aspect of NGO support for artisans in recent years is through the emerging trend of websites devoted to marketing crafts directly or indirectly as part of international charity and aid websites. Below, based on a sample of three websites and catalogues, I provide a critical analysis of the way they promote and sell crafts, especially in terms of the stereotypes of artisans used to market certain products.2 To this end, my aim is to analyse how, and to what extent, ‘ethnic branding’ is an important marketing feature of a craft, as are the use of highly contentious terms like ‘traditional’, ‘natural’, ‘primitive’, and ‘authentic’.

Website: Craftsbridge (www.craftsbridge.com)3 On this website, the consumer is addressed directly with many of the products advertised as being ‘made especially for you’ or made purely to ‘enliven your living room space’. The promise of information and the potential to interact with the craftsperson (through the ‘ask me a question’ link) is promoted by the company. However, there is a breadth rather than depth of information available and, as such, the site functions only as a good starting point for those who wanted to find out about a specific region/craft. Unsurprisingly, there are no sources cited for the various claims the company makes about the traditions of a particular area. The consumer has to rely on the assurances of the company’s expertise. Potential customers are defined as a fraternity of ‘craft lovers’ and there is a clear sense of the consumeras-collector or connoisseur throughout the site. Refinement and sophistication in taste are balanced by the more youthful notion of trendiness to appeal to customers across the age-spectrum. Flattering rhetoric is also put to use in the ‘crafts facts’ section where certain links are labelled ‘for the probing mind’ and so on. ‘Exclusive’, one-off items are highly priced and it is not made clear what percentage of the price of an item goes to Craftsbridge although they do insist, in some cases, that the ‘proceeds’ of a purchase ‘are channelised [sic] to tribal people who have made it’.

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Products are also promoted through titles which stress their ‘exotic’ or ‘ethnic’ charm. For instance, a cushion cover makes use of ‘traditional oriental motifs’ and ‘pattu weaving’ in order to ‘cast a magical spell in your interiors’. The small ‘sling purses’ are described as ‘striking’ and useful as they ‘combine beautifully with coloured or black and white ensembles’. The evening bag is similarly described as ‘a very cute and trendy accessory’ that ‘completes the feminine look’ as it is ‘guaranteed to look great with many outfits’. The use of the term ‘ethnic’ in relation to certain products and to the ‘ethnic art’ section on the website is seemingly flexible. It is applied to products made by NGOs and individuals who profess to use craft processes based on a particular regional tradition and also to indicate a type of styling. For example, the product description of a pendant assures the customer that it is a ‘cute’, ‘unique’ item that will go well with both ‘casual and ethnic wear’. In this sense, ethnic branding does not simply relate to the promotion of the Warli tribe’s specific style of painting, for example, but to the consumer’s ability to pick and choose between, or combine, different ‘ethnic’ products. The term ‘folk art’ is used to describe the craft of ‘tribal’ groups. The emphasis here is on renditions of daily life or mythological interpretations through the use of ‘ancient techniques’ on ‘traditional’ materials. A final observation with this website is that ethnic branding is clearly an important marketing feature, as are notions of tradition and authenticity, but, interestingly, in contrast we see that inevitably products made by contemporary designers are praised for characteristics of innovation of tradition.

Website: Exotic India (www.exoticindiaart.com)4 The site frequently employs descriptors such as ‘antiquated’, ‘handmade’, ‘traditional’, and ‘unique’ and particularly draws attention to the religious or ritual features of the craft. This framing of the products provides them with an aura of authenticity which offers the potential buyer some kind of connection to a constructed, Indian historical past. In keeping with this presumed intention, the site highlights both the originality (in terms of inspired rather than mass-produced art-forms) and the inherently traditional nature and value of the crafts. The company claims it is able to offer original artworks at low prices because they are ‘sourced directly from Indian villages’. This suggests that the company does not work through established, large cooperatives that demand equitable pay for the piece-work produced and raises the issue of whether an equitable price is paid.

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Satisfied customers have submitted their comments to a ‘Testimonials’ page. As expected all the comments are positive and praise the quality of the product and service. This company does not have any philanthropic objectives and as such it does not employ a discourse of charity or self-help. Instead, it is customer focused and product based, with all information centred on the craft, rather than the artisan. The use of a newsletter, the extensive (albeit incomplete) product information and the site’s interactive elements suggest an educative agenda which is based on learning and knowing ‘Indian’ traditions. However, this sense of knowing does not include finding out much about the artisan, the community, or region in which the craft was produced. Even in the dedicated section on ‘Folk Art’ the folk are curiously absent, unless they happen to be an award winning artist of national repute. Folk Art is defined in seemingly contradictory terms, as simplistic yet distinctive, as spontaneous yet rooted in an age-old tradition. Most of the articles and the product information do not comment on contemporary folk traditions, or on changes in the process of craft-making. Rather, they reference ‘high’ art, mythology and philosophy. The site promotes conspicuous consumption as a form of cultural enrichment and offers its customers the opportunity to buy back, or buy into mythological, textual Indian traditions, whilst bypassing the living traditions (and conditions) under which the craftsmanship takes place.

Catalogue: Oxfam/Community Aid Abroad (2003–04)5 The company repeatedly makes use of terms and phrases such as ‘traditional’, ‘in the ancient way’, ‘age-old’, and ‘for centuries’ when describing the origins of a craft, or the processes, designs and materials used by artisans. The concept of tradition is used in a relatively simplistic and elastic manner, with anything made by an ‘impoverished’ artisan becoming part of this narrative. In a couple of instances the catalogue explains that the crafts are ‘stunning new interpretations of traditional’ designs or that the designs used are not always created by the artisan but provided by the cooperative (Oxfam/CAA catalogue 2003–04: 22–3). However, the notion of development seems very limited to describing about the individual artisans, their lives and locality, rather than broader concerns. This is obviously a marketing technique used to connect individuals – the producers with the consumers – across the market space. For one item, a Jaipur urn, the catalogue states: ‘New advances in technique mean their famous pottery can now be made food-safe and waterproof, while retaining the characteristic glaze and remarkably clear colours’

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(Oxfam/CAA catalogue 2003–04: 10). Here they are obviously meeting global elite consumer concerns about health and safety of certain plastics and other synthetic materials, as well as safe production standards more generally. Yet even in this case the design qualities remain the same while the use value is improved. There is often an interesting set of contradictions in the description of how a craft is made and the way it could be used. When speaking of the former, Oxfam’s focus is on hardship, tradition and generational continuity, whereas leisure, innovation and originality are attributed to the latter. For example, the back page of the catalogue describes Rasai Bells as ‘an ancient tribal craft going back thousands of years in northern India’ and gives a lengthy description of the process involved; originally used as a cow bell, the catalogue suggests ‘it makes a distinctive doorbell’. In a similar manner, Sari Wine Bags, made from ‘colourful offcuts’ and fashioned into generic bags ‘are a unique way to carry your BYO wine’ (Oxfam/CAA catalogue 2003–04: 14). Both the website and catalogue make use of personal stories to promote the cooperatives and their products. These narratives combine all or some of the following elements: hardship or exploitation, struggle against the odds, eventual success and philanthropy towards others less fortunate. For women there is also a focus on societal restrictions, abuse and the goal of financial independence. This is an extract from information on the Association of Craft People (ACP), a cooperative that formed around a few leather workers in Calcutta: 26 year old Monica Paul had a tough start to life, marrying early and having a son at 14. When her husband died, she had to leave her inlaw’s home, while they kept her son. Desperate and with no prospects, she learnt about ACP, and joined them to get training. Five years later, she has married again and is well settled in life. Her new husband also works with ACP and her boy is back with her… (Oxfam/CAA catalogue 2003–04: 9). The provision of information on trade, together with personal accounts, is a key element to raising awareness and promoting consumers’ appreciation of the conditions under which artisans and small-scale farmers work. However, the foregrounding of Oxfam’s history and reputation also means that much of what they say they are currently doing is taken on trust. There is certainly a need for greater transparency in their commercial relationships with ‘producer partners’ and in the partners’ dealings with individual artisans. The potential customer is simply told that pur-

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chasing from Oxfam makes a ‘real difference’ to ‘our producers’ lives’ (Oxfam/CAA catalogue 2003–04: 20). Here is ‘consumerism with a conscience’ writ large. Ethnic branding is also integral to Oxfam’s promotion of craft goods and ethnicity is framed within the notion of ‘developing countries’. Oxfam occasionally falls back on stereotypes – Indian crafts come from villages; they are unique and traditional but not innovative. There is the familiar contradiction between past glory and present poverty which is so often associated with South Asia, summed up in the following statement: ‘…though at least 98 per cent of the women come from nil to low income families, they are rich in appreciating the beauty of their tradition’ (Oxfam/CAA catalogue 2003–04: 23). In reflecting on the sample of websites and catalogues analysed above, we see emerging a distinct blurring of boundaries between notions of fair-trade, doing justice by consuming products from the third world poor, and more blatant examples of ethnic stereotyping of Indians for commercial profit. Johnson (2002), previously discussed, has argued that fair-trade discourse constructs various understandings of development, consumerism, and social justice. She finds that fair-trade discourse tends to: …rely on individualistic notions of choice and consumer sovereignty, obscures the structural linkages between core and periphery in a globalized economy, and belies the collective environmental implications of individual free choice in the marketplace (Johnson 2002: 55). To a certain extent, in the context of the sample of websites analysed for this study, this observation is true. There is no concrete evidence provided as to how the purchasing of crafts will actually lead to actual development outcomes. The catalogues also mention artisanal or craft bricolage, whereby the artisanal product becomes an assemblage of popular patterns and designs, often used out of context, and with the finished good a mere resemblance of its former self. This is exemplified in ‘traditional’ crafts that are redesigned to meet ‘modern’ consumer tastes and demands. There is a strong sense that consumers are the saviours of poor Asian peoples, even in the Oxfam/CAA catalogue, a group which prides itself on having a good understanding of structural inequality and the causes and consequences of global poverty. In this sense one can argue that their poverty is being commodified and their particular skills commercialized and exploited in the world of globalized consumer markets. This is also reinforced by several recent

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findings from India, showing the inherent problems of globalized craft commodification and rising entrepreneurship in artisan communities (see, for example, Parthasarathy 1999; Venkatesan 2006).

Conclusion But in this ancient city along the Ganges, Hinduism’s holiest river, an estimated 1 million sari weavers are facing almost certain ruin. Cheaper, machine-made saris – many of which are copied from Varanasi’s famous patterns – are being pumped out of China and from newer factories in India’s western Gujarat state. Adding to the weavers’ woes, changing fashions and global trade rules have opened the Indian market to foreign competitors, leaving many once-prosperous sari weavers and their families in desperate poverty. ‘This loom will be in a museum,’ said Javen’s despairing uncle, Nazir Ahmed, 30, whose family was forced to shut down 12 of their 14 looms. ‘We would have never predicted this. We were India’s artists. Now we are living in poverty.’ (Wax 2007: n.p.). As this recent newspaper article explains, not even the most exclusive and ancient of the Indian crafts industry is immune from the forces of global trade, rapid industrialization and modernization of the local and international manufacturing sector. So, as this chapter has explained, nearly all sectors of the Indian crafts industry have been under pressure to either change the way the crafts are produced, and that mainly means cheaper and better quality products, or else the craft, and the craft communities, will disappear forever. When we turn to the marketing and purchasing of crafts, craft consumption is significant because, in the act of buying an artisanal commodity, the consumer is buying the constructed experience of authenticity and traditionalism, establishing a connection that symbolically links the commodity back to the artisan and their community. This is reinforced by a direct experience of buying from the producer, as in a tourist encounter, at a crafts market, fair or festival, or from a fair-trade shop or through a catalogue, where the details of the craft and the producers themselves are provided. Thus, in a hyperreal world of mass, packaged consumption, global telecommunications and virtual relationships, the purchase of an artisan craft may act to temporarily anchor the consumer in a real world of labour production. Despite shifts to the ‘smart’ economy, the daily life and struggle of Indian artisans have changed little over the past few decades. This is

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the life of precarious production – a marginalized existence determined by the ever-changing desires of an ever-changing global, and globalizedlocal, consumer market. The life of the Indian artisan is thus a contingent and relative experience, whereby the majority of artisans fluctuate between work and unemployment, income and poverty. We may also observe that the rapid globalization of Indian crafts has led to the slow but sure separation of the control of the craft from the actual artisan and where the marketing images and messages convey, at least in part, an image of a timeless, non-contingent world. For example, China mass-produces and markets ‘sari’ cloth, based on Indian designs, which finds it way into Western supermarkets and discount fabric stores, as tablecloths, placemats and bedding linen. In addition, there is also emerging what was termed craft bricolage, whereby some crafts move from their authentic traditional qualities and design to contemporary re-constructions and copies for the modern consumer marketplace, allowing a dwindling percentage of artisans to survive. Finally, in many respects, the contemporary artisan, like the urban professional middle classes and savvy cosmopolitans, has developed a hybrid identity: some retain traditionalism in their craft while simultaneously producing for a global or local consumer market. Moreover, the vestiges of the craft itself survive despite its material transference from design to artefact to mass-produced commodity. Either way, the identity of the artisan is imbued in the craft piece itself – whether it is on the design of the embroidery, the shape of the pot, the style of weaving, or the colours and patterns of the cloth. In other words, unlike the displaced or marginalized wage worker, artisan crafts carry with them a piece of the identity of the makers themselves and so circulate in the global consumer markets of department stores, fair-trade shops or local bazaars and markets. Notes 1 Research was undertaken in New Delhi from early 2003, and periodically each year thereafter. The latest period of fieldwork was in January 2007, when a number of in-depth interviews were conducted with middle class consumers. Interviews with artisans were carried out at two venues in New Delhi: Dilli Haat (literally: Delhi Marketplace) – a state run market offering stalls for rent (on a rotational basis) for artisans from all over India; and at the Delhi Crafts Museum, which also makes available for rent (on a rotational basis) outside stalls for artisans to display and sell their crafts. 2 Two websites, and one catalogue, were reviewed and analysed. I acknowledge that this is not an extensive coverage, considering the extent of websites devoted to promoting crafts, but nevertheless provides some interesting

124 Trade, Labour and Transformation of Community in Asia findings as to the extent they stereotype or misrepresent various crafts and artisan groups. The research was carried out by Dr Tamara Mabbott-Athique and I acknowledge her support and attention to detail. 3 Craftsbridge: Vision statement – ‘To be a global brand of choice for hand crafted products’. ‘Set up in July 2000. Craftsbridge (CB) India is a cross channel design and marketing organization dedicated to the handicrafts industry in India. Our mission is to positively impact the Global Market potential for Indian hand crafted products through innovation in design and marketing. We want to be the bridge between customers worldwide, craftspersons, designers, bulk buyers, researchers and others that form this Community. A team of design, marketing & operational professionals have promoted and is managing Craftsbridge. The venture represents the entry of professionals in the Indian crafts industry. We sell in the Corporate, Retail and Exports segment. We offer premium, contemporary designer products in various categories. We also provide ‘made-to-order’ customized products and designer services for the corporate gift market. In addition, CB sells a wide range of crafts and designer ware sourced directly from regions across India.’ (Source: www.craftsbridge.org. Accessed: 31 May 2008). 4 Exotic India – ‘The one stop shop for Indian Arts’ (www.exoticindiaart.com). 5 The OXFAM/CAA catalogue is still available, but there is also an extensive shop at their website. See: http://www.oxfam.org.au/shop/ (last accessed: 31 May 2008).

References Bourdieu, P. (1984) Distinction: A Social Critique of the Judgement of Taste, London: Routledge. Brohman, J. (1996) ‘New Directions in Tourism for Third World Development’, Annals of Tourism Research, 23 (1): 48–70. Chibnick, M. (2000) ‘The Evolution of Market Niches in Oaxacan Woodcarving’, Ethnology, 39 (3): 225–242. Craftsbridge (2008) CraftsBridge website, http://www.craftsbridge.com. Accessed 31 May 2008. Exotic India (2008) ExoticIndiaArt–‘The One Stop Shop for Indian Arts’ (www.exoticindiaart.com). Accessed 31 May 2008. Ganguly-Scrase, R. (2001) Global Issues/Local Contexts: The Rabi Das of West Bengal, New Delhi: Orient Longman. Grimes, K.M. and Milgram, B.L. (eds) (2000) Artisans and Cooperatives: Developing Alternative Trade for the Global Economy, Tucson: The University of Arizona Press. Guillermo, A.G. (1995) ‘Weaving: Women’s Art and Power’, in L. Kaino (ed.) The Necessity of Craft, Nedlands: University of Western Australia Press, pp. 35–56. Helu-Thaman, K. (1993) ‘Beyond Hula, Hotels, and Handicrafts: A Pacific Islander’s Perspective of Tourism Development’, Contemporary Pacific, 5 (1): 104–111. Hendrickson, C. (1996) ‘Selling Guatemala: Maya Export Products in US Mailorder Catalogues’, in D. Howes (ed.) Cross-cultural Consumption: Global Markets, Local Realities, London & New York: Routledge, pp. 106–121.

Timothy J. Scrase 125 Imhoff, D. (1998) ‘Artisans in the Global Bazaar’, Whole Earth, Fall, pp. 76–81. Johnson, J. (2002) ‘Consuming global justice: Fair-trade Shopping and Alternative Development’, in J. Goodman (ed.) Protest and Globalization: Prospects for Transnational Solidarity, Sydney: Pluto Press, pp. 38–56. Kaino, L. (ed.) (1995) The Necessity of Craft: Development and Women’s Craft Practices in the Asian-Pacific Region, Nedlands: University of Western Australia Press. Kathuria, S. (1988) ‘Indian Craft Exports for the Global Market’, in S. Kathuria, V. Miralao and R. Joseph (eds) Artisan Industries in Asia: Four Case Studies, Ottawa: International Development Research Centre, pp. 1–29. Kathuria, S., Miralao, V. and Joseph, R. (eds) (1988) Artisan Industries in Asia: Four Case studies, Ottawa: International Development Research Centre. Knorringa, P. (1999) ‘Artisan Labour in the Agra Footwear Industry: Continued Informality and Changing Threats’, Contributions to Indian Sociology, 33 (1–2): 303–328. Korovkin, T. (1998) ‘Commodity Production and Ethnic Culture: Otavalo, Northern Ecuador’, Economic Development and Cultural Change, 47 (1): 125–154. Kusakabe, K. (2001) ‘Cooperation and Competition Across Border Markets: Changes in the Definition of Women’s Weaving Activity in Lao-Thai Borderlands’. Unpublished paper presented at the 6th Conference of Women in Asia, Canberra, Australia. Liebl, M. and Roy, T. (2004) ‘Handmade in India: Traditional Craft Skills in a Changing World’, in J.M. Finger and P. Schuler (eds) Poor People’s Knowledge: Promoting Intellectual Property in Developing Countries, Washington: The World Bank, pp. 53–75. MacHenry, R. (2000) ‘Building on Local Strengths: Nepalese Fair-trade Textiles’, in K.M. Grimes and B.L. Milgram (eds) Artisans and Cooperatives: Developing Alternative Trade for the Global Economy, Tucson: The University of Arizona Press, pp. 25–44. Milgram, B.L. (1999) ‘Crafts, Cultivation, and Household Economies: Women’s Work and Positions in Ifugao, Northern Philippines’, Research in Economic Anthropology, vol. 20, pp. 221–261. Nakatani, A. (1999) ‘“Eating Threads”: Brocades as Cash Crop for Weaving Mothers and Daughters in Bali’, in R. Rubenstein and L.H. Connor (eds) Staying Local in the Global Village, Honolulu: University of Hawaii Press, pp. 203–229. Nakatani, A. (2001) ‘Exoticism and nostalgia: Consuming Southeast Asian handicrafts in Japan’, unpublished paper presented at the 3rd EUROSEAS Conference, London. Nash, J. (ed.) (1993a) Crafts in the World Market, Albany: SUNY Press. Nash, J. (1993b) ‘Introduction: Traditional Arts and Changing Markets in Middle America’, in J. Nash (ed.) Crafts in the World Market, Albany: SUNY Press, pp. 1–22. Oxfam/CAA (Oxfam/Community Aid Abroad catalogue) (2003–04). Parthasarathy, R. (1999) ‘Tradition and Change: Artisan Producers in Gujarat’, Journal of Entrepreneurship, 8 (1): 45–65. Riley, M. and Moran, K. (2001) ‘Protecting Indigenous Intellectual Property Rights: Tools that Work’, Cultural Survival Quarterly, 24 (4), available from www.culturalsurvival.org/newpage/publications/csq [10 March 2005].

126 Trade, Labour and Transformation of Community in Asia Rutten, R. (2002) ‘How Craftworkers and Small Subcontractors May Profit from the World Market: A Philippine Case’. Paper presented at the conference: ‘Asian Artisans and Small Scale Producers in the Global Economy: Trends, Issues and Problems in the New Millennium’, International Institute for Asian Studies (IIAS), University of Amsterdam. Scrase, T.J. (2003) ‘Precarious Production: Globalisation and Artisan Labour in the Third World’, Third World Quarterly, 24 (3): 449–461. Seth, S. (1995) ‘Towards a Volunteer Movement of Artisan Support’, Craft News, 6 (1): 1–4. Steiner, C.B. (1994) African Art in Transit, Cambridge: Cambridge University Press. Stephen, L. (1993) ‘Weaving in the Fast Lane: Class, Ethnicity and Gender in Zapotec Craft Commercialization’, in J. Nash (ed.) Crafts in the World Market, Albany: SUNY Press, pp. 25–57. Strawn, S. and Littrell M.A. (2006) ‘Beyond Capabilities: A Case Study of Three Artisan Enterprises in India’, Clothing and Textiles Research Journal, 24 (3): 207–213. Suratman, S. (1991) ‘“Weaving” a Development Strategy: Cottage Industries in the Philippines’, Sojourn, 6 (2): 263–289. Tice, K. (1995) Kuna Crafts, Gender and the Global Economy, Austin: University of Texas Press. UNIFEM (United Nations Development Fund for Women) (1997) ‘Social Security for Artisans in the Voluntary Sector: Are Human Rights Being Denied?’, New Delhi: UNIFEM. Venkatesan, S. (2006) ‘Shifting Balances in a Craft Community: The Mat Weavers of Pattamadai, South India’, Contributions to Indian Sociology (n.s.) 40 (1): 63–89. Wax, E. (2007) ‘An ancient Indian craft left in tatters: Sari Weavers Struggle Amid Economic Boom’, Washington Post Foreign Service, 6 June (Wednesday), n.p. Wilkinson-Weber, C.M. (1997) ‘Skill, Dependency and Differentiation: Artisans and Agents in the Lucknow Embroidery Industry’, Ethnology, 36 (1): 49–65. Wood, W.W. (2000) ‘Flexible Production, Households and Fieldwork: Multisited Zapotec Weavers in the Era of Late Capitalism’, Ethnology, 39 (2): 133–148. Yu, H. and Littrell, M.A. (2003) ‘Product and Process: Orientations to Tourism Shopping’, Journal of Travel Research, 42 (November): 140–150.

Part III Labour Organization in Transforming Economies and Societies

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6 Industrial Restructuring, Trade Union Strategy, and Social Transformation in Australia and Asia Michael Gillan and Rob Lambert

Introduction The predicament confronting labour movements at the turn of a new century has been interpreted as a structural and an organizationalstrategic challenge of such magnitude that unions, and more generally the power of organized labour, are thought likely to be superseded in a ‘network’ society (Castells 1997: 354). This sense of pessimism as to the limited agency and declining bargaining power of workers, especially for those engaged in factory or ‘routine’ forms of work, is also evident in Bauman’s discussion of the implications of ‘liquid modernity’. Tied as they are to the ground, barred from moving, or arrested if they move at the first of the heavily guarded border posts, they are in a position a priori inferior to the capital which moves around freely. Capital is increasingly global; they, however, stay local. For that reason they are exposed, armless, to the inscrutable whims of mysterious ‘investors’ and ‘shareholders’, and even more bewildering ‘market forces’, ‘terms of trade’ and ‘demands of competition’. Whatever they gain today may be taken away tomorrow without warning. They cannot win. Neither – being the rational persons they are or struggle to be – are they willing to risk the fight (Bauman 2000: 166–167). Global capital mobility is intertwined with ceaseless corporate restructuring and occurs at multiple geographic scales. For Bauman and other pessimistic observers, the willingness of individuals to fight, and to risk an association with other workers to build collective power in the local, is fatally undermined by the immense capacity of capital to 129

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engage in global restructuring and the seemingly abstract and immutable forces of competition that drive such corporate strategies. Setting aside alternative perspectives on the emergence of new forms of worker agency and reconstructed collective power (which will be discussed subsequently in this chapter), there is an apparent intensification of global restructuring and capital mobility that has, most prominently, re-shaped manufacturing industries. As Bronfenbrenner and Luce (2004: p. iii) have noted in their survey of restructuring and closures/production relocation in the United States, ‘…US and foreign owned multinationals are simultaneously shifting production from high-wage countries to multiple low-wage destinations, both near shore and off shore, with China as one of the primary destinations for all countries’. More specifically, they note a general trend whereby global corporations1 have shifted an ever increasing share of their production capacity from North America to China, India, and South East Asia, and from Western Europe to both Asia and lower cost (lower wage) locations in Eastern Europe. Even within the Asian region itself, there is pressure on sites located in ‘higher wage’ Asian nations which confront competition from potential alternative sites in neighbouring nations with lower wage costs and weaker trade unions and forms of labour regulation (Bronfenbrenner and Luce 2004). Overall, Bronfenbrenner and Luce’s sample of all production relocations from the United States found an overrepresentation of unionized worksites in the manufacturing sector and suggested that the ‘typical’ relocated site was large, consistently profitable, and long established in its locality.2 David Harvey’s concept of ‘spatial fixes’, the attempt to resolve the internal contradictions of capital accumulation spatially (Harvey 2000: 24), has been utilized by labour scholars such as Silver (2003: 39) to highlight the ‘the successive geographical relocation of capital’ and its implications for labour. Silver, nonetheless, suggests that while industries and regions have been decimated by the relocation of production facilities, jobs, and investment, the consequences of these flows for labour movements globally are complex and not unidirectional. In particular, she suggests that ‘while labor has been weakened in the locations from which productive capital emigrated, new working classes have been created and strengthened in the favored new sites of investment’ (Silver 2003: 5). In this way, Silver points to the creation of new working classes in Brazil, Korea, South Africa and the eventual emergence of ‘powerful new labor movements’ who are instrumental to improving wages and conditions and demanding labour regulation and democratic reform. A reconstituted and progressive labour internationalism allows

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for the possible construction of active and meaningful links between emerging and established labour movements to thereby exercise new forms of power (Silver 2003). From this perspective, premised on an analysis of the structural power of labour movements over time and space in the capitalist world system, pessimism gives way to guarded optimism. Established labour movements are in crisis and exercise diminished structural and associational bargaining power,3 yet as new working class formations appear in an ever more integrated capitalist global economy there is upsurge and labour revitalization. This sense of potential and optimism is also present in the emerging literature on ‘labour geography’ which suggests that literature on globalization and capital mobility neglects the question of human agency and the potential for space and spatial relations to serve as sources of power and a locus of struggle. In short, workers are also seen as fashioning the landscape of capitalism with the capacity to become ‘proactive, sentient, geographic actors’ rather than existing as ‘passive bearers of the geographical transformations wrought by capital’ (Herod 2001: 5). As Munck (2003: 17) has suggested, there is an implicit danger of simply assuming the ‘inevitable’ coalescence of strong labour movements where capital has relocated and the emergence of a new form of globally networked unionism to match the ‘objective’ reality of a globally networked form of capitalism. Similarly, in their book grounding globalization, Webster et al. (2008) have critiqued Silver’s perspective on the trajectory of the labour movement globally as overly deterministic. This chapter argues that without an empirically grounded and critical consideration of the prospects for reconstituting labour movement power across space, there is the possibility of neglecting the specificity of labour movements (including internal contestation on ideology, leadership, organizational structure, strategy), their articulation to state and politics, and the persistence of ‘fundamental spatial asymmetries between labour and capital’ (Coe et al. 2008: 285–286). Our analysis is developed with reference to broad patterns of corporate competition, restructuring, and production relocation in the whitegoods industry in Asia and Australia. In doing so, it provides insight into the dynamics of competition and changing power relations between labour and capital in a specific industry sector that has become radically ‘global’ in its production systems and product markets. In particular, the strategy of leading corporations in this sector demonstrates that spatial reorganization and the exploitation of uneven development stand at the very centre of the way competition is played out.

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Moreover, the global scale of the corporate network leads to an interrelated transformation of local communities and the bargaining power of workers’ that fall within its ambit. The power imbalances this process reflects will only be redressed effectively through new forms of labour internationalism (Lambert and Webster 2004) and trade union organizations capable of experimenting with the politics of ‘scale’. However, as noted above, a crucial and as yet unfulfilled research agenda is the development of grounded and critical analysis of structural obstacles to the emergence of cohesive and effective labour movement networks in such ‘globalized’ industry sectors.

The whitegoods industry: Global and regional patterns of corporate competition and investment The global whitegoods industry is shaped by an intense battle between a small group of corporations who utilize scale to produce and market their products across multiple regions and who access finance capital to acquire smaller competitors and, therefore, an expanded global portfolio of brands, market share and production facilities. Global competition has thus led to concentration with regard to the share of leading corporations of total world sales and to the emergence of integrated global production networks. With regard to the former, Table 6.1 below shows that nine companies accounted for 44 per cent of sales volume of whitegoods appliances in 2006. Moreover, the top five corTable 6.1

Global sales (by volume) of whitegoods*

Company

Global Ranking in 2006

Whitegoods as a % of overall company sales

Share of total global volume sales in 2006

Whirlpool Electrolux Bosch-Siemens Hausgeräte General Electric Appliances LG Haier Indesit Matsushita Samsung Appliances

1 2 3 4 5 6 7 8 9

79.6 61 62.3 74.5 Not available 53.3 100 28.6 72.7

10.9 6.4 5.9 4.3 4.2 3.3 3.2 2.9 2.7

Source: Euromonitor International (2008) ‘Domestic Electrical Appliances-World’, February. *Note: ‘Whitegoods’ refers to the category ‘Large Kitchen Appliances’ which encompasses refrigerators, home laundry products (washers and dryers), dishwashers, microwaves and large cookers. It excludes small electrical and kitchen appliances.

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porations (two based in the United States, two in Europe, and one in Korea) control near 32 per cent of global sales. It is important to acknowledge, however, the historical emergence of global competition and leading corporations in the industry, especially because these corporations emerge from particular (primarily national) spaces of capital accumulation and processes of industry concentration. As with many manufacturing industries across a range of advanced capitalist nations, the domestic appliance industry expanded rapidly postWWII, in an environment of state intervention in industry development and demand management, intensified patterns of consumption, and relative class compromise. In general, whitegoods production encompassed a wide range of nationally-based manufacturers and suppliers. Notably, in countries such as Sweden (Electrolux) and the United States (four major manufacturers with close relationships with dominant national retail chains) a shift towards national industry concentration occurred relatively early in the late 1950s and early 1960s. In the case of the United States, however, while there was domestic industry consolidation, leading companies such as Whirlpool, GE and Maytag did not have a strong export orientation or a global strategic focus in these decades. A general crisis of capital accumulation and increasingly ‘saturated’ markets for whitegoods in Western Europe and North America, contributed to a pronounced shift in the 1970s towards industry ‘rationalization’ at a national scale and greater regional concentration. One response to this crisis was a drive by successful national firms to lift exports and another strategy sought to maximize market power via an aggressive acquisition strategy of major regional competitors.4 In general, therefore, there was a marked transition away from a variety of nationallevel manufacturers towards regional and global industry concentration.5 Whitegoods corporations moved towards greater standardization of components and common product manufacturing ‘platforms’ which could nonetheless serve differentiated consumer product markets (Segal-Horn et al. 1998; Solvell 1992). There was also the emergence of pan-regional markets, regulatory institutions, marketing, and product development strategies and the start up costs of ‘market entry’ in various nations were limited by larger global corporations acquiring already successful national companies (Segal-Horn et al. 1998). While distribution and marketing remained primarily nationally based, global production systems emerged and fully assembled and ‘rebranded’ products were exchanged internationally between firms. By the 1990s the two leading corporations in the industry, Whirlpool and Electrolux, sought to publicly ‘position’ themselves as ‘global’

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appliance manufacturers. However, the emerging global dimension to competition in the whitegoods industry also required extensive new investments. This led to contradictory forces acting on global whitegoods corporations in that they were compelled to invest in extending their global market share and production networks while at the same time appeasing finance capital and demonstrating shareholder ‘value creation’ by delivering ever increasing returns (Holding 1999). As a consequence, over the last decade as both corporations moved into new phases of development by making substantial investments in corporate acquisitions and new manufacturing facilities in non-traditional regions such as Asia, there has been an ever tightening squeeze on established production sites. While expansion into Asia was typically represented as a long-term strategic initiative to tap into a growing base of consumers in the region, both Whirlpool and Electrolux have found it difficult to realize profit from ‘local’ sales in key markets such as India and China.6 Instead, their expansion of investment and production capacity in the region (and in other regions such as Eastern Europe) has created a manufacturing base for global product ‘platforms’. These product platforms primarily feed into core consumer markets in North America and Europe, thereby reducing total labour costs by relocating production formerly housed in these regions. Competitive pressures are just as applicable to whitegoods corporations originating from Asia. As Table 6.1 indicates, Korean corporations such as Samsung Appliances and LG are amongst the largest global appliance manufacturers, with both growing rapidly in global market share and sales volumes over a decade. Both corporations, however, have also increased profits and driven their expansion by engaging in continuous restructuring, work intensification and production relocation. Again, China has assumed a central place in corporate strategy by means of expanded production facilities designed as export platforms for the region and for the penetration of Chinese consumer markets. LG was an early market entrant in China and, as a result, is now well-established across a range of product types.7 Production relocation soon led to concern as to the potential ‘hollowing out’ of Korean manufacturing, with the Korean Ministry of Commerce, Industry and Energy (MOCIE) estimating in 2001 that Korean corporations had more than doubled their offshore production of refrigerators and washing machines in the preceding five years (Korea Times 6 August 2001). Moreover, the relocated production was typically sophisticated, high value added product types and not simple goods and components. Indeed, by 2005, LG executives could boast of their success in shifting 35 per cent of all pro-

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duction from Korea to China; their ability to create a ‘tough’ work environment and lean production system through escalating productivity targets for all workers; and the realization of profit by pressuring suppliers to lower input costs and reduce inventories in the supply chain (Ihlwan 2005). Such strategies, and in particular the relocation of production to China where lower wages and non-independent, compliant union representation prevail, must also be understood with reference to the historic emergence of a powerful and independent trade union movement in South Korea. Haier, a Chinese appliance manufacturer, is the fastest rising corporation within the global whitegoods industry. One of the most notable aspects of Haier’s business strategy has been its self-professed ‘global’ ambitions and the consequent expansion of its capacities in production, distribution, and marketing beyond China. In core developed countries and regions (Europe and the United States) Haier has moved to increase its knowledge of local product markets, distribution, and retail networks and has aggressively marketed ‘niche’ whitegoods products to establish a brand presence.8 At the same time, the corporation has also focused on establishing manufacturing capacity and entering consumer markets in a range of ‘developing’ nations. In this regard, Haier has major whitegoods manufacturing subsidiaries or joint ventures in countries such as Bangladesh, Pakistan, Indonesia, Philippines, Malaysia, Iran and Nigeria (Xinhua News Agency 24 December 2000). In China itself, although competition has intensified with the entry of rival global corporations in the whitegoods sector in China (Electrolux, Whirlpool, Samsung, LG), Haier has significant structural advantages over its rivals and will benefit from the ongoing consolidation of the sector, as competition squeezes out small to medium scale manufacturers. Although the company promotes its products as quality, ‘high end’ goods in China and other developing nations, Haier seeks to increase market share in North America, Europe and Australasia by undercutting dominant players primarily on price. Indeed, by 2007 Haier had achieved close to 14 billion US dollars in global sales and signalled its global ambition by launching (in 2005) a bid to acquire the US whitegoods major Maytag.9 The ruthless nature of competition and the drive towards global industry concentration is at the forefront of management strategy. In an interview in 2007, the chief executive of Haier, Zhang Ruimin, stated that ‘In the globalization era, there are only two categories of companies. One is the international company, and the other is those taken over by the former group. There isn’t a third choice.’ (Mei Fong 2007).

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Labour and industrial restructuring: The erosion of established forms of bargaining power The competitive dynamics outlined above, whereby acquisitions and the expanded scale of corporations (total size and integrated global production networks) drive industry concentration, have had an immense impact on the relative bargaining power of workers and their experience of work. Perpetual restructuring programmes and intracorporate comparisons of relative costs and profit have led to leaner production systems, an intensification of work, and profound collective and personal insecurity. Within these global production networks trade unions are unevenly present and vary widely in the form and force of their activity and representation of workers. In general, the traditional forms of union organization and strategy (local-national; bureaucratic-hierarchical) have proved to be incapable of preventing the erosion of the relative bargaining power of workers in a global production system. Moreover, under the sway of neoliberal ideology, the transformation of state intervention and regulation has privileged global economic integration and market competition over social protection and the rights and collective bargaining capacities of workers. The transformation of the Australian whitegoods industry stands as a prime example of the production of this collective disempowerment and insecurity and the erosion of established industrial areas and sectors such as manufacturing that are vulnerable to the ‘spatial fix’. In Australia in the 1980s and 1990s, in the context of the radical withdrawal of trade protection for the manufacturing sector and inadequate state intervention to promote industry development, there was a notable intensification of competition in the white goods industry as imported foreign goods penetrated local product markets. This resulted in waves of enterprise restructuring, closures, and acquisitions among Australian white goods manufacturing firms. The concentration of the industry was such that the near two dozen firms manufacturing these products in Australia in the early 1980s had been reduced to just two firms10 by the turn of the new century. Industry consolidation was accompanied by significant changes to plant level production and work systems, including the automation of many processes (Lambert et al. 2005; Gillan and Lambert 2006). In 2001, Electrolux acquired Email, the last surviving Australian owned and located whitegoods manufacturing firm. As Electrolux completed its acquisition between 2000 and 2001, restructuring led to job reductions across several plants within the local production network

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and the closure of a profitable cooker manufacturing plant in Melbourne, Victoria (Lambert 2004). The acquisition saw Electrolux gain control of four major sites manufacturing washing machines and dryers (Beverly, South Australia), cookers (Dudley Park, South Australia), dishwashers (Regency Park, South Australia) and refrigeration appliances (Orange, a town located in a semi-rural interior of the state of New South Wales) and leading product ‘brands’ widely recognized by Australians (Simpson, Kelvinator, Westinghouse, Dishlex, Chef). In site visits to these plants, senior Electrolux executives gave no guarantees as to their future viability and instead suggested that improved productivity would be necessary to preserve jobs (Lambert et al. 2005; Gillan and Lambert 2006). The acquisition occurred, as discussed above, within the general context of intensifying competition among the leading global whitegoods manufacturing firms and their turn towards restructuring and production relocation. Electrolux, in particular, from 1996–1997 onwards has pursued an aggressive strategy of closing production facilities and reducing employment in so-called ‘higher cost’ nations (Germany, Sweden, Spain, the United States) that had formerly been the core of its regional and global production systems. By 2005, Electrolux openly promoted production relocation as the hard core of its global corporate strategy, designed to boost rates of profit and reassure investors of its potential for expansion. The strategy detailed plans to halve production in designated ‘high cost’ locations and a related expansion of production capacity in designated ‘low cost’ regions. Subsequently, the corporation closed a series of profitable plants in Western Europe and North America and made significant investments in Mexico, Poland, Thailand, and China in new production facilities and, in already operational plants, increased capacity (Euromonitor International 2006). For workers located in the remnants of the Australian whitegoods industry the ‘spatial fix’ was clearly no idle threat. Indeed, awareness of the existence of a very real threat of closure and job reductions had a profound impact on the bargaining power of workers and trade unions. As the Australian sites were drawn within the global production network, Electrolux was able to apply the dynamic of ‘internal’ competition and uncertainty as to the future viability of production to drive closures, job reductions, work intensification, changes to production systems, and enhanced managerial prerogative and leverage in collective bargaining (Lambert et al. 2005). In particular, Electrolux methodically ‘benchmarked’ all aspects of its new Australian operations against other production facilities, including plants in so-called ‘low cost’ countries such as China and Thailand.

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The new scale and geography of the production network meant that workers were in effect locked into an internal, intra-corporate struggle for survival. The weakened bargaining power of workers and their representatives in the industry was further eroded by changes to state regulation of industrial relations in Australia. A sharp turn to neoliberal governance and ideology resulted in a series of political, policy and legislative interventions to secure weakened protective labour regulation, decentralized plant level bargaining, and restraints on the capacity for unions to engage in industrial action and coordinated collective bargaining. In particular, managerial prerogative and bargaining power was enhanced11 by the conservative coalition Federal government’s introduction of the Workplace Relations Act in 1996 and the so-called Work Choices legislation of 2005–2006.12 In sum, therefore, the integration of Australian production plants into a global production network led to a significant transformation of work and production systems and a general weakening in the bargaining power of labour, with the latter also underpinned by significant changes to labour regulation designed to enhance managerial prerogative. A multi-year study of the impact of these transformations on workers and their representative unions in the Electrolux refrigeration plant in Orange, N.S.W. suggests a deep sense of encroaching insecurity and fading belief in individual or collective agency within the workplace (Lambert et al. 2005; Lambert and Gillan 2007). Feelings of despondency and resignation were connected to the immediate experience of workers on the ‘shop floor’ of the transformations occurring in the factory, with employment at the plant reducing from 1800 to near 500, a shift towards simple assembly rather than integrated manufacturing, and an increase in the pace and intensity of the labour process as the production line was ‘benchmarked’ against equivalent plants located in Asia. Indeed, the strategic position of the factory within the corporation’s production network was openly linked to the development of China as a regional export platform for refrigeration products. With more than 60 years of operations and as the largest employer and contributor to associated economic activity in this interior region, the restructuring of the factory was also closely linked to a transformed sense of place, ‘community’, and weakening economic and social security in Orange. Notably, the factory had been converted from munitions to whitegoods manufacturing after WWII, in large measure, because strong action from workers and local citizens compelled state intervention to secure the future of jobs in the factory. This ability of

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workers and local citizens to rally behind a sense of place and economic justice in the past, stood in contrast to a pervasive contemporary sense of resignation and powerlessness as to the possibility of intervening to prevent or shape the restructuring of the factory and its damaging impact on the locality (Lambert and Gillan 2007). While pessimism as to the future of production at Orange was widespread, local management insisted that the factory would remain in operation. Such reassurances, however, were never more than short term and were premised on Australia’s relative geographic isolation, in that the assembly of very large ‘side by side’ refrigeration units to serve local product markets was considered worthwhile given the relative freight costs of equivalent fully assembled products from China (Roberts 2006). Workers in other Australian sites did not have even this minimal insulation from internal competition within the global corporate production network. In 2006, Electrolux announced a decision to close the Regency Park and Beverly factories in South Australia, effectively discontinuing all local production of washing machines, dryers, and dishwashing appliances, all of which were now to be sourced from lower cost factories in Asia and Europe. Across the two factories, 500 workers lost their livelihoods while the impact of the closure on dependent local component supplier firms was thought likely to result in several hundred associated job losses in South Australia’s already distressed manufacturing sector (ABC News Online 15 September 2006; Debelle 2006). There was no consideration of alternatives to the closure, nor even prior consultation with workers or union representatives with the closure decision announced by means of a press release issued from corporate headquarters in Sweden (ABC News Online 15 September 2006; Debelle 2006). The then Australian Prime Minister, John Howard, adopted a position entirely consistent with neoliberal ideology and governance, by offering an expression of ‘disappointment’ at the closure decision but nonetheless tacitly approving of the market logic of the decision in suggesting that the Electrolux closures were ‘driven by commercial decisions and realities as far as that company sees them’ and by refusing to see any merit in the notion of a government package to maintain production in a ‘struggling’ company. Instead, state intervention was limited to an ‘innovation and investment’ fund to cushion the immediate impact of redundancy on workers and their families and ostensibly to assist in the transition to alternate employment (Debelle 2006). For representative trade unions the response of the state was

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regarded as merely a thinly veiled attempt to limit political damage from widespread manufacturing closures in the states of South Australia and Victoria, with a senior leader from the Australian manufacturing workers union (AMWU) suggesting that ‘they send in the ambulances to patch up the victims of job losses when it’s in a marginal seat but they have no vision, no plan, for manufacturing in Australia’ (ABC News Online 15 September 2006). The decision to close the two factories came one day after the release of statistical data from the Australian Bureau of Statistics revealed that manufacturing employment in Australia had reached the lowest levels on record (Debelle 2006). Indeed, restructuring in the whitegoods industry is symptomatic of a general crisis of Australian manufacturing. Import competition, most notably from China, offshore sourcing of component manufacturing and suppliers, and relocation of entire factories and production lines to ‘lower cost’ locations are most evident in manufacturing sectors such as whitegoods, automotive assembly and components, and textiles, clothing and footwear. Yet, these industries are considered to be merely at the forefront of an accelerating trend among all manufacturing segments, leading to predictions from the leading manufacturing industry association of a net outflow of manufacturing investment and tens of thousands of job losses annually (Australian Industry Group 2006). In 2008 the disappearance of whitegoods manufacturing from Australia’s industrial landscape drew closer. In April of that year Fisher and Paykel announced the closure of their refrigerator production facility in Brisbane and the relocation of the production to Thailand, with the chief executive of the company suggesting that ‘free trade agreements with low cost labour countries like China and Thailand have created a playing field we are unable to compete in’ (Australian 17 April 2008). In bargaining with local managers in the year preceding the closure decision, workers and their union representatives had made significant concessions on working time arrangements to attempt to secure the future of employment at the factory. Instead of achieving this goal, union representatives found themselves locked out of the factory at the time of the closure announcement and confronted with a corporate executive unwilling to consider any form of rescue package or serious consideration of negotiated alternatives to relocation.13 In February 2008 Electrolux’s global corporate chief executive, Hans Straberg, suggested that restructuring in its Australian operations (plant closures, outsourced manufacture of components and complete product lines) had improved the profitability of its operations in Australasia

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(Henry 2008). While the corporation could represent improved profitability as strengthening the likelihood of maintaining a production presence in Australia, the vulnerability of the two remaining sites remained evident. Indeed, by year end, Electrolux signalled that rising (labour and material) costs and product market competition would require thousands of job losses across its global production network. The ongoing employment of the corporation’s workers in Australia was linked to the relative success of its branded products in consumer markets during the Christmas season (Australian 16 December 2008).

Social transformation and the politics of production in Asia The trajectory of the whitegoods industry in Australia is indicative of a more general trend in manufacturing in developed economies. The political policies of free trade and investment have led to the restructuring of work and production systems, industry concentration and an escalation in the relocation of production to ‘lower cost’ locations, with Asian nations and, most especially, China, among the most favoured destinations for relocated production. China is now one of the largest producers of whitegoods products and its industry has expanded rapidly over the last three decades. While conventional neoliberal economic analysis would presume that the establishment and rapid growth of an industry such as appliance manufacturing in China is the consequence of unfettered market forces and global integration, as noted by Liu (2005: 88), the appliance industry in China ‘would never have survived without massive government protection, subsidies and compulsory foreign technology transfers’. Moreover, Liu (2005) draws attention to the fact that industrial policy and supportive state intervention in China occurs via the dynamic relationship between market actors and governance at multiple geographic scales. Thus, while a new surge of industry growth began in the 1990s that was characterized by global corporate investment in new production facilities (predominantly export ‘platforms’) in China and the developing export orientation of successful local companies such as Haier, this growth was underpinned by national policy interventions and overlapping provincial (Shandong) and city-based (Qingdao) industrial policy initiatives (Liu 2005: 39–57). These linkages are perhaps even more evident as the governing authorities of various regions compete for intensified capital investment/accumulation by offering incentives, tax concessions, and land. Although coastal regions of southern China once were successful in

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positioning themselves with respect to global production networks as a ‘low cost’ alternative to established sites in other nations, interior regions now engage in spatial competition with ‘established’ zones of industrial production in China by promoting their relative ‘cost’ advantage (Le-Min Lim 2006). Thus, in 2005 the interior city of Changsha (Hunan province in South-central China), the site of one of Electrolux’s major production facilities, could boast of attracting over 900 million dollars in direct foreign investment. The fundamental nature of this advantage was revealed by a regional official who suggested that investors were drawn to relocate or establish new production facilities by the fact that ‘our labor is cheap, our water is cheap, our power is cheap, and our pollution standards are less stringent’ (Le-Min Lim 2006). Spatial competition, therefore, cascades and plays out at multiple geographic resolutions, contributing to the disintegration of established workers and worksites and the constitution of new spaces of work and new bodies of workers. What then are the prospects for the collective organization of workers in these zones of expanded production? What are the politics of production in these new spaces of work in Asia? Nichols et al. (2004) have sought to address the latter by revisiting Burawoy’s classic Politics of Production (1985) as a means of analysing production regimes in three whitegoods factories located in Asia. In his original formulation, Burawoy outlined three ‘factory regimes’ that shaped the social relations of production and the relative bargaining power of labour. In the first, market despotism, unconstrained markets reconstitute workers as individuals who are pitted against each other in competition and who, in the absence of collective organization or nonwage income, confront harsh and coercive labour regimes. In the second, the hegemonic regime, the emergence of working class resistance over time results in various social compromises (state provision of basic social security, protective labour legislation, collective organization and representation) which do not eliminate coercion in the factory regime but do ensure that capital must seek and maintain forms and degrees of consent from workers.14 Finally, there is hegemonic despotism which emerges from the transformation of the aforementioned regime in that enhanced global mobility of capital allows for capital to evade or erode the various constraints (collective bargaining, internal labour markets, limited managerial prerogative) of the hegemonic regime. For Nichols et al. (2004: 664–665) hegemonic despotism implies that the primary instruments and practices of the hegemonic regime (collective bargaining, consultative mechanisms etc.) are now used by management to produce worker consent for sacrificing hard won gains out of

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concern for the future viability of the production location or ‘…where labour used to be granted concessions on the basis of the expansion of profits, it now makes concessions on the basis of the relative profitability of one capitalist vis-a-vis another’ (Nichols et al. 2004: 664–665). Nichols et al. (2004) further argue that two aspects of contemporary factory regimes are underemphasized in Burawoy’s original formulation but are crucial for understanding the transformation of the labour process and labour’s relative bargaining power: changing forms of ‘contract’ and the degree of ‘material support’ available to workers. In the case of the latter, their study of whitegoods manufacturing plants in China, Korea and Taiwan revealed the removal or restriction of access to various forms of material support (healthcare, housing, education etc.) formerly provided by the enterprise, a shift that was most evident in China. With regard to changing forms of ‘contract’, managers had been largely successful in altering the standard employment relationship, so that outsourcing of production and the use of casual workers on short-term contracts or employed by labour agencies had become consistent practices across all sites. In China, for instance, pay had been detached from seniority and linked to productivity and a majority of workers shifted from permanent employment to contingent two year rolling contracts. Similarly, in the Korean factory there was a steep decline in the proportion of permanent workers and an associated increase in agency workers paid half of the permanent rate. For Nichols et al. (2004: 671) these transformations pointed towards a common drive towards the ‘dismantling of established labour’ further underpinned by the typical practices and dynamics of hegemonic despotism: the utilization of human resource management techniques to promote worker identification with the enterprise, the operation of ‘lean production’ systems, and the extensive internal and external (against equivalent facilities and competitors globally) benchmarking of all production teams and sub-processes. Similarly, Grounding Globalization (Webster et al. 2008) is a three way comparison of the nature of corporate restructuring and its social impacts in refrigeration factories in Korea (LG), Australia (Electrolux) and South Africa (Defy). Not surprisingly, the research findings confirm Nichol’s analysis, revealing the character of the employment relations shift from permanent to temporary contracts and complex systems of multi-layered outsourcing. The book highlights how these changes have created deep feelings of insecurity in both the permanent and casualized workforce, where all are uncertain with regard to the future. The book further explores the social impacts of insecurity through penetrating

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the hidden abode of reproduction, researching the impacts of these changes within the family and community. The survey and individual interview results illustrate the production of psychological and social insecurity and confirm Polanyi’s (1944 [2001]) thesis which asserts that the self-regulating market will create a dystopia, destroying persons, families and communities. Neoliberal ideology, and indeed corporations who seek to justify production relocation,15 promote the notion of a sharp divide between the experiences and collective interests of workers in established sites threatened by relocation and newly established spaces of production and employment – a loss for some workers is an unequivocal ‘gain’ for others. Comparative analysis that is grounded in an understanding of the specificity of the transformation of a workplace and the local politics of production allows for a crucial counter observation: all workers in these global production networks confront, to varying degrees of intensity, the threat of the ‘spatial fix’, work intensification, and various forms (material, contractual and psychological) of insecurity. As noted in recent labour studies scholarship, this underlying commonality of experience points towards the inherent possibilities of revived labour movement internationalism and networking across multiple spaces and geographic scales (Silver 2003; Munck 2003; Webster et al. 2008). Yet, when analysis turns from the general to the particular, as in assessments of the prospects of internationalism or ‘multi-scalar’ action in concrete workplace, industry or regional settings, the structural impediments to rebuilding collective power also become very apparent. Thus, in Asia there is the complex reality of the uneven strength and diverging organizational development of labour movements across the region. Unions have their own unique histories, organizational cultures and structures, and established repertoires of action, and these may variously empower or constrain experimentation and the degree of commitment to meaningful internationalism. The unevenness of union power and organizational capacity is also grounded in the specificity of institutional and regulatory configurations, and evident variation between national or sub-national patterns (scales) of capitalist economic development, civil society, and state governance. In Asia, a general tendency towards authoritarianism in the articulation between state, politics and civil society is perhaps especially relevant as labour movements have historically confronted active state strategies, enacted in the name of rapid capitalist economic development, to repress independent unions and/or ‘capture’ or neutralize union activity by their incorporation within state or ruling party structures.

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As Lambert (2002: 194) has elsewhere suggested, these strategies often entail the development of an ‘authoritarian variant’ of business unionism where ‘global competitiveness’ and export-oriented industrialization are built on ‘labour subordination’. In particular, three distinctive approaches lead to particular union forms: The first is direct state intervention where unions are a state apparatus and freedom to associate outside this structure is denied and repressed. The second is where the state intervenes to establish bureaucratic control through complex, drawn out procedures. The third is indirect with greater reliance placed on the role of corporations where the promotion of company or enterprise unionism dominated by employers is the pathway to subordination (Lambert 2002: 194). This first approach is especially the case in China, where the state dictates that all unions must be member affiliates of the All China Federation of Trade Unions (ACFTU), a body which traditionally has served as an extension of the party-state nexus into the workplace (Wei et al. 2005). In particular, rather than providing vigorous independent representation of workers interests, typically the ACFTU has been a ‘transmission belt’ for disseminating and relaying information and managing production targets between workers, local enterprise managers and party-state representatives (Howell 1998; Wei et al. 2005). In the 1990s market-based (but state-directed) reform intensified in China, which resulted in the closure of a swathe of public sector enterprises and the often drastic restructuring of surviving units. In labour relations there was also a fundamental transition towards a contractbased labour regime. Representing workers in the grievances emanating from restructuring or engaging in effective bargaining for collective agreements to regulate wages and conditions of employment are fundamental, and most likely impossible, challenges for the ACFTU to overcome given its limited scope of activity in the past, inability to organize industrial action, and its non-independent and nonrepresentative status (Howell 1998; Wei et al. 2005). Moreover, in the private sector and most especially in foreign invested enterprises the ACFTU is weak and enterprise management have actively sought to evade or delay the introduction of trade unions or collective bargaining processes (Howell 1998; Wei et al. 2005).16 The implications of spatial competition and uneven union power and labour rights are revealed by a recent research report produced by the Asia Monitor Resource Centre (AMRC). Commissioned by the

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International Metalworkers’ Federation (IMF) to examine typical industrial relations practices and working conditions in transnational corporations (TNCs) operating in China, the AMRC report provides fieldwork based case studies of TNC factories (including TNCs such as Volkswagen, Toyota, Nokia, Bosch, General Electric, Panasonic and Electrolux) across three industries (electronics/electrical appliances; automobiles; chemicals) (AMRC 2007).17 The report notes that: One third of factories surveyed did not have trade unions or other workers’ organizations. Companies preferred to use human resource management (HRM) as a substitute for industrial relations. Where there were unions, they rarely engaged in collective bargaining on behalf of their members. Collective consultation was usually ritualized without real substance and hard bargaining. Wages were determined unilaterally by management. Workers in only six of the 27 factories were covered by collective contracts (AMRC 2007: 14). While noting the difficulty of assessing the extent to which local labour regulation was actually enforced, the report nonetheless found that the TNC factories complied with the minimum standards provided by Chinese labour law and that ‘wages in the surveyed factories were generally higher than local averages’ (AMRC 2007: 14). This was also found to be the case in an Electrolux appliance factory based in Hangzhou (AMRC 2007: 76). Indeed, in its public communications on its operations in so-called ‘low cost’ nations, the corporation has pointed to its compliance with local labour law and its implementation of a system for auditing and monitoring supplier firms in China for their compliance with a corporate code of conduct.18 Such measures allow corporations to defend the legitimacy of their strategy and practice but this position is replete with tensions and contradictions. Given the dynamics of intra- and inter-corporate competition outlined in this chapter, it allows for the evasion of the broader question of how humane and equitable working conditions and global standards can be established and enforced across space by processes of collective social regulation.19 In the case of China, corporate compliance with local labour law and standards also obscures the facts that standards are established (and unevenly enforced) by state authorities which, above all else, seek to facilitate capital.20 The authoritarian context of politics and governance works strongly against (but is incapable of suppressing entirely) political action from workers and

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groups within civil society directed towards improving labour rights, protections, and working conditions.21 At enterprise level, as noted above, independent trade unionism is illegal in China and where officially sanctioned unions are present they lack the necessary will, experience, resources or organic connections with workers to enable effective bargaining with employers to level up rights, wages, and conditions. Codes of conduct and associated ‘ethical audits’ may mitigate some of the most egregious abuses in the workplace but are limited in scope, prone to subversion, and as a form of corporate self-regulation suffer from the fundamental absence of independent worker voice and representation (Pun 2006).

Labour internationalism and experimentation with scale and network construction As discussed above, the articulation of labour movements to specific institutional and production regimes and the unevenness of their form, organizational capacity, and power across multiple spatial scales, is crucial to the prospects of developing an effective countervailing force to the ‘spatial fix’. Thus while it can be argued that ‘multi-scalar’ experimentation (in thought, strategy, organizational form and networkbased action) and revived labour movement internationalism do indeed provide new potential for recovering collective power and workers’ belief in new possibilities, the implicit optimism of such analysis must be tempered by a deeper understanding of the aforementioned structural constraints. As Coe et al. (2008: 285–286) have suggested this critical consideration of constraints and obstacles has been somewhat absent in the ‘labour geography’ literature, which nonetheless has provided productive explorations in theory and practice of conceptions of ‘scale’ and a powerful articulation of the unextinguished potential of human agency. Moreover, and as discussed in Lambert and Gillan (2007: 83–84), scale is conceived in different ways within this literature and a number of scholars have challenged narrow conceptions of bounded spatial scales that are situated in a hierarchy of significance (local/regional/national/global). In contrast, the preferred image of scale is as overlapping and multiple, where places are intertwined (and can be further networked together) and are ‘simultaneously global and local (and regional and national) without being wholly one or the other’ (Herod and Wright 2002: 8). Within neoliberal discourse globalization, global scale is presented as inevitable – a scale from which there is no escape, leading all counter

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initiatives to failure. As discussed in this chapter, the trajectory of the Australian whitegoods industry would appear to confirm the representation of global scale as overwhelming the local and eroding any sense of belief from workers and citizens that they can resist or influence restructuring and the spatial fix. However, in their study of a refrigeration plant in rural NSW, Lambert and Gillan (2007) suggest that there were also counter-veiling tendencies, which, in part, confirmed the optimism of the labour geography perspective on agency. Confronted by relentless restructuring, local trade union delegates determined to take action. The form of effective action, however, was far from selfevident and it was clear that the desire for action would dissipate in the absence of initiative and innovation. Key national leaders of the union reflected on the predicament and moved towards a commitment to exploring new strategic responses to restructuring. This involved a conceptual and discursive shift towards exploring new ways of working space within the corporate network and working towards a new model of unionism more appropriate to an era where global corporations dominate. In particular, there was a commitment to explore the potential of linking workers in geographically dispersed Electrolux factories through the formation of local action groups to connect unions and other civil society actors. Connectivity through cyberspace would allow for the opportunity for the transmission of common experiences and new strategic thinking on re-empowering the local. The union decided to form a research unit to feed information on corporate strategy to the action groups and to investigate the activation of a World Company Council (WCC) convened by the International Metal Workers’ Federation (IMF). The significance of the initiative resided in its representation of an alternative model of unionism, grounded in the local yet connected globally through the networking of place-based action groups. The introduction of a new ideas and initiatives for countering the spatial power of the corporation had an immediate empowering effect within the local, with workers and union delegates beginning to shift away from a hitherto pervasive sense of powerlessness and pessimism (Lambert and Gillan 2007). Despite this early success in countering fatalism, the realization of the new ideas and initiatives has proved, as yet, to be elusive. The WCC remains unformed, in part due to the estimated financial costs of convening such a body, and an early upsurge in enthusiasm has as yet failed to translate into sustained activity to convene and activate web-based local action groups within the corporate network. From

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2004–2007, Australian trade unions engaged in one of the most significant campaigns in their history by attempting to repeal industrial relations laws enacted by the conservative Federal government designed to erode common working standards, collective bargaining, and union representation. At the same time, unions have confronted the rapid erosion of the manufacturing sector as a whole within Australia with an acceleration of closures, relocations and downsizing in manufacturing sectors such as automotive components. Inevitably, therefore, limited resources and the attention of organizers are directed towards sites and sectors with larger numbers of workers and the most immediate and pressing concerns. In short, the need to engage energy and resources in ‘fire-fighting’ is a very real constraint to the necessary creativity and commitment required to sustain experimentation in scale and reworking union forms. This is a crucial problem that needs to be addressed; real organizational and institutional constraints that shape the strategic horizons of collective actors and which need to be understood, and overcome, to enable a shift from an understanding of the potential of new forms of action to the actual realization of this full potential. Similarly, new perspectives on labour internationalism offer potential for recovering agency and collective power by shifting away from established ideas, forms and spheres of action. In particular, the concept of a ‘new labour internationalism’ (NLI) suggests a need to escape from the narrowly bureaucratic-institutional forms of union internationalism towards dynamic action-based networks and a reengagement with ‘contentious’ forms of politics. In particular, the NLI assumes a global campaign orientation and social movement style of organizing, whilst the established internationals generally limit their action to political lobbying, social dialogue and attempts to apply a collective bargaining model globally. Identifying different forms of labour internationalism is pertinent, for in general, the established orientation has not challenged global corporations’ prerogative to command and produce space in shaping a new geography of production. In contrast, the NLI strives to make and contest scale so as to reconfigure the geography of power; hence labour geography is being played out in and through the NLI. In the south, the formation of the Southern Initiative on Globalization and Trade Union Rights (SIGTUR) is one expression of these tendencies. The SIGTUR was formed in May 1991 and now comprises democratic unions from 15 countries across Asia, Africa and Latin America. From the outset, this action-orientated global network chose not to work with any state-sponsored or company-dominated ‘trade union’ as the

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networked movement recognized that local power is the critical variable in constructing global networks within global corporations. International Labour Organization (ILO) Conventions 87 on Freedom of Association and 98 on collective bargaining were applied in the implementation of this strategic choice. SIGTUR attempts to facilitate multi-scalar networks to defend or extend labour rights and promote democratic forms of governance. In the past SIGTUR campaigns have centred on networked global protest actions over state and/or corporate backed repression, particularly in Korea, where leaders of the Korean Confederation of Trade Unions (KCTU) have been imprisoned on numerous occasions. These actions have generally taken the form of embassy protests across the global south. In one case, shipping boycotts were organized in South Africa to pressure the Australian government to abandon anti-union laws. SIGTUR also reflects a shift within the progressive wing of international trade unionism to search for new sources of power, linking geographically dispersed workforces within particular global corporations to assert basic rights. Although incipient, SIGTUR is beginning to facilitate experimentation in the construction of action-based labour networks within the production networks of global corporations. In particular, an active network is currently being constructed between Hyundai workers in Seoul and in Chennai. Leaders from the KCTU participated in a protest action of Chennai workers, which took the form of a human chain around the factory culminating in a flag-raising ceremony. The focus of the protest was the denial of all union rights in the factory. These contacts were then followed by a visit to the KCTU Hyundai union in Seoul by Indian workers from the Centre for Indian Trade Unions. The immediate aim is to coincide with the 2010 round of bargaining in Korea (where there are limited union rights) various actions to forward a simultaneous demand to extend rights for workers in Korea and concede basic rights in Chennai. A coordinating committee to realize this goal has been established. Thus far networking is limited to these contacts and meetings and will have to be further developed through cyberspace. In this the challenge is to be introduced and trained in interactive cyberspace networking through blogging and other new methods of intense transnational contact and idea exchange.

Conclusion This chapter has explored the dynamics of restructuring and the corporate spatial fix, with special reference to restructuring of the Australian

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whitegoods industry and the simultaneous emergence of new zones of production and bodies of workers in the same industry in the Asian region. While it has acknowledged the significance of differential patterns of historical development, economic structure, and forms of state intervention, it has also suggested that there is a common problem of establishing and exercising collective power for both established and emerging groups of workers, and within the production networks of global corporations a common sense of insecurity and the threat, to varying degrees of intensity, of the ‘spatial fix’. Silver (2003: 20) notes the dynamics by which labour struggles, of varying forms, emanate from the ‘making’ of ‘newly emerging working classes’ and from ‘working classes that are being unmade by global economic transformations as well as by those workers who had benefited from established social compacts that are being abandoned from above’. This may allow for the linkage of these various spaces and forms of struggle. Certainly, this chapter has suggested that there are incipient but very significant examples in practice of revived labour internationalism and multi-scalar experimentation in network construction to bridge the gap between workers and reconstitute collective power. In a spirit of critical reflection, however, it is crucial to avoid overdeterministic analysis which does not acknowledge and explore the structural constraints to the realization of new forms of power: the complex ways in which unions are embedded in specific (scaled) legalinstitutional environments; their articulation with state and politics; and the specificity of organizational structure, resource constraints, ideology, and leadership. This also provides an ongoing agenda for labour research and theorization that is grounded in the complexity and dynamism of contemporary practice. Notes 1 Hirst and Thompson (1996) argue that the term ‘transnational corporation’ (TNC) suggests a corporation that is stateless and no longer embedded in its country of origin, whereas the multi-national corporation (MNC) operates internationally but continues to be influenced and structured by its home country environment. Dicken (2007: 106–107) attempts to manage this problem of definition by arguing for a ‘broader definition’ of the TNC which recognizes the expanded global scale of corporations and their ‘power to coordinate and control operations in more than one country’ while, at the same time, recognizing that most TNCs ‘remain strongly embedded’ in their country of origin. We would agree with this perspective but prefer to use the term ‘global corporation’. 2 The study was based upon a pilot tested methodology used to develop a database on all announced production relocations in the United States. The

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report developed an analysis based on a sample of all production shifts in the first three months of 2004. Silver draws on the work of Erik Olin Wright to suggest that associational power stems from the capacity of workers to engage in collective organization and establish instruments of representation (unions, parties, etc.). Structural power stems from two sources: marketplace bargaining power, which relates to fluctuation and structure within labour markets, and workplace bargaining power, which relates to the ‘strategic location of a particular group of workers within a key industrial sector’ (Silver 2003: 13). In Europe, Italian white good manufacturers were among the most proactive exponents of the former strategy and moved to strengthen their panEuropean market share and distribution networks. Electrolux was the most prominent exponent of the latter strategy, and its success was perhaps best underlined by its acquisition of Zanussi in the early 1980s – a company that had been among the most prominent export-oriented Italian white goods manufacturing firms. This process, however, was perhaps not as unidirectional as this might suggest. Indeed, a debate within international business and strategic management literature questioned whether there was a competitive advantage in pursuing a global as opposed to a ‘localized’ (predominantly nationally focused) corporate strategy. In particular, Baden-Fuller and Stopford (1991) provided a sceptical assessment of the advantages of a ‘global’ strategy in the industry by arguing that consumer preferences for whitegoods and product specifications varied widely between nations; retail networks were primarily national, ‘market entry’ costs were high, and that a globally integrated strategy imposed huge organizational costs. In contrast, Segal-Horn et al. (1998) contended that, by the 1990s, there were supply side (production technology advances and organizational learning) and demand side changes (consumer preferences) that made regional and global strategies predominate. In China, for instance, Electrolux and Whirlpool have invested heavily in joint venture and wholly owned manufacturing subsidiaries. These have been of greatest value to the global corporations as production ‘platforms’ for established markets in North America and Europe. However, in the Chinese consumer market they have faced intense competition from local manufacturers such as Haier and the Kelon group who are able to produce basic product lines at less cost and who have strong local distribution and retailing networks in place. In response, Electrolux, Whirlpool and BoschSiemens have focused on marketing quality ‘high end’ products. In a similar manner to India, these efforts in local consumer markets were related to long-term strategic positioning rather short-term profits. In fact, over a number of years Electrolux has consistently made an operating loss from its production versus local sales in China (Euromonitor International 2006). In India, Electrolux has frequently faced excess capacity and ongoing losses in regard to its operational investment. Its inability to compete with Indian brands/manufacturers and lower cost Korean and Chinese manufacturers led to a strategic shift in 2005 when the corporation sold its local production facilities to the Indian firm Videocon. A related partnership deal allows Electrolux, on the one hand, to feed a small range of niche products into

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the Indian firms well-developed distribution network and, on the other hand, to source low cost appliances manufactured by Videocon that can be rebranded as Electrolux products and sold in export markets. According to the Economist Intelligence Unit, by 2002 LG had 15,000 employees in China and was a leading manufacturer of televisions, CD-ROM drives, microwaves, monitors, air conditioning units and washing machines. Indeed, there were even suggestions that China was of such strategic priority that LG considered transferring its corporate HQ to China (Economist Intelligence Unit 2002). Haier opened a US$30 million refrigerator manufacturing plant in South Carolina in the United States in 2000 that was scheduled to produce around 200,000 refrigerators a year (Biers 2001). The construction of the plant was symbolic of Haier’s plans to make an aggressive push into the North American market for whitegoods and by 2001 Haier had claimed a significant share of the US market for small fridges (bar fridges), signed agreements with major US retail chains, and commenced a significant marketing campaign (Biers 2001). Haier has acknowledged that it has acquired production facilities in developed nations ‘for the sake of brand building rather than manufacturing’ (Mei Fong 2007). The bid generated political concern in the US as to the expansion of Chinese corporate control and was thwarted by a successful counter-bid from Whirlpool Corporation which was not impeded by US anti-trust law. Email ltd and Fisher and Paykel. The latter was in fact a New Zealand-based and owned firm that was a late entrant in whitegoods manufacturing in Australia, constructing a refrigeration manufacturing plant in Brisbane, Queensland in the late 1980s. Union organizer access to worksites was constrained and in collective bargaining negotiations management at Electrolux attempted (unsuccessfully) to use legislation to circumvent trade unions by offering employees a nonunion collective agreement. See Lambert et al. (2005). The so-called Work Choices legislation provided incentives for offering individual contracts over collective agreements and restricted the capacity of workers to take industrial action, coordinate bargaining on an industry or sector wide basis, bargain various clauses in collective agreements, and limited the ability of union officials to gain entry rights to worksites for the purposes of organizing. While the Conservative government which introduced these changes was defeated in a national election in 2007 and many aspects of the regime were repealed, especially the privileged place of individual contracts, the industrial relations system retains powerful limitations on strike action and coordinated bargaining. The corporation also announced the closure of production facilities in New Zealand with a combined loss of over 1000 jobs across all existing sites. In Cleveland (Brisbane) 300 workers lost their jobs. As noted by the mayor of the local government authority the impact of the closure was not limited to direct job losses but also associated stress on families and the general economic and social wellbeing of the local community (ABC News Online 17 April 2008; ABC News Online 21 April 2008). This is the factory regime that has been most frequently discussed in subsequent scholarship, especially with regard to the question of labour control,

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consent, and ideology. As Nichols et al. note the form of regime varies due to different types of labour process, competition, and the degree and form of state intervention. Electrolux, for instance, includes in its Sustainability Report 2007 a section on restructuring and production relocation with the sub-headings ‘dialogue delivers fair outcomes’ and ‘boost to low-cost economies’. For their part, local governing authorities remain focused on attracting investment and, consequently, are thought to be reluctant to enforce regulation or intervene in labour grievances (Wei et al. 2005). These are industries where the IMF has a global presence (albeit uneven and primarily in the form of institutional representation rather than direct intervention and action) via its various affiliate metalworking unions. While providing credible fieldwork-based reports on union recognition, compliance with local labour standards, and minimum wage rates, the sources and scope of data obtained for this report is admitted by the researchers to be partial and uneven – in large measure owing to the inherent difficulties of conducting labour/rights related research in China (AMRC 2007: 43–45). The Electrolux Sustainability Report 2007, for instance, suggests that supplier audits encompass health and safety, discrimination, working hours, wages, child and forced labour, and compliance with local law. International Framework Agreements are perhaps the most prominent instrument to emerge from international labour movement institutions. However, as with voluntaristic internal codes of conduct, they are typically very limited in scope and suffer from uneven enforcement. For Pun and Smith (2007: 31) a ‘dormitory labour regime’ based on internal migrant labour has been ‘constructed within China by both capital and state’. In their view ‘capital flight to China is to a regime where labour power is massively weakened relative to the power of capital and the power of labour in the Western manufacturing countries’ (2007: 42). Harvey (2006: 34) has suggested that what has emerged in China is a ‘particular kind of neo-liberalism interdigitated with authoritarian centralized control’, although, as he further notes, this form may indeed be most compatible with the inherent ‘anti-democratic tendencies’ of neoliberalism. In this way, Harvey (2006: 41) suggests that ‘China’s competitive weight’ in the global economy may serve to ‘add momentum to this trend towards authoritarianism’.

References ABC News Online (2006) ‘Electrolux Promises Other Plants Safe’, 15 September. Available from http://www.abc.net.au/news/newsitems/200609/s1741485.htm ABC News Online (2008) ‘Fisher and Paykel Urged to Rethink Factory Closure’, 21 April. Available from http://www.abc.net.au/news/stories/2008/04/21/ 2223252.htm ABC News Online (2008) ‘Union Locked Out of Fisher and Paykel Plant’, 17 April. Available from http://www.abc.net.au/news/stories/2008/04/17/2220029.htm AMRC (Asia Monitor Resource Centre) (2007) Report on Industrial Relations and Working Conditions in IMF-related TNCs in China, Geneva: International Metalworkers’ Federation. Available from http://www.imfmetal.org/main/files/ 07050810105979/IMF_china_report_EN.pdf

Michael Gillan and Rob Lambert 155 Australian (2008) ‘Electrolux Jobs to Rely on Christmas Sales’, 16 December. Australian (2008) ‘Fisher & Paykel to Shut Brisbane Plant’, 17 April. Australian Industry Group (2006) Manufacturing Futures: Achieving Global Fitness, Australian Industry Group, April. Baden-Fuller, C. and Stopford, J. (1991) ‘Globalisation Frustrated: The Case of White Goods’, Strategic Management Journal, 12 (7): 493–507. Bauman, Z. (2000) Liquid Modernity, Cambridge: Polity. Biers, D. (2001) ‘Taking the Fight to the Enemy’, Far Eastern Economic Review, 29 March: 52–54. Bronfenbrenner, K. and Luce, S. (2004) The Changing Nature of Corporate Global Restructuring: The Impact of Production Shifts on Jobs in the US, China, and Around the Globe. Washington, DC: US-China Economic and Security Review Commission. Available from http://digitalcommons.ilr.cornell.edu/cbpubs/16/ Burawoy, M. (1985) The Politics of Production, London: Verso. Castells, M. (1997) The Information Age. Volume II. The Power of Identity, Oxford: Blackwell. Coe, N.M., Dicken, P. and Hess, M. (2008) ‘Global Production Networks: Realizing the Potential’, Journal of Economic Geography, 8 (3): 271–295. Debelle, P. (2006) ‘Electrolux Shock Prompts Aid Package’, The Age, 15 September. Dicken, P. (2007) Global Shift: Mapping the Changing Contours of the World Economy, 5th edition, New York and London: The Guilford Press. Economist Intelligence Unit (2002) ‘The Chaebols’ China’, 14 January. Euromonitor International (2006) ‘Electrolux Profile’, December. Euromonitor International (2008) ‘Domestic Electrical Appliances – World’, February. Gillan, M. and Lambert, R. (2006) ‘Whitegoods’, in Peter Waring and Mark Bray (eds) Evolving Employee Relations: Industry Profiles from Australia, North Ryde (N.S.W.): McGraw Hill. Harvey, D. (2000) Spaces of Hope, Edinburgh: Edinburgh University Press. Harvey, D. (2006) Spaces of Global Capitalism: Towards a Theory of Uneven Geographical Development, London and New York: Verso. Henry, M. (2008) ‘Electrolux Increases Profitability in Australia, says CEO’, Current.Com.au. Available from http://www.current.com.au/2008/02/11/article/ XAOOYECPNQ.html Herod, A. (2001) Labor Geographies: Workers and the Landscapes of Capitalism, New York: Guilford Press. Herod, A. and Wright, M. (2002) Geographies of Power: Placing Scale, Oxford: Blackwell. Hirst, P. and Thompson, G. (1996) Globalization in Question: The International Economy and the Possibilities of Governance, Cambridge: Polity Press. Holding, R.L. (1999) ‘Globalization: The Second Decade’, Appliance Manufacturer, May: 34–40. Howell, J. (1998) ‘Trade Unions in China: The Challenge of Foreign Capital’, in G. O’Leary (ed.) Adjusting to Capitalism: Chinese Workers and the State, New York: M.E. Sharpe. Ihlwan, M. (2005) ‘Korea’s LG: Will it be the Next Samsung?’, BusinessWeek, 24 January. Korea Times (2001) ‘More than Half of ROK Electronic Goods Produced at Overseas Factories’, 6 August. Lambert, R. (2002) ‘Labour Movement Renewal in the Era of Globalization: Union Responses, in the South’, in J. Harrod and R. O’Brien (eds) Global Unions?

156 Trade, Labour and Transformation of Community in Asia Theory and Strategy of Organized Labour in the Global Political Economy, London: Routledge, pp. 185–203. Lambert, R. (2004) ‘Death of a Factory: An Ethnography of Market Rationalism’s Hidden Abode’, Anthropological Forum, 14: 297–313. Lambert, R. and Gillan, M. (2007) ‘Spaces of Hope? Fatalism, Trade Unionism and the Uneven Geography of Capital in Whitegoods Manufacturing’, Economic Geography, 83 (1): 75–95. Lambert, R. and Webster, E. (2004) ‘Global Civil Society and the New Labor Internationalism: A View from the South’, in R. Taylor (ed.) Creating a Better World: Interpreting Global Civil Society, Bloomfield, Conn.: Kumarian Press, pp. 82–116. Lambert, R., Gillan, M. and Fitzgerald, S. (2005) ‘Electrolux in Australia: Deregulation, Industry Restructuring and the Dynamics of Bargaining’, The Journal of Industrial Relations, 47 (3): 261–275. Le-Min Lim (2006) ‘Foreign Investment in China Takes a Chance Inland’, International Herald Tribune, 17 October. Liu, Ling (2005) China’s Industrial Policies and the Global Business Revolution: The Case of the Domestic Appliance Industry, London: Routledge. Mei Fong (2007) ‘Haier’s Chairman on His Quest for a Global Brand’, The Wall Street Journal Asia, 12 March. Munck, R. (2003) Globalisation and Labour: The New ‘Great Transformation’, Delhi: Madhyam Books. Nichols, T., Cam, S., Chou, W.G., Chun, S., Zhao, W. and Feng, T. (2004) ‘Factory Regimes and the Dismantling of Established Labour in Asia: A Review of Cases from Large Manufacturing Plants in China, South Korea and Taiwan’, Work, Employment and Society, 18 (4): 663–685. Polanyi, K. (2001) ‘The Great Transformation: The Political and Economic Origins of Our Time’, Boston, MA: Beacon Press. Pun Ngai (2006) ‘Capital’s incorporation of Labor Rights and Corporate Codes of Conduct in a Chinese Dormitory Labor Regime’ in Eyferth, J. (ed.) How China Works: Perspectives on the Twentieth-century Industrial Workplace, London and New York: Routledge. Pun Ngai and Smith, C. (2007) ‘Putting Transnational Labour Process in its Place: The Dormitory Labour Regime in Post-Socialist China’, Work, Employment and Society, 21(1): 27–45. Roberts, P. (2006) ‘Global Machinations’, Australian Financial Review, 10 April. Segal-Horn, S., Asch, D. and Suneja, V. (1998) ‘The Globalization of the European White Goods Industry’, European Management Journal, 16 (1): 101–109. Silver, B. (2003) Forces of Labor: Workers’ Movements and Globalization since 1870, Cambridge: Cambridge University Press. Solvell, O. (1992) ‘The White Goods Industry’, in Yves Bourdet (ed.), Internationalization, Market Power and Consumer Welfare, London: Routledge, pp. 132–133. Webster, E., Lambert, R. and Bezuidenhout, A. (2008) Grounding Globalization: Labour in the Age of Insecurity, Oxford: Blackwell. Wei, Z., Nichols, T. and Cam, S. (2005) ‘China-White Goods and the Capitalist Transformation’, in Theo Nichols and Surhan Cam (eds) Labour in a Global World: Case Studies from the White Goods Industry in Africa, South America, East Asia and Europe, Basingstoke: Palgrave Macmillan, pp. 92–112. Xinhua News Agency (2000) ‘Chinese Entrepreneur Striving to Create Global Brand Name’, 24 December.

7 Governance, Labour and Uneven Development: The Political Economy of the Port Sector in South and South-East Asia Douglas Hill

In understanding how changes in global capitalism might affect local communities, the transformation of ports provides an important point of examination of the economic, political and social impacts on a number of spatial scales: global, regional, national and local. The port sector has a significant role in the continual expansion, crisis and renewal of global capitalism, not least because the majority of capitalist expansion into hitherto peripheral parts of the globe continues to involve sea-borne traffic. The two most significant trends in the past 30 or so years in this sense have been containerization, the process where all goods (whether it is electronics, garments or foodstuffs) are transported in standard sized containers (Cudahy 2006), and the globalization of maritime trade, where ports that were previously served by different operators have become integrated into a network dominated by just a few corporations (McCalla et al. 2004). Both these processes have both been major drivers of global economic change because they have facilitated time-space compression (Agnew 2001; Harvey 1989), which has had dramatic impacts on the growth of export processing zones, just-in-time manufacturing and inter-port competition. While ports clearly have a significant role in the global economy, and their reform is central to many economic growth strategies, less certain are the political conditions associated with the structural transformation of any particular port sector so that it operates in a way that is most desired by global capital and, importantly, is socially equitable and achievable. This is particularly in the case of old-style ports, often historically located in the middle of a city and employing many thousands of people in both formal and informal sectors. The major shift in the mode of port management and governance has been towards the now prevalent landlord model of port operation, 157

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where the state retains the overall control of the port but the private sector runs processes day-to-day, including where the labour is drawn from and the conditions under which they work (Brooks 2004). In keeping with this, labour restructuring is one element of the politics of port sector transition that is important to consider, particularly the shift from a labour intensive port system that historically predominated to a new era where contemporary port operations are capital intensive and driven by technological change, which usually requires a substantial reduction in the number of workers. The standardization of port operations globally is based around minimizing turn-around times, which has meant that there is pressure to shed labour and adhere to norms of technology, efficiency and cost. However, dockworkers and port sector workers wield disproportionate power in affecting global trade if they decide to strike, which often occurs at times of major restructuring, in the process demonstrating that particular sites can serve as potent illustrations of the continuing tension between capital and labour (Turnbull and Wass 2007; Turnbull 2000). The transformation of both governance and labour relations in the sector at the global, national and local scales means that individual ports remain highly contested nodes in the global economy and thus occupy a significant place in determining the social, economic and political impacts of restructuring at different scales. The transformation of governance and labour relations examined in this chapter analyses the transition from a wholly state-owned port that utilizes unionized labour to a port whose berths are operated by the private sector utilizing contract labour which may or may not be able to access union representation. In the case of state-owned ports, labour is often drawn from a dock labour board or equivalent labour organizations, with strong links to trade unions. In contrast, the berths under a landlord model are usually run by a subsidiary of a global multinational port and shipping corporation such as Hutchinsons or Maersk, and the labour is often highly casualized – sometimes drawing on foreign or migrant labour that work for less money and with much reduced conditions. Ports become significant material and symbolic battle grounds for the resolution of conflicts between broader socio-economic forces in the process of undertaking this transition, so that the port is best understood in an economic sense as part of the ongoing contradictions between capital, labour and the state. The political and social changes that these transitions induce can often lead to instability at various scalesfrom the port scale to the national scale – even if the economic revenue subsequently earned from the port is raised with benefits to the wider economy.

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This chapter explores the dynamics of two such transitions amongst ports in Asia; one port sector that accomplished the transition to private sector run operation relatively smoothly, is Port Klang in Malaysia, and one port where this process has led to political upheaval of the highest order, is Port of Chittagong in Bangladesh. As colonial era ports that remain central to their respective economies in the contemporary era, both Port Klang and Chittagong Port have needed to undertake certain structural changes to adapt their operations to the contemporary global economy. In terms of the way that labour is restructured in response to these changes in maritime trade and port management, our two case study ports are in stark contrast to each other. In 1985 all but a handful of those previously employed by Klang Container Terminal transferred their contracts over to a private sector company (Tull and Reveley 2002), after which time they began to work under conditions that have subsequently been cited as a model for tripartite labour privatization and well managed divestment (Kikeri 1997). In contrast, Chittagong has become synonymous with smuggling, long delays, entrenched payments for speed money, and the continuing persistence of intermediaries involved in the clearance and movement of goods. While Port Klang is firmly entrenched within the top 20 container ports worldwide (International Association of Ports and Harbours 2007), a recent report compiled by the World Bank cites Chittagong Port as having: overstaffing, labour strikes, cumbersome customs procedures, outdated and inefficient work rules, outdated and inflexible management (World Bank 2003: 38). The delays that are involved as a consequence of these conditions means that Chittagong Port is out of step with the one-stop, single window clearance transactions occurring in most major ports throughout the world and so global maritime trade corporations are less likely to use the port. This has huge consequences for the Bangladesh economy, particularly given its reliance on low wage manufacturing such as the ready made garment (RMG) (Rock 2001) and shrimp industries (Pokrant and Reeves 2001). Chittagong Port is centrally located in the Bay of Bengal and so could develop as a trans-shipment point between third parties outside of Bangladesh, something that Port Klang has done very well in attracting trans-shipment traffic transiting through the Straits of Malacca to or from Asia and Europe. The lack of maritime operators using Chittagong Port hampers the economic integration of the entire north

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eastern part of South Asia, so that Nepal, Bhutan and NE India would all potentially develop stronger trade links if Chittagong Port was efficient. This is particularly because the alternative major port in the region, Calcutta Port, is itself beset with problems (Hill 2008). There are also concerns within the region over Chittagong Port’s lax controls for regional security, because drugs, guns and money have been entering or leaving South Asia through here. As well as being useful examples to discuss the relationship of political legitimacy to transformation on the broader national scale, Port Klang and Chittagong Port also illustrate variation in the nature of labour transition within the scale of the port. While accepting that this process has been largely successful at Port Klang this paper argues that it is an example of transition carried out with constrained political legitimacy, because the conditions offered to workers were comparable to what they were already receiving and because the Mahathir government’s hostility to organized labour had by then meant that in-house enterprise unions were the only mechanism for the negotiation of labour matters by the time of the privatization. In contrast, there was almost no legitimacy in Chittagong Port for such a process, and this example suggests that the process of port transformation may sometimes be problematic, particularly if there is a wide array of intermediate classes involved. Chittagong Port has attempted a similar process to the corporatization of Port Klang with donor encouragement and backing but this proved politically difficult, culminating in the events of 2007 when the army acted as a strike breaker by surrounding the port; strikes were thereafter banned and 900 workers aged 57 or above were forced to retire. According to 2007 estimates, there were 4140 dockworkers remaining in March 2007 immediately after the takeover (United News of Bangladesh 2007a) and by May 2007 the dockworkers board had effectively been abolished, with reports suggesting as many as 5000 dock and merchant labourers would be retrenched (United News of Bangladesh 16 May 2007c).

Governance in the port sector Governance is frequently emphasized as the missing component of economic and social development and this is also the case with the port sector (Brooks 2004). The discussion of strong states, developmental states and failed states (Boas and Jennings 2005; Chang 2002) are all a significant part of the discourse around governance and there is an equally varied literature that discusses how these might be related

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to democratic processes. Some writers have sought to modify the exuberant discussion of governance and economic transformation by noting that the Tiger economies often reduced labour rights in the quest for increased global economic integration (Leftwich 1996). We might think of these processes in the Gramscian sense of consent and coercion, since each state contains elements of authoritarianism and mechanisms for legitimizing the interests of a particular class on the basis of appeal that it projects as a generalized interest of all classes. Acknowledging that consent plays such a role suggests we examine, what role, if any, for politics of governance in developing countries; and in particular how is it associated with corruption or in the equitable treatment of workers? It argues that Chittagong Port and Port Klang are in contrasting situations in terms of the broader regulatory environment, regime types and labour relations and that these differences point to much broader patterns in state-society relations and the functioning of the economy. Most commentators would classify Malaysia, which has ambitions to be an industrialized country by 2020, as a second generation, exportoriented ‘Tiger’ economy. The development of the Malaysian economy has been accompanied by a growth in wages and living standards, particularly among the middle class. This economic success has been underlain by a political system that institutionalizes political populism on the basis of ethnicity. Indeed, the trajectory of the Malaysian political economy cannot be understood without reference to the political conditions that have existed due to the dominance of the Barisan Nasional (BN). This is a coalition of parties dominated by the United Malays National Organization (UMNO) as well as parties that represent ethnic Chinese (MCA) and Indian (MIC) constituents. Despite the generalized rise in standards of living, the pattern of Malaysian development has continued to promote inequalities. These include geographical differences between the prosperous western parts of Peninsula Malaysia and elsewhere and differences between rural and urban areas. In terms of class, the politics of patronage has meant that close business associates of the ruling political parties have disproportionately benefited, leading to criticism that this system is characterized by crony capitalism (Gomez 2002). While there have undoubtedly been gains in prosperity in the economic strategy pursued by Malaysia, this has been accompanied by increasingly authoritarian tendencies, although this is unevenly exercised throughout society. The changes in Malaysia’s political economy are exemplified by the transformation of its major ports, a process initiated by the corporatization of Port Klang in 1985; a

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symbolically and economically significant moment in the history of Malaysian political economy. The port is a vital part of the development of an industrial base centred in the Klang Valley and so has contributed significantly to the country’s transformation into a second generation Tiger economy. Further, the port became a national symbol for this process and an argument that under UMNO class and ethnic accommodation was possible amidst growing economic prosperity. In contrast, Bangladesh is often classified as a failed state, (although such terminology is highly problematic), since it consistently reverts to military rule and contains parasitic state and non-state sectors appropriating surplus for private gain (Kochanek 2000). The connections between this failed state and corruption is often made explicit in the case of the operation of Chittagong Port, which Transparency International named as the ‘world’s most corrupt’ in 2004. The debate over why Chittagong Port continued to display these characteristics has been ongoing for many years and intensified after the expiration of the Multi-Fibre Agreement (hereafter MFA) in January 1st 2005, which meant that Bangladesh’s highly cost sensitive RMG sector became more exposed to competitive pressures (Das 2005). At this time, attempts to establish a container port at Patenga, just outside Chittagong Port by Stevedore Services of America were delayed by large-scale political agitation and were squashed by the High Court. The interim military government that took control of Bangladesh in January 2007 made reform of the port’s operations a priority. The license to operate the terminal was finally given to a local company, Saif Power Tech, on a two-year agreement following the effective military takeover of the port. Although Saif Power Tech had an agreement to run the terminal a considerable period before this time, the firm was unable to do so because of trade union resistance (Reuters News 5 March 2007). The ramifications for Bangladeshi politics and society are still being felt, as former Prime Minister Khaleeda Zia was jailed over her influence in awarding a container terminal license, (prior to it being awarded by the interim government to Saif Power Tech) to Global Agro Trade (GAT). Others accused in this case include a former Chittagong Port Authority Chairman; Directors of GAT, and Jahanara Akbar, the wife of former shipping minister Akbar Hossain (BBC Monitoring South Asia 3 September 2007). Given the fact that one of the rationales for the interim government seizing control of the country was the strike that paralysed the port prior to the January 2007 elections, it is understandable that trade unions have been retrospectively blamed for all of the ills of Chittagong

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Port. However, as the rest of the chapter will argue, the reasons behind the structural problems of Chittagong Port as an inefficient port are not particularly associated with union-initiated political upheaval over the longer term but rather are connected to the number of intermediaries that are involved in transactions in the day-to-day operations of moving goods through customs, clearing the docks or being transhipped elsewhere. While the speed of transactions through the port has increased enormously since the military takeover, the very process of transforming the port in this way suggests a challenge to a simple association between the relationship between governance, labour, democracy and economic development.

Contextualising Port Klang and Malaysian political economy In many ways, Port Klang is emblematic of Malaysia’s development experience and so by examining this sector we gain a greater understanding of the internal dynamics of the Malaysian political economy and its changing relationship to global forces. Over the long term, the decline of autonomous unions and the growing significance of foreign workers that port labour restructuring entails suggest that the benefits enjoyed by workers at Port Klang during the initial era of the port’s privatization are being replaced by more precarious and insecure employment. Port Klang was historically an important rubber and oil palm port, dating from the time of its colonial period as Port Sweetenham and in the post-colonial period the port was developed to compete with the Port of Singapore as a major hub for trans-shipment, simultaneously developing rapidly in conjunction with the rest of the Klang Valley as the national transportation network expanded. While the Port Klang Authority (PKA) now supervises three major operators (Northport, Westport and South Point), in this chapter we concentrate on Northport. Its operations include container, general, dry bulk, liquid bulk and passenger handling terminals and supports a highly diversified adjoining industrial sector. Its continuing rapid growth over the past few years has been assisted by its strategic position at the edge of the Malacca Straits, one of the busiest maritime trade zones in the world. This means that it is a perfect trans-shipment point for the huge volume of traffic that comes through on the Asia-Europe route. The corporatization of Port Klang was an early statement of how Malaysian political economy after the institution of the New Economic Policy (NEP) would involve the state actively creating the conditions

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for economic growth, employ mechanisms for reconciling this with labour, and supporting differential participation in the Malaysian economy on the basis of ethnicity. In assessing the nature of the relationship between the state, labour and capital and their correlation with rent-seeking, Jomo and Gomez, argue that: Accumulation in the ‘internationalized’ sectors of the economy has not been significantly undermined by the magnitude and nature of these rents, but has instead ensured much of the growth and dynamism of the Malaysian economy. The continued and recently enhanced allocation in favour of industrialization, especially of the export-oriented variety…has ensured rapid growth (Jomo and Gomez 2000: 298).

Port Klang and corporatization Port Swettenham, as the current Port Klang was previously known, was originally developed to support the plantation economy of the colonial era and so was mainly used as a cargo depot for rubber based on its connections to the rail network. The development strategy until the 1960s was based on import substitution policies combined with an emphasis on rural development and economic diversification (Jomo and Todd 1994: 128). Ethnic Chinese and Indians were dominant in the ranks of the domestic capitalist class and as the Malay economy grew, so the port expanded its operations. In the post-World War Two period, there were tensions about the formation of a Malayan Union, which entailed the incorporation of territories that had been directly under British control as well as those territories that had merely accepted advisors from Britain but had not been directly ruled from London. Concerns about the strength of Singapore from other parts of the Union were reflected in debates about the improvement of the port sector. For most of the 1960s, Port Swettenham was overly congested and was losing productivity in the midst of a tremendous increase in cargo, which saw increased numbers of ships and income. Planning concentrated on upgrading infrastructure and forging closer links between railways and port authorities to cater to the industrial growth occurring in new centres such as Petaling Jaya (Far Eastern Economic Review 1965: 238). Increased handling resulted from an expansion of exports of iron ore, rubber, and tin ingots as well as from a reduction in port charges. This meant that in 1967 Port Swettenham got a greater share of cargo than normal from Singapore (Far Eastern Economic Review 1967: 270).

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By 1968 the port authorities began to look at constructing additional wharves (Far Eastern Economic Review 1969: 228). As occurred with all matters of economic and social development, the expansion of Port Klang from 1969 onwards was influenced by shifts in Malaysian politics. Although the early import substitution policy enjoyed some limited success, built on high prices for its major commodities, the strategy had also resulted in a growing disparity of income among different ethnic groups. These growing disparities were to have both political and economic consequences. Race riots in 1969 and the subsequent imposition of a period of Emergency rule (1969–1971) saw a change in direction. The New Economic Policy (NEP) was introduced in 1971 as an attempt to foster a more inclusive growth pattern, principally through the promotion of the interest of the bumiputras (sons of the soil) by increasing their participation in business either directly or through trust companies set up on their behalf. The NEP led to an increase in government involvement in all sectors of the economy, an export orientation and greater reliance on foreign capital. These changes affected Port Swettenham in two ways. First, there was a concerted effort to hire Malay workers, a trend which continues to this day. Second, export-led economic growth meant greater emphasis was placed on upgrading the facilities of the port, particularly since the management of the port were sufficiently prescient to realize the need for early adaptation to containerization. Impetus for much of this development was the initial loss of trade to Singapore that containerization had entailed. The Malaysian response was to attempt to develop Port Klang as a rival container port to Singapore. The focus on adapting to containerization was bolstered by substantial outlays in the Second Malaysia Plan, in 1971, which allocated M$176 million for container facilities and wharves at Port Swettenham (Far Eastern Economic Review 1972). The haulier Kontena Nasional which was set up in 1973 was a joint venture between Peras, MARA and MISC (the National Shipping Line). The period since the introduction of the NEP has seen the Malaysian economy grow rapidly and diversifying from its base of tin, rubber, petroleum and tropical timbers to a greater emphasis on manufacturing, including electronics and semiconductors (Gomez and Jomo 1999). A major element of the economic strategy instituted under Mahathir Mohamad, Malaysian Prime Minister from 1981 onwards, was increased cooperation between the government and the private sector. This strategy was largely successful, due in large part to infusion of sizeable quantities of foreign direct investment (FDI), particularly from East

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Asia. The areas that have undergone some form of privatization in Malaysia include major infrastructure provision, such as ports, airports and highways. From 1983 there was substantial support for privatization of Port Klang from both the Malaysian government and private sector organizations, and the possibility was raised in the Fifth Malaysian Plan 1986–1990. The highly profitable container terminal was the first part to be corporatized, with the setting up of the Kelang Container Terminal (KCT). Moveable assets were sold and land and fixed assets were leased for 21 years under a formal agreement. It was not until the end of January 1986 that the representatives of the Transport Ministry, Konnas Terminal (KTK), and KCT agreed to the conditions of the sale of the container terminal. The KPA then issued an operating license to KCT for the provision of container terminal services and facilities for the same period (21 years). Konnas Kelang Sdn Bhd (KTK), which was an 80:20 joint venture concern between Kontena Nasional and P&O Australia Limited, acquired 51 per cent of KPA’s shares in KCT by private tender. The 1990s marked a second round of privatization, with the Malaysian Industrial Development Authority approving 250 projects in 1990 alone. Legislative changes, in the form of the Ports (Privatization) Act 1990, cleared the way for the second phase of privatization in Port Klang (Cassey Lee, 2003: 4). This was achieved in 1992 when the rest of the port’s operations were privatized and Kelang Port Management Sdn Bhd. (KPM) took over the rest of the port’s operational services in Northport and Southport from Kelang Port Authority on a 21-year lease. KPM is wholly owned by Kontena Nasional, which itself was a subsidiary of Permodalan Nasional Berhad (Malaysia’s biggest fund manager). This privatization phase included the transfer of responsibility to KPM for 4000 port authority employees, who received a 15 per cent increase in salary plus one increment. From August 1993 the Kelang Port Container Terminal began operating as a revenue earning arm of Kontena Nasional. As Jomo and Syn have pointed out, one needs to bear in mind that the definition of privatization used in the case of state-owned enterprises such as Port Klang is not necessarily about the full involvement of the private sector and can take on a number of forms. In this case, 90 per cent of KPA shares remained in the hands of the government, with the remaining 10 per cent being with P&O (Jomo and Syn n.d.: 28), so that overall the KCT remains 88.7 per cent owned by government-owned enterprises. They argue that there was in fact a lack of transparency in the choice of P&O as one of the partners: It is not self evident that divestiture was necessary for the change in management. It is also not clear that P&O offered the most compet-

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itive management contract available since there never was any competitive (eg tender) process involved in determining the new managers of KCT (ibid). In reviewing the outcomes of the divestiture from the perspective of the welfare gains to all parties, Jomo and Syn conclude by asserting that there is little to suggest that the same welfare benefits would not have been obtained if the KCT was still fully KPA owned with the changed management. The divesture was, from their perspective, more closely related to gaining political momentum for the rest of the economic programme that was mapped out under Mahathir, and the container terminal was a perfect candidate for this since it was relatively uncontroversial, was profitable, and would remain so given the growth in international trade. It is in this context, of a government trying to generate political goodwill for a broader programme of economic transformation that we must understand the change in labour relations that occurred at the time of divestiture.

Labour relations in Port Klang Just as changes in the governance regime of Port Klang are linked to broader changes in political economy, to understand labour relations the historical juncture needs to be considered – the relationship between capital and labour that was prevailing when Port Klang was corporatized reflected a broader trend within industrial relations in Malaysia, so that the industrial climate in Malaysia was less favourable to resistance to the changes to the port. The industrial relations system in Malaysia changed when Tun Abdul Razak developed a tripartite approach as part of the objective of moving away from unions having a strong impact, when the New Economic Policy was enacted. This was accompanied by increasingly repressive labour laws, which were strengthened in 1971, 1976 and 1980. Successive governments during this period sought to reduce the organizational capacities and effectiveness of the union movement. The impetus for the 1980 Amendment was the Malaysian Airline System (MAS) strike in 1978–79, which resulted in the de-registration of the union and the imprisonment of activists under the Internal Security Act (ISA). The International Transport Workers Federation (ITF) attempted to intervene in the dispute by supporting the Airline Employees Union (AEU), to which the MAS workers were affiliated. In solidarity, workers at Port Klang threatened to take strike action but were ultimately silenced by government intervention (Jomo and Todd, 1994: 142–143, 145).

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The 1980 Amendment provided the framework for a more repressive industrial relations climate during the tenure of Mahathir Mohamad, as the right to strike, organize and collectively bargain became more closely regulated. After the ‘Look East Policy’, there was growing encouragement of in-house unions, whereby the focus of bargaining shifted to the enterprise level (Todd et al. 2004: 3). The government held negotiations with relevant unions at Port Klang and the resulting agreement included provision that KCT would employ all existing employees of KPA at the Kelang Port Container Terminal on overall terms and conditions no less favourable than those enjoyed at KPA. Following these negotiations, workers were given assurances of employment for five years. Further, the 700 affected employees were given the option of either taking early retirement, joining the new company, or continuing to work for the KPA. A deal was brokered so that workers were given a 5 per cent stake in the Kelang Container Terminal. To the extent that this has been labelled a success, the privatization of labour in Port Klang is at least partly due to the fact that there was little political resistance. In this sense, the transition at Port Klang is an exemplar of the model proposed in the World Bank’s Port Reform Toolkit (2007), which suggests an initial tripartite negotiation process involving government, labour unions and the private sector. The Bank recognizes that there may be resistance to these moves but argues that unions must recognize that restructuring is in their member’s long-term interests. In its emphasis on tripartite negotiation and a phased transition with support to affected sectors, the combination of transitional strategies suggested by the World Bank for Port reform mirrors the approach taken to labour-restructuring in other sectors (Kikeri 1997). One element of this preferred strategy is to phase out the workforce by voluntary retirement. When this is not possible, or is insufficient, the workers may be employed casually, given reduced hours or offered a compensation package to ease the process (World Bank 2007: 326–334). In Port Klang, the transition to privatization has been hailed as a success largely because wages and productivity both subsequently increased, the latter assisted by retraining (Kikeri 1997: 12). However, the industrial climate that prevailed at this time arguably discouraged militant activity. The Klang Containers Terminal Staff Union (KCTSU) was at the time of divestment affiliated with the country’s peak union body, the Malaysian Trades Union Congress (MTUC), which had been under constant attack during the 1970s and 1980s. The KCTSU resisted attempts to register itself as an in-house union of the National Union of Commercial Workers (NUCW), since the latter group was not an affiliate of the MTUC (Jomo and Todd 1994). Far

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from proceeding from a position of strength, organized labour at Port Klang was under pressure to conform to management demands or face incorporation into a weak and ineffectual organization. Nevertheless, the port has subsequently managed to retain the consent of workers for the current labour regime because it has entrenched a system of benefits. In the contemporary period, at North Port these include a salary revision every three years under a negotiated Collective Agreement. The last Collective Agreement, which was completed in 2001, came with an 8 per cent salary rise. From 2002, employees have also been receiving bonuses equivalent to 5.3 months salary. This marks a substantial increase, as bonuses previously amounted to somewhere between 2.5 and 3.2 months salary (New Straits Times 4 May 2004).

Port labour, casualization and foreign workers Another feature that Port Klang shares with sectors of the contemporary Malaysian economy is an increased reliance upon foreign workers (Piper 2006; Pillai 1999). As such, the conditions available to the permanent employees at North Port will not be available to some future workers, as North Port takes steps to reduce costs in the face of competition from the Port of Singapore, WestPort and the newly established Tanjung Pelepas (PTP). Many of the non-essential functions of the port, such as container lashing, stuffing and unstuffing, are now carried out by private contractors who are increasingly hiring foreign migrant workers. While as much as 60 per cent of foreign migrant workers in Malaysia in all sectors have in the past come from Indonesia, the Malaysian Government has signed agreements with 11 countries in the region to supply labour, which means that contractors can legally draw from a much larger pool of potential workers than in the past. Many of the foreign workers in North Port come from Nepal, southern India and Bangladesh. Although most hold valid work permits, they are not unionized, nor collectively organized in any other manner. Large increases in the number of workers began in 2000. By 2004, estimates of the number of foreign workers in Port Klang varied between 600 and 2000. These workers are employed in capacities such as general dockworkers, forklift drivers, tally clerks and stevedores. There is a significant difference between the salaries of migrant workers, receiving RM400–800 per month and their local counterparts, who receive between RM1000–RM1300 (New Straits Times 4 May 2004). While local workers have assured benefits under compulsory provident fund

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contributions, foreign workers do not. Additionally, foreign workers are denied protection under the social insurance system which includes temporary and permanent disablement benefits, invalidity pensions, funeral benefits, and payments for eligible dependants of deceased persons. There are about 30,000–35,000 workers in ports in Malaysia and now only about 30 per cent are unionized (New Straits Times 4 May 2004). KPA labour officials argued in interviews with the author in 2005 that although they would prefer that local workers were employed, since it is the contractors, rather than the ports, which are the principal agents, the legal responsibility falls on the contractors. However, others argue that the prevailing justification is based on a legal fiction that the port is removed from responsibility. For example, in an interview with the author in 2005, the president of the Northport Malaysia Staff Union, Ahmat Abu, who is also a board member of the Port Klang Authority representing workers’ interests, argued that the contractor system is not as transparent as it should be. He drew attention to the fact that while in principle the contracts are supposed to be given after a tender system to the most cost effective and efficient contracts, in practice this is not necessarily so since Northport is controlled by government-financed companies. Abu argued that though tenders are called, it appears that political patronage comes into play since the contracts tend to go to those with connections to politicians from the Barisan Nasional component parties. Clearly though, the nature of the compromise between these different forces in the political economy have come at the expense of the ability of labour to collectively organize. Attempts to form a national union of dockworkers, with the assistance of the International Transport Workers Federation, have been faltering. In December 2004 General Secretary G. Rajasekaran and his ally Syed Shahir Syed Mohamud regained control of the Malaysian Trade Union Congress (MTUC) and initiated fresh campaigns to allow foreign workers, even undocumented ones, to join local trade unions (Netto 2005). While the position of foreign workers in this reorganization is uncertain, it is clear that the recent past marks a fundamental shift in the working conditions prevailing on the docks at Port Klang, precisely because the nature of the political settlement in the Malaysian political economy has changed in terms of its relationship to forces at different global, national and local scales.

Reform in Chittagong Port, Bangladesh While Port Klang is often cited as an exemplar of successful port transformation, Chittagong Port, the major port of Bangladesh, is often

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cited as an example of all that is in need of reform. Located within the second largest city in the country and the major import and export point for the Bangladeshi economy, Chittagong handles up to 90 per cent of sea-borne traffic each year. It is nevertheless peripheral to the majority of global trade flows and so there are few incentives for transshipment on the significant Asia-Europe route compared to major ports in the region such as Colombo, Sri Lanka or newer southern ports in India. Chittagong Port has long been synonymous with many of the widely documented governance issues of Bangladesh, such as corruption, inefficiency and highly politicized but ineffectual labour militancy. Its high cost structure is seen as an increasing liability, particularly in the context of the expiration of the MFA, which has provided the impetus for corporatization. The economy now has a high degree of dependence on project aid and remittances, both of which dwarf foreign investment. Ports and related infrastructure were one of the last sectors where liberalization had thus far not occurred in Bangladesh and the politics surrounding this process have taken on a new urgency as a consequence. Chittagong Port has long been a project goal of donors seeking to transform the structure of its operations and introduce new technology. Certainly, in a broader sense, in Bangladesh there have been innovations (Grameen banking and mobile phones being the most widely cited examples) but the economy has a small export base, comprising mostly goods from primary industries and the RMG industry, and the latter is under increased cost pressure after the extinguishment of the Multi-Fibre Agreement which ended Bangladesh’s preferential access to US and European markets. An issue that continues to be significant in Bangladesh is the extent of rent-seeking, including corruption, and Chittagong Port is a good example of this as was indicated in the Transparency International Report (2004). For example, the process for goods to move to the Inland Container Deport at Dhaka from Chittagong Port required on average 25 transactions. Mustaq Khan defines corruption as: an exchange between a private individual (or group) and a public official (or officials), where the public official breaks formal rules of conduct and provides something to the private individual or group that would not otherwise have been received. The benefit that the public official gains is technically illegal because it violates a formal rule of conduct (for the act to be corrupt). The benefit that the private individual receives in exchange may be either a legal entitlement that they would not otherwise receive or an illegal

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benefit that confers greater advantage than otherwise (Khan 2004: 2). The popular accounts of corruption emphasize economic inefficiency and potential to induce unproductive rent-seeking behaviour to the detriment of all. But what is the role of corruption in the perpetuation of particular kind of patron-client relationships and how can this be understood both as an economic transaction and as a social relation? In the next section, we describe the case of Chittagong Port which, it is argued, suggests we understand corruption as socially embedded transactions that have implications for the nature of governance.

Corruption and good governance in Bangladesh There are strong historical reasons for the broader political environment in Bangladesh that has had an impact upon the prevalence of rent-seeking behaviour. From 1978 onwards, the newly formed Bangladesh Nationalist Party (BNP) under Zia presided over a weak and fragmented opposition aided by support from dominant classes. These groups were in return shielded from scrutiny over the increasing revenues gained from legal and illegal use of public resources. This trend accelerated during the almost decade long military rule of General Hussain M. Ershad (hereafter Ershad) from 1982 onwards. The New Industrial Policy of 1982 and the Revised Industrial Policy of 1986 saw a large transfer of profitable state-owned enterprises over to the private sector. With little popular support for this process, Ershad nevertheless managed to sustain his rule by appeasing the multilateral donor community and enriching business elites. During the era of Khaleda Zia’s BNP government (1991–1996) and the Awami League government (1996–2001), the process of liberalization again gained further momentum. The Bangladeshi authorities established an ‘open door policy’ in order to attract investment including exemptions from duties, taxes and restrictions on repatriation of profits (Nuruzzaman 2004). Throughout this period of misrule in Bangladesh, the role of organized labour movements has been weak, with only a small proportion of the workforce represented in a large number of fragmented unions. Again, the state has consistently sided with large business interests as a matter of political calculus. For example, Export Processing Zones (EPZs), the first of which was established in Chittagong in 1975, is a huge sector for the Bangladesh economy and Chittagong Port in particular, but arguably the primary reason they have boomed is because

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until January 2004 it was illegal to form any labour unions within these EPZs. The continued push towards further liberalization in Bangladesh has thus far not managed to expand the levels of foreign direct investment much beyond investors interested in EPZs. The levels of investment in the port are evidence of this. Undoubtedly part of this reluctance on the part of foreign investors stems from the nature of the polity, which is characterized by high levels of corruption, governance problems, an ineffective and rent-seeking state and political turmoil. Introduced earlier in this chapter was the importance of turn-around time to the capacity of a port to attract through traffic and establish itself as a node in global maritime trade networks. This factor is particularly pertinent to Chittagong, which has historically been amongst the most cumbersome of major ports in Asia in the efficient movement of goods. Part of this slow turn around time stems from the specific, socially embedded nature of economic transactions prevailing at the port. Although there is difficulty in capturing the specific dynamics of these transactions, a 2005 World Bank report suggested that where in the past between 49–72 official signatures were required to clear the docks, this had reduced to between 20–25 at the time of their study, a figure far greater than the 5–7 signatures that is the official position of Chittagong customs (World Bank 2005). In detailing the quantity of signatures required, the Bank’s study provides an argument that the delays at Chittagong are related to small payments extracted at every stage of the port process: unloading goods, clearing through customs, finally moving these goods off the docks and on to whatever form of transport is the next link in its internodal journey. This proliferation of agents for stamping forms, opening containers and granting permission for goods to move on, are all linked to small-scale ‘speed money’, but because of the frequency of these transactions money is dispersed very widely throughout the port. The total payment for a Principal Appraiser working in the port during the time of the Bank’s report was around Tk. 28,000 per day (approx US$467), which is gained from 280 entries per day that each yield Tk. 100 (approx US$1.67) per entry. In turn, the Principle Assessor supervises four appraisers, who each get approximately Tk. 10,500 (US$175) per day according to the World Bank calculations. In addition to these costs incurred regularly by those wanting to move goods, there are additional costs if irregularities are found with their documents. In these cases an additional fee up to Tk 2000 (US$33.33) to Tk 100,000 (US$1666.67) may need to be paid to one of these assessors (World Bank 2005).

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Interviews conducted by the author with trade union officials and workers in 2005 suggested that as many as 50,000 people were directly or indirectly employed in some connection with Chittagong Port. Of this total there are about 4500 dockworkers according to Hazi Md. Eunus and Taslim Hossain Selim, respectively President and General Secretary of the CBA Port Workers and Employees Federation (interview with author January, 2005). Given that this exceeds what is acceptable according to contemporary port management models, Chittagong has attempted to shed a portion of this workforce, particularly by abolishing its Dock Worker Management Board (DWMB). The CBA leaders outlined that workers are engaged on a ‘no work no pay’ basis, with a dock worker earning Tk. 186 (US$ 3.10) per eight hour day. During interviews with the author in January 2005, the workers argued that the DWMB is a useful way of diluting the power of the stevedores. Attempts to reduce the workforce were also due to the fact that labourers that are too old to continue working on the docks remain on the payroll but sub-contract out the work, thereby spreading rents further. Prior to this latest instance of labour rationalization, there had been an initial golden handshake in 2004 when more than 1000 workers were forced to take early retirement (United News of Bangladesh 2007a), but disputes over further labour rationalization had subsequently become intractable. Among non-unionized labour there are instead various middle men extracting rents for brokering labour. In addition to those working under the DWMB, workers were also hired as part of the Chittagong Port Merchant Labor Association (CPMLA). According to representatives from the CPMLA there were a total of 5000 merchant workers working in the port, under conditions that were different from DWMB labourers (interview with author January, 2005). The CPMLA labour is hired through a Majhi, who is employed by Clearing and Forward agents and takes a percentage of the benefits. Indeed, if we extend our view of labour relations further to include all of the different categories of workers involved with the port, we find a myriad of complex social relations of sub-leasing the right to work that are something akin to sub-tenancy relations that have predominated in various parts of rural Bengal for many generations (Bose 1993). In this sense, while it is true that there is a relationship between the extraction of rents occurring at the port and the high level of labour unionization, it is not the case that we should assume that unions are the chief reason why restructuring is necessary, or that their abolishment will necessarily change the way that labour is hired. Indeed in the case of Chittagong, the port and dock unions are only sporadically

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politically vocal and not in a coordinated way, remaining highly fragmented and, typically, shifting their political alignments to whichever party was in power (World Bank 2005). The political resistance by unions that accompanied the allocation of the container license was unusual in that sense. As the World Bank’s 2005 report argued: there is nothing to suggest that the CBAs (i.e. key trade union representatives) are the ‘main’ problem in the port. Although they are extremely powerful – strikes can paralyze the port and bring much economic activity in the country to a halt – official strikes are called very rarely and no official and port-wide strike has been called for the last twenty years. Instead, groups of workers unhappy with a change in their situation will stop work unofficially to bring attention to their plight. The interdependency principle then comes into play. Because many other groups of workers – including exporters with good political connections – will be adversely affected by their action – it is in everyone’s interests to address the issue and resume normal working. Stoppages therefore tend to be unofficial and short lived although this does not mean they are not extremely costly (World Bank, 2005: 11). Despite the considerable nuance shown in the above analysis of social relations in the port, there is little doubt that the World Bank was keen for its abolishment. This is evidenced by offers from officials from the Bank’s private sector arm, the International Finance Corporation (IFC) to facilitate the privatization of services of the port in March 2007 (United News of Bangladesh 2007b). On 16 May 2007, a new system was introduced with 15 new stevedoring institutions working the port’s outer anchorage. Reports at this time suggested that perhaps as many as 5000 dock and merchant labourers would lose their jobs as a consequence (United News of Bangladesh 2007c). By 21 May 2007, the day after a new Chairman of the Chittagong Port authority had been appointed, private stevedoring firms began to operate at Chittagong Port and port officials announced that they would no longer employ dock labourers (Lloyd’s List 21 May 2007). The events of 2007, when the army acted as strike breakers to ensure that the trade unions did not interfere with the running of a new container terminal, suggests that the dynamics of port reform can sometimes involve political action at the national scale but must be understood at the local scale. Almost two years prior to the military takeover of the port, the World Bank report quoted above suggested a

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detailed plan of action for the revitalization of the port based around donor coordination and local corporate participation. The Bank suggested two possible scenarios in the reform of the operation. If change occurred slowly then stakeholders, including the international community, would have to accept that the gains would be slow. But if change was to occur quickly then a staged transition would be necessary that would ultimately need two years to run its course and involve a core team who would remodel the operation of the port. The Bank set out a funding scenario for port reform that would enable a change in the way that the port was operated, including the training of negotiators and reforming labour practices (World Bank 2005: 21–23). Their support for these processes was underlined by assurances that other sources of funding to Bangladesh would not be affected whatever the success or failure of reform within the port (World Bank 2005: 22). This attempt to isolate assessment of lending practices to Bangladesh is important because it had previously backed attempts to establish a container port at Patenga just outside Chittagong Port but the bid by Stevedore Services of America (SSA) was squashed by the High Court, and in the minds of many of the opponents of foreign ownership of the container terminal, the Bank was, ultimately, politically linked to SSA in Bangladesh. Whatever one might think of the possible leverage that the World Bank and similar agencies might have on the domestic politics of Bangladesh, the scenario mapped out in 2005 for the second kind of transition in fact came to pass around two years after the publication of the report. One would hope that the Bank itself would distance itself from the way that change occurred even if it may endorse the consequent transformation of the port. The contention over the Berths 11–13 in Chittagong Port container terminal demonstrates that there is still great opportunity for social upheaval as port sectors become dismantled, suggesting that a key question becomes what constitutes a politically stable approach to dismantling old regime forms and the transformation of labour, class and social relations. In many respects the restructuring thought necessary by the World Bank to ensure the efficient operation of Chittagong Port as a modern link in the global system is closer to realization, in the container sector most especially. However, whatever perspective adopted on the merits or otherwise of this kind of port reform in Chittagong (be it only port efficiency and broader economic gains or more localized concerns over labour equity and procedural justice) the process must also be judged bearing in mind that it occurred in the wake of a military takeover of governance

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in the country. In that sense, those assessing the benefits of this reform must question to what extent does the military takeover problematize support for the projected economic gains of the port, the RMG manufacturing sector, and the Bangladesh economy. Ultimately, port reform in Bangladesh seems to have been driven through by authoritarian politics and by means of a direct and forceful military action. This is in contrast to the transition accomplished in Malaysia where the more coercive actions of the state, such as restrictions on the right to collectively organize beyond prescribed institutional forms, were balanced by significant material concessions that functioned to guarantee some degree of consent on the part of workers. Since little of the legitimacy for change that was generated in the Port Klang context was evident in the case of Chittagong Port, much stronger forms of coercion were employed. This suggests that there is no inherent association between economic reform and democratization or that labour restructuring is always a situation of mutual gains, particularly if we consider this restructuring in its broader social context. Rather, the proponents of global economic integration may knowingly or otherwise be endorsing increasing authoritarianism.

Conclusion While it is incumbent upon those critically thinking about the connection between economic growth and governance issues to consider the role of democracy and the social context of reform, this is not a debate that is often considered by port reformers. Instead, the shift towards a landlord model where the state cedes to the private sector its previous role for the day-to-day operations of the port, is often considered in a fairly depoliticized, functionalist sense which elides the actual dynamics of social transformation. This chapter has suggested that we can understand the relationship between global trade and local communities by analysing specific processes, capturing the dynamics of change at international, regional, national and local scales. Clearly, global processes such as those evident in the port and maritime trade sectors have enormous impacts upon the dynamics of restructuring, although in the context of increasing competition between ports located adjacent to each other (such as Port Klang and Singapore or between Chittagong and Calcutta) it is as well to think about the regional scale in terms of competition for hinterland and trans-shipment trade. Just as evident in our discussion is that the state, the nature of its relationship to social classes and the way that different classes utilize the state in

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national politics are also significant in how the cost and benefits of restructuring are mediated. The forces propelling these changes may be global in origin, yet ultimately these tensions are resolved at the local scale. Nor is it always the case that the consequences of restructuring can be easily captured by simply thinking about a tripartite process of negotiation between capital, state and labour, particularly in those cases where the groups that dominate the local political economy are a motley collection of intermediate classes. While in Malaysia we have demonstrated how the state can facilitate labour restructuring through a mixture of consensual and coercive interventions, whilst still assisting corporate allies to gain from increasing global economic integration, in Bangladesh widespread patron-client relations have meant that these intermediate classes dominate the economy over formal capital and interfere with the articulation of the national and international economies. In comparing these two cases, then, it is clear that the relationship between these different classes and their relationship to different fractions of capital is at least as important as the kinds of economic philosophies ostensibly pursued. Indeed, Malaysia and Bangladesh began to enthusiastically liberalize their economies at around the same time but the consequences in the past two decades could not be more divergent. Malaysia has reached a class/ethnicity compromise, with the state initially supporting, through the NEP, the promotion of a Bumiputra class of new capitalists, off-setting established Chinese capitalist classes and diverting rents created into activities that enhanced economic growth. As divestiture became more frequent, the state began to divert attention away from import substitution and towards a greater engagement with the global economy. In so doing, significant economic assets were partially privatized but the state kept control of the process, and potentially politically difficult confrontations were averted by strategically incorporating workers. This process has been criticized on the grounds of crony capitalism but has secured a degree of legitimacy and the Malaysian economy has grown even though labour has been disciplined. While the Malaysian polity has elements of authoritarianism, it has maintained its legitimacy by recourse to social and political strategies which provide material dividends to strategically important social groups. This strategy has been buttressed by a strongly growing economy and is an example of a state working with capital and indeed creating the conditions for emergence of indigenous capitalists at different levels. It has been fortunate that its exports have generally been in demand, which has allowed the transition to export-oriented economy

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using more semi-skilled and skilled labour. Nevertheless, North Port in recent years is similar to many other corporate operations that have increasingly resorted to utilizing migrant workers, demonstrating how the relationship between capital and labour has altered as new competitive pressures have arisen. Bangladesh has no similar political compromise and the rents that in Malaysia have been siphoned off for political stability has been diverted into other avenues – such as petty corruption, pay-offs, and divestiture has not contributed to productive investment. The conditions conducive to the growth of large-scale capitalism have not occurred in Bangladesh, nor have politics been consensual; both of these absences are at least partially understood as stemming from the fact that no development elite exists in Bangladesh in the sense that this term is used in the literature on the developmental state. Indeed, the polity has lost almost all legitimacy and is periodically propped up by a military government. The way that the local engages with the global scale through these social processes are clearly damaging to economic efficiency, upon which the engagement of Chittagong, indeed the economy of eastern South Asia, depends. The actual operation of labour at the port, in terms of the small-scale rents that are extracted at every stage, is almost never discussed other than in terms of very standard ideas about corruption and so the dynamics of the port at the local scale remain elusive to most commentators. Arguably, the possibility of transforming the port in a manner that is economically, politically, and socially sustainable has been under theorized and misunderstood. The future of local communities in this new phase of Bangladesh’s post MFA era export orientation, epitomized by a new port at Chittagong that is more acceptable to the demands of global capital, is therefore also yet to be determined. References Agnew, J. (2001) ‘The New Global Economy: Time-Space Compression, Geopolitics and Global Uneven Development’, Journal of World Systems Research, 7 (2): 133–154. BBC Monitoring South Asia (2007) ‘Corruption Case Filed against Bangladesh ex-PM Zia – Paper’, 3 September. Boas, M. and K.M. Jennings (2005) ‘Insecurity and Development: The Rhetoric of the “Failed State”’, The European Journal of Development Research, 17 (3): 385–395. Bose, S. (1993) Peasant Labour and Colonial Capital: Rural Bengal Since 1770, New Delhi: Cambridge University Press and Foundation Books. Brooks, M.R. (2004) ‘The Governance Structure of Ports’, Review of Network Economics, 3 (2): 168–183.

180 Trade, Labour and Transformation of Community in Asia Cassey Lee Hong Kim (2003) ‘Implementing Competition Policy in Malaysia’, Trends in South East Asia Series No. 14 (Institute of South East Asian Studies, Singapore) Chang, H.J. (2002) Kicking Away the Ladder: Development Strategy in Historical Perspective, London: Anthem Press. Cudahy, B.J. (2006) Box Boats: How Container Ships Changed the World, New York: Fordham University Press. Das, S. (2005) ‘Studies on the Quality, Status and Prospect of RMG in Bangladesh’, Asian Textile Journal, 14 (8): 69–80. Far Eastern Economic Review Annual 1965 Hong Kong: Far Eastern Economic Review Ltd. Far Eastern Economic Review Annual Yearbook (1967), Hong Kong: Far Eastern Economic Review. Far Eastern Economic Review Annual Yearbook (1969), Hong Kong: Far Eastern Economic Review. Far Eastern Economic Review Annual (1972) Hong Kong: Far Eastern Economic Review Ltd. Gomez, E.T. (2002) ‘Political business in Malaysia: party factionalism, corporate development, and economic crisis’, in E.T. Gomez (ed.) Political Business in East Asia, London, New York: Routledge, pp. 82–114. Gomez, E.T. and K.S. Jomo (1999) Malaysia’s Political Economy: Politics, Patronage and Profits, New York: Cambridge University Press. Harvey, D. (1989) The Condition of Postmodernity: An Enquiry into the Origins of Cultural Change, Oxford; Cambridge, Mass.: Blackwell. Hill, D.P. (2008) ‘Developing India’s Ports: Balancing Economic and Social Objectives?’, in J. Reveley and M. Tull (eds) Port Privatisation: The Asia-Pacific Experience, Cheltenham, UK and Northampton: Edward Elgar, pp. 152–166. International Association of Ports and Harbours (2007) World Container Port League 2005, available from http://www.iaphworldsports.org/world_port_ infoWorldPortTrafficLeague(2005).pdf Jomo, K.S. and E.G. Gomez (2000) ‘The Malaysian Development Dilemma’, in Khan, M.H. and K.S. Jomo (eds) Rents, Rent-Seeking and Economic Development in Asia, pp. 274–303. Jomo, K.S. and P. Todd (1994) Trade Unions and the State in Peninsula Malaysia, Kuala Lumpur: Oxford University Press. Jomo, K.S. and T.W. Syn (n.d.) ‘Privatization and Renationalization in Malaysia: A Survey’, available from http://www.jomoks.org/research/pdf/IPD_Privatization_ Renationalization.pdf Khan M.H. (2004) ‘Corruption, Governance and Economic Development’, in Jomo, K.S. and B. Fine (eds) The New Development Economics, New Delhi: Tulika Press and London: Zed Press, pp. 1–20. Kikeri, S. (1997) Privatization and Labor: What Happens to Workers when Governments Divest?, Washington: World Bank. Kochanek, S. (2000) ‘Governance, Patronage Politics, and Democratic Transition in Bangladesh’, Asian Survey, 40 (3): 530–550. Leftwich, A. (ed.) (1996) Democracy and Development: Theory and Practice, Cambridge, UK: Polity Press. Lloyd’s List (2007) ‘Private Stevedores in Chittagong Operations’, 21 May.

Douglas Hill 181 McCalla, R.J., B. Slack and C. Comtois (2004) ‘Dealing with Globalisation at the Regional and Local Level: The Case of Contemporary Containerization’, Canadian Geographer, 48 (4): 473–487. Netto, A. (2005) ‘Malaysia: Labour Movement Wants Migrant Workers in Unions’, Global Information Network, 1 March. New Straits Times (2004) ‘Unhappy over Foreign Workers’, 4 May. Nuruzzaman, M. (2004) ‘Neoliberal Economic Reforms, the Rich and Poor in Bangladesh’, Journal of Contemporary Asia, 34 (1): 33–54. Pillai, P. (1999) The Malaysian State’s Response to Migration’, Sojourn: Journal of Social issues in Southeast Asia, 14 (1): 178–184. Piper, N. (2006) ‘Migrant Worker Activism in Singapore and Malaysia: Freedom of Association and the Role of the State’, Asian and Pacific Migration Journal, 15 (3): 359–380. Pokrant, B. and P. Reeves (2001) ‘Putting Globalisation in its Place. Globalisation, liberalisation and Export-Oriented Aquaculture in West Bengal and Bangladesh’, South Asia, New Series, 24 (1): 159–184. Reuters News (2007) ‘Bangladesh leases container berth to local firm’, 5 March. Rock, M. (2001) ‘Globalisation and Bangladesh: The Case of the ExportOriented Garment Manufacture’, South Asia, New Series, 24 (1): 201–225. Todd, P., R. Lansbury and E.M. Davis (2004) ‘Industrial Relations in Malaysia: Some Proposals for Reform’, Proceedings of the IIRA 5th Asian Regional Congress, Seoul, Korea. Transparency International Bangladesh (2004) Working Paper on Chittagong Port, Dhaka: Transparency International. Tull, M. and J. Reveley (2002) ‘Privatisation of Ports – An Evaluation of the Malaysian Experience’, Economic Papers, 21 (4): 63–89. Turnbull, P. (2000) ‘Contesting Globalization of the Waterfront’, Politics and Society, 28 (3): 367–391. Turnbull, P.J. and V.J. Wass (2007) ‘Defending Dock Workers Globalization and Labor Relations in the World’s Ports’, Industrial Relations: A Journal of Economy and Society, 46 (3): 582–612. United News of Bangladesh (2007a) ‘900 over 57 Dock Workers to be Sent on Retirement’, 11 March. United News of Bangladesh (2007b) ‘IFC Keen to Help Subcontract Out Ctg Port Services to Private Sector’, 11 March. United News of Bangladesh (2007c) ‘Berth Operating System Introduced in Ctg Seaport’, 16 May. World Bank (2007) Port Reform Toolkit, 2nd edition, Washington: World Bank. World Bank (2005) ‘Improving Trade and Transport Efficiency – understanding the political economy of Chittagong Port’, Bangladesh Development Series, Paper No. 6, Dhaka: World Bank. World Bank (2003) ‘Bangladesh Development Policy Review: Impressive Achievements but Continuing Challenges’, Report No. 26154-BD.

8 Women Workers Organizing in the Free Trade Zones: Collective Action and Community Janaka Biyanwila

Introduction As a labour regulation regime that is anti-union by design, the Free Trade Zones (FTZs) highlight the new geographic flexibility of capital, reconstituting class formations and the self-organization of workers. The women workers’ struggles in the FTZs demands a re-examination of organized worker struggles within world market factories. In resisting both capital and patriarchy, the struggles of organized women workers highlight their subordinate position in both paid and unpaid labour. Not only are women workers restrained by the employers and the state, they also face a hostile local and national community embedded in patriarchy. Nevertheless, women workers in these FTZ factories continue to organize and resist, transforming both work and local communities. Amidst a range of collective strategies, there are women workers’ organizations experimenting with a new orientation towards collective action. By linking their workplace with the women’s struggles outside, this strategic orientation reveals how class struggles in the FTZs are shaped by the social construction of gender in a particular place and space. From a gendered class perspective, women workers’ self-organization and alliances with activist organizations are significant factors revitalizing collective action within the workplace, which in turn elaborates notions of community and nation. Neo-liberal strategies in Sri Lanka began in 1977, with a president that openly declared ‘let the robber barons come!’ (Caspersz 1998; Kelegama 1997). In re-integrating with the world economy under the Structural Adjustment and Stabilization policies of the World Bank and the IMF, the state adopted Export Oriented Industrialization (EOI) strategies that reorganized the ‘developmental’ welfare state. With privatization 182

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and deregulation as core policy strategies, liberalization processes reinforced an authoritarian centralized state with ethno-nationalist tendencies – a Sinhala Buddhist nationalist project.1 Despite the presumed benefits of EOI strategies particularly in South East Asian economies, in Sri Lanka, these strategies have failed to strengthen domestic institutions or substantially reduce social inequality (Dunham and Jayasuriya 2001; UNIFEM 2005; World Bank 2007). With the FTZs (or Export Processing Zones) designated as sites for cheap and docile labour for global and domestic capital, unions are essentially banned and worker organizations are restricted to narrow welfare activities. The coercive factory regimes are interdependent with the workers’ living conditions in the surrounding local community (Kearny 2006; Solidarity Centre 2003). Unlike the case of Chinese FTZ factories with dormitories, in Sri Lanka the living conditions are left to ‘self-regulating’ market mechanisms characterized by dismal living conditions with minimal public services. This lack of public services, such as housing, transport, roads, water, electricity and public spaces, is a consequence of cuts in state welfare spending, privatization and public investment programmes (Kelegama 1997; Dunham and Jayasuriya 2001; UNIFEM 2005). In addition, the strengthening of political patronage and local politics has directly restrained workers’ protests. Under these circumstances, women workers, the main labour force of the FTZs, are struggling for basic labour rights – to freely associate and collectively bargain within the factory – and decent living conditions as citizens and workers. This chapter examines how women workers are engaging in collective action to transform both their work and their living conditions in the FTZs. In contesting the dynamics of both patriarchy and capital controlling women’s labour, women workers organizing through trade unions and NGOs (non-governmental organizations) illustrate a spectrum of strategies from welfare activities, to awareness raising, to militant strikes. While the internal relations and politics of these organizations are significant, in terms of doing and deciding, their external relations in local, national, and international spaces are equally important. The ways women worker organizations in the FTZs engage in collective action at many levels by building specific alliances depict new modes of resistance against capital and patriarchy. The chapter begins with a conceptual framework for understanding the struggles of women workers in the FTZs. As opposed to a class analysis that simply adds gender, a gendered class analysis foregrounds both the waged and unwaged work of women. In situating the FTZs as

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gendered spaces, this framework locates the notion of community in terms of specific places and spaces, which are nonetheless linked into a complex new geography of labour. In describing the working and living conditions in the Sri Lankan FTZs, the next section draws attention to the surrounding local community. This is followed by a brief overview of organizations in the FTZs, which then leads to the case study of a new union, the Free Trade Zone Workers Union (FTZWU). Finally, the chapter concludes by considering both theoretical and practical implications for women workers’ collective action within world market factories.

World market factories: redrawing boundaries The concept of ‘world market factories’ captures the new geographic flexibility of capital and the uneven geographic spread of global manufacturing production (Elson and Pearson 1981). This suggests formulating how class and gender relations are intertwined with concepts of space and place (Massey 1994: 2). Such an approach recognizes the relevance of ‘complexity, difference and multi-determinacy combined with universalism’ for social transformation (Waterman and Wills 2001: 3) and the importance of linking theory with practice, while prioritizing a gendered class understanding of women workers’ struggles. The social imagination of space and place is intertwined with particular social constructions of gender (Massey 1994). Space is linked with time, and the goal here is to locate women workers’ struggles as a process of elaboration over time. Space is defined as a multiplicity of social relations and social phenomena, ‘stretched out’ in different scales, overlapping the global, national and the local, as well as households and workplaces (Massey 1994: 4). By defining space in a dynamic and differentiated frame, the approach to place also changes. Rather than seeing place as bounded, as a site of authenticity, as a singular, fixed and unproblematic identity, place is seen as ‘unfixed, contested and multiple’ (Massey 1994: 5). Rethinking space and place in terms of social relations contests dualistic gendered categories of space and place as feminine, and time as masculine (Massey 1994: 7). Acknowledging this mutual interaction of space, place, and gender, enables a transformative notion of community, as well as collective identities of women. The world market factories highlight the changing geography of capital. The shifting of production to peripheral geographic locations or the peripheralization of production is a central feature of capital’s attempt to remedy its crisis of accumulation (Silver 2003; Massey

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1994). This search for new sites of investment and surplus extraction involves a ‘new labour geography’ which reconstitutes class formations (Herrod 1998: xi). In determining participation in labour markets, citizenship, and the assertion of class identities, these ‘boundary drawing strategies’ are enacted by states and workers (Silver 2003: 24). In seeking to extend labour market rights, workers’ collective action reconstitutes class identities by shaping citizenship rights, which intersect with gender and ethnic power relations (Silver 2003: 20–25). The new geographic flexibility of corporate capital, driven by Transnational Corporations (TNCs), draws new boundaries, work systems, and forms of discipline in order to re-regulate labour. The new labour regimes implemented via corporate restructuring include a range of strategies to undermine collective worker struggles. These strategies combine relocation, reorganization of production (technology and product lines) and retraction from trade and production into finance (Silver 2003). The inclusion or exclusion of workers in different regulation regimes allows capital to ‘regime shop’ and to change the basis of conflicts over wages, work rules and local governance (Storper and Walker 1989). These strategies to subordinate labour, directly relate to how communities are shaped by, and also actively shape, the boundary drawing strategies of capital. The redrawing of spatial boundaries by capital involves a redefinition of class dynamics (Herrod 1998; Silver 2003). While a general crisis of accumulation demands the commodification of labour, a legitimacy crisis promotes some measures to de-commodify labour. In order to escape labour militancy and concessions made to the labour movement, capital and states engage in the active creation of new sites of production premised on the availability of cheap and docile workers. In the process of commodification, the new working classes also develop strong labour movements (Silver 2003: 20). The counter movements of workers to de-commodify and capital attempts to re-commodify involve spatial strategies. However, the emergence of worker resistance to commoditization is not as deterministic or inevitable as implied by Silver (2003). The resistance of workers relates to questions of agency which is embedded in local power relations and the spaces and opportunities for collective agency and action. The further the workers in FTZs are made increasingly dependent upon wage labour alone to subsist by the ‘regime shopping’ tactics of capital, the more they develop new spatial strategies towards de-commodification. What this chapter elaborates is the structural location of garment workers in Sri Lanka and the character of their resistance which is shaped by a specific local context.

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The FTZs illustrate a specific regulation regime in a particular place with spatial relations that overlap local, national and global scales. While FTZs were initially introduced as places for cheap docile labour, the workers, through their collective struggles, are redefining the labour regime of the zones. Silver (2003) argues that the broader crisis of the labour movements is reversible and demands a shift in strategic orientation. According to Silver, the success of the labour movement depends on their ‘associational bargaining power (trade unions, political parties, and cross-class alliances with nationalist movements)’ (Silver 2003: 172). Therefore, ‘community-based organizing models’ builds workers’ capacities, which is interdependent with their ‘positional power’ at the point of production (Silver 2003). This interaction between associational and positional power, is shaped by a particular social context and a notion of community. The articulation of collective identities of women workers in FTZs appropriates notions of community, which is intertwined with nationalism, patriarchy and sexuality. In an article provocatively titled, ‘The politics of White women’s underwear in Sri Lanka’s open economy’, Caitrin Lynch (2002) highlights how gender is central to the intersections of economy and culture. She describes how the sexuality of women workers producing women’s underwear for the US and European markets under liberalization became the site on which morality and tradition were debated and how these debates about ‘our innocent girls’ remained centred around the ‘moral status of the nation’ and rural vote and other priorities rather than improving the status of factory women (Lynch 2002: 112). While gender here primarily concerns wage workers, a gendered class analysis (Turner and Brownhill 2004) highlights the unwaged labour of women. This framework focuses on the collective agency of unwaged people, particularly women, peasants, indigenous and urban poor, who are in the forefront of the struggles against commodification (Turner and Brownhill 2004). Although the FTZ workers are waged workers, their unwaged work to maintain their livelihood is often made invisible. In emphasizing institutional decision making dynamics, gendered class analysis exposes the ‘male deals’ or how male dealers, acting as middlemen between capital and labour, create consent to ‘capitalist demands such as military service, the expropriation of land, and especially the disciplining and supply of unwaged labour’ (Turner and Brownhill 2004). In focusing on the unwaged labour of women, gendered class analysis reveals the complexities and contradictions inherent in the notion of

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‘community’. When this standpoint is linked with geography of labour, the women workers’ struggles in the FTZs are positioned within specific places and spaces with gendered class dynamics in operation. The complicity of some ‘nationals’ with the goals and interests of capital is central to a gendered class analysis (Turner and Brownhill 2004). By creating conditions for global capital to expand, the ‘national’ capitalist and managerial classes play a crucial role drawing new boundaries to subordinate labour within ‘imaginary’ communities. Defining ‘community’ in differing spatial scales allows women workers’ struggles in the FTZs to be understood in cultural and economic terms, with overlapping gender and class dimensions. Situating community in a distinct time and space avoids reifying collective identities and emphasizes how collective action at many levels, and in different spaces, can change the structural basis of communities by confronting state, capital and patriarchy (Chhachhi and Pitten 2001).

Women workers in FTZs The FTZs are sites that integrate women manufacturing workers within ‘world market factories’ producing exports to rich Northern countries (Elson and Pearson 1981; Kearny 2006; UNIFEM 2005). Historically, women’s paid and unpaid labour was central to the plantation export economy, particularly under British colonialism (Lakshman 2000). In shifting the local structure of exports from ‘traditional’ agricultural commodities to ‘modern’ manufacturing activities, the FTZs were a pivotal element. In 2005, the garment industry accounted for around 60 per cent of the country’s total exports, with an export value of US$2.7 billion.2 Although the ‘modern’ is meant to signify the expansion and elaboration of a technological base, with potential for adapting this technology to other parts of the economy, this has not happened to any significant extent (Liyanage 1997; Lynch 2002, 2007). Most FTZ factories are based on old assembly line technology with standardized production processes that are highly labour intensive (Elson and Pearson 1981; Fine and Howard 1995). These factories located within layers of sub-contracting arrangements, are mostly owned by regional and local investors. A majority of factories are involved in assembling garments which accounts for the largest portion of manufacturing exports (Solidarity Centre 2003). The main labour force sustaining this export economy is women. In Sri Lanka, women workers accounted for 88 per cent of total workers employed (310,530) in the garment sector in 2001 (BOI 2003). Most of

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these women are Sinhalese, between the ages of 16 and 24, unmarried, secondary level educated, and from rural areas (Rosa 1994: 79; FES 1997; Lynch 2002, 2007). Most enter FTZ jobs with a short-term outlook of working for between five to eight years, enduring poor living conditions and monotonous work, in order to receive their special bonuses at the end of five years (Abeysekera 1997; Biyanwila 2004). The factory regimes in the FTZs are despotic, being based on Taylorist labour processes and a myriad of coercive strategies to discipline and punish workers. Such despotic regimes as defined by Burawoy (1985) neglect workers’ already insecure employment contracts which also add to their vulnerability (Nichols et al. 2004). The conditions of work often include compulsory overtime, termination for ‘unsatisfactory’ performance, forced resignation in the event of marriage, and restrictions against joining any group within the factory (Fine and Howard 1995; Solidarity Centre 2003). After selective recruitment, the workers are socialized into authoritarian production relations, involving regimented work and multiple forms of surveillance (Abeysekera 1997; Kearny 2006). Even the slightest delays in production targets and slippages in quality are penalized by warning letters, deductions from wages, suspension from work or dismissal (FES 1997). Faced with global competition to reduce delivery times, and smaller, less stable orders, work is intensified by increasing production targets, extending the workday, reducing holidays and multiple shift systems. The violence involved in the labour process directly threatens the wellbeing and safety of workers. The disciplining of workers to fit tight production schedules consists of a range of coercive tactics, including verbal and physical abuse (FES 1997; Solidarity Centre 2003). While occupational and safety standards are at times violated by factories, even when they are maintained, exposure to chemicals, gases, dust, and noise have led to various ailments. Workers are also maimed and killed in factory ‘accidents’ (Abeysekera 1997; Fine and Howard 1995). The physical effects many workers experience include pain in the joints, knees, shoulders, spine, chest pains, and strained eyes (Siano 1997; De Alwis and Perera 2000). As for their mental health, high levels of stress, long working hours, living away from home, poor living conditions, along with issues of sexuality, have multiple effects on their wellbeing (Siano 1997; Samarasinghe and Ismail 2000).

Union avoidance and ‘male deals’ From their inception, the FTZ factories were based on avoiding and discouraging unions. Not only are union activists refused entry into the

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FTZs, suspected activist workers are harassed, intimidated, victimized and sacked (Fine and Howard 1995; FES 1997; Marcus and Brehaut 2003). More importantly, the dominant unions have also neglected organizing young women workers, illustrating a pattern of ‘male deals’ between the unions, employers and the state (Turner and Brownhill 2004). In maintaining tight control over workers, ex-police and military personnel are often appointed as ‘Human Resource Managers’ in factories. Not only are these factories heavily guarded by private security guards, the employers, often with the assistance of local politicians, mobilize the police and thugs to discipline and coerce workers. The state extended trade union rights to FTZ workers in December 1999, after considerable pressure from local and global activists (Biyanwila 2004). Prior to this, factories in the Zones were advised to establish enterprise level bargaining structures as Joint Consultative Councils (JCCs), which only a minority implemented. The JCCs were renamed as Employee Councils in 1994, under a new Peoples Alliance (PA) government, which was supported by the labour movement. As with the JCCs, the employers often ignored or avoided trade union rights, illustrating the weakness of legislation as well as enforcement (Marcus and Brehaut 2003). Although the PA (1994–2000) government promised to introduce a Worker’s Charter as a comprehensive framework for protecting workers, this was soon retracted in order to comply with the interest of capital, the World Bank and IMF. The national employers’ associations as well as the state (the BOI) asserted their goal of maintaining access to a low wage, non-unionized workforce, which complemented the World Bank and IMF policies of improving conditions for foreign investment.

Living in the FTZs The issue of housing in the FTZs reflect the commodification of labour as well as womens’ resistance to control over their bodies and sexuality. Most workers (50–84%) are migrants, who live in boarding houses provided by villagers adjacent to the FTZs (Women’s Centre 1993; FES 1997; Biyanwila 2004). For those workers who commute, travelling in mostly privatized public transport means negotiating crowded ‘minivans’, which are often unreliable and expensive. As for boarding houses, they expose the challenges women workers face in confronting patriarchal cultural practices of the state and a generally hostile community. Although there are a handful of organized hostels operated by Christian Organizations and the government, for multiple reasons workers avoid these (Rosa 1994; Solidarity Centre 2003). Along with high costs and inadequate cooking and storage facilities, the strict rules and control

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over worker’s freedoms such as restrictions on visitors are key factors keeping workers away from these organized hostels (De Alwis 1994: 21). In this context, providing rental accommodation has become a source of profit for property owners in the surrounding areas. Meanwhile, workers are increasingly pushed towards the squalid living conditions of boarding houses, undermining their work and wellbeing. Most boarding houses are essentially temporary structures erected by landowners, with minimal concern for basic amenities (FES 1997; Abeysekera 1997; Women’s Centre 1993). Some boarding houses have no ventilation, adequate space, electricity and running water. Workers have to live, cook their meals and sleep in one cramped room. In trying to keep fuel expenditures low, a majority of workers use firewood and a minority kerosene oil (Women’s Centre 1993). They are often exposed to a cocktail of toxic fumes by cooking in cramped spaces with poor ventilation (Women’s Centre 1993). Some of these boarding house structures are described as ‘insecure sheds, like chicken-coups’ (FES 1997: 39). In 1998, a presidential committee examining the safety and welfare of the women workers in FTZs found that most of the 3810 boarding houses surveyed were ‘highly inadequate and unhygienic’ (Biyanwila 2004). Following the committee’s recommendations, the BOI provided subsidized loans to boarding houseowners to up-grade the rental spaces. Similar to a housing loan scheme implemented in 1993, the policy effects were negligible (Cottingham 1993: 12). According to local activists, the loans were used by most owners to upgrade their own houses and not the rental spaces. Women workers’ health is closely linked to work and living conditions in the boarding houses. The time demands of work and the pressure on cooking space has a direct effect on the type and variety of dietary intake (Women’s Centre 1993; Solidarity Centre 2003). Although there are small minimum health facilities provided by some factories and the Zone, most of the workers use private medical clinics. While the private medical clinics are more sympathetic to the workers’ plight, they also reveal the inadequacy of public medical facilities in the area (Biyanwila 2004). The working and living conditions of FTZ workers reflect patriarchal cultural practices of the local and national community, which has reinforced coercive tendencies to control workers.

Local communities and FTZ workers The relationship between FTZ workers and surrounding local communities contains many contradictions shaped by their history and

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location and by the ways in which FTZ boundaries are drawn. There are instances of local communities supporting the workers in their struggles. However, the dominant tendency is an instrumental commercial relationship that further exploits women (FES 1997: 32). The two main FTZs are located in the Western Province, near Colombo, the main financial and commercial centre, with access to the sea and air ports. The Western Province, with a population of around 5.4 million in 2004, is a significant electoral as well as an industrial area. Although there were nine FTZs in 2008, the two Zones near Colombo – the Katunayake and Biayagama FTZs – attract most investment and employment (BOI 2008). From 2003 to 2008, the Katunayake FTZ (KFTZ) employed nearly 52,000 workers (in 84 factories), while Biyagama FTZ employed 20–22,000 workers (in 56–62 factories) (BOI 2008). In 1992 the ‘FTZ status’ extended to any workplace approved by the state (BOI), further fragmenting labour regimes. Within the Western Province, the two main FTZs are located in the Gampaha district, with a voting population of around 1.3 million. The Colombo metropolis, covering the districts of Colombo and Gampaha, accounted for over 70 per cent of manufacturing in 1997 (UNCED 1997). The economic activities of the Gampaha district consist of tourism, fishing, rubber plantations, and rice cultivation. While some local youth found employment in the FTZ factories, the local economies are primarily oriented towards a range of small commercial enterprises, along with rentier and speculative activities (Uyangoda 1997). The FTZs created immediate opportunities for boarding houses, small food shops and vendors, private bus owners, and three-wheel taxi drivers. The uneven spread of new economic opportunities in the Gampaha district coexists with entrenched poverty and unemployment, along with inadequate social and physical infrastructure, such as roads, electricity, water, and hospitals. The relative deprivation of the local community also provides a pool of young men for recruitment by politicians and employers as private ‘security agencies’. In the redrawing of spatial boundaries which accompanies the growth of FTZs, the regulation of labour in the Zones intersects with the dynamics of local government and coercive agents of meta-governance. The Gampaha district is notorious for political violence, with a recent manifestation of more dispersed and decentralized under-world networks of coercive power (Uyangoda 1997). With the outbreak of the ethnic war in 1983, political violence is often intertwined with ethnic, class, gender, and caste violence. The state, as well as employers, mobilize local gangs of strong men, or ‘security agencies’, to harass and threaten workers and

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labour activists (DeVotta 2003; Kearny 2006). Although the use of violence and criminals in politics in Sri Lanka has a long history, it is reconstituted in the FTZs as underground networks of quasi-state power (Uyangoda 1992). The ongoing war also contributes to the growing networks of local gangs, with the availability of trained military deserters, of which there were as many as 40,000 in early 2002 out of a military force of 125,000 soldiers (DeVotta 2003). These gangs are ‘new networks and structures of political patronage, capital accumulation and means of repression and coercion’ with access to modern weapons and a parallel authority to formal state power (DeVotta 2003). However, the primary agent of mobilizing the gangs is local/domestic capital with links to politicians and bureaucrats in governing authorities that enable more effective deployment of coercive power. The local ‘community’ is also shaped by the broader national community, and constructions of nationalism. The promotion of neoliberal strategies in 1977 reinforced Sinhala-Buddhist ethnocentric nationalism under the rhetoric of Dharmishta samajaya, or ‘righteous society’ (Kelegama 1997; Dunham and Jayasuriya 2001; DeVotta 2003). Ethnonationalist Sinhala-Buddhist notions of ‘nation’ and national community, are grounded in a patriarchal projection of women as embodiments of national culture and femininity (De Alwis and Jayawardena 2001; Lynch 2002). While most FTZ workers are internally migrant Sinhala Buddhist women, often it is the Catholic churches in the area that have assisted workers in their daily struggles (Rosa 1994). The influence of local churches, a legacy of colonial history, reflects the predominance of Christian population in this multicultural area. The Sinhala Buddhist nationalists have maintained anti-Christian hostilities, also leveled at NGOs and INGOs, by alleging neocolonial motives. In 2002, a violent anti-Christian campaign under the ‘anticonversion laws’ emerged with scores of attacks against Christians. This campaign calling a ban on ‘unethical conversions’ later consolidated with the formation of the Jathika Hela Urumaya (National Heritage Party). While the Christian churches do attract hostility from Sinhala Buddhist nationalist forces, the dominance of the Christian community around the FTZs in Western Province and their significance for electoral politics has meant limited anti-Christian attacks in the area.

Controlling women’s sexuality and labour The general hostility of the local community toward women workers reveals the patriarchal cultural practices that devalue women’s waged

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work by controlling their bodies and sexuality. Central to women’s integration into the new FTZs has been their depiction as ‘nimble fingered’ and ‘productive docile’ (Elson and Pearson 1981). This overlaps with the dominant cultural representation of women as ‘good’ mother, wife and daughter roles rather than as workers and citizens (De Alwis and Jayawardena 2001; Lynch 2002). In the context of war, patriarchal practices and masculine identities can be reinforced by violence directed towards women and the construction of ‘respectability’ has been central to the gender politics of nationalism as well as citizenship (De Alwis and Jayawardena 2001; Lynch 2002; Hewamanne 2003). Cultural constructions of respectability are based on subordinating working class women to hegemonic constructions of femininity. According to the Indian labour historian, Rajnarayan Chandavarkar, the dominant definition and meaning of female ‘respectability’ is the ‘exclusive attribute of households which were able to withdraw the labour of women’ (1997: 186). This hegemonic femininity relates back to the anticolonial constructions of Sinhala nationalism in the late 19th century. Male nationalists adopted Victorian notions of femininity, domesticity and discipline, in order to articulate bourgeois notions of respectability (De Alwis and Jayawardena 2001). This notion of respectability was grounded in a nationalism that combined elements of race, gender and sexuality while obfuscating class and caste inequalities (Lynch 2002, 2007). This cultural representation of the wage work of women is an integral component of controlling women’s labour as well as their sexuality. Nevertheless, women workers also engage in oppositional cultural practices, involving the exploration of new tastes in music, dance, film, reading material, styles of dress, speech and mannerisms (Hewamanne 2003). While these practices are often represented by the middle class as ‘disrespectable’, they highlight how specific working class identities are mediated through culture. Although FTZ workers participate in these stigmatized cultural practices with a subversive twist, there are contradictory effects of resistance and accommodation (Hewamanne 2003). The social construction of ‘disrespectability’ involves depicting FTZ women workers as prostitutes and sexual objects (Abeysekera 1997; Hewamanne 2003; Lynch 2002, 2007). Since most workers are young, single women and outsiders to the community, male youth in these areas converge on roads surrounding the FTZs. The roads are generally the only public space to interact with workers, given that recreational spaces such as parks are non-existent. A large number of young women

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workers confined to a relatively small geographic space have also influenced the construction of male desires and fantasies among these communities. The local Sinhala media, particularly popular private radio stations and tabloid news papers, also play a critical role in the sexualization of women workers in the Zone (Hewamanne 2003; Lynch 2002, 2007). While a small proportion of women workers develop enduring relationships, most encounter sexual harassment and violence (Abeysekera 1997; Biyanwila 2004). The sexuality of FTZ women workers is controlled by a range of cultural practices from seemingly harmless jokes to sexual violence. In terms of their reproductive health, the FTZs areas have recorded a high incidence of abortions and sexually transmitted infections (Hettiarachchy and Schensul 2001). There is also a dimension of sexual violence involving abductions, rape, and murder. Despite these constraints, women workers continue to organize and resist, through NGOs and unions, and use diverse strategies to do so.

Women workers organizing The formation of workers’ organizations in the KFTZ was influenced by worker struggles in the adjacent industrial areas of Ja-Ela and Ekala. The early workers’ organizations emerged through struggles and collective action initiated by progressive women and trade union activists. In particular, the 1982–83 Politex strike mobilized an initial wave of activist organizations that continue to function today. Given the hostility of employers, state actors, as well as the surrounding community towards unions, most organizations in the FTZs are NGOs with a social service orientation. In assisting workers, there is a spectrum of community organizations that are active around the Zone and which overlap with other community and ‘development’ oriented organizations. Christian and other inter-faith organizations play a key role in assisting women workers with Catholic centres often providing spaces to meet, socialize, and to conduct seminars and formal social activities. They also provide limited boarding house facilities (Rosa 1994: 92). Most of these NGOs/community organizations are engaged in providing welfare facilities to the workers, while a few intervene to attempt to change the underlying social and political constraints faced by women workers. Even among trade unions, most are engaged in providing social services rather than encouraging the self-organization of workers (Biyanwila 2004). Religious community organizations are often

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networked with similarly positioned women’s groups, legal advice centres, health centres, and other community organizations (Rosa 1994; Solidarity Centre 2003). In 2006, the NGOs active in the Zones included Kamkaru Sevana (Shelter for workers), a Christian Workers Fellowship; Mithuru Sevana (Friendship Shelter) of the NWC (National Workers Council); Dabindu (Drops of Sweat) Collective; Women’s Centre; Centre for Women; Kalape Api (We of the Zones); and the Legal Advice Centre (launched in 1984). These local organizations are allied with international labour networks, which mostly focus on non-contentious collective action. The American Centre for International Labour Solidarity (ACILS), the international arm of the peak US union (AFL-CIO), funds and encourages compliant worker organizations with a focus on narrowly defined workplace issues. These organizations include the JSS (Progress Centre), an affiliate of the United National Party (UNP) and the NWC, an affiliate of international Christian labour networks (Solidarity Centre 2003). However, there are also alternative international labour networks which encourage movement politics, discussed in the case study below. Dominant union strategies are subordinated to political parties and avoid contentious forms of collective action or movement politics (Biyanwila 2004). They mobilize workers mostly for party purposes. With the weakening of ‘old’ bureaucratic working class parties, the rise of the JVP, (Janatha Vimukthi Peramuna – Peoples Liberation Front) as an insurrectionary Left party, has complicated labour movement politics. The JVP emerged as a splinter group of the Communist Party (CP) and launched its first insurrection in 1971. Despite legal bans, the JVP re-grouped to launch a second insurrection from 1988–90. In articulating a militant, revolutionary, anti-imperialist, anti-feudal and anticapitalist strategy, the JVP harnessed an educated youth resentment of class, caste and regional power hierarchies (Uyangoda 2000: 72). The second JVP insurrection from 1988–90 is described as the ‘terror period’. It claimed over 40,000 lives involving arbitrary arrests, extrajudicial killings, torture, ‘disappearances’, and extensive abuse of human rights. The JVP re-grouped again by 2000, and became a formidable political party promoting a unitary Sinhala state. The JVPs shift towards ethnonationalism and the long standing strategy of infiltrating already established worker organizations remains contentious for most worker organizations in the FTZs. Most working class parties have only a minor presence in the FTZs. A smaller Marxist party, the NSSP (Nawa Sama Samaja Party), although having no strong FTZ worker organizations, has actively supported

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contentious action in the FTZs. The NSSP, as a self-defined affiliate of the Fourth International – or socialist internationalism – split from the Lanka Sama Samaja Party (LSSP) in the early 1970s. In contrast to the ‘old’ working class parties, the LSSP and the Communist Party, the NSSP focuses on more wide-ranging collective action by networking with unions and other civil society actors, such as NGOs engaged in human rights, environment, peace and women’s campaigns. A key reason for the low visibility of working class parties relates to the attack on them under the UNP government (1977–94). The JSS union (UNP), also known as Thugs Inc. (thug sansthawa) by the labour movement, was at the forefront of attacks on activists and working class parties during the early 1980s (Fernando 1988; Biyanwila 2004). The JSS also played a key role in instigating anti-Tamil violence, under the leadership of Cyril Mathew, the Minister for Industries (DeVotta 2003: 119). Cyril Mathew’s political violence in the Kelaniya electorate close to Colombo combined class and caste violence (Uyangoda 1997). The working class parties also came under attack during the 1989–91 JVP insurrection and the subsequent counter-insurrection. Nevertheless, the compromises of the working class parties with the PA government in the post-1994 period have also undermined their own capacity to engage in collective action. To summarize, along with the active repression of unions in the FTZs, employers and the state indirectly have promoted NGO type service organizations for workers rather than encouraging their selforganization. A network of NGOs and unions mostly run by men, who are engaged with the making of ‘male deals’ contribute to mechanisms that control women workers. Nevertheless, women workers also engage in collective action by actively building their own organizations. The case of the FTZWU illustrates such tendencies and new possibilities for workers’ self-organization and collective action.

The Free Trade Zone Workers Union The Free Trade Zone Workers Union (FTZWU) emerged in 1999, from a partnership between a trade union and a women’s NGO (Women’s Centre) that began in 1982. The union, the International Transport and General Workers Union (ITGWU), established in 1980, was led by Anton Marcus, a motor mechanic and a welder in his early work life. He became a union activist, joining radical union politics in the late 1970s. The Women’s Centre (WC), initiated in 1980, was led by two young women activists, who were linked with Marxist feminist politics

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and the Student Christian Movement. With the departure of both of these women leaders, Padmini Weerasinghe has led the WC since the late 1980s. In 1982 Padmini, as a young FTZ factory worker,, crossed the picket line during the Polytex strike, but five years later became a committed activist. Both Anton and Padmini represent a new generation of leaders; ‘organic’ leaders that emerged through their experiences of exploitation and repression as factory workers and activists. The key event that brought the ITGWU and the WC partnership together was the historic 1982 Polytex strike (Jayakody and Goonetilake 1988). At the time, Polytex was one of the largest garment factories in the FTZ, employing 1400 mostly women workers (Fernando 1988). The strike was led by young women workers, who resisted formidable state and employer repression which deployed the police and local gangs of criminal youth to assault and intimidate strike leaders. With a communitybased campaign that mobilized a range of activists and organizations, the women engaged in a difficult and lengthy struggle. Women’s collective action against an authoritarian repressive state, revealed the weakness of a fragmented and exhausted male-dominated labour movement, which was then attempting to recover from the failed general strike of July 1980 (Fernando 1988). The Polytex strike was pivotal in spawning a range of worker organizations (NGOs) in the FTZs, which included women’s groups, legal advice centres, health centres, and other community organizations (Rosa 1994: 92).

The partnership’s activism: 1977–2000 From its inception, the activism of the partnership was severely constrained by the repression of activists in the Zone. In 1985 Padmini and six others were arrested by armed security guards, for selling the WC newspaper, Sthree (women), about a mile outside the Zone. The main focus of partnership activity during these initial years was the provision of information to women workers on worker rights. The partnership’s activism was again restricted during the ‘terror period’ of the 1988–89 JVP insurrection and the counter-insurrection of the state. This was a period of intensified violence with a series of brutal incidents of torture, killings and disappearances (Abeysekera 1997; Ferdinando 2003a, 2003b). Since Anton was known as a trade union leader in the area, he was under threat by the counter-state JVP, the police, military, and paramilitary forces, which included death squads. The state and employers, who were complicit in the violence, often labelled activist workers as JVP members, which meant they often ‘disappeared’ (Abeysekera 1997; AI

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1989). The political violence in the FTZ area was therefore linked to local politics and attempts by powerful local politicians to maintain ‘mini-republics’ of sovereignty and control over local social relations (Uyangoda 1997). The repressive context of the late 1980s reinforced the partnership’s alliances with a loose network of worker NGOs in the Zone, involving the Dabindu Collective; Kalape Api (We of the Zones); and the Legal Advice Centre. In this climate of terror, the campaigns around worker rights expanded into issues of human rights. Thus, since the early 90s, the strategic orientation has extended into highlighting women’s rights as human rights and a broader strategy of contesting structures of patriarchy and violence against women in local communities. The space for the formation of the FTZWU emerged following the People’s Alliance (PA) government assumption of power in 1994. The PA government re-launched Employee Councils in the FTZs, enabling the partnership to initiate a network of Employee Councils, commonly known as the Joint Association. While campaigning to enforce Worker Councils, the Joint Association launched the Free Workers Forum, a forum for open dialogue and debate among independent unions. With the gradual building of solidarity among workers across different FTZs, the Joint Association established the FTZWU in December 1999.

Members and organizational resources The FTZWU membership increased from around 6000 workers in 2000 to some 14,000 workers in 2006. Almost 80 per cent of the membership is made up of women workers between the ages of 18 and 25. They were spread across factories from two main Zones, Katunayake, and Biyagama, and in the Eastern province about 95 per cent resided in boarding houses. The average monthly wage rose from Rs. 3000–4000 (US$40–53) in 2000 to Rs. 4800 in 2006. However, this still represented a bare minimum living given the increased cost of living in an urban setting (Prasanna and Gowtham 2006). The meagre resources for the FTZWU, a reflection of the low wages, also required a continuous search for sources of funding. The membership fees of the ITGWU comprised between 50 per cent to 60 per cent of the union’s total budget, which contrasted with the WC, which was wholly funded by international NGOs, although this source of funds has gradually weakened, particularly since the mid-1990s. During the early stages (1982–87), the WC was funded by Christian donor organizations such as Bread for the World. Later, in

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the early 1990s, funds were received from New Zealand-based Christian organizations such as the Christian World Service. More recently, the Asia Pacific Workers Solidarity Links (APWSL) has assisted the partnership with foreign funding sources such as OXFAM. The partnership continues to function on a shoe-string budget, but its strength lies in its organic and well-established alliances.

Alliances: Different strategies and spaces The partnership’s alliances include a diverse and broad network of local, regional, and international organizations. These organizations include unions, NGOs and activist networks that operate in different strategic terrains and spatial scales. The local network includes other trade unions, women’s organizations and activists engaged in human rights, women’s rights, peace, and democracy. The core national network of worker organizations are mostly movement-oriented independent trade unions and NGOs gathered under the Free Workers Forum (or the Forum).3 Meanwhile, the WC maintains links with a national network of women’s organizations, which includes the Women’s NGO forum, Mothers and Daughters of Lanka, and Women and Media. The partnership actively participates in these networks on issue-based collective action, while experimenting with innovative political-cultural practices such as May Day and worker exchange programmes. At a regional level, the partnership is closely linked with activist labour networks, such as the Transnational Information Exchange (TIE Asia), and the Asia Pacific Workers Solidarity Links (APWSL). The partnership also engaged in a network of trade unions and NGOs, called the South Asia Labour Forum, involving Nepal, Bangladesh, Pakistan, Sri Lanka, and India. Created in May 1996 in Kathmandu, this Forum initiated a South Asian Labour Rights Charter, based on UN and International Labour Organization (ILO) Conventions.4 Recognizing the pressures against a regional Charter, a new initiative was launched in 2005 towards a Labour Charter for garment workers. As the local coordinator for the Asian Cultural Forum of Development (ACFOD), the partnership launched a street theatre group to promote social change through oppositional cultural practices.

Global-local action The partnership’s main campaigns mobilize global labour networks and unions. Some of these networks, campaigning on Corporate Social

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Responsibility (CSR) issues, are directly associated with workers’ struggles in the global garment industry. These include the Transnational Information Exchange (TIE-Asia), Women Working Worldwide (WWW), Clean Clothes Campaign, and the Fair Labour Association (FLA). For the partnership’s local activism in the garment sector in the late 1990s, TIE-Asia’s regional coordinator, Kelly Dent, played an instrumental role. In 2005, the partnership joined a ‘living wage’ campaign for garment workers initiated by OXFAM, called ALaRM or Apparel-industry Labour Rights Movement. The campaign aimed at addressing job losses due to shifting production following the end of the Multi-Fibre Agreement (MFA) in 2005, which allocated export quotas to the US and the European Union. Comprised of unions and labour NGOs, the ALaRM network demanded a living wage for garment workers, compensation for those who lose jobs, better living conditions and freedom for workers to join unions (Prasanna and Gowtham 2006). The ALaRM campaign revealed the limits of European Union pressures to improve labour rights under the GSP (General Special Preference) status granted in 2002. While focused on more activist labour networks, the partnership maintains links with other international labour organizations such as the German Friedrich Ebert Stiftung (FES) and the US American Centre for International Labour Solidarity (ACILS) that are focused on noncontentious representative politics. In 2005 the partnership also allied with the International Textile, Garment and Leather Workers Federation (ITGLWF), a key Global Union Federation (Kearny 2006). These strategic alliances are concerned primarily with building their capacities, resources and training, and engagement in movement politics. The Jaqalanka campaign in 2003 illustrates the exchange of communication and information through activist networks and how a codebased strategy can contribute to local worker struggles (Hale and Shaw 2001). This struggle at the Jaqalanka factory of around 400 workers was primarily about management’s refusal to recognize the FTZWU branch at the workplace. Management tactics to coerce, bully and intimidate members of the FTZWU were supported by the BOI and the state (Labour Department, Minister for Employment and Labour) (Marcus and Brehaut 2003; ICFTU 2004). The FTZWU mobilized its networks, particularly the FLA, given that two of its participants, Nike and Vanity Fair, were sourcing from Jaqalanka Ltd.5 The dispute, which lasted nearly six months, at great cost to workers and the FTZWU, was tentatively resolved with the management agreeing to most of the union demands. The main union demands included granting union recognition as the collective bargaining agent; safeguarding the lives of the

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branch union members; a clear statement that Jaqalanka Ltd will respect the right to Freedom of Association and collective bargaining and provide facilities for trade unions to operate freely inside the factory (Marcus and Brehaut 2003). Because of the Jaqalanka campaign’s international pressure, the BOI was forced to revise its guidelines recognizing Freedom of Association in FTZs (ICFTU 2004). In terms of the global labour movement, the partnership is an active participant in the Southern Initiative on Globalization and Trade Union Rights (SIGTUR). The SIGTUR, launched in 1992, is a network/ organization of Southern unions that brings together independent democratic unions from Southern Africa, Asia, Australasia, and Latin America (Lambert and Webster 2001). As an emerging forum for ‘new’ labour internationalism, the SIGTUR illustrates an instance of global social movement unionism (Lambert and Webster 2001). Its campaign/ movement orientation emphasizes horizontal and reciprocal relations to enable global solidarity actions. For example, during the 2001 SIGTUR conference in South Korea the partnership was assisted by the Korean Confederation of Trade Unions (KCTU). The KCTU shared information with the FTZWU to lobby the OECD ‘national contact point’, which is an OECD-ILO voluntary regulation mechanism of multinationals originating from OECD countries, including Korea (ICFTU 2004). The FTZWU experience with Korean companies in Sri Lanka is generally one of hostility. In return, the partnership also contributed to KCTU campaigns. With the SIGTUR conference deciding on a global solidarity campaign to demand the release of arrested trade union leaders in Korea and Malaysia, the partnership activated its local union networks. As a result, the 2002 ‘Joint Trade Union 2002 May Day Resolution’ demanded the release of the jailed unionists (CW 2002a). While the SIGTUR network is actively engaged in increasing the participation of women, the ‘male deals’ within this progressive network maintain the subordination of women (Caspersz 2003).

Renewing local solidarity The emphasis on global alliances also relates to renewing solidarity locally among unionized workers within and outside the garment industry and among non-organized workers. At the local level, there have been new efforts to address the social marginalization and exploitation of migrant workers in the zones. The front-page article of the WC newspaper, Sthree Kamkaru Handa (Voice of Working Women), in May–June 1997, was entitled ‘Appreciating Migrant Workers’ Contribution’. In 2000 the

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partnership initiated discussions with activists in the Ratmalana industrial area, near Colombo, to organize factory workers who supply labels for FTZ factories. The WC also participates in a network of progressive civil society groups, which launched a programme of Migrant Women’s Tribunals, somewhat similar to a ‘truth commission’, to expose discrimination and violence against migrant women workers. The cultural activities of the May Day and the International Women’s Day are two instances of FTZ women workers redefining their own collective identities, while transforming local and national communities. The partnership pioneered the first FTZ May Day rally in 1995, bringing together dispersed women workers and women’s organizations. As mostly a women workers’ event, the FTZ May Day rally challenges the male-dominated May Day culture and the public space of streets, while reinforcing women’s identities as active agents. For the celebration of the 1998 International Women’s Day, under the banner of ‘Women in Action, Struggle and Resistance’, the Women’s Centre networked with two activist NGOs named the Community Development Centre of Badulla and the Law and Society Trust of Colombo. In breaking with the Colombo urban-bias of the labour activism, around 200 workers, mostly women from the Zones, travelled in four buses to Badulla, a small town in the central hill country, where over 3000 workers from tea plantations and factories participated in a rally through the streets, culminating in a public meeting that included cultural events. The momentum for the rally was initiated in 1992, when the partnership formed the Centre for the Welfare of Garment Workers (CWGW), focusing on leadership, awareness-raising, legal advice, research, and exchange programmes. The partnership has carried out worker exchange programmes, where factory workers meet women workers in agriculture, tea plantations, and other spaces and types of work, to share their life experiences within and outside the workplace. In renewing solidarity with other workers, the partnership illustrates a willingness to experiment with a range of strategies for women workers’ collective action. In summary, the FTZWU represents a break from established union forms and strategies in that its membership is mostly young women factory workers who seek to resist coercive employment practices in new ways and who are committed to transforming both work and local communities. A central feature of this strategic orientation is FTZWU’s activity on multiple levels and spaces. Not only does the FTZWU engage in national and international negotiations and lobbying within established institutions, it also encourages collective action locally, building

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solidarity with other workers as a social movement. This strategic orientation, also described elsewhere as social movement unionism (Moody 1997; Lambert 2002), complements a gendered class politics that focuses on ‘the struggle between forces imposing commodification and those defending subsistence’ (Turner and Brownhill 2004).

Conclusion: collective action in multiple spaces The struggles of FTZ women workers represent a gendered class struggle within a specific place and space, contesting the representation of women workers as cheap, docile labour. The factories as workplaces are networked with spaces of global capital, as well as national and local communities. The dismal living conditions that have endured in the FTZs over the past 26 years reveal the subordinated position of women workers within the (ethno) nationalist politics and economic strategies of the nation-state and within the accumulation imperatives of global capital. It also exposes the boundary drawing strategies of capital and state, which restrain women workers from organizing and maintaining their subsistence. The FTZs highlight how neoliberal strategies have intensified the commodification of labour and the breaking of old social compacts or class compromises, which provided public goods, such as housing, transport, safe public roads, water, electricity, and other services central to de-commodifying labour. In terms of class formations, the wage relationship as well as the local gender politics of ‘community’ play complementary roles in re-regulating women’s labour in the FTZs. The FTZs represent a specific nationalist agenda of economic development driven by a neoliberal globalization project. The dominant cultural construction of national ‘community’ or nationalism reproduces the subordination of women by devaluing their waged and unwaged work. This ethno-centric Sinhala Buddhist nationalism complements the interests of global and local capital in that it actively seeks to represent and promote women workers as an available pool of cheap, docile labour. In turn, the gender politics of ethno-nationalism comprises a reinvention of national and local communities which is grounded in controlling women’s bodies and sexuality. The FTZWU illustrates a case of women workers’ ‘community-based organizing model’, which builds workers’ capacities for collective action, while reinforcing their ‘positional power’ at the point of production. It also highlights the centrality of alliance-building with a range of activist organizations and networks to enable interventions at many levels,

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thereby transforming communities and women workers’ identities in many spaces and places. In the context of anti-union ‘despotic’ factory regimes and a hostile local community, the struggles of FTZ women workers also expose the ‘male deals’ which predominate within a network of institutions (state, employers, unions, local governments and local gangsters) and which seek to maintain control of the boundaries of the FTZs. By positioning these women workers with regard to both their waged and unwaged labour, gendered class analysis highlights the constraints and opportunities women workers face in resisting both patriarchy and capital. This involves locating women’s struggles in the FTZs, in global, national and local spaces intertwined with notions of community and the social constructions of gender. In effect, women’s struggles in the FTZs demonstrate how women workers in world market factories are transforming themselves, their work and their communities through strategies that build alliances in order to reinforce their capacities for collective action. Notes 1 Ethno-nationalist tendencies relates specifically to the rise of Sinhala Buddhist nationalism as a post-colonial nation-building project. The privileging of Sinhala language (1956) and Buddhist religion (1972) within the state apparatus were instrumental in the rise of counter movements asserting Tamil nationalism in the mid-1970s. The strengthening on Sinhala Buddhist nationalism in the post-1977 period instigated the ethnic war and continued to maintain a militant hegemonic project. In 2005, the strengthening of Sinhala Buddhist nationalism was illustrated by the formation of a Buddhist monks party, the Jathika Hela Urumaya (JHU – National Sinhala Heritage Party). 2 See Gamini Warushamana, ‘Textile manufacture will boost value addition’, Sunday Observer July 10th 2005, http://www.sundayobserver.lk/2005/07/10/ bus01.html, accessed July 2008. 3 The core members of the network include the Inter Company Employees Union (JVP), United Federation of Labour (NSSP), Commercial and Industrial Workers’ Union (NSSP), Progress Centre (Biyagama), Joint BOI Industry and Services Employees’ Union (JVP). The activist organizations (NGOs) in the union’s network include Movement for Inter-Racial, Justice and Equality (MIRJE), Free Media Movement (FMM), Women and Media, INFORM, Centre for Society and Religion (CSR), Civil Rights Movement (CRM), and the Centre for Development Alternatives (Kandy). The NSSP (Nava Sama Samaja Party) is a small Trotskyite workers’ party. 4 See the South Asia Citizens Web, http://www.sacw.net/Labour/SALRC.html, accessed July 2008. 5 See the Centre for Policy Alternatives statement on the agreement between union and the management at Jaqalanka, http://www.cleanclothes.org/codes/ 03-10-16-fla.htm, accessed July 2008.

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References Abeysekera, S. (ed.) (1997) A Review of Free Trade Zones in Sri Lanka, Colombo: Dabindu Collective. AI (Amnesty International) (1989) Political Killings in Southern Sri Lanka: On the Brink of Civil War, London: AI Publication. Biyanwila, J. (2004) ‘Trade unions in Sri Lanka Under Globalisation: Reinventing Worker Solidarity’, unpublished PhD dissertation, University of Western Australia, Perth. Accessible through the university library http://catalogue. library.uwa.edu.au/, date accessed July 2007. BOI (Board of Investments) (2003) Sri Lankan Apparels – An Overview, http://www. boisrilanka.org/portal/index.phtml?catId=6&newsId=371, date accessed January 2003. BOI (Board of Investments) (2008) FTZ Information, www.boisrilanka.org, date accessed July 2008. Burawoy, M. (1985) The Politics of Production, London: Verso. Chandavarkar, R. (1997) ‘The Making of the Working Class: E.P. Thompson and Indian History’, History Workshop Journal, 43: 177–196. Caspersz, D. (1998) ‘Difficulties in Organising FTZ Workers in Sri Lanka’, in M. Hess (ed.) Labour Organisation and Development: Case Studies, ANU, Australia: NCDS Asia Pacific Press. Caspersz, D. (2003) ‘Asian Working Women and Agency: Their Voices’, paper presented at the AIRAANZ conference, Melbourne. Chhachhi, A. and Pitten R. (2001) ‘Multiple Identities and Multiple Strategies: Confronting State, Capital and Patriarchy’, in Peter Waterman and Jane Willis (eds) Place, Space, and the New Labour Internationalism, London: Blackwell Publishers. Christian Worker (CW) (2002a) ‘Joint May Day Resolution’, 2&3 Ort, November, p. 66. Christian Worker (CW) (2002b) ‘Amendment to Factory Law’, 2&3 Ort, November, p. 64. Cottingham, M. (1993) ‘Cut to the bone’, New Statesman and Society, London, March. De Alwis, M. and Jayawardena, K. (2001) Casting Pearls: The Women’s Franchise Movement in Sri Lanka, Colombo: SSA. De Alwis, R. (1994) ‘An Overview of Export Processing Zones in Sri Lanka’, in J. Abeywardena et al. (eds) Export Processing Zones in Sri Lanka: Economic Impact and Social Issues, Working Chapter No. 69, Geneva: International Labour Office. De Alwis, R. and Perera, S.R. (2000) ‘Occupational Over-Use Disorder of the Upper Limbs of Female Garment Workers’, in 7th National Convention on Women’s Studies, Colombo: CENWOR. DeVotta, N. (2003) ‘Sri Lanka’s Political Decay: Analysing the October 2000 and December 2001 parliamentary elections’, Commonwealth and Comparative Politics, 41 (2). Dunham, D. and Jayasuriya, S. (2001) ‘Liberalisation and Political Decay: Sri Lanka’s Journey from Welfare State to Brutalised State’, Working Chapter 352, The Hague: Institute of Social Studies. Elson, D. and Pearson, R. (1981) ‘Nimble Fingers Make Cheap Workers: An Analysis of Women’s Employment in Third World Export Manufacturing’, Feminist Review, Spring.

206 Trade, Labour and Transformation of Community in Asia Ferdinando, S. (2003a) ‘A Monument for the Disappeared FTZ’, The Island newschapter, October 28. Ferdinando, S. (2003b) ‘Courage Wins Prestigious South Korean Human Rights Award for Jayanthi’, The Island newspaper, 15 June. Fernando, L. (1988) ‘The Challenge of the Open Economy: Trade Unionism in Sri Lanka’, in Roger Southall (ed.) Trade Unions and the New Industrialisation of the Third World, London: Zed Press. Fine, J. and Howard, M. (1995) ‘Women in the Free Trade Zones of Sri Lanka’, Dollars and Sense, 202. Friedrich Ebert Stiftung (FES) (1997) Women Workers in the FTZs, W. Wilfred Silva (ed.) (Sinhala), Colombo: FES. Hale, A. and Shaw, L. (2001) ‘Women Workers and the Promise of Ethical Trade in the Globalised Garment Industry: A Serious Beginning?’, in P. Waterman and J. Willis (eds) Place, Space, and the New Labour Internationalism, London: Blackwell Publishers. Herrod, A. (ed.) (1998) Organising the Landscape: Geographical Perspectives on Labour Unionism, Minneapolis: University of Minnesota Press. Hettiarachchy, T. and Schensul, S.L. (2001) ‘The Risks of Pregnancy and the Consequences among Young Unmarried Women Working in the Free Trade Zone in Sri Lanka’, Asia-Pacific Population Journal, 16 (2), June. Hewamanne, S. (2003) ‘Performing Dis-respectability: New Tastes, Cultural Practices and identity Performances by Sri Lanka’s Free Trade Zone Garment Factory Workers’, Cultural Dynamics, 15 (1): 71–101. International Confederation of Free Trade Unions (ICFTU) (2004) Behind the Brand Names: Working Conditions and Labour Rights in Export Processing Zones, Geneva: ICFTU. Jayakody, S. and Goonetilake, H. (1988) ‘Industrial Action by women Workers in Sri Lanka: The Polytex Garment Workers’, in N. Heyzer (ed.) Daughters in Industry: Work, Skill and Consciousness of Women Workers in Asia, Kuala Lumpur: Asian and Pacific Development Centre. Kearney, N. (2006) ‘Government of Sri Lanka Asked to Explain Scope of Sweeping New Emergency Regulations’, The International Textile, Garment and Leather Workers’ Federation, available from http://www.itglwf.org/ DisplayDocument.aspx?idarticle=15169&langue=2 Kelegama, S. (1997) ‘Privatisation in Sri Lanka’, in A. Bennett (ed.) How does Privatisation work? Essays on Privatisation in Honour of Professor V.V. Ramanadham, London: Routledge. Lakshman, W.D. (2000) ‘Twenty Years of Liberalisation in Sri Lanka: Implication for Women Workers’, Pravada, Colombo: Social Scientists Association, 5 (9). Lambert, R. (2002) ‘Labour movement renewal in the era of globalisation: Union responses in the South’, in J. Harrod and R. O’Brien (eds) Global Unions?: Theory and Strategies of Organized Labour in the Global Political Economy, London: Routledge. Lambert, R. and Webster, E. (2001) ‘Southern Unionism and the new Labour Internationalism’, in P. Waterman and J. Wills (eds) Place, Space, and the New Labour Internationalism, London: Blackwell. Liyanage, S. (1997) ‘The State, State Capital and Capitalistic Development’, in W.D. Lakshman (ed.) Dilemmas of Development: Fifty Years of Economic Change in Sri Lanka, Colombo: Sri Lanka Association of Economists.

Janaka Biyanwila 207 Lynch, C. (2002) ‘The Politics of white Women’s Underwear In Sri Lanka’s open Economy’, Social Politics, Spring. Lynch, C. (2007) Juki Girls: Gender and Cultural Politics in Sri Lanka’s Global Garment Industry, Ithika: Cornell University Press. Marcus, A. and Brehaut, M. (2003) ‘Sri Lanka: Busting Jaqalanka’, in AMRC Asian Labour Update, www.amrc.org.hk/4808.htm, date accessed October 2005. Massey, D. (1994) Place, Space and Gender, Cambridge: Polity. Moody, K. (1997) Workers in a Lean World: Unions in the International Economy, London: Verso. Nichols T., Cam, S., Chou, W.G., Chun, S., Zhao, W. and Feng, T. (2004) ‘Factory Regimes and the Dismantling of Established Labour in Asia: A Review of cases from Large Manufacturing Plants in China, South Korea and Taiwan’, Work Employment Society, 18: 663–685. Prasanna, R. P. I. R. and Gowtham, B. (2006) ‘Sector specific living wage for Sri Lankan apparel industry workers’, Apparel-industry Labour Rights Movement (ALaRM), Clean Clothes Campaign, www.cleanclothes.org/ftp/06-ALaRM_ LIVING_WAGE_sri_lanka.pdf, date accessed July 2008. Rosa, K. (1994) ‘The Conditions and Organisational Activities of Women in Free Trade Zones: Malaysia, Philippines and Sri Lanka, 1970–1990’, in S. Rowbotham and S. Mitter (eds) Dignity and Daily Bread: New Forms of Economic Organising Among Poor Women in the Third World and the First, London: Routledge. Samarasinghe, G. and C. Ismail (2000) A Psychological Study of Blue Collar Female Workers, Colombo: Women’s Education and Research Centre. Siano, C.S. (1997) ‘Changing Health Issues in the FTZs’, Voice of Women, Colombo: Voice of Women, 4 (5). Silver, B.J. (2003) Forces of Labor: Workers’ Movements and Globalization since 1870, Cambridge: Cambridge University Press. Solidarity Centre (2003) The Struggle for Worker Rights in Sri Lanka, A Report by the AFL-CIO Solidarity Centre, Washington: American Center for International Labor Solidarity. Storper, M. and Walker, R. (1989) The Capitalist Imperative: Territory, Technology and Industrial Growth, London: Basil Blackwell. Turner, T.E. and Brownhill, L.S. (2005) ‘We Want our Land Back: Gendered Class Analysis, the Second Contradiction of Capitalism and Social Movement Theory’, Capitalism, Nature, Socialism, 14: 4. United Nations Conference on Environment and Development (UNCED) (1997) Sri Lanka: Report on the Proceedings of the National Consultation for RIO+5, http://www.ecouncil.ac.cr/rio/national/reports/asia/srilanka.htm, date accessed October 2005. United Nations Development Fund for Women (UNIFEM) (2005) Gender Profile of the Conflict in Sri Lanka, Available from: http://www.womenwarpeace.org/ sri_lanka/sril_pfv.pdf, date accessed February 2006. Uyangoda, J. (1992) ‘Gangsterism: It’s Political Sociology’, Pravada, Colombo: Social Scientists’ Association, 2 (3). Uyangoda, J. (1997) ‘Local Bodies as Domains of Localized Power’, Pravada, Colombo: Social Scientists’ Association, 5 (1). Uyangoda, J. (2000) ‘Post-Independence Social Movements’, in W.D. Lakshman and C.A. Tisdell (eds) Sri Lanka’s Development since Independence: Socio-economic Perspectives and Analysis, New York: Nova Scisence Publishers.

208 Trade, Labour and Transformation of Community in Asia Waterman, P. and Wills, J. (2001) Place, Space and the New labour Internationalism, Oxford: Blackwell Publishers Ltd. Women’s Centre (1993) Health Survey of Women Workers in the KFTZ, Ja Ela: The Women’s Centre. World Bank (2007) Doing Business in South Asia 2007, http://web.worldbank.org/ WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/0,,contentMDK:21217344~page PK:146736~piPK:146830~theSitePK:223547,00.html, date accessed March 2007.

Part IV Emerging Trade and Labour in Asia: The Information Technology Sector

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9 Linking and Legitimizing Knowledge-based Economic Development: India-Singapore Collaboration in the Information Technology Sector Faizal bin Yahya

Introduction The aim of this chapter is to examine state-led trade and economic development strategies that both India and Singapore have pursued by using the information technology (IT) sector as a case study. Singapore has sought to invest in the provision of IT infrastructure in India to leverage1 on India’s vast human capital.2 While the Singaporean state has been able to expand its economic reach overseas and pursue its developmental goals through investments in IT Parks, the state in India has faced crisis of political legitimacy despite its apparent ‘success’ in developing the sector. In this regard, this chapter will examine Singaporean investment in the IT sector in the southern Indian states of Karnataka and Andhra Pradesh and consider the legitimacy of such technocratic and IT driven development strategies given the uneven nature of local level socio-economic development in these regions. The city of Bangalore in the state of Karnataka in Southern India is approximately 366 square kilometres in size and has some six million inhabitants. Bangalore once enjoyed a reputation in India as a quiet ‘honeymooners’ and pensioners paradise, but, riding on the crest of a wave of information technology (IT) industry growth, the city now enjoys a global reputation as India’s ‘Silicon Valley’. The IT sector has become India’s leading services export industry. The country’s software and services exports reached US$23.6 billion from 2005–06 with an annual growth rate of over 30 per cent and are forecast to be worth around US$60 billion by 2009–10 (Yeo 2007). From 2008–09, Indian analysts expect to capture a 6 per cent share of the global IT market 211

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against its 3 per cent share at the beginning of 2005. With increasing options for outsourcing services, India has become one of the main global hubs for outsourced IT enabled services (ITES). Outsourcing activities include: call centres, medical transcription and back office accounting. From a relatively low share of 10.02 per cent in 1995–96, exports of software services occupied 38.1 per cent of India’s total services exports in 2005 (Press Trust of India 2005). India produces over three million university graduates including more than 400,000 engineers every year. There are insufficient jobs to cater for these graduates and, as a result, Federal and state-level governments are encouraging foreign multinational companies (MNCs)3 to locate in India in order to increase employment opportunities and stimulate regional economic growth. However, one of the key challenges faced by India to attract foreign MNCs is the lack of infrastructure. Moreover, if India is to create employment in knowledge based industries (KBI) such as software and ITES that could expand its Knowledge-based economy (KBE), huge investments are needed in infrastructure development. In this regard, India has encouraged foreign direct investments (FDI) in developing its KBE. Singapore is the fourth largest foreign investor in India with a cumulative investment of US$3 billion which is mostly invested in IT Parks such as in the metro cities of Bangalore and Hyderabad. These selfcontained IT Parks have food outlets, shops, gymnasiums, banking and other facilities. The IT Park Bangalore (ITPB) also happens to be Singapore’s flagship investment project in India and proved to be a benchmark project for other IT Parks being built across India. From Singapore’s perspective India represented an opportunity to expand its economy overseas through a policy of regionalization by creating a ‘virtual Singapore’ or ‘mini-Singapores’. Why would Singapore companies invest in India? Singapore companies are attracted to the vast resource of low cost, English-speaking skilled Indian IT talent. Coupled with the absence of effective infrastructures in India, this has opened up a particular niche for Singapore companies that have expertise in design, construction and management of high-technology Parks. This advantage was evident from 1992 onwards, when former Singapore Prime Minister Goh Chok Tong agreed with the late Prime Minister of India, Narasimha Rao, to replicate Singapore’s quality infrastructure in India (Teo 2005).

Regionalization and Look East policy Singapore is often classified as a ‘developmental state’ and the government is highly interventionist in economic development. The model of

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Singapore’s state-led development economic strategy involved the promotion of business interests as a whole (Hoogvelt 2001: 218–219). Moreover, specific industries that were deemed strategic were primarily targeted by the state and received priority in terms of resources. In order to expand, the state in Singapore also created a suitable business climate for capital accumulation and productivity improvement. Despite the economic ‘melt down’ caused by the Asian Financial Crisis of 1997–98, which led to scrutiny on the role that the state has played in East Asian economic development, the Singaporean state has continued to depend on government-linked companies (GLCs) to drive its economic growth (Beeson 2007: 165). The GLCs were at the vanguard of Singapore’s regionalization strategies such as ‘Growth Triangles’. The Growth Triangle concept involved three countries within the same region, and contiguous to each other, tasked to develop their common region. With its small domestic economy, Singapore is an active proponent for open trade, regionalism, and the integration of East Asian economies (Hoogvelt 2001: 229–230). Most of the Singapore GLCs are majority owned by Temasek Holdings. Temasek was incorporated in 1974 and is the monitoring arm of the Finance Ministry as it tracks the performances of the various investments and companies under its portfolio (Ching 2004). In its capacity as the representative safeguarding the Singapore government’s equity in the GLCs, Temasek exercises its ability to review the appointment of directors and chairmen to the boards of its various companies (Ching 2004). However, the GLCs are professionally managed companies and Temasek has no direct control over daily operations. Temasek’s role in Singapore’s economy is significant as its investment portfolio is equivalent to 13 percent of the total value of the economy in late 2004 (Kraar 2004). Temasek Holdings has shares in over 200 companies in various sectors of the Singapore economy. With the need to nurture and invest in Singapore companies planning to expand overseas, the passive shareholder position of Temasek has altered with the adoption of a more pro-active strategy to create value and build platforms for successful companies into the future (Burton 2007: 21). The main components of Temasek’s strategic growth plan depended upon the renewed dynamism that Asian economies had acquired after the Asian Financial Crisis of 1997. Singapore has no natural resources and is acutely limited in talented human capital. In the late 1990s, Singapore’s minister mentor Lee Kuan Yew was once reported to have remarked that if 300 key officials from Singapore died in a plane crash, Singapore as a nation would collapse (Compton 2000: 60). From 1965 onwards, a post-independence Singapore initiated a massive housing strategy to re-house squatters on state

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land and reclamation projects to release land for development purposes. By the 1990s, as a maturing economy but still constrained by shortages of land and talented human capital, Singapore had to develop an externallyoriented economy. In overcoming the impediment of limited land and human resources, the Singapore government invested in new emerging economies like China, Vietnam and India.4 In the early 1990s, Singapore’s Prime Minister Goh Chok Tong (now Senior Minister) said: ‘There is so much we can do in the region. Our problem is that our manpower resources are limited’ (Editorial 1993: 1). Goh explained that by establishing economic and investment linkages with other countries, Singapore could overcome its domestic manpower and resource constraints (Editorial 1993: 1). In turn, India’s late Prime Minister, Narasimha Rao, replied that: ‘India looked towards Singapore as a vibrant and responsive partner which would be able to complement India’s economy’ (Han 1994). India was regarded as having an abundance of skilled and professional manpower resources that Singapore could leverage to expand its economic growth (O’ Reilly 1992: 29). India’s other resources like land, minerals, and basic industry also had the potential to complement Singapore’s own strengths in investment, management, and high-technology industries (O’Reilly 1992: 29). India, in turn, viewed Singapore as an important partner in its ‘Look East’ policy which was designed to realign its economic and political relations with East Asia after the conclusion of the Cold War. India began enhancing its economic and strategic linkages with East Asia including Southeast Asia in a post-Cold War environment because of several internal and external factors. At the end of the Cold War in 1989, India’s main trading partner, the Soviet Union, ceased to exist and this ended the discounted supply of oil that India had received from the former. The First Gulf War caused millions of Indian workers to be repatriated from the Gulf region causing India to lose billions of dollars in remittances. Intra-regional economic cooperation in South Asia was hampered by lingering suspicions and hostility especially between India and Pakistan over the disputed territory of Kashmir. Therefore, in the early 1990s, India began to look for economic opportunities in other regions and was impressed by the rapid development of the economies in Southeast Asia. Despite political differences, the countries belonging to the Association of Southeast Asian Nations (ASEAN) were able to enhance regional cooperation. Engagement with the ASEAN region was also seen as enabling India to expand its influence into a region that its rival China was heavily involved in.

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It was fortuitous for India that at the onset of its ‘Look East’ policy, the Singapore government also decided to emphasize the importance of India as an emerging market. While Chinese business networks between China and Singapore have been in place for decades, the Singaporean state moved to balance its investment projects in the region and to correct a misperception that Singapore favoured business links exclusively with China. Moreover, Singapore is situated between much larger countries that are predominantly Islamic in faith, Malaysia to the north and Indonesia to the south, and it would damage Singapore’s image as a multicultural, multiracial, and multilingual society if it maintained a perceived preference to trade and invest solely in China. Then Prime Minister Goh remarked that, ‘we should not look just at China… now that would not be the right impression’ (Kwan 1993: 1). Furthermore, PM Goh commented that, ‘although China beckons, there are also opportunities elsewhere. India and Vietnam will become attractive as they open up and welcome foreign investments. We should be among the first to get through the door’ (Kwan 1993: 1). In addition, Goh also urged Singaporean companies to diversify their investments around the region because this ‘makes good economic sense’ in order to cushion any adverse impact of an economic downturn in any single nation (Cua 1993: 1). The emphasis by Goh in urging Singapore companies to invest in India also came with the realization by the Singapore government that, to some extent, Singapore had seized the opportunity to realize China’s investment potential at a rather late stage when compared to other trading nations (Hong Kong, Taiwan) in the region (Sikes 1993: 6). In this regard, state officials expressed their intention not to repeat the same mistake with India (Zoher 1994: 22). The emphasis on regionalization by the Singapore government was also part of a larger strategy to adopt a more systematic approach to tap into the Asian regions’ emerging economic potential. Previously, Singapore’s economic initiatives in the region were not planned as an overall and integrated strategy. As explained by then Deputy Prime Minister Lee Hsien Loong: ‘We have been around the region, but I think we have not done it quite as systematically as we could. So we had to focus a little bit more attention on this, particularly by making use of our capabilities in our statutory (boards) and government-linked companies’ (Zoher 1994: 22). One of the areas that Singapore had excelled in was infrastructure development and this was deemed by the government as a key element to market the region. As mentioned, infrastructure development is a key concern for emerging economies such as India. In 1992, Lee Hsien

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Loong, then Singapore’s Deputy Prime Minister, noted the strategic capabilities of agencies such as the Housing Board and the Port of Singapore Authority, suggesting that ‘we run a good port, we have a successful housing programme and maybe some of these skills will be useful to other people’ (Zoher 1994: 22). In refocusing onto the Asian region, the Singapore government attempted to balance its earlier globalization drive which had become synonymous with expanding investment and trade linkages with developed western countries (Chua 1992: 10). Nonetheless, many Singapore-based companies could take this regionalization strategy in their stride because for decades they had invested in Malaysia, and to a somewhat lesser extent, in Hong Kong and China (Chua 1992: 10). The strategy of regionalization5 was also launched to ensure that Singapore could maintain high rates of economic growth and development, and thereby its industrial and technological lead over competitor nation-states (Sharma 1993). Singapore’s political leaders emphasized that Singapore could be left behind if other more outward-looking New Industrializing Economies (NIEs) surged forward to match the level of Singapore’s economic achievement (Chiang 1992: 7). Referring to Taiwan, Hong Kong and South Korea, the former Senior Minister of Singapore, Lee Kuan Yew, commented that: ‘With a domestic and an external economy, the other three NIEs had two wings with which to take flight. Singapore, however, had one wing built from the domestic economy. With only one wing we will stay on the ground and not get airborne (Chiang 1992: 7). Comments such as these were indicative of the anxiety regarding future economic expansion and the desire of the Singapore government to practice its brand of state-directed capitalism by propelling its investments and entrepreneurs overseas into the region. Similarly, then Prime Minister Goh explained that the objective of regionalization was to expand the national economy by building stronger private companies and establishing several as powerful MNCs in the region (Tong 1993a). In promoting regionalization, Prime Minister Goh outlined five principles and three approaches for Singapore enterprises venturing abroad. The principles for regionalization included the need for Singapore to diversify its investments and an imperative to venture into new markets to form steady and durable relationships that should not be compromised by a short-term exploitative concern for quick profits (Tong 1993a). Nonetheless, while emphasizing the need to venture into new country-markets, Goh suggested that Singapore would need to consolidate and build on its strengths in traditional investment destinations such as Malaysia and Indonesia (Tong 1993b).

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Singapore’s small size and generally good reputation as a foreign investment partner assisted in the process of building economic complementarities with India because Singaporean investment was not seen as a threat to local Indian firms. However, Goh and other senior state ministers recognized that Singaporean investment would need to be seen to benefit the host country in terms of technology transfer and employee training (Tong 1993a). This perspective complemented India’s stated strategic objective of obtaining advanced technology, expertise, and capital through joint ventures with foreign partners. Singapore companies venturing abroad were also advised by the state to invest in community projects to enrich the lives of the host countries’ citizens (Editorial 1993: 33). The physical size and regional diversity of host countries such as India was of great relevance to the Singapore government when the regionalization strategy was conceptualized. The Singapore government realized that in these large and diverse emerging markets, economic reforms initiated by the central government would fall short of desired objectives if provincial state governments were not involved in the process of implementing economic reform. Acknowledging this, in 1995 Goh said that: ‘state governments play a critical role because they can facilitate the implementation of projects or stymie it with innumerable hurdles’ (Tong 1995).

Economic decentralization In line with this thinking, the Singapore government focused its investment strategies in India on specific areas at the provincial state level. Realizing that certain states in India had greater potential for rapid economic growth, the Singapore government looked to concentrate their economic and political engagement on these more dynamic region-states. In doing so, state bureaucrats drew on their knowledge and past experiences in trading with China, another nation with uneven patterns of economic development. In this regard, Goh commented that the Chinese ‘lesson’ was that: ‘Decentralization has led to intense competition between its provinces for investments. Provincial and local officials see it in their interest to grant quick approvals. The result is sharply differing growth rates between the more dynamic provinces and the rest. …But rapid income growth in the more dynamic areas eventually spurs the lagging provinces’ (Tong 1995). Competition between Indian states for foreign investment and collaboration was considered to be the spur for faster economic growth (Raghunathan 2005). Therefore, the process of economic decentralization

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in India with the central government devolving economic autonomy to individual states was of great interest to the Singapore government. The key factors that foreign investors looked for before investing were: political stability, steady policy guidelines, simple rules and regulations, rate of return, and the availability of skilled labour (Raghunathan 2005). From the outset of the liberalization process, the states favoured by foreign investors were Maharashtra, Karnataka, Andhra Pradesh, Tamil Nadu and Gujarat, although other states such as West Bengal, Uttar Pradesh, and Orissa, soon came to attract significant interest from foreign investors as well. In response to the ‘opening-up’ of new markets in the region, the Singapore government outlined three approaches to assist its companies investing overseas (Tong 1993a). Initially, the government would provide business enterprises with the freedom to invest in their preferred sectors. The government would then encourage, assist and facilitate their efforts by supporting them through its various agencies such as the Economic Development Board (EDB) and the Trade Development Board now known as International Enterprises (IE) Singapore (Editorial 1993: 1). Alternatively, the Singapore government or a Singapore consortium commissioned to identify major projects in selected cities, regions or countries could utilize the capabilities and expertise available in Singapore (Editorial 1993: 1). In particular, Singapore would transfer its expertise in master planning, development and operational management to the host country (Editorial 1993: 1) and the careful implementation of each project would become the highly visible ‘flagship’ of economic cooperation between Singapore and the countries that it had chosen to invest in. In India, Singapore chose to focus on specific states whose leaders were eager to tap into Singapore’s experience and expertise in executing economic development plans. Moreover, this approach was thought to be likely to assist in establishing broad and deep relationships with provincial state leaders (Tong 1993b: 20–21). This approach was also beneficial in that Singapore-based investors had only a vague knowledge of India and saw it as a somewhat homogenous entity instead of a diversity of states with their own potential strengths and weaknesses. In evaluating the Indian states, the Singapore Indian Chamber of Commerce (SICC) commented that there was a need for each state to ‘market’ its comparative advantages, such as a labour force skilled in a particular industry sector, or seaport or airport facilities with attractive schedules for product transportation (Straits Times, 22 September 1993: 22).

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Knowledge based economy India is also important to the Singapore government’s plan to reinvent its economy to focus on the knowledge-based economy6 where information and research and development (R&D) serve as the primary source of wealth creation in society (Solvell and Birkinshaw 2000: 83). Singapore’s political leaders acknowledged that the new founding for wealth creation among nations are not traditional forms of capital and labour but knowledge and intellectual capital, with Prime Minister Goh suggesting that, ‘the new knowledge economy is to the advantage of a resource-poor country like Singapore’ (Ibrahim 1998). While Singapore’s small population and declining birth rate pose major challenges to developing a knowledge-based economy, creative industries have contributed significantly to economic development over recent years. Indeed, such industries in general exhibit significant linkages with each other and they form a supportive ecosystem of creative industries.7 The Singapore government has invested heavily in its industrial training programmes and tertiary institutions with an emphasis on science and technology subjects and allowance for graduates to train abroad (Mani 2002: 128–129). Nonetheless, even with the in-migration of technically-trained personnel from overseas on a selective basis, Singapore still faces a shortage of personnel in the R&D field. This will continue to have a dampening effect on creative industries that Singapore is fostering because it lacks the innovative capacity of the developed economies (Heng et al. 2003: 65). To counter this disadvantage, the government encouraged the regionalization of Singapore’s expertise and management in constructing and managing high-tech industrial parks. Singapore-based companies like Ascendas invested and constructed IT Parks with Indian counterparts in a number of locations in India. This facet of the regionalization strategy was aimed at increasing revenue streams and direct access to India’s large human talent pool. Singapore’s political leaders believed that India’s depth of human resource and talent pool could be harnessed effectively for the benefit of India and Singapore. While short on domestic supply of skilled and professional labour, the Singapore government also faced the twin need to expand its economy beyond its boundary to create an external economic wing through the process of regionalization. In surveying various industries, the Singapore government decided that information technology (IT) should be its flagship investment in India. The flagship

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investment became the Bangalore IT Park in the southern Indian state of Karnataka (Ghosh 2000a). The Bangalore IT Park has reached its third phase of development and has yet to be completed but it has enjoyed full occupancy in the first two phases. Singapore companies have gone on to invest in other IT Parks in India. Next to Bangalore, the other prominent Singaporean IT investment is the ‘Cyber Pearl’ development in Hyderabad in the southern state of Andhra Pradesh.

The development of the IT sector in Bangalore Why did Bangalore emerge as India’s equivalent of Silicon Valley? In the 1950s and 60s, large public sector enterprises like Bharat Electronics Limited (BEL) and Hindustan Aeronautics Limited (HAL) were established in Bangalore by the government. Together with national defence laboratories and the Indian Institute of Science they formed the crux of Bangalore’s scientific foundation. In the 1970s, the Indian Space and Research Organization (ISRO) and Bharat Heavy Electronics Limited (BHEL) were also established in the city. In the 1980s because of rising rent and land prices in Mumbai, an influx of industrialists relocated hightechnology divisions of their businesses to Bangalore. Table 9.1 illustrates the main events in the transformation of Bangalore into India’s leading capital for IT industries. With a strong base of government defence labs, such as those developing aeronautical technology, and the presence of automotive and electronics companies, Bangalore provided a suitable Table 9.1 1984 1986 1991 1992 1997 1998 1999 2000 2001 2002

Historical overview of IT industry in Bangalore

Texas Instruments (US MNC) enters India for offshore development DOE announces software policy Software Technology Parks of India (STPI) is set up Exclusive satellite international gateway for export industry is set up Karnataka becomes the first state in India to announce an IT policy Number of IT companies increases to 253, total project worth US$840 million Indian Institute of Information Technology, Bangalore (IIITB) and the KITVEN FUND are established Number of IT companies increases to 782 with total projects worth US$1.1 billion Number of IT companies grows to 928 with total projects worth US$1.6 billion Number of IT software companies under STPI increases to 1038, total projects worth US$2.06 billion, IT companies number 1038.

Source: STPI Karnataka, India

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environment for the take-off of the IT industry in the mid-1980s. This gradual ‘clustering’ of high-tech companies and R&D centres provided the foundation for innovation. Initially, the Singapore government chose Chennai, in the state of Tamil Nadu, as the site for its flagship investment project. Because of a change in state government and the perceived lack of a productive business environment in Chennai, Singapore switched its attention to neighbouring Bangalore. Indeed, the state of Karnataka was chosen for the IT Park because it had a ‘pro business’ Chief Minister Deve Gowda who later became the Prime Minister of India. Initially, the Singapore consortium of government-linked companies (GLCs) proposed to build a high-tech manufacturing hub to produce electronic goods but this was not possible because of the huge tract of land required. After much debate between the Singapore Economic and Development Board Chief Executive Philip Yeo, Ratan Tata of Tata Corporation, and the Karnataka state government, it was decided that an IT Park could be constructed to tap into Bangalore’s emergence as an IT hub in India. Problems encountered by the GLCs in the newly emerging Indian market prompted the Singapore government to advise Singapore-based companies venturing into India to form joint ventures with local companies – the underlying rationale being, that Indian companies would understand the local market better and would be in the best position to guide and advise their Singapore-based partners on business development strategies. In this context, the Singapore consortium decided to cooperate with India’s Tata Group of companies to develop the Bangalore IT Park. The partnership with the Tata Group of companies was crucial because Tata was the leading force in acquiring the necessary approvals for the Park.8 The Tata Group of Companies requested approval from the Foreign Investment Promotion Board (FIPB) of India by citing the compatibility of the IT Park project with the long-term vision of expanding Bangalore’s credentials as the ‘Silicon Valley’ of India.9 Moreover, in resources and trained personnel, Bangalore offered cost advantages and a ready supply of already trained workers as compared to other cities in India.10 The Singapore government chose the Tata Group as its Indian partner to develop its first flagship project in India for several reasons. Tata was a large and well-known Indian corporation with assets of US$ 5 billion in 1994 (Vasuki 1994: 7) and comprised 100 companies and subsidiaries including three of India’s top ten companies.11 Included in the Tata Group of companies were subsidiaries that specialized in software development, engineering, and infrastructure related projects.

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Tata Consultancy Services (TCS) was India’s largest software export firm with annual revenues that totalled over US$100 million in 1994, and the Tata Group had previously developed successful joint ventures in the IT sector with IBM, Unisys and Honeywell.12 Moreover, there were well-developed personal and business relationships between Tata executives and Singapore’s political and economic leaders, as Tata was among the first foreign firms to respond to Singapore’s call for foreign investment in the early 1970s (Vasuki 1994: 3). In 1972, the Tata Group established Tata Precision Industries in Singapore. This was followed by the establishment of a computer manufacturer (Tata Elxsi) and a biotechnology firm (Plantek) in the early 1980s (Business Times, 31 Dec 1991: 6). Ratan Tata commented that: ‘I have always been a great admirer of the Singapore government and hence I maintained an informal relationship with officials at EDB and DBS for many years’ (Vasuki 1994: 3). In 1992, this relationship initiated the Bangalore IT Park project when Ratan Tata, the Chairman of the Tata Group, suggested to the chairman of the EDB that Bangalore would make a suitable site for an industrial park. A detailed feasibility study revealed potential problems in large-scale land acquisition and indicated that the level of prevailing infrastructure was inadequate to support industrial parks.13 According to Ratan Tata, an alternative vision emerged of ‘…a white-collar driven high technology park along the lines of Silicon Valley’.14 Concurring with Ratan Tata’s assessment, the EDB recommended that the project should be transformed into the construction of an IT Park to complement Karnataka’s strengths in software technology.15 The involvement of the Tata Group was not planned when the EDB evaluated the Bangalore site for an IT Park, but the Tata Group eventually took a 40 per cent equity position in the Bangalore IT Park because of the personal rapport and trust between Tata and the Singapore government.

State developmental strategies and the political legitimacy of the expansion of the IT sector in India In October 1999, Indian Prime Minister A.B. Vajpayee announced the formation of the Ministry of Information Technology (MIT), as a new government agency designed to transform India into a global IT superpower (Allison 2000). The MIT was tasked to be the nodal institutional mechanism to facilitate IT initiatives from various sources such as the central government, the state governments, Academia and the private sector for the overall growth of the IT sector. MIT’s main target was to implement a comprehensive strategic plan to achieve the target of

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US$50 billion in software exports for India by 2008. In October 2000, India’s Information Technology Act came into force making India one of the few countries in the world, and the second after Singapore, to have an IT Law. Regional governments in various states also began to attract direct foreign investments in the IT industry. These state governments took their cue from the federal government and implemented their own IT strategies and development agencies. In late 1999, S.M. Krishna took over as Chief Minister in Karnataka and continued the state’s development as an IT hub (Financial Times, London, 1 December 1999: 12). Krishna introduced several incentives to attract investments, including new ‘cyber parks’, a one-stop IT unit to approve development, a convention centre built to international standards, and various fiscal measures. The fiscal measures proved popular with MNCs and included incentives such as exemption from stamp duty, 100 per cent exemption from entry tax on computer hardware and other inputs. By the end of 2001, more than 100 MNCs had invested in Karnataka and the cumulative investment in the software16 industry amounted to some US$1.3 billion. Singapore’s Prime Minister Goh inaugurated the Bangalore IT Park in January 2000, and drew praise from Indian business executives and government officials for his personal stamp and leadership in building the partnership between India and Singapore (Ghosh 2000b). Indeed, as the flagship investment project and a symbol of India and Singapore bilateral cooperation, the position taken by the Singapore authorities was that failure was not an option for the IT Park. In this regard, the significance of the Bangalore IT Park went beyond the actual development in itself, with Goh stating that: ‘With the coming of the IT era, the strategic alliances of our two countries would bring great synergy’ (Ghosh 2000c). Ascendas also signalled that it would widen its scope beyond the ITPB and assume a city-wide view to take on more projects and joint ventures (Ascendas 2005: 9 June). As of April 2007, over US$220 million had been invested in ITPB to create a total of 2.3 million square feet of high quality IT space over 20.3 acres. The next phase of the ITPB, to be constructed over an additional 26 acres to develop a total of three million square feet of IT space, will cost approximately US$180 million (Ascendas 2007: 10 April). The ITPB buildings are named Discoverer, Innovator, Creator, Explorer and Inventor and they are fully occupied. The latest building to be constructed, the new 400,000 square feet Navigator which can accommodate 4000 employees, has 80 per cent occupancy (Ascendas 2007: 10 April). In total, over 130 companies and more than 20,000 people work within the ITPB.

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Despite the relative success of the IT sector, the 2004 federal and state elections resulted in a loss by the Bharatiya Janata Party (BJP) at the federal level and incumbent regional parties at the state level. While the ruling BJP had campaigned on the slogan of ‘India Shining’, large parts of India did not benefit from economic reforms and liberalization. In the states of Karnataka and Hyderabad, despite massive investments in the IT sector, voters turned out the incumbent state governments (Waldman 2004). What were the underlying factors for voter grievances, especially those in the rural areas, against the incumbent governments? In these states, where the vast majority of the population live and work in rural areas, voters appeared to be unhappy with policy reforms like the privatization of state-owned enterprises, expanded foreign investment, and, above all else, economic liberalization policies pursued by the state administration which aimed to rapidly expand the services and high-tech sectors, without sufficient attention to the struggling agricultural sector which supported twothirds of the population (Waldman 2004). In the Congress-run state government of Karnataka, voters were unhappy with the policies of incumbent Chief Minister S.M. Krishna, especially fiscal and governance reforms suggested by the World Bank (WB) as conditions for the Karnataka state government to secure a US$150 million loan (Menon 2005). The power sector was privatized resulting in the termination of free power for agricultural pumps and higher electricity tariffs, while the reorganization of the public distribution system brought misery to poor farming families. Less than 40 per cent of the state farming lands were irrigated and the power supply was available only erratically for ten hours a day (Waldman 2004). Already indebted to money-lenders, farmers were unable to irrigate their remaining crops during a severe drought in Karnataka (Menon 2005). Farmer suicides increased to 650 in the first ten months of 2004 and state compensation packages were inadequate. Moreover, S.M. Krishna’s image as a pro-big business and technology savvy politician focused on supporting the IT sector did not endear him to rural voters. Ironically, the IT companies were also not satisfied with the investments made by the state administration on Bangalore’s inadequate infrastructure. Well-known IT companies like Infosys and Wipro had warned the state government over its failure to tackle the infrastructure woes of the city and the likelihood of business losses to rival cities in India and overseas (Ramachandran 2004). The new coalition state government which included the Janata Dal drew its strongest support from

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farmers and largely sought to ignore the demands of the technology industry elites in Bangalore (Scrutton 2008). Pro-urban policies that were needed to solve the city’s infrastructure woes were neglected and Bangalore’s infrastructure was unable to cope with rising demand from the high-tech industries. In the wake of this political transition, neither Bangalore’s infrastructure nor the IT sector has received significant attention in state budgets and the government appeared unconcerned over the flight of capital (Ramachandran 2004). Four years on, the infrastructure has become more decrepit (Scrutton 2008) and while mega projects such as the new international airport have been completed, road networks and traffic management remains inadequate. Clearly, Bangalore has not kept pace with infrastructure needs and emerging vested interest groups broadly defined as pro-urban and prorural policies are competing for scarce resources. For example, interest groups led by former Prime Minister Deve Gowda and leading IT entrepreneur Narayanan Murthy have clashed. While Deve Gowda had called for state intervention for job creation for farmers that stood to lose their land, Narayanan Murthy derided the state government for being slow to react to infrastructure needs (Business Times, 5–6 November 2005). In addition, Deve Gowda had also questioned the financial viability of a US$900 million Bangalore metro rail project in a city suffering from massive traffic congestion. As a result of inadequate infrastructure and rising costs, investors began to consider alternative sites for investment. Hyderabad, the capital of Andhra Pradesh, has emerged as a competitor for new IT investments. Although Hyderabad was a late-comer in the development of IT industries, in the 1990s and in the early years of the 21st century, nascent IT industries received strong political support from the state’s then Chief Minister, Chandrababu Naidu (BBC News 17 March 2000). Singapore, keen to expand and diversify its IT investments in India, also began to look to other states for business opportunities. Arguably, the growth of Hyderabad and Andhra Pradesh as an investment destination was a manifestation of India’s decentralized process of economic liberalization which has allowed the states to implement their respective economic initiatives (Huang and Khanna 2003). Indeed, it has been suggested that the city of four million people was transformed under the leadership of Chandrababu Naidu, who presided over the development of the Hyderabad Information Technology and Engineering Consultancy (Hitec) City into clusters of IT industries and created another cluster called Cyberabad at the city of Charminar (Tandon and Sridharan 1998). Naidu’s entrepreneurial drive soon drew

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praise from private companies and from his own federal government and foreign governments alike. Through the use of information systems and computerization, Naidu and his team of officials were able to generate accurate data and present compelling arguments to attract foreign investors to Andhra Pradesh (Gopalakrishnan et al. 1998). Naidu and his ministers also promoted the notion that IT-led growth would enhance the transparency and accountability of his administration (Hindu, 5 October 2001). The initial lure of Hyderabad for IT MNCs was the availability of skilled IT talent, improving infrastructure, a responsive and efficient state government, and relatively low rental costs starting at Rs 24 per square feet compared to between Rs 25–40 for other major towns like Bangalore and Mumbai. The Hitec City project was managed by L and T Infocity, a joint venture between L and T and the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) (Hindu, 25 June 2001). Hitec City, located near Madhapur village adjacent to the wealthy Jubilee Hills area in Hyderabad (Prasad 1997), was built across 158 acres to provide five million square feet of office space at a cost of US$375 million. Phase I of the project was built over six acres and provided a ten storey structure of 120 modules and a large range of user-friendly features (Business Line, 29 October 1999). The second phase of the project was named ‘Cyber Gateway’ (India Business Insight, 11 September 2000) and the third ‘Cyber Pearl’. The latter phase was developed as a joint venture between the Indian firm L and T Infocity and the Singapore firm Ascendas, an experienced business space provider (India Business Insight, 11 September 2000). In October 2004, Cyber Pearl was inaugurated by the new Chief Minister of Andhra Pradesh, Dr. Y.S. Rajasekhara Reddy and Singapore Minister Lim Boon Heng (Business Times, 15 October 2004). An estimated 5000 employees work in the IT and ITES companies at Cyber Pearl. These include: General Electric, Nipuna, Keane, Microsoft and Sitel (Ascendas Press Release, 28 November 2006). Ascendas marketed Cyber Pearl to IT MNCs looking for alternative sites to establish their operations in order to avoid the traffic congestion, competition for skilled IT workers, and high rental rates for office space in Bangalore. Due to the strong demand for office space by IT companies attracted to Hyderabad, Ascendas acquired Vanenberg IT Park from the Dutch Technology Group Vanenberg. The Vanenberg IT Park (VITP) site has a total floor area of 850,000 square feet and is 95 per cent occupied (Chong 2004). Ascendas has renamed Vanenburg IT Park the ‘V’.

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Despite growth in the high-tech industries, the political backlash against the IT elites and the Telegu Desam Party (TDP) of CM Naidu in the 2004 elections in Andhra Pradesh was similar to the plight of S.M. Krishna in Karnataka (Scrutton 2008). Once considered a role model for directing initiatives in the IT sector, CM Naidu failed to read voters’ concerns in the May 2004 state elections. At odds with Naidu’s campaign on IT, voters gave more attention to local issues such as poor sanitation, traffic congestion and the lack of drinking water (Kumar 2005). The Congress Party of Rajasekhara Reddy won the elections by focusing on key issues; improvement of drainage and sanitation, ration cards for below poverty line families, housing for low income families and providing drinking water connections to the poor (Kumar 2005). Since he came to power in May 2004, CM Reddy has toured the states’ villages and is rarely found in the state capital of Hyderabad. While CM Reddy placed irrigation as a prime concern, farmers across the state continued to commit suicide and IT companies are leaving Hyderabad because of his lack of vision for the further development of high-tech industry (Iype 2004). Singapore GLC Ascendas is aware of the political tension related to the growth of the IT industry in India. Ascendas has put on hold its IT plans in Kolkata and is looking for alternative sites for investments to hedge business risks. In April 2007, Ascendas announced plans to build two IT Parks in Pune and Nagpur in the state of Maharashtra. In Pune, Ascendas will collaborate with the Maharashtra Industrial Development Corporation (MIDC) and in Nagpur Ascendas will have a joint venture with the Maharashtra Airport Development Company (MADC). Both these projects are located on Special Economic Zones (SEZs) and have the strong backing of the state government (Ascendas Press Release, 18 April 2007). To facilitate its long-term strategy of investing in IT Parks, Ascendas has also launched a SGD$350 million Ascendas India IT Parks Fund in June 2005 (Ascendas Press Release, 16 June 2005). The private real estate fund is constituted in Singapore as a private trust and will focus on mature income producing assets with developmental potential. The Ascendas India IT Parks Fund was seeded by the company’s two IT properties, the ITPB and the VITP. A third property, the Cyber Pearl was added in November 2006 when Ascendas acquired L and T Infocity Ascendas Limited (LTIAL). In June 2007, Ascendas launched its Ascendas India Development Trust (AIDT) with a value of S$500 million with a target expansion to S$1 billion (Ascendas Press Release, 13 June 2007). The AIDT aims to invest in integrated real estate projects in India including business space such as IT

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Parks. The launch of the AIDT complements the promotion and development of the Special Economic Zones (SEZs) by the Indian government.

Conclusion This chapter has provided a discussion of Singaporean investments in the Information and Communications Technology (ICT) sector in India as one aspect of a broader state-directed strategy for future economic growth and development. A crucial policy goal of this strategy has been ‘regionalization’ whereby the Singaporean state has provided policy direction and economic intervention to intensify trade, technological, investment, education, and human resource linkages with South Asia and other regional neighbours. In the ICT sector this has seen Singapore, through its GLCs, expand its outward investment and knowledge transfers in the development of IT Parks across India. In the process, it has overcome several challenges such as the need for political endorsement from various state governments. Ascendas has bought over Tata’s 47 per cent share of the Bangalore IT Park to become the majority share holder with 82 per cent held by its joint venture company Information Technology Park Limited (ITPL) (Teo 2005). The repositioning and rebranding of the Bangalore IT Park to become Information Technology Park Bangalore (ITPB) reflected Ascendas’ intent to expand its activities in Bangalore and across India in IT Park projects (Business Standard 2005). The strengths of the Singapore GLCs and their partnership with Indian companies in developing IT Parks has provided mutual benefits. Singapore was able to regionalize its investments and expand its external economy. India was able to overcome its lack of infrastructure and attract foreign IT and ITES companies which has provided thousands of jobs for its people. The future of IT Parks in India remains positive because these high-tech parks have been able to overcome the impediments caused by India’s inadequate infrastructure. The Singapore government is also aware that it has to work closely with, and have the endorsement of, the various Indian state governments in order to succeed in its joint venture projects. In the IT sector, it can be argued that the regionalization policy is reaping mutual benefit for Singapore and India in that both are able to leverage each other’s complementary economies. In contrast to Singapore, and as discussed in this chapter, state-led development of the IT sector in India nonetheless encountered a serious crisis of political legitimacy which led to the political demise of chief ministers in Andhra Pradesh and Karnataka who were publicly committed to the IT sector as a primary aspect of a development strategy.

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As the majority of voters are located in rural areas, political parties have to attend to the interests of the mass of voters or risk losing elections. Contemporaneously, growth in high-tech industries requires significant investment in urban infrastructure despite the development of self-contained IT Parks and mega projects such as new airports. In this regard, a balanced budget that places emphasis on the rural sector without neglecting the development of urban areas is needed. Singapore’s state-led development was able to achieve rapid economic development in the relatively short time of about three decades compared to other economies. The same time span could not be applied to India even at the level of regional state development. Drastic economic restructuring resulting in high unemployment will surely result in further losses at the state polls. In this regard, change would have to be gradual and there needs to be a continuity of policy implementation that would benefit both urban and rural dwellers. Notes 1 Leverage is both an outward and inward oriented concept. It refers to the outward reach by the firm for resources beyond it, which may be contained in firms and institutions ‘out there’ in the global economy and with which it must form linkages of one kind or another, and to the inward process of capability enhancement that the firm engages in after absorption of new resources. Matthews, John A. (2002) Dragon Multinational: A New Model for Global Growth, Oxford: Oxford University Press, p. 117. 2 Human capital is defined as talented human resource labour that uses information for knowledge creation. They could also be referred to as knowledge workers and are employed by knowledge-based industries such as information technology and biotechnology. 3 The Multinational Corporation also called Multinational Enterprises (MNEs) and Transnational Corporations (TNCs) are companies that enter markets throughout the world by establishing their own sales and production subsidiaries. They exercise control over these subsidiaries and aim to execute corporate strategies in marketing, production, finance and other functions. Root, Franklin R. (1994) Entry Strategies for International Markets, New York: Lexington Books, pp. 252–253. 4 Interview with Trade Officer, Trade and Development Board, Singapore, 30 June 1997. 5 The creation of an ‘external-wing’ to its domestic economy by investing in the surrounding region. 6 KBE embodies the ability to constantly innovate through accessing, processing, using and creating knowledge, Heng, Tang, Choo and Singapore MTI, ‘Mapping Singapore’s Knowledge Based Economy, Economic Survey of Singapore – Third Quarter 2002. 7 Heng, Choo and Ho, ‘Economic Contributions of Singapore’s Creative Industries, Ministry of Trade and Industry, Singapore Ministry of Trade and Industry, First quarter 2003.

230 Trade, Labour and Transformation of Community in Asia 8 Letters from Tata Group of Companies to the Foreign Investment Promotion Board of the Government of India, seeking and receiving approval for the joint venture project, the Bangalore IT Park. 9 Ibid. 10 Ibid. 11 ‘Proposal for the Development of an Information Technology Park in Bangalore in Association with Information Technology Park Investment Private Limited, Singapore and Government of Karnataka’, Tata Industries Limited, December 1993. 12 Ibid. 13 ‘Building on the Singapore connection’, Business Times, 17–18 September 1994, p. 3. 14 Ibid. 15 Interview with Chi Pang Chee, Regional Director South Asia, EDB, 1997. 16 Software is a term used to refer to the instructions that direct the operation of computer equipment and information content that computers manipulate.

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Faizal bin Yahya 233 Tong, PM G.C. (1993a) ‘Singapore Must Plug into Thriving Regional Economies and Grow with Them’, Straits Times, 22 May [URL:http://www.straitstimes. com/Home.html/, Accessed 23 May]. Tong, PM G.C. (1993b) ‘Staying Competitive through Regionalisation’, Speeches, 17 (3). Tong, PM G.C. (1995) ‘Prospects for India in the New World Economic Order’, Speeches, 19 (1). Vasuki, S.N. (1994) ‘Ratan Tata Takes Charge’, Straits Times, 17–18 September, p. 7. Waldman, A. (2004) ‘What India’s Upset Vote Reveals: The High Tech is Skin Deep’, New York Times, 15 May [URL: http://www.nytimes.com/, Accessed 17 May]. Yeo, G. (2007) ‘Singapore-India: Roadmap to the Future’, Speech by Minister for Foreign Affairs, Confederation of Indian Industry Partnership Summit, 18 January. Zoher, A. (1994) ‘India’s Power Unleashed’, Asian Business, February, p. 22.

10 Difference in a Transnational Organization in Australia: The Case of Transient Indian Information Technology (IT) Professionals Salim Lakha

Introduction In contemporary western democracies there is a constant celebration of cultural diversity. Yet the difficulties of difference keep asserting themselves. This is only too clear in the domain of work and migration. The questions of diversity and difference cannot be uncoupled from each other because they both constitute crucial elements of the same discourse, especially with reference to migration and work. This chapter examines the problematic relationship between difference and diversity as manifested in the workplace in an era dominated by transnational corporations. It explores the relationship between discourses of difference and diversity, on the one hand, and the material conditions of globalized production on the other. Studies of migration have traced movements of people through different routes and at various historical junctures. Yet the focus on the international movement of skilled workers within the same transnational corporation is relatively recent (Peixoto 2001). With the growth of transnational corporations and increasing globalization of business activities, intra-organizational mobility of professionals across national borders has assumed considerable significance in terms of scale, economic impact and cultural transactions. Allan Findlay argues that the economic advantages accruing from such transfers of skilled workers for both the employers and recipient countries are substantial and should not be underestimated (1995: 517). Though his study emphasizes the movement of skilled people between the so-called ‘developed’ countries, he acknowledges that many other studies of skilled migra234

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tion are also concerned with intra-firm transfers from the industrialized nations to industrializing countries (1995: 517). In contrast to these studies and Findlay’s investigation, this chapter deals with the intraorganizational movement of professionals from India which is an industrializing, ‘developing’ country to one that is ‘developed’, namely, Australia.1 The focus upon this movement from a ‘developing’ to a ‘developed’ country is significant because it questions important assumptions underlying some of the literature on intra-organizational migration. This literature claims that skilled transients are ‘invisible migrants’ (Findlay 1995: 517; Peixoto 2001) or ‘hidden from history’ (Vertovec and Cohen 1999: xv). It is argued that the global mobility of skilled transients is inconspicuous because it does not present an economic or social threat, and also because the transients are not visible by their ethnicity (Findlay 1995: 515). Such assumptions regarding visibility may be valid where the movement of skilled professionals involves people whose ethnicity and national origins are less visible and where cultural differences are relatively insignificant. However in the case of transient Indian IT professionals in Melbourne, who are the subject of this chapter, their visibility is particularly evident for at least two important reasons. First, they are a visible national minority who are clearly distinguished by their physical appearance. Second, because their presence in Australia (and other developed countries) is represented by some in the IT industry and the media as a threat to the jobs of Australians in the IT sector (Connors 2003: 29–30; Hiebert and Slater 2003: 14–16). This threat has been magnified in recent years with the emergence of India as a major centre of software development for global companies. As an increasing number of corporations in the West, including Australia, outsource their software development and back-office activities to Indian companies, the fear of competition from India is considerably heightened (Economist 2003a: 14–15; Economist 2003b: 67–69; Nancarrow 2004: 8–9). Further, the status of Indian IT professionals questions the assumption that skilled transients are ‘privileged’ (Vertovec and Cohen 1999: xv). Even though Indian IT professionals in India occupy a privileged position by virtue of their remuneration and occupational status, their social status is somewhat ambiguous in Australia. On the one hand, they are accorded respect for their professional skills but, on the other, they are also perceived as culturally different (or the ‘Other’) and an economic threat. This chapter will examine, with reference to a specific case study, how Indian IT professionals in Melbourne experience cultural difference and

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respond to perceptions of economic competition in the workplace. It raises three related questions: (i)

What are the experiences of transient Indian IT professionals in the workplace? (ii) How are cultural differences constructed in the workplace? (iii) Are cultural differences the only source of difference in the workplace? These questions are significant because they explore the idea of how culturalist discourses shape people’s understanding of themselves and others. The importance of these questions is also underscored by the increasing recognition, and sometimes celebration, of diversity and difference in the corporate sector and within academic fields such as organization studies, business management, gender studies, and sociology. According to one American management specialist, ‘diversity has become a top priority’ at the corporate level in the USA (Thomas 2001: 117). In the case of IBM, diversity has shifted from being a ‘moral imperative to being a strategic imperative’ (Galt 2002: B3). Needless to say, cultural diversity as distinguished by national differences is one amongst many other forms of group based differences such as gender, religion, age group, and occupational distinctions which define diversity and shape ‘people’s life experiences’ (Cox 2001: 3–4). Surprisingly in anthropology, which has a long history of studying organizations in complex societies (Schwartzman 1993: 2), the issue of cultural diversity within organizations, especially relating to ethnic and national differences, has received little attention. An exception is Wendy Smith’s study on Malaysian employees of a Japanese factory in Kuala Lumpur. Her ethnography reveals how cultural considerations shape the interactions between Japanese managers and their Malay employees who aspire to maintain their status as part of the new middle class (1999: 115–128). Mostly, ethnographic studies of organizations have focused upon a variety of other topics including gender hierarchy, unequal power relations, technology, managerial practices, and methodological issues (Schwartzman 1993; Hamada and Sibley 1994; Wright 1994a; Gellner and Hirsch 2001). Insufficient attention by anthropologists to the question of cultural diversity in the workplace is regrettable as explained in section one below. For many writers cultural diversity is of prime concern as flows of people accelerate with globalization and begin to impact upon the workplace. Cope and Kalantzis argue that as the ‘integration of global labour

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markets’ intensifies through economic globalization, cultural diversity in the workplace will offer both potential opportunities and challenges to business (1997: 27). The high-technology sector, for example, presents a major challenge in managing a multicultural workforce because it sources its workers on the basis of technical competence regardless of geographic and national origins (Elashmawi and Harris 1998: 3). Over the last two decades the recruitment of IT professionals from India, East Asia, Eastern Europe and other parts of the world to work in western countries and Australia confirms this trend. The significance of contemporary globalization is now widely acknowledged by scholars from different disciplines. Ulf Hannerz and Arjun Appadurai have eloquently articulated the implications of ‘transnational connections’ and ‘deterritorialization’ respectively for both the concept of culture and the methods of investigation within the discipline of anthropology (Hannerz 1996; Hannerz 2003; Appadurai 1996). According to Appadurai, contemporary migration is increasingly dissolving the links between territory, culture, and identity leading to new ways of imagining the nation and national identity (1996: 48–50). The assumed correspondence between space, place and culture in the social sciences is also vigorously criticized by Malkki (1997) and Gupta and Ferguson (1997a). They rightly question the construction of homogenous cultural entities, especially in the age of capitalist expansion and increasingly mobile subjects whose movements transcend national borders (Gupta and Ferguson 1997b: 36–37, 44–45). The recognition of transnational linkages (Basch et al. 1994) and increasing mobility of people has led to a reappraisal of what constitutes the ‘field’. In some cases it has resulted in an extension of fieldwork over multiple sites instead of focusing upon a single location (Hannerz 2003; Marcus 1998: 79–104; and Gupta and Ferguson 1997a: 3). As the link between culture and territory erodes, and the pace of cultural flows accelerates at the global level, it calls into question both the boundaries of the culture concept and the ‘unitary’ character of identities (Kearney 1995: 557; Kahn 1991: 53). Instead there is increasing recognition that transnational movements are resulting in complex and multiple expressions of identities. The contributions of Appadurai, Hannerz and others on globalization, transnationalism, and culture have, however, eluded the discourse of cultural diversity in the field of management which is largely confined to static and bounded notions of culture. Culture is viewed as bounded by national borders and static in that it possesses fixed attributes. This chapter will argue that culture is not ‘a thing’ (Tucker 1997: 7) or a set of fixed attributes but that it is a process that involves a contest

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of meanings (Smircich cited in Wright 1994a: 19; see also Tucker 1997: 7–10). The bounded view of culture in the discourse on cultural diversity in the workplace is problematic because as this chapter demonstrates it tends to homogenize ethnic groups and creates distinctions that are questionable. This chapter is divided into three sections and will begin with a critical examination of the discourses on cultural diversity in the workplace. Section two provides a description of the organization which is part of this case study and explains the research methods utilized for conducting the study. The final section deals with various sources of difference in the workplace. It will be argued in this section that the organization is an important site of cultural transactions, social interactions, and the construction of identities.

Section 1: Discourses on cultural diversity Anthropologists have paid little attention to the discourses on cultural diversity in the workplace, which is regrettable for a number of reasons. First, the workplace is a major site for the forging of identities in modern societies, and ethnographic methods can offer rich insights into how discourses of diversity shape the process of identity formation. Second, anthropologists have long debated and engaged with the concept of culture, and therefore have developed a more nuanced and refined understanding of the concept compared to scholars in other disciplines. Finally, discourse constitutes a form of data which is of considerable analytical value. Ethnographers sometimes disregard such discursive material even though it is an essential part of the data.2 For example, discussions with managers and supervisors in this study revealed that their perspectives and practices corresponded with the prevailing discourses on cultural diversity in both the management literature and wider society. The discourses on cultural diversity straddle several disciplines and are influenced by a wide range of analytical approaches. Ironically, in many management and organization studies texts, the discussion of cultural diversity is based upon the old fashioned anthropological definition of culture that emphasizes shared attributes and values which are territorially bound. For example, Hofstede, in his renowned study of how cultural differences shape the behaviour of workers from different nationalities, claims that culture is ‘always a collective phenomenon, because it is at least partly shared with people who live or lived within the same social environment where it was learned’ (1991: 5). Further, he asserts that dif-

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ferences in values ‘between nations’ have persisted over many centuries despite ‘close contact’ (Hofstede 1991: 238). Hofstede’s essentialization of cultural differences leads to stereotyping of nationalities which is evident in many culturalist discourses. Much of the management literature is concerned with the challenges of managing a culturally diverse workforce and the potential economic benefits that could be derived through the expertise of these workers (Jackson and Schuler 2000: 32–37; Griggs 1995: 9, 11–12; Hubbard 2004: 10–14). Critical concerns with issues of identity and power are of less significance. By contrast, some of the organizational studies literature (see below) addresses issues related to power, hierarchy, and identity, and draws its theoretical inspiration from varied sources, including postcolonial studies, gender studies and post-structuralism (Prasad et al. 1997; Ely et al. 2003). In Australia the notion of diversity received formal, official recognition in 1992 under Prime Minister Paul Keating who coined the term ‘productive diversity’ (Cope and Kalantzis 1997: ix). As in the case of the USA, this concept emphasizes economic benefits. It refers to the economic advantages which can result from the dismantling of ‘barriers’ that act against the ‘utilisation of cultural differences within a diverse workforce’ (Bertone et al. 1998: 6). This celebration or recognition of cultural diversity is therefore connected to a strategy for the valorization of capital.3 Cultural diversity should be recognized for the economic benefits it offers, and issues connected with hierarchy, power and inequality are subsumed under overriding business objectives. Cope and Kalantzis, however, adopt a broader approach in their discussion of productive diversity by going beyond narrow economic concerns. Whilst they demonstrate the economic benefits that accrue to organizations that recognize the cultural diversity of their workers, they also present a case for civic pluralism in the workplace. According to their version of productive diversity, difference does not equate with ‘otherness’ but instead diversity is treated as part of the mainstream (1997: 259). Productive diversity is presented as civic pluralism applied to the workplace (Cope and Kalantzis 1997: 26). The notion of civic pluralism rejects homogenized conceptions of culture in both the workplace and society at large. Instead civic pluralism views culture and identity as ‘multilayered, hybrid, shifting, dynamic and contingent’ (Cope and Kalantzis 1997: 278). Their understanding of culture and identity echoes more recent approaches in anthropology which do not view culture and identity as territorially bounded or possessing

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essential features (Clifford 1992: 109–110; Rapport and Dawson 1998: 4–6; Ong 1999: 16–21). Though the ideas and sentiments expressed by Cope and Kalantzis are commendable, critical studies based on the experiences of countries such as Canada, USA and Britain express serious reservations about the effectiveness of promoting cultural diversity in the workplace (see Prasad et al. 1997). It is argued that one of the problems with the diversity literature is its naive optimism despite the widespread ‘conflicts and ruptures’ afflicting workplaces that are experiencing demographic shifts (Prasad and Mills 1997: 5). Considering the ‘cultural norms’ that characterize many organizations such as dress code, ‘demeanor’, and ‘cultural expectations’ associated with ‘performance’, there is little likelihood of multiculturalism thriving in the workplace (Prasad and Mills 1997: 15). Whilst some organizations in countries like Australia may have become more flexible with regards to dress code, a significant barrier to multiculturalism in the workplace still remains where ‘cultural expectations’ regarding ‘performance’ are concerned, as revealed by the case study considered below. Several critical studies follow a discourse analysis approach in their critiques of diversity within contemporary organizations (Oseen 1997; Prasad 1997). In line with the post-colonial studies approach, Anshuman Prasad examines diversity with reference to western colonization and imperialism (1997). He argues that colonization as a process has been a key factor in shaping the West’s understanding of non-western ‘Others’ both historically and in the contemporary period. Therefore, postcolonial theory offers useful insights into the ways in which ‘cultural and racial dynamics’ operate at the organizational level in western countries. As he explains, his focus is ‘upon the subtle aspects of colonialism which encompass culture, ideology and discourse’ (Prasad 1997: 288). Turning to workplace diversity, he argues that the continuation of colonial discourse in the west combined with ‘white male power structure’ result in various differences being handled in ways reminiscent of colonial interaction (Prasad 1997). However, too strong a focus on dominant discourses can blind one to the ways in which such discourses are constantly contested by those who are less empowered. It is not unusual for such groups to simultaneously accept these discourses and question them. Importantly, the overriding attention of post-colonial studies writings to discourse analysis overlooks the many ways in which material processes are also implicated in the marginalization of non-dominant groups. In the discussion below, it is clear from the experiences of transient Indian IT

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professionals that both material processes and cultural constructions are at play within the organization under study.

Section 2: The organization The organization in Melbourne within which this research was conducted is referred to in this chapter by a pseudonym, ‘Global Credit’. It is a major financial institution in Australia with international operations that include India. The Indian subsidiary which is fully owned by Global Credit is also referred to by a pseudonym, namely, ‘Global Credit Software’. The subsidiary in India employed around 430 people when this study was conducted. They were IT specialists who worked on projects connected with the activities of Global Credit. The Indian IT professionals are brought to Melbourne mostly on a short-term basis to work with various project teams there. The duration of their stay varies anywhere from around a month to over two years. In cases where their stay is longer, that is, one year and above, they often return to India between their visits. For example, one person who had been in Melbourne for over two years had returned to India three times. Whilst some of the Indian IT professionals who come to Melbourne are single, others are married and sometimes bring their families with them. Most of the professionals are relatively young, mainly between 20 and 35 years of age. The majority of the staff of Global Credit Software are young males but according to one manager many females are also employed. The proportion of females on assignments in Melbourne is roughly similar to the male-female staff ratio at Global Credit Software. The operations of Global Credit Software in India complement those of Global Credit in Australia. Much of the work undertaken in India involves coding or writing software which is labour intensive and lowvalue added work. Other activities like testing and design work are also undertaken in India, but in the case of design it is only a minor proportion of the overall activities of Global Credit Software. One wellinformed staff member of Global Credit Software stated the operations of the subsidiary are a ‘reflection of the requirements’ of Global Credit. This relationship between Global Credit and its subsidiary is similar to that of many foreign-owned subsidiaries operating in India or foreign corporations that outsource their work to Indian software developers. The software industry in India is part of the international division of labour within which many Indian companies undertake labour intensive, low value added tasks such as coding and testing (Lakha 1992, 1999). For example, one of the directors of a major

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telecommunications company that outsourced its software development to India explained that ‘high-level work’ continued to be performed in Australia and it was merely the ‘grunt work’ that was transferred to India (Hayes 2005: 2). Although Indian firms are now engaging in more complex software development, their share of more advanced software activity, such as the production and export of software packages, remains small in global terms. The relationship between Global Credit and Global Credit Software, however, is not one that is typically representative of outsourcing because the latter is a fully-owned subsidiary of the former. In a typical outsourcing relationship the foreign corporation that outsources work to India does not own the software company in India. The relationships between the foreign corporations and their Indian counterparts are based upon contracts of varying lengths and therefore these relationships are sometimes ephemeral rather than ongoing. The fact that Global Credit Software is a fully-owned subsidiary of Global Credit makes it an integral part of the latter’s organizational structure. As discussed below, this relationship has an important bearing on the interactions and the identity of the staff of Global Credit Software when they come to work in Melbourne. For employees of Global Credit Software, the experience of working with Global Credit in Melbourne is vital because they get to understand the business side of the operations of Global Credit through client contact. When they are working in India their work is technically oriented, and they therefore acquire little understanding of how their input relates to the business operations of Global Credit. As many of them explained, being in Melbourne gave them an overview of the financial side of the operations and a sharper appreciation of the interface between the financial and technical processes. As an organization, Global Credit ranks highly within Australia in terms of its diversity policy. The corporation’s diversity policy recognizes differences over a wide range of attributes that include gender, race, religion and nationality amongst others. Employees of Global Credit Software on assignments in Melbourne spoke favourably of the organization’s policy towards equal opportunity issues and did not feel they faced racial discrimination in the workplace. Some claimed that they had attended workshops on equal opportunity conducted by Global Credit and felt reassured. One of the supervisors of Global Credit in Melbourne explained that the organization regularly sent out electronic bulletins related to diversity and equal opportunity issues to its staff to keep them abreast of new developments in the area. A senior

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manager, for example, referred to different ways in which the organization accommodates the needs of its Muslim staff during the month of Ramadan when ritual fasting and prayers are an important part of worship for Muslims. In addition, as discussed in the next section, Global Credit facilitates various celebratory events that encourage mutual appreciation of cultural and national differences. The research for this study involved discussions with senior managers of Global Credit, and focus group meetings and semi-structured interviews in Melbourne with the employees of both Global Credit and Global Credit Software. The group and individual interviews were conducted during 2003–04. When the interviews began there were just over 50 Global Software employees based in Melbourne. The focus groups covered a total of 24 people from Global Credit Software of whom four were females. The 15 individual interviews that were conducted included many who had participated in the focus group discussions. Six team supervisors from the Melbourne Office of Global Credit were also interviewed individually. In addition, a supervisor from Global Credit Software who acted as a liaison officer in Melbourne was interviewed. The study has also been informed by the author’s informal interactions with IT professionals in Melbourne (both Indians and nonIndians). Though the narratives of these informants are not directly referred to in this discussion, they represent a rich ethnographic source.

Section 3: Culture, difference and identity The workplace is an important site for both constructing and celebrating cultural differences. Though Global Credit upholds the principles of equal opportunity and diversity, for individual managers and supervisors different styles of communication and work-related behaviour are still perceived as problematic when they have to deal with the Indian staff from Global Credit Software. At the same time, both at the individual and group levels, the staff members of Global Credit and Global Credit Software participate in cultural transactions which celebrate diversity and attempt to promote cultural understandings. Whilst such interactions are significant, the staff members of Global Credit Software in Melbourne still feel they are not fully accepted. This section will discuss the contradictory processes by which difference is constructed and expressed in the workplace. Though the individual experiences of Global Credit Software staff members vary within the workplace and in the broader milieu of

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Melbourne, their initial experience upon arrival in Melbourne is important. In many respects Melbourne presents a culture shock for those who have not travelled to Australia before. Some people are met at the airport when they first arrive by colleagues from India which helps to ease their entry into an environment which is unfamiliar. However, one individual who arrived without anyone to receive him at the airport felt aggrieved and contrasted his experience to that of Australian counterparts visiting India: If Westerners go to India they get five star treatment. We pick them up at the airport and take them to restaurants and sight seeing and they receive hardship allowances. But when we come here it is not the same. For this individual a sense of abandonment and difference set in from the moment of arrival and even before he had entered the workplace. He also felt that he did not receive the respect that is normally accorded to westerners visiting India on business. Though many of the respondents expressed their attachment to Melbourne, their stay is also perceived as presenting hardships such as missing their families, food, and local language television programmes as well as having to put up with various inconveniences. As one manager of Global Credit sympathetically stated, Melbourne is a ‘hardship posting’ for many of the Indians. The Indian employees are briefed about their Melbourne assignments before they depart India, but the briefing does not fully prepare them for the expectations of managers and supervisors in the workplace, nor the living conditions they are confronted with in Melbourne. The induction programme consists of a package of documents which according to one respondent provides a list of ‘dos’ and ‘don’ts’. For example, they are advised not to communicate with each other in their local languages in the workplace and to keep their voices low when communicating. They also receive information on a major feature of Australian leisure activity, that is, Australian Rules football, but as some claimed they did not have an extended briefing on the work practices at Global Credit in Melbourne. The perceived distinctions in the styles of communication and behaviour between the Australian and Indian staff members are a major issue in the construction of difference by the supervisors and managers in Melbourne. For the Indians and their Australian managers/supervisors, variations in English accents are of relatively less concern because both

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parties adapt to different mannerisms in speech. From the management’s point of view, the more pertinent issues are the ones connected with body language, deferential attitude towards authority, passive participation in meetings, and reluctance to admit potential problems related to work, such as meeting targets and deadlines. Inability on the part of supervisors to interpret the body language of their Indian staff is evidently frustrating. One supervisor explained that a manager will not understand that an Indian person nodding does not mean she/he is in agreement. Similarly, another commented that Indians nod when addressed but it does not imply they have understood what they have been told. It only means that they are listening. This supervisor then explained that Indian staff do not like to talk back; they do not contradict what they have been instructed but they are being trained to act otherwise. Interestingly another supervisor of Anglo-Indian background, who defined himself as an ‘in-between’, confirmed the above viewpoint by claiming that the majority of Indians do not like to contradict their superiors. He explained: Indians won’t stand up to their manager. Indians will say ‘Yes’. It’s to do with culture. Look at, for example, Indians marrying their kids [a reference to arranged marriages]. Out of that blossoms respect for elders. Ninety percent of the staff will not stand up to managers. It goes back to respect. Giving negative feedback is considered dangerous. Overall, in Indian culture and workplace there is hierarchy. How many times do you see managers in India going out for lunch with their staff? The management’s perspective is confirmed by some of the Indian staff members from Global Credit Software who also define their attitudes and behaviour in cultural terms. According to one respondent, in India a fresh graduate from college would not be expected to question the boss because the cultural system and upbringing do not sanction such behaviour. Many of the respondents described the system of management at Global Credit Software in India as hierarchical compared to what they encountered in Melbourne. This culturalist discourse, however, is contested by some of the Indian staff of Global Credit Software. One Indian woman smartly attired in western dress sharply asserted: People at Global Credit in Melbourne have stereotypes about Indians – they think of Indians having arranged marriages; that Indians are

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docile; they are surprised when you wear western clothes. South Indians are more traditional than north Indians. North Indian females are less traditional than the ones in the south. Global Credit staff’s understanding is based on Indians from the south mostly. Their perspective is very limited. Whether Indians from the north of the country are less traditional or not is not the relevant point. Considering the immense diversity of India, cultural generalizations are of limited value because they are as much open to affirmation as they are to rejection. What is telling about the statement above is how this young woman articulates her idea of difference in contrast and in contestation to the culturalist constructions of both the management and some of her Indian counterparts.4 Another respondent also contested the characterization of Indians by her supervisors and Indian counterparts who felt Indians were reluctant to ask questions or challenge managers. Neither did she believe culture was necessarily a barrier to change. This woman stated: When I joined Global Credit Software, we had a manager as a mentor and she was Indian-Australian. She had migrated from Australia to India and was an amazing mentor. She told us to question. I had eight months with her training when I joined. We interacted with the top management, so we don’t have problems asking questions. Both the respondents who strongly rejected the above mentioned stereotypes of Indians were relatively young females who were graduates in business studies. They worked as business analysts whereas many of the other male and female employees of Global Credit Software had science and engineering backgrounds and were employed in the technical section when they worked in India. The two women were aware of work practices at Global Credit since they had both had assignments in Melbourne previously. A male respondent was also upset with the stereotypes held by some of his Australian counterparts about Indians and found these stereotypes offensive and irritating. He felt some workers at Global Credit did not appreciate and respect cultural differences. For example, a few people he encountered at work joked about religion and other cultural aspects of India, particularly the reverence for cows amongst Hindus. He argued Indians did not ridicule other cultures because they were

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tolerant people. Such negative encounters, however, did not generate antipathy towards all his Australian work colleagues as he found people generally very friendly. Within the workplace the discourse of culture both constructs difference and celebrates it. Cultural transactions occur at informal levels as well as during formal events. Since Global Credit has a multicultural workforce, there is considerable curiosity amongst individuals about the cultural habits and rituals of different ethnic and national groups. For example, one Indian woman regularly exchanged recipes with one of her Australian work colleagues. She gave her Australian friend Indian recipes in return for pasta recipes. This Indian woman found her Australian friends took a lively interest in the Indian dresses she wore and were disappointed if she turned up in western attire. She claimed: There are 45 people in my team. It is a mixed group with people of all different nationalities. It is pretty interesting working in such a mixed group. They appreciate all other cultures and the Indian culture…they love Indian food and saris…. At first I was worried about my Indian clothes and if they were allowed or not. But people really try to find out about our food and culture. Since the Indian employees of Global Credit Software work in project teams with people from many different cultural backgrounds, they find their assignments in Melbourne provide a window to observe other nationalities and cultural groups. One manager explained that Global Credit did not encourage ‘ghettoization’ of Indians. This viewpoint reflects the antipathy to ‘ghettoization’ that is generally expressed by Australian business people who believe ‘ethnic ghettoes’ are a social hazard and symbolize failure to ‘integrate’ ethnic minorities into mainstream Australian society (Hage 1998: 131). Thus the employees of Global Credit Software are dispersed in different teams throughout the organization. Their deployment, however, is also partly dependent upon their expertise and the staff required for different projects. As far as the Indian professionals are concerned, they find working in multicultural teams less alienating because as they stated: ‘We feel we are not the only foreigners around’. Socializing amongst colleagues in the workplace is common, though the frequency of interactions varies between individuals and work teams. Team members, for example, celebrate occasions connected with departure of a work colleague, birthdays or similar personal events. More particularly, the completion of a project is marked by celebration, and

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according to one respondent, the event involves significant cultural transactions where people in the group share food and recipes. Members of the group introduce the foods they have brought and explain its history and cultural significance. In this group celebrations are frequent because every little achievement by the group is regarded as worthwhile. For some individuals socializing outside work hours is a regular feature as one young woman explained: My team is mixed – Greeks, Russians, Malays and Chinese. We all try different things and different food and go out together and take turns in eating different cuisines [sic]. They are very appreciative of Indian culture. The Australian culture is very open and curious… I socialize with my team, we go out together. Implicitly, her understanding of Australian culture is cosmopolitan and inclusive of different nationalities. She was a quite widely travelled person who had worked in the USA previously as well as in Australia but with a different organization. She had visited Australia on several occasions previously and liked being in the country compared to the USA where she felt ‘very homesick’ and excluded. At the more formal level, individual managers and supervisors within the organization also encourage the celebration of cultural diversity. They organize ‘national days’ or ‘diversity days’ when staff members in their sections bring food associated with their country of origin and sometimes dress in national costumes. Staff members of Global Credit Software also observe the most important annual Hindu religious event which is Diwali. Some staff members on the occasion of Diwali organized an Indian lunch which was served in the workplace and attended by colleagues from various sections of the organization. In addition, a weekend picnic was held so friends, family and colleagues could participate. Writers who are skeptical of attempts to achieve genuine diversity in the workplace are somewhat dismissive of diversity workshops and celebratory events because the popularity of diversity in these instances is confined to ‘trendy’ activities, consumption, and the ‘celebration of different cultural festivals’ (Prasad and Mills 1997: 17–18). Similarly, with reference to multiculturalism, Donald and Rattansi argue that the ‘multicultural celebration of diversity’ is confined to the consumption of ‘somosas, sambal and steel bands’ whereas issues related to power and legitimacy among ‘different centres of cultural authority’ are overlooked (1992: 2). Whilst these criticisms are relevant, they

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underestimate the value of the consumption of food and cultural festivals. The celebration of cultural festivals is an expression of identity by transnational and transient subjects who are creating a sense of ‘belonging’ in their host environment, even if such belonging is transitory (see Westwood and Phizacklea 2000: 1–16). In Westwood and Phizacklea’s evocative phrase, celebration of such events reflects ‘carrying bits and pieces of national identity around the globe’ and the creation of ‘cultural spaces’ by less powerful migrants (2000:16). Consumption and festival participation are also significant because they potentially provide a means through which greater cultural understanding and a more cosmopolitan outlook may emerge. Whilst consumption and celebration of festive occasions represent important channels of cross-cultural interaction, a major source of difference remains in the workplace. For some members of the staff at Global Credit in Melbourne, the presence of Indians from Global Credit Software represents an economic threat because the latter are viewed as cheap labour that could be used to replace Australian professionals. According to one manager, this sense of threat was heightened when the organization went through a phase of restructuring involving redundancies. However, he claimed the fear had subsided once the restructuring was completed. From the evidence of some of the supervisors in Melbourne and the Indian staff of Global Credit Software, it appears that the fear of loss of jobs on the part of Australian professionals is a continuing feature. The concern about employment is partly aggravated, as stated above, by reports in the Australian Press of major corporations outsourcing their software development to India. Since the dotcom crash employment opportunities in the IT sector have been sluggish leading to a more competitive environment within the labour market. Many of the Indian respondents felt that the fear of unemployment was palpable and sometimes openly expressed by a minor section of their counterparts at Global Credit. According to one Indian respondent the issue did not arise on a daily basis but only periodically. Though the Indians claimed it did not affect their professional duties and morale, they certainly articulated unease and dismay at the attitude of some of their colleagues in Melbourne who they felt were uncooperative and did not socialize with them. Their responses to the antipathy they encountered in the workplace varied but most believed it was misdirected because they were part of the same organization as their Australian counterparts.

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The Indians resented the reference to them as cheap labour. A male respondent stated: Over here I am referred to as cheap labour. It is irritating. We are referred to as cheap labour – like a brand name. I have worked in four countries and it is the same. I have experienced the same thing in each. We are employed because we are cheap labour… Anyone in management uses this term. In my experience Indian IT professionals are profoundly hurt by this assertion that they constitute ‘cheap labour’. This remains true even when they themselves recognize that they are being exploited as cheap labour by both the Indian companies and the transnational corporations. Supervisory staff in Melbourne often remarked that the Indian IT workers were perceived as cheap labour. By equating ‘cheap labour’ with ‘brand name’, there is also implicit recognition on the part of the IT worker quoted above, of the commoditization of Indian IT professionals. Significantly, the awareness that professional labour has been commoditized extends beyond Indian IT professionals. This awareness is even prevalent amongst Australian professionals who have witnessed the migration of IT jobs to low cost centres and who have complained about their plight in the leading Australian financial newspaper (Ramage 2003: 58). The division of labour between Australia and India is also an important source of distinction as explained by a female respondent: The type of work that trickles down to Global Credit Software is not as good. People here don’t want to do this work, it is less desirable, more monotonous work and so they send it to India. Coding gets done in India. They ask us to do a small piece of work and we don’t know how it all… comes together. It is clear that whilst this division of labour provides employment to IT professionals in India, it is also a source of alienation for some who fail to gain fulfilment through their work and cannot understand how their contribution fits into the complex chain of production of which they are only one link. Amongst the respondents there was also a strong feeling that they were not fully accepted within Global Credit. One person claimed that although some of them had been in Melbourne for a long time they did not get all the facilities enjoyed by the staff of Global Credit.

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They had the same equipment but not the same privileges; they were not treated like employees of Global Credit but rather as employees of Global Credit Software. Similarly, another respondent from India stated that even though they were all part of the team in Melbourne they were always regarded as ‘separate’ and ‘treated separately’. In part this feeling stemmed from the separate system of performance appraisal and reporting for the Indian staff members of Global Credit Software. The Indians are appraised by both their supervisors in Melbourne and their supervisors in India in contrast to the Australian staff whose performance is only evaluated by their Australian supervisors. In terms of reporting, the Indians are also accountable to their Indian and Australian supervisors. Their experience of difference and exclusion is, therefore, both a result of their categorization as cheap labour and the system of appraisal and reporting which does not acknowledge them as full members of the team whilst they are in Melbourne. Consequently, as one respondent stated they felt they were ‘outside of the organization, not part of the family of Global Credit’. For another respondent this feeling of exclusion within the organization combined with unfortunate racial encounters outside the workplace precipitated an ‘identity crisis’ not experienced in India. In the process it gave rise to a sense of national identity that had remained latent in India. As this professional explained, it was outside India that he perceived himself as an Indian whereas in India he was identified (like many other Indians) in terms of caste, religious community, region, or other sub-groups that people belong to. He added, here ‘I have to say I’m Indian and there is feeling of unity, that we share things in common’. Needless to say, the expression of his Indian identity is not grounded in primordial roots but is a response to the circumstances he encountered in Melbourne.

Conclusion From the discussion above it is evident that the construction of difference takes place along different axes – through culturalist discourses; material processes such as the division of labour; and administrative procedures through which people’s worth to the organization is evaluated. Many of the respondents felt strongly aggrieved about being labelled as cheap labour that presented a threat to jobs in Australia. They believed they had as much right to be considered a part of the organization (or the ‘family’) as their Australian counterparts. Whilst

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not attempting to privilege one axis against another, the forces of economic competition generate a sense of exclusion which exerts a major influence on the perceptions and identities of many of the professionals from India. These same forces create anxiety about employment prospects amongst some Australian professionals within the organization. The sense of anxiety and threat felt by the Australian employees was strongly articulated by one of the supervisors who claimed that the rhetoric of diversity promoted by management was an attempt to divert attention from the racialization of economic differences. At the same time as globalization creates a worldwide labour market and contributes to a culturally diverse workforce, it also fractures the idea of civic pluralism as imagined by proponents of this concept. Whilst not wishing to devalue the idea of civic pluralism, one is forced to concede its limits considering the contradictory outcomes of globalization and the asymmetrical power relations within organizations. Recognizing cultural difference may not be sufficient without understanding how difference is produced in an ‘interconnected’ world, as Gupta and Ferguson argue (1997a: 43). The outsourcing of software development which promotes the international division of labour is clearly a chief source of difference within the organization. Importantly, the paradigm within which the organization under study operates represents assimilationist tendencies rather than involving the mainstreaming of multicultural practices as referred to by various writers including Cope and Kalantzis (1997). These assimilationist tendencies are demonstrated by the expectations of supervisors and managers regarding the behaviour of Global Credit Software employees in Melbourne. From discussions with managers and supervisors it was evident that standardized work practices and uniform behaviour were viewed as a preferable organizational objective. Though diversity is recognized in some of its aspects within the organization, the uniformity of work practices takes precedence over diverse approaches to work. This is also clear from the culturalist constructions of Indians that view difference as a problem to be overcome by the management. It is clear that the culturalist construction of difference is not uniformly accepted by Indian professionals and is strongly contested by some amongst their ranks. The understanding that there are homogenous cultural attributes that can be labelled as ‘Indian’ appears flawed in the face of contesting viewpoints. One is tempted to assert that homogenizing nationalities and ethnic groups is a convenient strategy on the part of those who are responsible for managing the daily complexities of a diverse workforce. Such an assertion, however, may

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provide only a partial explanation because some of those who are subjected to this discourse are also implicated in it. The acceptance of a culturalist discourse by actors (both Indian and non-Indian) who are differentially positioned within the organizational hierarchy demonstrates the power and pervasiveness of this discourse. The idea of a singular national culture and a unitary nation-state still has a powerful sway over many people’s imagination. Needless to say, the domination of this discourse is incomplete since it is hotly contested by some. Rather than identifying a cultural core, this study emphasizes the multiplicity of ways and contexts within which people define their identities. The example stated above of one of the Indian employees who asserted that it was only since coming to Australia that he identified himself as an Indian is a case in point. By contrast, from his experience in India it was the particularistic, micro-identities around caste, region and religion that mattered most in everyday interactions. As Avtar Brah succinctly asserts, ‘identity is never a fixed core’ (1992: 142). Importantly, it is relationally forged and expressed and fluid, especially when linked to transnational movements of people. Thus, as Appadurai argues (1996), the fixity and overlap between place and culture is undermined leading to redefinitions of identity. Acknowledgements I wish to thank Dr Michael Stevenson (Monash University, Melbourne) for his comments on the paper. I am also grateful to the staff of Global Credit and Global Credit Software for their cooperation and participation in this study. Notes 1 The terms ‘developed’ and ‘developing’ countries are problematic even though they are widely referred to in the development studies literature. This binary division of the world positions many parts of the non-west as inferior and reinforces the notion of the ‘Other’. The use of these terms in this paper reflects the popular perception in Australia and elsewhere that India is less ‘developed’ compared to Australia. 2 I am grateful to Professor Michael Herzfeld (Harvard University) for emphasizing this point in personal communication (6th September 2005). 3 Refer to Hage for a critical assessment of the discourse of cultural diversity in Australia, especially how this discourse is aimed at valorizing or producing ‘ethnic surplus value’ (1998: 128–129). 4 Ironically her rejection of management’s culturalist discourse is couched in stereotypes of her own which accentuate the regional differences within India.

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References Appadurai, A. (1996) Modernity at Large: Cultural Dimensions of Globalization, Minneapolis: University of Minnesota Press. Basch, L., Schiller, N.G. and Blanc, C.S. (eds) (1994) Nations Unbound: Transnational Projects, Post-colonial Predicaments, and Deterritorialized Nation-States, Amsterdam: Gordon and Breach Publishers. Bertone, S., Esposto, A. and Turner, R. (1998) Diversity and Dollars: Productive Diversity in Australian Business and Industry, Melbourne: Committee for Economic Development of Australia. Brah, A. (1992) ‘Difference, Diversity and Differentiation’, in J. Donald and A. Rattansi (eds) ‘Race’, Culture and Difference, London: Sage Publications and The Open University, pp. 126–145. Clifford, J. (1992): ‘Traveling Cultures,’ in L. Grossberg, C. Nelson and P. Treichler. Cultural Studies, London: Routledge, pp. 96–117. Connors, E. (2003) ‘Alarms Ring as Telstra Exports Jobs’, The Australian Financial Review, September 9: 29–30. Cope, B. and Kalantzis, M. (eds) (1997) Productive Diversity. A New Australian Model for Work and Management, Annandale: Pluto Press. Cox Jr, T. (2001) Creating the Multicultural Organization. A Strategy for Capturing the Power of Diversity, San Francisco: Jossey-Bass. Donald, J. and Rattansi, A. (1992) ‘Introduction’, in J. Donald and A. Rattansi (eds) Race, Culture and Difference, London: Sage Publications and The Open University, pp. 1–8. Economist (2003a) ‘Offshoring. Stolen Jobs?’, December 13: 14–15. Economist (2003b) ‘Relocating the Backoffice’, December 13: 67–69. Elashmawi, F. and Harris, P. R. (1998) Multicultural Management 2000. Essential Cultural Insights for Global Business Success, Houston: Gulf Publishing Company. Ely, R.J., Foldy, E.G. and Scully, M.A. (eds) (2003) Reader in Gender, Work, and Organization, Oxford: Blackwell. Findlay, A.M. (1995) ‘Skilled Transients: The Invisible Phenomenon?’, in R. Cohen (ed.) The Cambridge Survey of World Migration, Cambridge: Cambridge University Press, pp. 515–522. Galt, V. (2002) ‘IBM Labels Diversity a “Strategic Imperative”’, The Globe and Mail. Canadian Business, June 24: B3. Gellner, D.N. and Hirsch, E. (eds) (2001) Inside Organizations. Anthropologists at Work, New York: Berg. Griggs, L.B. (1995) ‘Valuing Diversity: Where From…Where To?’, in L.B. Griggs and L. Louw (eds) Valuing Diversity. New Tools for a New Reality, New York: McGraw Hill, pp. 1–14. Gupta, A. and Ferguson, J. (1997a) ‘Beyond “Culture”: Space Identity and the Politics of Difference’, in A. Gupta and J. Ferguson (eds) Culture, Power, Place. Explorations in Critical Anthropology, Durham: Duke University Press, pp. 33–51. Gupta, A. and Ferguson, J. (1997b) ‘Discipline and Practice: “The Field” as Site, Method, and Location in Anthropology’, in A. Gupta and J. Ferguson (eds) Anthropological Locations. Boundaries and Grounds of a Field of Science, Berkeley and Los Angeles: University of California Press, pp. 1–46. Hage, G. (1998) White Nation: Fantasies of White Supremacy in a Multicultural Society, Annandale: Pluto Press Australia.

Salim Lakha 255 Hamada, T. and Sibley, W.E. (eds) (1994) Anthropological Perspectives on Organizational Culture, University Press of America. Hannerz, U. (1996) Transnational Connections. Culture, People, Places, London and New York: Routledge. Hannerz, U. (2003) ‘Several Sites in One’, in T.H. Eriksen (ed.) Globalisation: Studies in Anthropology, London: Pluto Press, pp. 18–38. Hayes, S. (2005) ‘Disaster Brings out Staff Commitment’, The Australian (IT Business), August 23: 2. Hiebert, M. and Slater J. (2003) ‘In Search of a Ready Scapegoat’, Far Eastern Economic Review, November 13: 14–16. Hofstede, G. (1991) Cultures and Organizations: Software of the Mind, London and New York: McGraw-Hill. Hubbard, E.E. (2004) The Diversity Scorecard. Evaluating the Impact of Diversity on Organizational Performance, Oxford: Elsevier Butterworth – Heinemann. Jackson, S.E. and Schuler, R.S. (2000) Managing Human Resources: A Partnership Perspective, Cincinnati: South-Western College Publishing. Kahn, J.S. (1991) ‘Constructing Culture: Towards an Anthropology of the Middle Classes in Southeast Asia’, Asian Studies Review, 15 (2): 50–56. Kearney, M. (1995) ‘The Local and the Global: The Anthropology of Globalization and Transnationalism’, Annual Review of Anthropology, 24: 547–565. Lakha, S. (1992) ‘The Internationalization of Indian Computer Professionals’, South Asia, XV (2): 93–113. Lakha, S. (1999) ‘The New International Division of Labour and the Computer Software Industry’, in J. Bryson et al. (eds) The Economic Geography Reader: Producing and Consuming Global Capitalism, Chichester: John Wiley and Sons, pp. 48–55. Malkki, L.H. (1997) ‘National Geographic: The Rooting of Peoples and the Territorialization of National Identity among Scholars and Refugees’, in A. Gupta and J. Ferguson (eds) Culture, Power, Place. Explorations in Critical Anthropology, Durham: Duke University Press, pp. 52–74. Marcus, G.E. (1998) Ethnography Through Thick and Thin, Princeton: Princeton University Press. Nancarrow, K. (2004) ‘Out of India’, The Sunday Age (Agenda): Melbourne, February 29: 8–9. Ong, A. (1999) Flexible Citizenship: The Cultural Logics of Transnationality, Durham and London: Duke University Press. Oseen, C. (1997) ‘The Sexually Specific Subject and the Dilemma of Difference: Rethinking the Different in the Construction of the Nonhierarchical Workplace’, in P. Prasad et al. (eds) Managing the Organizational Melting Pot. Dilemmas of Workplace Diversity, California: Sage Publications, pp. 54–79. Peixoto, J. (2001) ‘The International Mobility of Highly Skilled Workers in Transnational Corporations: The Macro and Micro Factors of the Organizational Migration of Cadres’, International Migration Review, 35 (4): 1030–1053. Prasad, A. (1997) ‘The Colonizing Consciousness and Representations of the Other: A Post-colonial Critique of the Discourse of Oil’, in P. Prasad et al. (eds) Managing the Organizational Melting Pot. Dilemmas of Workplace Diversity, California: Sage Publications, pp. 285–311. Prasad, P. et al. (eds) (1997) Managing the Organizational Melting Pot. Dilemmas of Workplace Diversity, California: Sage Publications.

256 Trade, Labour and Transformation of Community in Asia Prasad, P. and Mills, A.J. (1997) ‘From Showcase to Shadow. Understanding the Dilemmas of Managing Workplace Diversity’, in P. Prasad et al. (eds) Managing the Organizational Melting Pot. Dilemmas of Workplace Diversity, California: Sage Publications, pp. 3–27. Ramage, R. (2003) ‘IT Workers Just Another Commodity’, The Australian Financial Review, September 9: 58. Rapport, N. and Dawson, A. (eds) (1998) ‘The Topic and the Book’, Migrants of Identity. Perceptions of Home in a World of Movement, Oxford: Berg, pp. 3–17. Schwartzman, H.B. (1993) Ethnography in Organizations. Qualitative Research Methods, Volume 27, Newbury Park: Sage Publications. Smith, W. (1999) ‘The Contribution of a Japanese Firm to the Cultural Construction of the Malay New Rich in Malaysia’, in M. Pinches (ed.) Culture and Privilege in Capitalist Asia, London and New York: Routledge, pp. 111–136. Thomas, D.A. (2001) ‘The Truth About Mentoring Minorities: Race Matters’, in Harvard Business Review on Managing Diversity, Boston: Harvard Business School Publishing Company, pp. 117–142. Tucker, V. (1997) ‘Introduction: A Cultural Perspective on Development’, in V. Tucker (ed.) Cultural Perspectives on Development, London: Frank Cass, pp. 1–21. Vertovec, S. and Cohen, R. (1999) ‘Introduction’, in Steven Vertovec and Robin Cohen (eds) Migration, Diasporas and Transnationalism, Cheltenham: Edward Elgar, pp. xiii–xxviii. Westwood, S. and Phizacklea, A. (2000) Trans-nationalism and the Politics of Belonging, London and New York: Routledge. Wright, S. (ed.) (1994a) Anthropology of Organizations, London and New York: Routledge. Wright, S. (1994b) ‘Culture in Anthropology and Organizational Studies’, in S. Wright (ed.) Anthropology of Organizations, London and New York: Routledge, pp. 1–34.

11 Envisioning Futures in Work and Career in Large Transnational Call Centres in India Jennifer Jarman

Were a man to feel that he is under the spell of an inevitable fate and that he is not in the remotest degree dependent upon his own exertions, then it would follow that all his activities would become paralyzed, and he would find himself out of harmony with the world system of which he is a part. To realize, on the other hand, that he is the architect of his own fortune and the master of his fate, is to inspire him with the earnest desire and strong purpose to realize the best that is in him. John Grier Hibben, Hegel’s Logic: An Essay in Interpretation, 1902

Introduction1 This chapter explores the ways in which people who participate in India’s booming call centre outsourcing industry view the potentialities and constraints of their careers and the overall development of the sector. It is premised on the understanding that people have a degree of agency in their decision-making processes and that their understandings of what this industry might bring to India are important in terms of understanding what it eventually will bring to India. It is also premised on the assumption that call centres are situated in different environments in different parts of the world, and that this placespecific social context has influence in shaping the differentiated development of the industry. The rise of the call centre industry, has received a lot of attention in other areas of the world (Bain and Taylor 2004; Bain and Taylor 1999; Buchanan 2000; Richardson et al. 2000; Larner 2001; Richardson and 257

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Belt 2001; Larner 2002; Richardson and Gillespie 2003; Von Otter and Sandberg 2001). The analysis of this industry in India, however, is still in its early stages as the industry itself is quite new. For example, in a recent survey of 60 call centres, the average year of start-up was 2000 (Batt et al. 2005: 7). According to the literature on economic globalization, its rise is a product of several dynamics. These include the search for lower cost labour to replace more expensive North American and European labour, the search for labour pools large enough to sustain the expansion, and the search for educated labour to perform tasks requiring at least secondary if not tertiary level education. By these criteria – cheap, large and highly educated – India’s labour supply continues to rate highly. This has allowed India to place first on A.T. Kearney’s Global Service Locations Index (Kearney 2007) due to a combination of ‘…low costs, deep technical and language skills, mature vendors and supportive government policies’. Not surprisingly, India is experiencing rapid growth of employment in the service sectors. A recent NASSCOM report states that two million people are now employed in the Information-Business Process Outsourcing sector, with a growth rate of 25 per cent over the past decade (NASSCOM 2008). While still a small employer compared to other sectors such as agriculture, it is an important industry because it employs large numbers of young educated people and helps to stem the so-called ‘brain drain’ of educated professionals from India. There is a need for more research on this new Indian industry to understand the social and economic implications of its rapid development. While academic research on the industry is just developing, Indian popular culture has entertained the world with stories of sadistic supervisors, ambitious and immoral professional women clad in red saris (Hyderabad Blues 2004), overwhelmed Indian telephone agents trying to serve calls from rude American clients to suicide victims on help hotlines, (Call Centre, 2007) and even God, (Bhagat 2005), as well as attempting to rise above their humble call centre jobs as depicted in Slumdog Millionaire (2008). Given the strategic importance of the knowledge economy of which this industry is one part (Dahlman and Utz 2005), this chapter seeks to move beyond such popular stereotypes to a more nuanced understanding of how the industry actually operates. It analyses a sample of 16 people working for leading global call centre employers in the technical support and financial services sectors to understand how they view the impacts of the rise of the industry on their own careers and lives, and how they see its potentialities and constraints both for themselves and more generally on others. One theme

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that emerges is that the very strong industry demand, especially for university labour, has created opportunities for the improvement of working conditions, benefits and wages in a workforce where both unionization levels and significant labour standards enforcement are minimal. Furthermore, this context creates an opportunity for call centre workers to use the tactic of threatening imminent departure to improve their working lives.

The Indian call centre industry The literature on Indian call centres is limited compared to the analysis of the industry elsewhere, despite the fact that global corporations see this country as one of the most significant destinations for business process outsourcing. The Indian industry contains a much wider range of situations than found elsewhere in the world; wages are lower than in developed countries, and labour protections are comparatively weak. This has given rise to a large number of ‘sweatshops’, especially in centres that focus on serving the Indian market where profit margins are low and international standards are not enforced. At the same time, the availability of well-educated labour has drawn top multinational corporations to India to take advantage of the combination of availability, cheapness and quality of the science and technology graduates and some of these sites are amongst the largest in the world. Large centres contain between 5000 to 10,000 seats compared with up to 2000 seats in centres in the developed world. Early research on call centres explored the structural similarities between the position of the industry in the current global economic order and the position of India’s older industries in the previous colonial era. Ramesh suggests that these jobs are as substandard as the jobs in the older economy (Ramesh 2004). Mirchandani (2004), through an examination of how scripting, synchronicity and location masking are constructed and negotiated by Indian workers, makes a similar point, suggesting that Indian workers continue to remain subordinate to more powerful Western societies. Her work draws on some of the themes of the new international division of labour debates in that it points to the exploitative role of multinational companies reorganizing the global production processes. She also emphasizes the ‘gaps, cracks and ironies’ of the globalization process that produce uneven developments around the world and opens possibilities for the shaping of these developments by local actors.

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These researchers draw parallels between the exploitative work practices of the old colonial economy and the new economy because one of the main reasons for investment in the industry is to reduce labour costs and provide good quality services at lower prices than competitors. Approximately 70 per cent of the cost of running a call centre consists of wages (Holman et al. 2007). There has been considerable discussion of the implications of the constant pressure to reduce wage costs in the operation of call centres in developed countries (Bain and Taylor 2004; Collins and Brainard 2006; Chakravartty 2006; Bronfennbrenner and Luce 2004) but less on call centres in the developing world. One of the few such studies is that of Cecilia Ng and Swasti Mitter (2005) who interviewed women call centre workers in Malaysia and India. They focused on the extent to which these new Information Technology Enabled Service jobs have potential to ‘liberate and empower’ women workers.2 They focus specifically on understanding women workers’ views of the industry in an attempt to move debates beyond the ‘oppressed and marginalized’ thesis of the developing country worker. They found that women were ‘hopeful’ about the opportunities such work provided them with but were also aware of its routine yet fast-paced nature, the prevalence of night-shifts, extensive surveillance over job tasks, stress created by working for monetary incentives, lack of breaks, and limited promotion opportunities (Ng and Mitter 2005: 228–229). In contrast to those who saw call centre firms as prone to ‘flight’ due to the relatively low capital requirements to set up one of these businesses (Richardson and Belt 2001), Ng and Mitter were more optimistic about what they referred to as the potential ‘stickiness’ of business process operations. In contrast to manufacturing work in Asian countries that relied on a cheap, unskilled labour force, they argued that call centre work depended more on ‘…language, communications skills, cultural knowledge and IT infrastructure’ (Ng and Mitter 2005: 230), which made it less portable. Shah and Bandi (2003) studied the more technically complex technical support call centres in India and concluded that they do not conform to what they called the ‘sweatshop model of a traditional call centre’ (Shah and Bandi 2003: 426). Rather, they argued that telephone queries have different levels of complexity (basic, average and complex), and that complexity makes it impossible to script calls. As a result, workers engage in problem-solving and have much greater skill and autonomy than found in other call centre research (Shah and Bandi 2003). One of the problems of researching the Indian call centre industry is the lack of hard data on its size and scale, which is partly explained by its fast-growing nature and the lack of well-developed employment

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statistics compared with developed countries. Despite these limitations, it is possible to categorize the call centre industry in different ways. One widely used division is into ‘international’ centres serving international customers and ‘domestic’ centres serving Indian customers. While many Indians are taught English as a first language, there are many regional accents some of which are difficult for overseas clients to understand. As a result, the international call centres recruit workers who speak with an accent understandable to overseas clients. These Indian teleservice agents are generally middle-class educated and often have some experience of speaking to foreigners from travelling overseas or from interacting with relatives who are part of the diasporic Indian community. Batt et al. (2005) have shown that these ‘international English’ speakers earn substantially higher wages than other workers. Their 2004 survey of 60 call centres in six Indian cities (Bangalore, Bombay, Chennai, Delhi, Hyderabad, Kolkata) found agents, who usually form the majority of workers in a call centre, earning INR 121,444 [US$2687] in international centres compared with 94,861 INR [US$2108] in domestic centres. Supervisors’ average annual pay in international centres was 221,101 INR [US$4913] including performance pay while supervisors employed in domestic centres earned much less – 146,541 INR [US$3256] annually. In contrast, managers earned 388,728 INR [US$8,638] per year in international centres compared with 293,142 INR [US$6154) in domestic call centres (Batt et al. 2005: 18–24). The survey also found that the industry draws on a highly educated pool of labour, with 30 per cent of the sample holding a secondary education certificate and 70 per cent a Bachelor’s degree. Competition for jobs was stiff with international centres hiring on average one in ten interviewees and domestic centres one in four. In contrast to Ramesh who drew attention to the use of non-standard work, (one definition of which is part-time or seasonal work), 95 per cent of the workers in the sample held permanent full-time jobs (Batt et al. 2005). Phil Taylor and Peter Bain’s (2005) comparison of the labour process in UK and Indian call centres challenges the idea that shifting work practices is ‘seamless’ or easily offshored, arguing that this underplays the problems of understanding accents, the cultural differences which interfere with communication, and the impact on the production of lower quality calls (Taylor and Bain 2005). They suggest that the labour process is prone to conflict and Indian workers do not conform to the stereotype of the ‘supremely motivated, dedicated and loyal’ worker promoted by NASSCOM (Taylor and Bain 2005: 276). Rather, they resist the pressure, the intense scrutiny of their work, and other negative

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features of the labour process in a similar manner to UK workers (Taylor and Bain 2005). The more recent literature on the Indian call centre industry develops some of the themes found in the wider literature on new service sector environments such as turnover, surveillance, limited career opportunities, high levels of exploitation, adding new elements, which include the subordination to Western multinationals and customers, and the racism inherent in some of the interchanges between Western customers and Indian operatives. While the Indian research confirms some of the findings from studies on workers in more developed economies, it also shows that Indian workers are more hopeful about their future career and life prospects despite the problems of this fast-paced target-driven work environment. This perception of the better quality of the work environment and some optimism among India-based BPO workers stands in contrast to the literature on Western workers (Mirchandani 2004; Ng and Mitter 2005; Shah and Bandi 2003).3 This suggests that there are several elements in the Indian situation not found in Western work environments, in particular the diversity of call centre environments, which range from low end telemarketing operations, to the intermediate level international outsourced industry focusing on low-end routine and repetitive tasks in the world finance industry, to the high-tech call centres integrated into the global software industry. Thus, to understand the Indian situation, one must go beyond the assumption that all call centres are similarly structured with similar work environments and widen the research focus to include the greater diversity and heterogeneity of the industry. This chapter takes up one aspect of this diversity by describing the way in which people are developing their careers and perceive their working lives in some of the world’s largest and most experienced call centre operations. Theoretically, it is based on the idea that the specific shape of the Indian industry is a product not merely of the designs and imperatives of global capitalist firms, but also of the ways in which Indian employees think about their working lives and career prospects, and how their actions shape the organization of the industry, in particular urban spaces such as the greater Delhi region.

Research findings for workers and managers in the call centre industry The study sample of 16 workers were employed in the high wage ‘offshored’ sector of the top call centre companies in the National Capital

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Region of Delhi, one of the most important urban labour markets in India. This sector paid higher wages and provided more extensive training packages, transportation and other benefits. In this regard, their jobs are primary sector jobs in India as characterized by high pay, job stability, full-time status, set vacations, clear promotion ladders, training opportunities, and other perks such as concierge service, transportation and food services. While there are call centres employing workers under ‘sweatshop’ conditions in India, the section of the industry examined in this study generally provides well-paid jobs in modern office environments. Call complexity is often greater requiring longer more involved calls and as a result, employees have higher levels of responsibility. Given the size of the operations – organizations with up to 10,000 seats – there is more opportunity for upward mobility compared with firms with 50 or fewer seats. A major urban centre with a large pool of well-educated labour is in a stronger position than many other regions of the world to attract the largest global companies and provide more complex work requiring higher levels of skill. A centre like New Delhi has high quality labour, a large labour supply and is building an industrial concentration which seeks to be globally competitive with developed country competitors. A cross-section of employees were interviewed including agents, supervisors, and managers, with discussions centred on the career history and experiences of those interviewed. Selection of interviewees was based on them having at least six months’ experience working as ‘agents’, that is, people who answer and initiate calls. Several additional interviews with managers were included to provide a broader context. Agents form the majority of the workers in a call centre. The interviews revealed that there was considerable upward and sideways movement in the agents’ careers with seven of the 16 reporting movement into the technical, supervisory and/or managerial ranks. This differed from other locations where the author has interviewed call centre employees (eastern Canada, Singapore, Malaysia) and where such trajectories were not reported (Jarman 2006; Jarman and Barkow 2000). This difference is likely a product of three factors. First, the interviewees were contacted through networks, and the networks may have over-represented highly successful and ambitious people. Second, the sample was drawn from employees of top multinational firms which themselves choose well-qualified employees who can complete numerous rounds of human resources screening successfully (screening both for various social and technical skills but also for general suitability for the industry). This talented group is, indeed, one of the primary reasons that multinational companies locate not only

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in India, but in the capital region. Third, the interviews were conducted in 2006 and 2007 when the global economy was buoyant and a large expansion of the industry into Delhi was underway. The fact that the labour of educated people was in demand is a consistent theme running through all of the interviews, and so it seems likely that for some in the industry, promotions would come more quickly in this location than elsewhere in the world.

Entering the industry The interviewees were drawn to the industry for a variety of reasons. For some it was simply the prospect of good pay and promotional opportunities. So… it was about making money, there was good money in this industry. Another young man, who had just finished university, commented: To start a career with a company like a ‘Large Call Centre Firm’ [Name Withheld], it is a great opportunity. For another female respondent, the industry had an exciting allure and the opportunity to work with other young people: So, on the fifteenth day of my marriage, I joined a call centre. Hah. So what it was, my mother as I told you was quite an introvert, never wanted me to join that but I was also excited about this nightlife, wanted to see what it was all about. I did. I had the blast of my life. Very nice. Because, also in a call centre I don’t think so you’d find anyone beyond… 40, 45, 40. They’re all youngsters, all youngsters… They’re the same age group; you’re on the same page. Even the managers are 35, 30. Or even 28. My manager. She was like 28 years old. Her enthusiasm for this new industry was shared by an older manager: I’ll say government service per se is not as attractive as it used to be. In a country with a totally controlled economy, government service has a certain, shall I say, aura or depth to which that it was essential

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part of nationbuilding. But with the privatization and liberalization, and Indian government now doing more of a regulatory role rather than a controlling role, the glamour of government service has certainly reduced. And people were coming out of the uniform services, either the armed forces, either the paramilitary etc., seeing greater opportunity in the private sector or as entrepreneurs, rather than looking for any government jobs post-retirement. In the case of this manager, he was not attracted to the industry because it was full of young people but because he was looking for an industry with ‘aura and depth’ like that of the Indian civil service in former times. There was a shared feeling that the industry had ‘glamour’ and offered more opportunity than government jobs that previously had high status and the potential to wield power. For some of the older employees, the boom in this industry offered an opportunity to use skills in new ways and change career direction. The manager had also shifted from the public sector to the private sector, explaining what he saw as the relevance of his military background for managing an international call centre. Also, the highest portion of military personnel, not all but a very large number, [are used to] working in different environments, number one. Number two, managing rapidly changing scenarios because there’s no such thing as Fixed Day in the military, whether you are in the army or the navy, every day, every minute it’s different. Thirdly, the ability to set up structures which can function irrespective of the geography of the activity. For others, the boom in India provided an opportunity to return home and start businesses: I started the first call centre for Company A [major telecommunications company] in [Asian Country A] in 1985–86, and then I also worked in [Asian countries B, C and D] before returning to India. Here I started with one employee back in July 2003 which is when I started this operation in Delhi, but we now have [approximately 300] employees in India [and three other locations around the globe]. This globally mobile, flexible and entrepreneurial worker/manager is almost an archetype, but can also be seen as a product of a period

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when so many ambitious Indians from many walks of life left the country to pursue their careers. What is most interesting is that he has now returned to India with the skills and experience acquired elsewhere to help establish a company, provide leadership and jobs to other Indians and become competitive at the international level. Saxenian has suggested that such internationally experienced movers have become an important force in the growth of Indian industry (Saxenian 2000). Despite the varied career trajectories, all went into this location and industry because they saw it as dynamic and actively growing.

Entrance requirements Entry requirements to top multinational companies are stringent. One teleservice agent described his own hiring process in the following manner: Not easy. You have to go through a lot of rounds, a lot of rounds, at least 7 or 8 rounds. Like a normal entrance round then like uh, what your typing speed and all on the computer, then basic knowledge tests, and all, then what kind of voice you have, pleasant phone and all, H.R. rounds, director rounds. Successful candidates receive several types of training before they are allowed to start work. The training is necessary because offshore companies are governed by strict quality criteria for calls. If their quality of call service drops, they will quickly lose the contracts or the work to companies or divisions operating in other parts of the world. Quality is carefully measured by the industry and most large companies have both internal and external quality assessment reviews in place. Thus candidates in call centres around the world are trained in telephone manner, content necessary to respond to and initiate calls, and sales techniques (in centres where sales is an aspect of the job). In India, voice training for speaking with clarity to overseas clients has become widespread.

Promotions While some studies report limited promotion opportunities from the floor (Batt et al. 2005), this sample is unusual in that all employees had received promotions, with the first promotions from the agent position

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occurring within six months to one year of employment as an agent. This contrasts with the author’s interviews in other parts of the world where promotions after one to two years are more normal. One promoted person described his promotions as follows: As I told you I started in 2000 as an Executive [agent], in 2001 I got promoted as a Senior Executive [senior agent], then in 2003 I got the role of a Team Lead, then 2004 I became [word omitted] Manager, yeah, sorry 2004, [another type of] Manager, sorry that was 2004 [type of manager] Manager, then [mid-level] Manager, 2006, [senior] Manager and in December 2006 I was promoted to [another level] Manager. When asked if his experience was atypical, he responded: To be very frank it really depends on a person but yes, to talk about myself, every year on a scale of one to five with five being the highest, I’ve been ranked a five. Another reported: Started from 3, 4, 5, 6, 7 basically. Is that common? Not common, but it happens. It’s been a lot of challenge coming through all of these levels. All participants had experienced at least one promotion. Some experienced moves that included a temporary relocation to the United States, often to learn new techniques and processes. For example, one man reported: So out of my 7 years I’ve been 5 years with [Large Call Centre Firm], 1.5 years with [Large American Multinational Firm]. I was for about 14 months in [the US]. Then we transitioned the process back to India. This was in 2003, July 2003 it [the process] went back and I had to come here in 2002. I had to go to the US, then nothing worked out there, and ever since I’ve been with [Large Call Centre Firm]. This example suggests that some employees, particularly those at an intermediate level and involved with technical processes, obtain training from American experts, who are considered to have the most

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advanced processes, as well as gaining broader international experience. The examples given show that there are opportunities for mobility, but they are largely industry specific and the extent to which their skills and experience are transferable to other industries requires more investigation.

Trends Although it is India’s huge pool of skilled labour that is cited as a major reason that these companies to move to India, even this pool has its limits. There were numerous comments in the interviews that recruits with lower qualifications are now being accepted as compared to the early years when the first call centres arrived in Delhi. One agent comments: Yeah, otherwise, even call centre opportunities if see – earlier I know only graduates were permitted and appreciated to join a call centre but now you have people who have done plus two or are doing their plus two can join call centres.4 It’s a better prospect for undergraduates so even a plus two pass guy can easily earn to about fifteen to twenty grand which is awesome. None of the other industries give you that kind of opportunity. This view is reinforced by one of the managers: …in the middle, in the early nineties, and that’s the time when large number of companies came in from all over the world. The first thing they did was to snap up the managerial talent available in professional corporates across the country and a lot of young managers in the age bracket from 25 to 35 and middle managers from 30 to 40 were snapped up literally by all the global names. People like Nokia, Sony Ericsson, those from telecommunication field…I mean virtually everybody. And, er, that actually created a bit of a vacuum in the young and the middle management in the Indian head corporates. That’s an absolute fact. The two interviews suggest that at both agent and manager levels, the supply of the most strongly qualified available labour has been exhausted and workers with lower marks and somewhat lower levels of tertiary education are beginning to be drawn into call centre employment.

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Relationship of jobs to long-term career goals and mobility opportunities Upon entrance, most of the younger workers did not plan to stay in the industry for very long. Some were unclear about their career goals when they first entered the industry, others tried particular career directions but did not achieve them, which led them to settle into a commitment either to the industry or a specific firm. In this industry. I was planning to join in [year] when it came, I was planning to join [Large Call Centre Company] but couldn’t make it. Then *sigh* I went to other places, those things didn’t work out, then I came back. When I joined this industry, I was technically zero. I had never switched on a computer myself… So I told them that I don’t really think I’d be able to handle those queries, I’m not a technically sound person… But I learned and I invested a lot of time and energy and studied… [Laughs]. That’s how I started. It’s been a long journey. And, er, I think it’s a good industry to stick to. In the first case, the employee’s preference was to find another job but that was not possible, so he returned to the industry to a permanent position. In the second case, the agent entered without technical education or experience but received both and then decided to remain. Clearly for some workers, actual experience in the industry leads to an eventual acceptance of their commitment to a long-term career in the industry, albeit for different reasons and with different levels of enthusiasm depending upon the person.

Remuneration levels An important factor in the attractiveness of the call centre industry is the generally high levels of remuneration. Several of those interviewed suggested that wage levels were sufficiently attractive to draw people from other types of occupations and industries. For example, one respondent noted: The money they are offering to an Indian, according to Indian standards, that is a good amount of money, like huge. After two or three years, any individual in a call centre can easily earn like 25,000…

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30,000 [US$618 to US$742 per month]. And that’s a good amount of money to live in India. Another stated: So even a postgraduate today, in other industries like medical transcription or journalism or anything else would earn about twenty thousand, after doing post graduation and stuff. Of course, going higher, he would earn more and have better prospects. But should an undergraduate and a normal graduate work at call centres, he would earn a lot. It is noteworthy that the wage levels for agents reported here are almost equivalent to those of managers reported in Batt’s study which collected data during the year 2004 (Batt et al. 2005). Several managers referred to the fact that there is wage inflation occurring in India and these workers are in a prime urban location in top companies. One respondent compared call centre wage levels favourably to those earned by medical doctors, suggesting that the information technology boom in India is undermining the economic status of some of the more traditional professions. The exchange below illustrates that the labour process in some of the call centre jobs is more complex than a typical three minute scripted call where the agent has little discretion and uses little analytical skill and that this higher level of complexity is well rewarded. When asked to explain whether there was a stigma attached to the industry, one respondent replied: To a certain extent. So they don’t know what kind of work it is and there are certain call centres… the high end. My [word omitted] mates were Tax, Cisco Tax, Technical Advisor, Council of Committees. That’s the Tier Three support. Tier One is in that building. Tier Two is in America. Tier Three is once again in India, in Hotel Park. Those guys get a package of seven and a half lakhs [$18,454 US]. They’re the technical…? and they take calls of course, they take calls. Their calls last five days. They are handling prime ministers. Their maximum handling time is five days…

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So this is a very high end job. Very very high end. But definitely call centre work? It’s a call centre. They take calls… When it comes to package – 12 lakhs [about $30,000 US] is his package but he’s a caller. So that guy would not be viewed with the respect that a doctor would be viewed who might be earning four lakhs or three lakhs [$7500 to $10,000 US]. These examples suggest that higher incomes do not necessarily translate into higher social status and that traditional professions such as doctors retain higher status even if incomes are lower.

Turnover The sociological literature on turnover in call centres has tended to see high staff turnover as reflecting the substandard nature of these jobs. However, when the sampled employees discussed labour turnover in India, it was against a backdrop of opportunities. Their responses are similar to the findings of a survey conducted by the Communications Workers of America, Jobs with Justice, New Trade Union Initiative in India and Young Professionals Collective. That study found that 70 per cent of those changing jobs were doing so because of ‘pull factors’, (better job prospects or wages), as opposed to ‘push’ factors, (odd working hours, harassment or health problems) (John and Mansingh 2006). In addition, the main reason people gave for changing jobs was to increase salaries and improve one’s position in the company. As one respondent put it: Overall, yes, money is a big motivator in this industry and people do move around for a couple of lakhs, not at the manager level but at the junior level if you get 2000 then people do move around. That is why he is changing his job. Because he is being…Suppose you are working for [Large Outsourcing Firm], I tell you you’re getting 18 grand, I give you twenty. Or twenty-five or I make you

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assistant manager. It’s your call. You are looking for a promotion, a higher scale. One of the executive members of the Business Process Association of India gave a vivid example of the process. You have a trained manpower, I want you, I give you an offer, you come and join me. There’s so many call centres popping up on a daily basis. And otherwise HR is always on the lookout for right mind and right place. You mean a lot of it’s done because companies try and grab people? If it’s 80 per cent or 90 per cent as is happening in India today because the demand is so high, so many centres are popping up – people just take away teams of people for a few hundred rupees extra, take away a team leader and 20 agents… That kind of thing happens also. Companies are very clear about how long they need employees to stay in order to make up the costs of recruiting and training them: 18 months. If we keep them 18 months we are happy. One of the best ways is the in-house MBA program. You see many of them really like training and education. So we have a program linked with [Name Withheld] University. You join us, you also do your MBA at your desk. We give you the time, and there are four courses spaced out so that you sit the exams and to complete the degree you have to stay 18 months. Win-win. This is indeed a call centre solution to the process of getting an education – built-in, nicely wrapped and packaged and available at the desk in the company downtimes! Whether or not the company offering the training will eventually be able to retain these employees does not seem to be the main motivation. The emphasis is on shorter-term retention technique by offering something highly desirable (further education, particularly an advanced business degree), which keeps these employees attached to the firm for a period of time sufficient for the company to recoup its recruitment costs.

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Retention in a dynamic labour market The context of these people’s observations and experiences is an expanding Indian economy, which has grown at nine per cent per annum between 2000–08 (Reserve Bank of India 2008). Wages, inflation, and demands for products are rising, skilled labour is in a strong position, and educated middle-class people are, in general, feeling positive and enthusiastic about their futures, the future of their industry and the future of their country. But these expectations may also pose a problem for a manager trying to retain staff. Employees are quite aware of the impact of their potential departure: …because, you know, you cost a lot and you cost a lot to the firm, to employ you and stuff, and you cost a lot when you leave too ’cos they have to replace you. So it’s double whammy for the firm so they don’t want you to leave. In response to a question on what Human Resources and management were doing to create employee satisfaction, one manager responded: They are giving them various… On your birthday, we’ll give you off. On so-and-so day we’ll do this for you, we’ll take you, on a kind of… three months later, we’ll take you on a outing somewhere for a three day trip or something… It works. Another manager reported: Yeah, Management comes up with a lot of creative ideas as to how they can retain people. I think, you know, they come up with a lot of perks, retention plans. Currently, we’re running a scheme that’s…, double incentive. Your attendance is healthy and your performance is average, you’re able to earn, you know, what even supervisors can’t think of earning (laughs). It’s like a bonus or your basic salary? No, that’s bonus. Over and above. Two managers describe strategies to try and help keep workers committed to the industry: That is why you have your systems working and you’re not hiding anything from the employee, from day one itself, this is what we

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give you. This is what’s on the platter, accept it, you’re ours. Then they say your bonuses, your plans are linked, your performance based. Whereas the employer’s satisfied at the end of the day and we maintain that throughout and probably that helps you. Well, if you’re a people’s person then in that case with all that pressure that you have keeping your people happy and well bonded is the biggest challenge. If you are able to take care of that, half the battle is won. Your team is going to perform if the people are happy, well bonded, they’re satisfied working there. With all that kind of pressure, because it’s definitely a very stressful job, okay. And then people join thinking that they would leave in the next two, three months. They’re probably waiting for their MBA results, they’re waiting for their examinations, they’re waiting for their business to start and that’s how they join call centres to be fair. Companies are using a wide variety of strategies to retain employees and most of these strategies involve improvements in the workplaces, bonus schemes, or increased flexibility for the worker. Whether or not all of these strategies – the transparency of the organization, the small gifts, the attention to worker complaints – actually work or not, or the extent to which they are effective is a question that organizations will continue to face. The most important point to note is that these managers are attempting to improve workplace conditions and that they consider the measures described will be successful in retaining workers.

The changing perception of call centres As a new global and Indian industry, changing perceptions of call centres run through all the interviews. Probably when I started, this industry was about two to three years old in India. I think at that point of time probably people did not see call centres as a career, they saw them as a big-time stopgap arrangement because someone is doing a M.B.A. and has three months’ time. Now things are much more serious and there are people who want to make a career out here and I would say there is still a mixed bag – there are some who want a stopgap arrangement. Now the trends are changing about ten years into this industry in India, people are thinking about the industry itself.

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So you do see that your future would be in this industry? Oh yes, definitely, for about 10 years… Next 10 years, obviously, obviously, a lot of… there will be a lot of growth. The trend was that people were not outsourcing, now the trend is that everyone is outsourcing even in the domestic industry. The top 100 companies of India are planning to outsource. Definitely for the next 10 to 15 years there is nothing to stop India from growing by leaps and bounds. This person explicitly linked his decision to stay in the industry to where he thought the industry is going in the next ten to 15 years. Furthermore, the comment shows a sense of being a participant in a vanguard industry that will provide both personal gain and a sense of personally contributing to India’s economic development. One woman discussed the old perceptions of call centre work, pointing out that today the image of call centre work is much more positive than in the past: Like my mother couldn’t even share that ‘my daughter was in a call centre’. It was that kind of a thing but today people are very proud like my own relatives have their daughters joining call centres. They themselves promote them to join but now there’s a better understanding for sure. Things have drastically changed. Drastically, I would say that anyone who’s educated, even a bit, today would know that call centres is the place to be. If you’re talking about completely illiterate people, then that’s a different story. But otherwise, it’s a very nice thing. Things have changed, majorly. Here we see the worker attempting to construct her employment/ career as being thoroughly ‘respectable’ according to middle-class morality and norms. It is interesting to note that it is a female employee who discussed the increasing ‘respectability’ of the industry, suggesting that there is a gendered social construction of call centre work and careers. The growth of opportunities in this sector has generated a debate about the acceptability of a woman leaving the supervision of her parents’ or husband’s home to travel in buses with young men and women sitting next to one another, and working in mixed gender environments. While generally positive about call

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centre work, the interviewee speculated that the occupation might have a negative impact on marriage prospects: Er, no, and yes. It was like, there’s still known, like when, matrimonial prospects come. So it’s still there. [the stigma] Yes. This woman’s comments suggest gradual social and familial acceptance of this industry and her career, but are also suggestive of ongoing tension and the enforcement of gendered social constructions of call centre work as a career.

Conclusions and implications Some media and academic commentators have expressed concern about the growth of call centres as an example of the rise of a new set of colonial and exploitative relationships with India playing a subordinate role in a global division of labour dominated by privileged Western consumers. However, the study shows that call centre workers show greater complexity in their views of the industry. They often express a sense of personal and nationalist pride when describing their careers and view their work as giving them long-term security compared with working in declining industries. Many of the interviewees suggested that they had seen the industry change for the better in Delhi, with the growth of new managerial approaches emphasizing greater worker input. However, their views on changing management strategies, improving conditions of employment, and a strong sense of commitment to call centre work as a career must be interpreted within the context of their location within leading call centre firms. While they recognized constraints in their careers – initiatives that failed, for example – their comments often reflected a sense that there are new opportunities for educated middle-class Indian workers. In particular, two groups are seen to benefit most. The first group consists of under-30 year olds emerging from universities who are finding jobs waiting for them, compared with the recent past when they faced the prospect of longterm employment, which was a key reason for the emigration of many skilled people. The second group, which has attracted less scholarly attention, consists of older workers with management experience who were drawn into these jobs as a result of shortages of senior managers

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brought about by rapid growth in the Indian economy and the transformation of service delivery models in both the outsourced and domestic markets. Ironically, given the perceived attractiveness of India as a huge pool of inexpensive labour, the study suggests that there is a relative scarcity of educated graduates and people with senior management capability and experience. After a period of absorbing more educated segments of the labour market, firms are now being forced to accept graduates who have lower qualifications than those accepted for the same firms a few years ago. These employees clearly favoured job-hopping and upgrading their educational credentials as the main strategies for improving their own work and life conditions. The scarcity of qualified labour has also had a positive effect on wage levels. These observations suggest we need to move beyond understandings of India’s labour turnover problems as simply revolving around boredom, stress, negative impacts on health due to night shifts and lack of career growth possibilities. The workers in this study are changing jobs because they have opportunities and leverage and many are combining the onthe-job work experience with part-time study in formal education institutions. Indeed, some employers are actually facilitating the acquisition of formal education as a career development and retention exercise. Indian workers are placed in an ambiguous position with regard to the growing international competitiveness of emerging industries such as call centres/business process outsourcing. Having escaped the tyranny of long-term structural unemployment and/or under-employment, (predominantly young) educated middle-class workers have rising ambitions and career expectations. Evidently, there is the potential for employees to be vulnerable to exploitation in an overheated market where competition with established multinational companies means undercutting on labour costs, out-performing on quality, and continuous around the clock production that ensures that ‘a task that takes five days in America takes three days in India’. However, this study suggests that for some segments of call centre workers, work environments can be perceived as sites of opportunity for career development and potential individual agency rather than undifferentiated centres of ruthless exploitation.6 Notes 1 The author would like to thank Michael Gillan, Bob Pokrant and an anonymous referee for helpful comments, the National University of Singapore for providing research funds (Grant #R111000060112), Parminder S. Chopra and his family for assistance with the interviews, and Reena Retnam for assistance with library support.

278 Trade, Labour and Transformation of Community in Asia 2 Ng and Mitter draw the term ‘liberate and empower’ from a broader debate about the extent to which the benefits of employment opportunities in these industries has been overly negatively cast in relation to the negative features of the work. They cite Habiba Zaman (1999), Ng and Mohamad (1997) and Chhachhi (1999) as key discussants. 3 This may be because these studies rely on a qualitative research method more frequently than studies conducted by Western researchers (which suggests that these assessments might be modified with more extensive qualitative fieldwork) and with greater attention to the experiences of those working in jobs with primary labour market characteristics. 4 ‘Two plus’ is higher secondary education. 5 The Indian GNP and GDP dropped between the years 1990–92 (Panagariva 2004: 9). 6 This chapter was largely completed before the 2008 global financial crisis. This crisis is creating substantial job losses in the Indian call centre industry as the overseas part of the industry is strongly linked to economic activity in the global economy. Mr. Samir Chopra, President of the Business Process Industry Association of India, projected that 250,000 people could become unemployed as a result of the recession (BPIAI Press Release 2008). (The call centre industry is a substantial part of this industry). This is a sizable loss for an industry that employed two million in 2008 (NASSCOM 2008). The global crisis has increased support for protectionist job strategies around the world. President Obama, for example, has made it clear that his priority is to create jobs for Americans and has raised the concerns of trading partners as to the possible rise of protectionist sentiment. Not surprisingly, a number of countries are challenging this approach and arguing that growth will only occur with multilateral action rather than strategies that undermine freer trade. The difficulty for multinational companies is that they must get their service costs down in order to survive, and one way to do this is by using lower-cost labour overseas. Yet they have to fight against being seen as unpatriotic when they do so. How these fights over the location of jobs play out will have important implications for this newly developing sector of the Indian economy, and with it the opportunities for improving jobs, wages and working conditions by its workers. This chapter has suggested that continued economic growth has led to a dynamic labour market in the sector which is a source of bargaining leverage and protection against exploitation for these interviewees. The current global economic crisis may diminish the effectiveness of this strategy and threaten the career prospects of employees like those described in this chapter.

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Index agency, of workers, 17 agricultural sector, Bangladesh, 29–31, 33 Airline Employees Union (AEU), 167 ALaRM, 200 All China Federation of Trade Unions (ACFTU), 145 American Centre for International Labour Solidarity (ACILS), 195 anthropology, 12, 236, 237 appliance manufacturers, 132–135 see also whitegoods industry aquaculture, 72–78 environmental impacts of, 83–94 future directions, 94–96 see also shrimp export industry artisans exploitation of, 103–105 female, 104–105, 115 government and NGO support for, 113–115 Indian, 102–124 Ascendas, 226, 227 Ascendas India Development Trust (AIDT), 227–228 Asia, 21n2 see also specific countries community transformation in, 12–16 globalization and, 7–8 labour in, 16–20 labour movements in, 144–145 offshoring to, 130–131 social transformation in, 141–147 trade, 4–12 Asia Monitor Resource Centre (AMRC), 145–146 Asian Development Bank, 24, 45, 58 Asian financial crisis, 213 assimilation, 252 associational power, 152n3, 186 Association of South East Asian Nations (ASEAN), 40–41, 214 Aung San Suu Kyi, 60

Australia, 143 aid to Myanmar by, 59 trade unions in, 148–149 transient Indian IT professionals in, 234–253 whitegoods industry in, 136–141, 148 Australian Manufacturing Workers Union (AMWU), 140 authoritarianism, 144–145, 154n21, 178 Bangalore infrastructure in, 224–225 IT Park, 212, 220–222, 223–224, 228 IT sector in, 211–212, 220–222 Bangladesh aquaculture in, 72 Chittagong Port, 159–163, 170–177 corruption in, 172–177, 179 globalization and, 24–34 governance issues in, 171, 172–177, 179 history of, 31–34 land movements in, 92–93 political economy of, 162–163 ranking of, 26–27 role of state in, 29–31 shrimp export industry in, 71, 72–97 Bangladesh Frozen Food Exporters Association (BFFEA), 81 Bangladesh National Party (BNP), 172 banking sector, in Myanmar, 51–52 bargaining power, 143 erosion of, 136–141 of workers, 17 Barisan Nasional (BN), 161 Bharat Electronics Limited (BEL), 220 Black Tiger Prawn, 76, 77 boarding houses, 190 body language, 245 281

282 Index boundary drawing strategies, 185 branding, 116 Burma Freedom and Democracy Act (BFDA), 44, 52 business cycles, 27 business investment in Indian IT sector, by Singapore, 211–229 in Myanmar, 36–63 political context and, 37–41 Calcutta Port, 160 call centres, Indian, 257–277 changing perception of, 274–276 entrance requirements, 266 long-term career goals and, 269 promotions, 266–268 reasons for entering, 264–266 renumeration levels, 260, 261, 269–271 research findings on, 262–264 retention, 273–274 trends, 268 turnover in, 271–272 capital accumulation, 27 capitalism, 27–28 crony, 161, 178 capital mobility, 129–131, 184–185 casual workers, 143, 169–170 catalogues, craft, 115–122 Chakoria Sundarban, 87–92 ‘cheap labour’, 249–250 Chennai, 150, 221 Chicago School, 12 child labour, in shrimp export industry, 78–79 China Myanmar and, 45 neoliberalism in, 154n21 production facilities in, 134–135, 152n6 production relocation to, 141–143 regional competition in, 141–142 Singapore and, 215 state intervention in, 141, 145 unions in, 145–147 Chittagong Port, 159–163 corruption and, 171–177 employment at, 174

labour relations in, 174–176 reform in, 170–172, 179 turn-around times in, 173 Chittagong Port Merchant Labor Association (CPMLA), 174 civic pluralism, 252 Cold War, 214 collective action, in Free Trade Zones, 182–184, 194–204 collective bargaining, 136–141 collective identities, 186 collective organization, of workers, 142–143 colonization, 240 commoditization, of labour, 185, 250 community-based organizing, 186 community empowerment, 15 community(ies) artisan, 103–105 at Chittagong Port, 171–172 concept of, 3–4, 12–13, 15, 186–187 impact of shrimp export industry on, 83–94 impacts of globalization on, 3–4 local, 14–15 place-based, 12–13 transformation of, 3–4, 12–16 transnational, 13–14 community organizations, 194–195 consumer boycotts, of Myanmar, 41, 48 containerization, 157, 165 contract labour, in port sector, 158 contracts, employment, 143, 145 corporate restructuring labour impacts of, 185 social impacts of, 143–144 corporations communities and, 15 see also transnational corporations (TNCs) corporatization, of Port Klang, 163–167 corruption in Bangladesh, 162, 172–177, 179 in Myanmar, 52, 60, 63n4 Corruption Perceptions Index, 60 CP Group, 76, 96n4

Index 283 crafts globalization of, 102–124 government and NGO support for, 113–115 Internet and, 115–122 production of, 103–105, 109–110 styles and consumption, 110–113 trade of Indian, 106–109 Craftsbridge, 117–118, 124n3 crony capitalism, 161, 178 cultural diversity, 236–237, 238–241, 242–253 culturalist discourses, 236, 243–253 cultural stereotypes, 245–247 culture, 237–238 currency, Myanmar, 50–51 Cyber Gateway, 226 cyber parks, 223 Cyber Pearl, 226 Daewoo International Corporation, 54 decentralization, 217–218 deforestation, shrimp farming and, 86–92 Defy, 143 democracy, repression of, in Myanmar, 38 deregulation, 28 despotic regimes, 188 deterritorialization, 237 developed economies, manufacturing trends in, 141 development agencies, in Myanmar, 59–60 disrespectability, 193–194 diversity, 236–237, 239, 242–253 Dock Worker Management Board (DWMB), 174 East Bengal, 33 East India Company, 32 economic aid, to Myanmar, 58 economic change, in Bangladesh, 24–34 economic decentralization, 217–218 economic development, role of state in East Asian, 212–213

economic integration, 9, 13 economic reforms, 24–25 economic transformation, 5 Ecuador, 104 Electrolux, 133–134, 136–143, 146, 152n4, 152n6, 154n15 embroidery industry, 104 employment relationships, 143 environmental impacts, 11–12 in Myanmar, 54–55 of shrimp export industry, 83–94 ethnic chic, 112 ethnic identity, 116 ethnographic studies, 12 European Union (EU), policy of, toward Myanmar, 39 Exotic India, 118–119 Export Oriented Industrialization (EOI) strategies, 182–183 Export Processing Zones (EPZs), 172–173 exports, 5 of crafts, 106–109 Myanmar, 43–44 factory regimes, 142–143, 153n14, 188 fair-trade discourse, 115, 116 fashion trends, 112–113 femininity, 193 financial crisis (2008–2009), 10 Food and Agricultural Organization (FAO), 95 foreign direct investment (FDI), 21n3 in Bangladesh, 173 in China, 142 in Indian, 212 in Malaysia, 165–166 in Myanmar, 42–43, 45–46, 48, 53–54 Foreign Exchange Certificates (FECs), 63n2 foreign workers, in port sector, 169–170 freedoms, 57 free trade, 8 free trade agreements (FTAs), 8

284 Index Free Trade Zones (FTZs), 182–204 collective action in, 182–184, 194–204 living conditions, 182, 189–190 local communities and, 190–192 union avoidance and, 188–189 women workers in, 187–188, 192–204 working conditions, 188 Free Trade Zone Workers Union (FTZWU), 196–197, 203–204 activism by, 197–198 alliances, 199 global-local action, 199–201 local solidarity, 201–203 members and organizational resources, 198–199 garment exports, 44 garment industry, in Sri Lanka, 197 gender discrimination, craft production and, 104–105 gender politics, 193 ghettoization, 247 Global Agro Trade (GAT), 162 global capital mobility, 129–131, 184–185 global competition, whitegoods industry and, 132–135 global financial crisis (2008–2009), 10 globalization in Bangladesh, 24–34 community transformation and, 12–16 concept of, 7, 25–27, 96n2 of crafts, 102–124 environmental impacts, 11–12 historical understanding of, 31–34 impacts of, 3–4 labour and, 16–20 labour movements and, 129–132 as process, 27–29 state role in, 29–31 global production networks (GPNs), 5–6 China and, 141–142 impacts of, 3–4 global scale, 147–148 Global Union Federations (GUFs), 18

governance, 6, 9 in Bangladesh, 171, 172–177, 179 in Myanmar, 57, 60–61 in port sector, 157–158, 160–163 governing elites, 9 government, support for artisans by, 113–115 government-linked companies (GLCs), 213, 221 Gowda, Deve, 225 Greater Mekong Subregion (GMS) program, 58 Grounding Globalization (Webster et al.), 143–144 Growth Competitiveness Index, 27 Growth Triangles, 213 Guatemalan textiles, 110, 116 Haier, 135, 141, 152n6, 153n8 handicrafts, globalization and, 102–124 hegemonic despotism, 142–143 hegemonic regime, 142 Hibben, John Grier, 257 Hindustan Aeronautics Limited (HAL), 220 Hitec City project, 225–226 HIV-AIDS prevention, 59 human capital in India, 214, 219–220 lack of, in Singapore, 213–214 humanitarian aid, to Myanmar, 59 human rights abuses, in Myanmar, 39–40 human trafficking, 79 Hyderabad, 224, 225–226 hyperglobalizers, 7 Hyundai, 150 identity, 13 ethnic, 116 fluidity of, 253 national, 251, 253 transnational, 14 work, 14, 16 India aquaculture in, 72 call centres in, 257–277

Index 285 economic decentralization in, 217–218 human capital in, 214, 219–220 infrastructure development in, 215–216, 224–225 labour supply in, 258 Myanmar and, 45 outsourcing to, 212, 257–258 shrimp export industry in, 71, 72–78, 80, 82, 86 Singaporean investment in IT sector of, 211–229 state developmental strategies in, 222–229 uneven development in, 224 Indian artisans, globalization and, 102–124 Indian crafts, global trade of, 106–109 Indian IT professionals, transient, in Australia, 234–253 Indonesia, 41, 216 industrialized nations, 24 industrial restructuring, 129–130, 136–141 industry concentration, in whitegoods industry, 133 inflation, in Myanmar, 49–50 information technology (IT) sector, 10 in Bangalore, 220–222 India-Singapore collaboration in, 211–229 infrastructure development and, 224–225 Information Technology Act, 223 Information Technology Park Limited (ITPL), 228 infrastructure in India, 224–225 in Myanmar, 52–53 infrastructure development, 215–216 inter-corporate competition, 146 Internal Security Act (ISA), 167 international aid agencies communities and, 15 in Myanmar, 59–60 international business, in Myanmar, 48–53

International Committee of the Red Cross (ICRC), 60 International Finance Corporation (IFC), 175 International Framework Agreements, 154n19 internationalism, labour, 144, 147–150, 151 International Labour Organization (ILO), 39–40, 150 International Metal Workers Federation (IMF), 148 International Monetary Fund (IMF), 5, 24 international tourism, 109 international trade see also trade concept of, 4 impacts of, 3–4 of Indian crafts, 106–109 in Myanmar, 36–63 political context and, 37–41 International Transport and General Workers Union (ITGWU), 196–197, 198–199 International Transport Workers Federation (ITF), 167 International Women’s Day, 202 Internet, crafts on, 115–122 inter-regional trade, 5 intra-corporate competition, 146 intra-firm transfers, 234–235 intra-organizational migration, 234–253 intra-regional trade, 5 investments see also business investment; foreign direct investment (FDI) in Indian IT sector, by Singapore, 211–229 in whitegoods industry, 134 Iraq, 60 Italy, white good manufacturers in, 152n4 IT Park Bangalore (ITPB), 212, 220–224, 228 IT Parks, 212, 226, 228 Japan, aid to Myanmar by, 59 Jaqalanka campaign, 200–201

286 Index joint ventures, 217 JVP (Peoples Liberation Front), 195 Karnataka, 224 Keating, Paul, 239 Kelang Container Terminal (KCT), 166–167, 168 Kelon, 152n6 Klang Containers Terminal Staff Union (KCTSU), 168–169 knowledge-based economic development, in Indian IT sector, 211–229 knowledge based economy, 219–220 Korea corporate restructuring in, 143–144 factory regimes in, 143 protests in, 150 Korean Confederation of Trade Unions (KCTU), 150, 201 Krishna, S.M., 223, 224 labour artisan, 103–105 in Asia, 16–20 bargaining power of, 143 commoditization of, 185, 250 restructuring, 19 unwaged, 186–187 of women, 192–194 labour conditions, in shrimp export industry, 78–83 labour geography, 131, 147, 148, 185 labour internationalism, 144, 147–150, 151 labour migration, 11 labour movements, 16–20, 129 in Asia, 144–145 in Bangladesh, 172–173 in FTZs, 194–204 global, 201 industrial restructuring and, 136–141 internationalism, 144 production relocations and, 130–131 structural power of, 131 by women, 194–196 labour regulation, 138, 146

labour relations in Chitttagong Port, 174–176 in Port Klang, 167–169 in port sector, 158 labour restructuring, in port sector, 158, 159, 177–179 Labour Rights Promotion Network, 79 labour standards, 24, 34 land movements, in Bangladesh, 92–93 Lanka Sama Samaja Party (LSSP), 196 lean production systems, 143 least developed countries (LDCs), 25 LG, 134, 143, 153n7 liberalism, 26 lifeworlds, 6 liquid modernity, 13, 129 living conditions, in FTZs, 182, 189–190 living standards, in Myanmar, 58 living wage movement, 200 local business organizations, impacts of globalization on, 3–4 local communities, 14–15 FTZ workers and, 190–192 impacts of globalization on, 3–4 Look East Policy, 168, 212–217 macro-economic analysis, 5 Malaysia, 41, 57, 216 economic success of, 161 political economy, 161–164, 178–179 Port Klang, 159–170 privatization in, 165–166 Malaysian Airline System (MAS) strike, 167 Malaysian Trade Union Congress (MTUC), 168, 170 mangrove forests, 85–92 maritime trade, 157, 173 market despotism, 142 market economy, 24, 42–48 markets deregulation, 28 labour and, 16–17 Massachusetts, 41, 53–54 material support, 143 May Day, 202

Index 287 Melbourne, Australia, Indian IT professionals in, 241–253 mercantilism, 33 Migrant Women’s Tribunals, 202 migrant workers on shrimp farms, 81–83 skilled, 241–253 migration, 13 skilled, 234–253 mining companies, in Myanmar, 55–56, 57 modernity, liquid, 13, 129 money laundering, 63n3 ‘move to market’ policy, 53–54 multiculturalism, 248–249 Multi-Fibre Agreement (MFA), 162, 200 multilateral trade agreements, 4 multinational corporations (MNCs) see also transnational corporations (TNCs) definition of, 151n1 in India, 212 multi-scalar experimentation, 147, 151 multi-scalar networks, 150 Murthy, Narayanan, 225 Myanmar banking sector in, 51–52 exports, 43–44 FDI and, 42–43, 45–46, 48 inflation in, 49–50 infrastructure, 52–53 living standards in, 58 political context, 37–41 social implications of trade and investment in, 53–61 strategic development of international business in, 48–53 trade and business investment in, 36–63 trade sanctions against, 38–39, 42–43 transition to market economy, 42–48 Naidu, Chandrababu, 225–226, 227 National Center for Sustainable Aquaculture (NaCSA), 74

National Foreign Trade Council, 61n1 national identity, 251, 253 nationalism, 192, 193, 204 National League for Democracy (NLD), 38 National Union of Commercial Workers (NUCW), 168 nation-states, globalization and, 29–31 natural gas resources, in Myanmar, 44, 54–55, 56 natural resources community management of, 15 in Myanmar, 54–56 Naturland, 95 neoclassical economics, 8 neoliberalism, 7, 8, 24, 26 in China, 154n21 criticisms of, 8–9 production relocation and, 139–140, 144 in Sri Lanka, 182–183 networking, 150 network society, 129 New Economic Policy (NEP), 163–164, 165 New Farming Movement, 94 New Industrializing Economies (NIEs), 216 Ne Win regime, 37 new labour internationalism (NLI), 149 nongovernmental organizations (NGOs) in Bangladesh, 92–94 support for artisans by, 113–115, 117 North Port, 169–170, 179 North-South trade, 8 NSSP (Nawa Sama Samaja Party), 195–196 offshoring, 130–131 organic farming, 95 organizations, cultural diversity within, 237, 240, 242–253 organized labour, 129

288 Index outsourcing to India, 257–258 Indian call centres, 257–277 of IT enabled services, to India, 212 Oxfam/Community Aid Abroad catalogue, 119–121 Pakistan, 33, 214 patriarchy, 15, 182, 192–194 patronage, 161 Philippines, 41, 105 place, social imagination of, 184 place-based communities, 12–13 plantation export economy, 187 policy initiatives, in China, 141 political economy, in Malaysia, 161–164, 178–179 politics of port sector, 157–158 of production, 142–147 Politics of Production (Burawoy), 142 Polytex strike, 197 Port Klang, 159–170 corporatization and, 164–167 foreign workers in, 169–170 labour, 169–170 labour relations in, 167–169 Malaysian political economy and, 163–164 Port of Chittagong see Chittagong Port Port Reform Toolkit, 168 port sector, 157–179 see also Chittagong Port; Port Klang in Bangladesh, 170–177 corporatization and, 164–167 foreign workers in, 169–170 governance in, 160–163 labour restructuring in, 158, 159, 177–179 in Malaysia, 163–170 privatization in, 168–169 trends in, 157–159 turn-around times in, 173 Port Swettenham, 164–165 positional power, 186 poverty, 31 price competition, in whitegoods industry, 135

private sector, cooperation between Malaysian government and, 165–166 processing plants, shrimp, 78–81 production politics of, 141–147 relocation of, 130–131 production facilities, in China, 134–135, 152n6 production networks in Asia, 4–12 global, 5–6 impacts of, 3–4 regional, 5 production relocation, 184–185 to China, 141–143 neoliberal ideology and, 139–140, 144 in whitegoods industry, 134–135, 137–141 productive diversity, 239–240 professionals, intra-firm transfers of, 234–235 Reddy, Rajasekhara, 227 regime shopping, 185 regional competition, 217–218 regional development, 6 regionalization, 212–217 regional production networks, 5 regulation regimes, 185–186 rent-seeking behaviour, 172 resource curse hypothesis, 9, 56–57 respectability, 193 Saffron Revolution, 56 Samsung Appliances, 134 scale, 147–148 seafood industry, 71, 72 short-term contracts, 143 shrimp export industry, 71–97 community and environment impacts of, 83–94 current trends in, 72–78 future directions, 94–96 growth of, 71 opposition to, 94–95 organic farming and, 95 processing plants, 78–81

Index 289 work and labour conditions in, 78–83 shrimp farms, 81–83 SIGTUR see Southern Initiative on Globalization and Trade Union Rights (SIGTUR) Singapore China and, 215 economic decentralization, 217–218 foreign direct investment by, 214 investments by, in Indian IT sector, 211–229 regionalization and, 212–217 shortage of human capital in, 213–214 state-led development in, 212–213 Sinhala-Buddhism, 192, 204 skilled migrant workers, 234–253 social impacts, of corporate restructuring, 143–144 social interaction, 13–14 social transformation, in Asia, 4–12, 141–147 socio-ecological systems, 15 shrimp farming and, 83–94 Somalia, 60 South Africa, 143 South Asia, port sector in, 157–179 Southeast Asia, port sector in, 157–179 Southern Initiative on Globalization and Trade Union Rights (SIGTUR), 149–150, 201 Soviet Union, 214 space, social imagination of, 184 spatial boundaries, 185 spatial competition, 141–142, 145–146 spatial fixes, 130–131, 136, 137, 144, 147, 150–151 spatiality, 6 Special Economic Zones (SEZs), 226 Sri Lanka, 182–183 FTZs in, 182–204 garment workers in, 186–187 gender issues in, 192–204 labour movement in, 194–196 political violence in, 192

Sinhala-Buddhist nationalism, 192, 204 women workers in, 187–188 state, role of, in globalization, 29–31 state intervention in China, 141, 145 in unions, 145 State Law and Order Restoration Council (SLORC), 37–38, 42 state-owned ports, 158 State Peace and Development Council (SPDC), 37 state policy, 9–10 Stevedore Services of America (SSA), 176 strategic development, in Myanmar, 48–53 structural adjustment policies, 30, 182 structural constraints, 147 structural power, 152n3 subordination, 15 Swiss Import Promotion Program (SIPPO), 95 Tata Consultancy Services (TCS), 222 Tata Group, 221–222 telecommunication networks, in Myanmar, 53 Temasek Holdings, 213 territorial embeddedness, 6 textile industry, Bangladesh, 32–33 Thailand aquaculture in, 72 Myanmar and, 45 shrimp export industry in, 71, 72–97 time-space compression, 13, 157 Total, 54, 55 tourism, 109 trade see also international trade in Asia, 4–12 concept of, 4 free, 8 inter-regional, 5 intra-regional, 5 maritime, 157, 173 North-South, 8 trade agreements, 4, 8, 21n1

290 Index trade sanctions, against Myanmar, 38–39, 42–43 trade unions, 18–19, 129, 132, 136, 139–140, 148 see also labour movements in Australia, 148–149 in Bangladesh, 162–163, 172–173 in China, 145, 146–147 FTZs and, 188–189 multi-scalar action and, 144, 147 place-based action groups, 148–149 in Sri Lanka, 194–196 in transnationals, 146 transformationalists, 7 transient skilled workers, 234–253 transnational communities, 13–14 transnational connections, 237 transnational corporations (TNCs), 185 definition of, 151n1 in Myanmar, 46, 47, 48–49, 54–56 offshoring by, 130–131 regime shopping by, 185 working conditions in, 146 transnational linkages, 237 transnational organization, in Australia, 234–253 transportation networks, in Myanmar, 53 UN Global Fund, 60 UNICEF, 59 United Malays National Organization (UMNO), 161 United States isolation policy of, toward Myanmar, 38–39 trade sanctions against Myanmar by, 42–43, 44 Unocal, 54–55 UN Security Council (UNSC), 39 unwaged work, 186–187 Vajpayee, A.B., 222 Vanenberg IT Park (VITP), 226 Videocon, 152n6

wages, in call centres, 260, 261, 269–271 Wal-Mart, 79, 95 websites, craft, 115–122 Whirlpool, 133–134, 152n6 whitegoods industry, 132–135 in Australia, 136–141, 148 in China, 141 in Italy, 152n4 production relocation in, 134–135, 137–141 women artisans, 104–105, 115 labour of, 192–194 sexuality of, 192–194 in shrimp export industry, 78–81, 82 unwaged labour of, 186–187 Women’s Centre (WC), 196–197, 198–199, 202 women workers in call centres, 260 collective action by, 182–184, 194–204 collective identities of, 186 in Free Trade Zones, 182–204 local communities and, 190–192 organizing by, 194–196 sexuality of, 186, 192–194 in shrimp export industry, 79–82 Work Choices legislation, 153n12 worker identity, 16 workers, 16, 17 bargaining power of, 136–141, 143 casual, 143, 169–170 collective organization of, 142–143 foreign, 169–170 FTZ, and local communities, 190–192 worker’s parties, 195–196 work identities, 14 working classes, creation of new, 130–131, 151, 185 working conditions in FTZs, 188 in shrimp export industry, 78–83 in transnationals, 146

Index 291 workplace, cultural diversity in, 240, 242–253 Workplace Relations Act, 138 World Bank, 24, 168, 175–176

World Company Council (WCC), 148 world market factories, 184–187 world-systems theory, 8 World Trade Organization (WTO), 4