Abstract
This article seeks to understand why developing country suppliers internalize or outsource labour-intensive aspects of production as well as how these internalization/externalization processes affect working conditions in export-orientated industries in the global South. In order to achieve this aim, the article develops a new analytical framework based upon the global value chain approach. Applying this framework to the football manufacturing industry of Jalandhar, India, the article concludes that value chain restructuring produces both new forms of work organization and highly gendered outcomes for labour in this industry.
Introduction
International outsourcing of production from developed to developing countries has become an important part of the current phase of globalization. Instead of owning their own production facilities, many multinational companies source their products from dispersed supplier networks in developing countries in which they have no fixed investments or formal ownership (Wills, 2009). They also frequently demand decreases in price from their suppliers while the latter are required to respond quickly to changes in consumer and design trends as well as seasonal production cycles (Barrientos & Smith 2007). This has clear implications for workers employed in export industries in the global South as developing country suppliers are often compelled to employ flexible labour practices to cope with demand uncertainty and lower their fixed costs. In practice, many suppliers maintain a core of higher paid, higher skilled workers in more permanent work arrangements, and a peripheral labour force engaged in temporary, part-time or casual forms of work. At the same time, the most labour-intensive aspects of production are often outsourced further down the supply chain to smaller, lower-tier subcontracting firms, unregistered production units and/or home-based work that tend to include women, migrant and sometimes child labour (Posthuma & Nathan, 2010).
The question of how multinational companies manage these supplier networks has been a key concern in the literature on global value chains (GVCs). The GVC approach tries to understand how the input of supplies, production, trade, consumption and disposal of goods and services are co-ordinated on a global scale in inter-firm relationships as well as how local firms may engage in different industrial upgrading strategies in such chains (Gereffi, 1994; Humphrey & Schmitz, 2002: Bair, 2005; Schmitz, 2006). However, it is only more recently that the GVC literature has begun to conceptualize the role that labour plays in GVCs (Rainnie et al., 2011; Selwyn, 2012). One strand in the recent GVC and labour literature has sought to link the notions of industrial upgrading (called economic upgrading) and social upgrading (changes in work, employment and living conditions) (Barrientos et al., 2011), measure these links (Milberg & Winkler, 2011) and investigate the drivers behind social upgrading (Puppim de Oliveira, 2008). Another strand has looked at how the social and environmental guidelines of corporations – so-called codes of conduct – affect workers in developing country export industries. These studies indicate that code implementation may lead to tangible improvements in areas such as the reduction of industrial accidents and limits to overtime among factory-based workers, but that codes of conduct do not affect the ability of workers to join trade unions or engage in collective bargaining while they tend not to cover workers employed in the informal economy (ETI, 2006; Barrientos & Smith; 2007, Nelson et al., 2007). In addition, there is now an emerging literature on the role that labour agency plays in shaping GVCs and improving the conditions of workers in export-orientated industries in developing countries (Riisgaard, 2009; Carswell & de Neve, 2010; Riisgaard & Hammer, 2011). 1
Whereas these writings have made important contributions to our understanding of the role that labour plays in GVCs, they have rarely, if ever, systematically addressed the question of why local producers in some instances prefer to internalize the most labour-intensive aspects of production, keeping a core workforce with higher levels of social protection, and why local manufacturers in other instances choose to externalize labour-intensive aspects of production to informal small-scale workshops or home-based locations. Some authors, such as Posthuma and Nathan (2010) and Barrientos and Smith (2007), indicate that the international outsourcing trend is associated with the informalization of labour and the use of flexible work arrangements. However, they stop short of developing more explicit analytical frameworks that can explain the circumstances in which labour-intensive aspects of production are internalized or externalized by local manufacturers as well as the implications that this has for working conditions of those labouring in export-orientated industries in the South. In this article, we seek to fill part of this gap in the literature by developing an analytical framework that explains why developing country suppliers internalize or outsource the most labour-intensive aspects of production, and how their internalization/outsourcing decisions affect working conditions in developing country export industries by drawing upon the GVC approach.
We apply this framework to the case of the Jalandhar football manufacturing industry in India. This industry is interesting, because it has witnessed structural changes in the last 50 years whereby the most labour-intensive aspect of football production – football stitching – was first outsourced from factory to home-based settings, then partly shifted from home-based locations to designated stitching centres, before the football stitching process began to be internalized within factories again. In addition, the industry has been in the international spotlight for labour rights violations, particularly the use of child labour. Moreover, it mostly sells footballs to second-tier branded/non-branded importers, which are less frequently examined in GVC and labour standards studies that tend to focus on chains dominated by giant international retailers and supermarkets.
Our main line of argument is that changes in international demand for footballs, labour standard pressures and technological upgrading imperatives are the key factors that determined why centre-based, home-based and factory-based football stitching have (re)emerged in export-orientated football manufacturing in India. We also demonstrate that the emergence of these work forms has brought about highly gendered outcomes for labour in this industry. The article is structured as follows. The next two sections provide an introduction to the industry and the methodology used for this study. We then outline our analytical framework and conduct our empirical analysis of the (re)emergence of home-, centre- and factory-based settings in the Jalandhar cluster. Moreover, we examine the implications that this has for the working conditions of football stitchers in the industry. Finally, the conclusion contains the main findings, and the research and policy implications of our study.
Background to the Jalandhar football industry
The football manufacturing industry in Jalandhar has been studied in terms of main export challenges (Khara, 2008; Khara & Dogra, 2009), the involvement of children in football stitching (Goyal, 2004, 2005) and joint industry engagement in corporate social responsibility (CSR) activities (Lund-Thomsen & Nadvi, 2009, 2010; Vij et al., 2010). Instead of engaging in an in-depth review of this literature, we outline the main features of the Jalandhar football cluster, which help to draw out how this article distinguishes itself from earlier contributions to this literature; namely, through its focus on why the most labour-intensive aspect of production – the football stitching process – is internalized within factory-based settings or outsourced to stitching centres and home-based locations as well as how these internalization/externalization processes affect the working conditions of football stitchers in the industry. As Chart 1 shows, the export-orientated Indian football manufacturing industry that is almost exclusively located in Jalandhar is a relatively small player in terms of its share of exports from the four main manufacturing locations in the world: China, Pakistan, Thailand and India.
Overview of Football Manufacturing Exports from Pakistan, India, China, and Thailand: 2003–2010
Whereas China has increased its exports significantly since 2003, exports from India, along with Pakistan and Thailand, have remained relatively stagnant. Compared with Chinese producers in this industry, the Jalandhar producers have been slow to upgrade in terms of investing in research and development as well as engaging in mechanized forms of production that could facilitate an increase in their productivity. The Jalandhar football manufacturers mostly make medium-quality training and lower quality promotional hand-stitched balls, but do not have the capacity to produce the quantity of footballs required by some of the world's largest bulk buyers such as Nike and Adidas. Instead, they have specialized in producing smaller volumes of hand-stitched balls to niche markets in Europe, North America and developing/transition economies. Among the top buyers from the cluster are medium-sized brands such as UK-based Mitre and the French sports retail chain, Decathlon. The industry also supplies a range of non-branded international buyers and football clubs such as Premier League clubs that require smaller volumes of low-cost, promotional balls that are not usually supplied by the large-scale mechanized football suppliers in China.
The Jalandhar football manufacturing industry is made up of approximately ten medium-sized firms and 40 smaller producers (Lund-Thomsen & Nadvi, 2009). These manufacturers employ 4,000 ‘core’ workers in their factories and outsource the process of football stitching via a network of 1,000 contractors to 12,000 registered and an unknown number of unregistered stitchers. The registered stitchers work in 3,300 stitching units. These units are either designated stitching centres or home-based locations in the central part of Jalandhar, the villages surrounding the city (for example, in Adampur 50 kilometres east of Jalandhar) or the town of Batala, which is located about 80 kilometres west of Jalandhar, close to the Pakistan border. Out of 3,300 stitching units, approximately 30–40 are stitching centres that have been set up by some of the largest manufacturers in order to ensure that football stitching takes place inside a controlled space where the presence/absence of child labour in the process can be monitored. A stitching centre usually consists of a building or an outside courtyard that is rented or owned by a contractor (Lund-Thomsen & Nadvi, 2010). Football stitching is done by landless workers. Most are Hindus belonging to the scheduled castes (dalits). 2 The balls are often stitched by more than one family member in stitching households. Children also become involved in the stitching of footballs at home, usually in the light processes of waxing the thread or putting holes into the artificial leather. As they grow older, they learn to stitch an entire football on their own.
At the end of the 1990s, international news reports emerged about the involvement of children in the stitching of footballs in Jalandhar. The cluster's leading football manufacturers were concerned that the industry might face an international boycott from their buyers unless the child labour issue was resolved. Therefore, a group of 25 manufacturers decided to form a non-profit organization – the Sports Goods Foundation of India (SGFI) – whose work concentrated on two main areas: first, with assistance from the International Federation of Football Associations (FIFA) and the Swiss accreditation firm, Société Générale de Surveillance (SGS), the SGFI developed a mechanism for monitoring child labour within the cluster that consists of both internal and external elements. The internal element involves each SGFI member firm monitoring its supply chain for the presence/absence of child labour, and the external element involves the SGFI secretariat double-checking the findings of the member firms with the help of its own monitoring team. Second, with support from the Unite d Nations Industrial Development Organization (UNIDO), the SGFI also initiated social projects for football stitchers and their families, including tuition centres, child labour schools, health camps, saving schemes for female football stitchers and a common machine-stitching facility, and created an NGO, Reach, which gathers used clothes and other items in rich communities and distributes them to poor inhabitants in central Jalandhar (Lund-Thomsen & Nadvi, 2009).
In short, the Jalandhar football manufacturing industry faces significant challenges in relation to upgrading its products and manufacturing processes, and complying with international labour standards, particularly the norm that child labour should not be involved in football stitching. In the next section, we discuss how we mapped the evolution of value chain restructuring, forms of work organization and working conditions within the industry between 2007 and 2011.
Method
In 2007, quantitative surveys of 37 small and medium-sized firms in the industry were carried out. The survey questions focused on issues such as the export performance, capacity utilization, manufacturing practices, export quality parameters, government support, co-operation arrangements and use of information and communication technology in the Jalandhar football cluster. In 2008–2009, qualitative case studies of nine of these firms (five medium-sized and four small firms) were undertaken. Firms were sampled in terms of their size (medium or small), buyer linkages (branded versus non-branded/international versus local) and stitching supply chain linkages (centre-versus home-based chains). The owners or CEOs of these firms were asked how they perceived the sourcing and CSR requirements of their international buyers, how they managed their supply chain linkages to contractors and stitchers, how home-, centre-and factory-based football stitching were organized and whether they monitored working conditions of football stitchers in these supply chains.
We then took one step down the football stitching supply chain in Jalandhar, interviewing nine different contractors and choosing five centre-based and four home-based contractors from central Jalandhar and outlying stitching areas such as the nearby town of Batala and the villages of Talhan, Tajpur and Adampur. These interviews focused on how the contractors carried out and were paid for their work as well as how they managed their stitchers.
In 2008–2009, we undertook 40 further interviews with football stitchers as part of an exploratory process of mapping the working conditions of those engaged in the most labour-intensive aspect of football manufacturing in Jalandhar. We adopted a qualitative purposive sampling strategy by selecting a comparable number of stitchers from the home-based and centre-based stitching supply chains, ensuring that we interviewed a mix of male and female stitchers of different age groups from central Jalandhar and villages such as Adampur, Talhan and Tajpur. In these interviews, we asked about their productivity in terms of balls stitched per day, the stitching rates, changes in these rates in the last five years, their daily and weekly work hours, seasonal variations in the availability of work, health hazards associated with football stitching, the presence of trade unions and collective bargaining activity in the cluster, their relationship with their contractors, and the presence/absence of social insurance in the football stitching community.
In addition, we undertook a number of qualitative interviews with other stakeholders and field trips within the cluster. In terms of collective industry associations, our work was facilitated by the SGFI and the Sports Goods and Manufacturers Export Association in Jalandhar. They not only served as our guides in the cluster during initial field visits, but also helped increase our understanding of the value chain linkages between local producers and international buyers as well as the horizontal linkages between Jalandhar-based football manufacturers through repeated discussions. We also spoke to the Assistant Commissioner of Labour, Jalandhar, who shared his views with us regarding labour rights in the cluster. We met representatives from NGOs, the Lions Club, Volunteers for Social Justice, Reach and Bachpan Bachao Andolan who told us about their interventions in the industry aimed at helping local stitchers. We also visited the micro-credit projects, schools and tuition centres of the SGFI, a volunteer hospital started by one of the manufacturers in the cluster, and the philanthropic foundation established by another manufacturer that provides scholarships for students from disadvantaged backgrounds. This was complemented by repeat conversations with staff from UNIDO who had implemented different interventions in the Jalandhar football industry for a period of five to six years before our arrival. Moreover, we undertook several visits to local male and female stitching centres inside central Jalandhar and the nearby villages of Tajpur and Talhan as well as home-based stitching units. Finally, we had the chance to revisit Jalandhar in April 2011 when we presented and discussed our findings with 19 of the SGFI's members. We also made repeat visits to three of the firms that we had visited earlier. These were the firms that had begun to make the transition to machine-based stitching within the cluster. Table 1 presents an overview of the total number of respondents interviewed for this study.
PROFILE OF RESPONDENTS IN JALANDHAR, 2007–2011
In the next section we introduce our analytical framework, which seeks to explain why different forms of work organization (factory-, centre- and home-based work) appear in export-orientated industries in developing countries as well as how this affects the working conditions of those labouring within these work forms.
Towards an analytical framework
In understanding why firms internalize or externalize the most labour-intensive aspects of production, and how this affects the working conditions of those working in export-orientated industries in developing countries, our analytical framework draws upon the GVC approach. This approach sees power relations within GVCs as very hierarchical, with global buyers playing a key role in determining the quantity of orders, price and quality requirements in relation to changing international market trends. Local suppliers then organize their own supply chains, obtaining the required inputs at the lowest possible cost, while contractors and subcontractors negotiate with local manufacturers within the relatively tight constraints set by the manufacturers, buyers and international markets (Gereffi, 1994).
While the GVC approach is at the heart of our theoretical framework, we also incorporate what Grimshaw and Rubery (2005) call the ‘mutual gains’ approach to understanding why firms internalize and/or externalize the most labour-intensive aspect of production. In the mutual gains approach, the internalization of production is explained as arising from the resistance of labour to the casualization of employment through non-internalized forms of production. Instead the development of a formal employment relationship between employers and workers requires employers to offer guarantees to workers (for example, through the provisioning of a formal contract, minimum payment levels and overtime payment) as a compensation for the use of their labour time. From this point of view, employers also benefit as the mutual gains approach facilitates the development of a skilled workforce, reduces labour turnover and helps increase labour productivity. However, as Grimshaw and Rubery (2005) point out, the mutual gains approach to employment relations may not be possible to realize in a wider competitive environment that may compel firms to focus on cutting costs in order to stay alive in the short term instead of pursuing long-term innovation and increasing productivity levels.
In the context of the Jalandhar football manufacturing industry, this wider competitive environment appears to be particularly important given that the Jalandhar producers are offering medium to low-end footballs in market segments where price competition with mechanized suppliers from China is fierce. Within the overall context of price competition, we suggest that three factors provide local suppliers with incentives to either build up in-house production capacity in the area of football stitching or outsource this aspect of production to lower-level chain actors. These are the changing nature of international demand, labour standard pressures and access to production technology.
First, if international demand for footballs is relatively stable, and volumes are low, it may be more economically efficient for football manufacturers to internalize all aspects of production as subcontracting the football stitching process in this situation would require local suppliers to provide their contractors with a premium above the cost of stitching a football in order to make this an economically viable business proposition for the latter. This might constitute a case for keeping football stitching a factory-based activity. However, if international demand is high but unevenly spread throughout the year, the Jalandhar-based firms may engage in what Marchington et al. (2005: 90) call capacity outsourcing, which helps firms remain flexible and productive through peaks and troughs in demand, using subcontracting to facilitate the ‘just-in-time’ deployment of human resources. This makes it possible to save on fixed labour and training costs as well as avoid industrial relations problems. In Jalandhar, capacity outsourcing would lead to football stitching taking place in stitching centres or home-based locations.
Second, if GVC actors such as international buyers, NGOs, nation-states or regional groupings (the European Union, for example) demand compliance with codes of conduct and international/national labour standards, this could potentially increase the production costs of local manufacturers. On the one hand, this could incentivize suppliers to subcontract the most labour-intensive aspects of production to centre- or home-based locations in order to reduce their cost structure. However, some buyers may require that football stitching takes place inside factories in order to avoid the involvement of children in football stitching. Internalizing this aspect of production also reduces the time and financial resources that local manufacturers have to spend on monitoring the presence/absence of child labour in widely dispersed home- and/or centre-based locations. On the other hand, if GVC actors are not concerned about the implementation of labour standards at the level of football producers, it may be, if volumes are large, financially more efficient to externalize the football stitching process since decentralizing this aspect of production may make it more difficult for workers to collectively organize and demand improvements in their working conditions.
Finally, if technologically capable football stitching subcontractors are locally available, football suppliers may outsource the football stitching process instead of incurring the costs associated with establishing this technological capability in-house. However, if technologically capable subcontracting firms are not locally available, the time, costs and production delays associated with outsourcing the football stitching process to far-away locations may incentivize local manufacturers to technologically upgrade and internalize the football stitching process.
In sum, the dynamic interaction between international demand, labour standards and technological upgrading might shape the transition between these work forms as local producers either pursue a high road or a low road to competitiveness. The high road involves the Jalandhar producers receiving larger order volumes from high end buyers as they technologically upgrade and comply with national and international labour standard pressures. Inevitably, this leads to the internalization of the football stitching process as machine-stitching can only meaningfully be organized in factory-based settings. The low road to competition refers to the Jalandhar producers receiving declining order volumes as they fail to technologically upgrade and do not comply with national/international labour standards. In this case, football stitching continues to take place mainly in home-based locations.
In terms of the consequences for workers, our analytical framework also draws upon insights from the global production network approach (GPN) in the recognition that a wider set of actors and institutions such as states, NGOs, trade unions and local communities also play a role in structuring and organizing GPNs. The GPN approach thus emphasizes that all kinds of network structures and actors, local institutional contexts and the embeddedness of economic activity in broader social relations are important in understanding how GPNs are structured (Henderson et al., 2002; Coe et al., 2008). Inspired by the work of Barrientos et al. (2003), our analytical framework thus assumes that export-orientated industries in developing countries are embedded within both the productive (market-orientated) economy and the reproductive economy (unpaid domestic work and childcare typically undertaken by women). From this point of view, a gendered economy perspective typically sees the role of males as being located within the sphere of production and females in the sphere of social reproduction. Participation in the workforce is thus gendered to the extent that men often obtain more permanent, higher paid and higher skilled jobs in the productive economy whereas females tend to work in informal economy, lower paid and more temporary forms of employment as they engage simultaneously in both the spheres of production and social reproduction (Tallontire et al., 2005). We can thus present a stylized overview of how the creation of factory, centre, and home-based work is likely to be highly gendered as shown in Table 2.
THE LINKAGE BETWEEN WORK FORM AND GENDER
If factory-based work is the dominant work form, males are more likely to gain than women as they are better positioned to participate in higher skilled, higher paid, full-time work in the productive economy. At the same time, the consequence may be that female workers are excluded from the workforce as full-time work outside their home may not be compatible with simultaneously taking care of their household duties and children in the sphere of social reproduction. However, if centre-based work emerges as the dominant work form, this might facilitate the participation of female stitchers in the workforce, provided that work timings at the stitching centre are flexible and that the centre is located close to their homes. In this way, women may be able to alternate between work in the productive economy (outside their homes) and the economy of social reproduction (inside their homes). At the same time, male stitchers are also likely to participate in centre-based work as long as this permits them to engage in full-time work that will allow them to provide for their families. When it comes to home-based work, we would expect that females participate in this work form to a greater extent than males. Female home-based workers might labour in this work form as it permits them to simultaneously take care of their domestic duties such as cooking, cleaning the house and looking after their children. However, male workers might be less likely to participate in this work form as higher skilled, higher paid, full-time work is less likely to be found in stitchers' individual homes.
In the next section, we use this analytical framework to analyze why the process of football stitching has been internalized or outsourced in the Jalandhar football manufacturing industry from the middle of the twentieth century until the beginning of the second decade of the twenty-first century. We combine this with an analysis of how these internalization/externalization processes have affected the working conditions of football stitchers in the industry.
Value chain restructuring in Jalandhar
Phase I
This section analyzes the first phase of value chain restructuring in the Jalandhar football manufacturing industry, which resulted in the transfer of factory-based stitching of footballs to home-based locations from the late 1950s until the early 1970s. As assumed in our analytical framework, it appeared as if changes in the international demand for footballs and labour standard pressures were the key drivers that incentivized football manufacturers to externalize the process of football stitching to home-based locations. Initially, in the 1950s, football stitching in Jalandhar was factory-based, and only a limited number of skilled artisan male stitchers were required as order volumes were low. Over the years factory-based football stitching became increasingly economically inefficient as a work form. First, international order volumes increased steadily and changes in seasonal demand associated with the football World Cup held every four years meant that the number of required football stitchers tended to fluctuate. Second, in relation to labour standards, a provision in the 1947 Industrial Disputes Act stipulated that companies employing more than 100 workers had to seek government approval before they could retrench workers or close down their business. These factories also had to pay workers the legal minimum wage, compensation in case of lay-offs and provide other forms of social insurance. As orders kept increasing and footballs were a seasonal product, the exporters believed that it was economically unviable to retain the workers during the off-season.
At the same time, the exporters were afraid of union unrest and the prospect of having to engage in collective bargaining if the number of factory-based workers continued increasing. In the 1960s when stitching was still primarily taking place inside the factories, collective bargaining did not occur on an industry-wide basis. Some of the factories had their own unions which were responsible for negotiating piece-rates with their employers. However, union membership was not compulsory and tended to be limited to those working on a given sports goods item, for example cricket bats or footballs. Hence, if a strike took place among workers producing cricket bats, they would usually not be supported by workers in other factories labouring on other items such as footballs.
By the end of the 1950s, the manufacturers had outsourced approximately half of their production via contractors and subcontractors to home-based locations. This trend intensified until the 1970s, at which time football stitching was almost exclusively taking place in the homes of individual stitchers. The move to home-based stitching was not opposed by the unions as this increased the income of stitching families. For example, whereas a single, male factory-based stitcher might only be able to stitch four to five balls a day, his entire family might stitch 15 to 20 footballs a day.
Outcomes for labour
The emergence of home-based football stitching as the dominant work form in Jalandhar had a number of immediate effects on the composition of the workforce and the working conditions of football stitchers within the cluster. First, whereas factory-based work had almost exclusively been carried out by skilled male stitchers in the 1950s and 1960s in Jalandhar, the switch to home-based football stitching facilitated the entry of a large number of unskilled male and female football stitchers into the workforce. Some of the home-based male football stitchers we interviewed were now in their fifties or sixties. They explained how they had started in this profession more than 35 years ago at a time when football stitching was seen as a respectable profession in which work had to be carried out by skilled artisans. However, with the switch to home-based stitching, the introduction of artificial leather and a simplification of the stitching process, it had now become possible for almost anyone to enter this profession. Second, as a result of this expansion and deskilling of the workforce, significant downward pressure was exerted on piece rates within the industry. At the time of our fieldwork in late 2009, some of the home-based stitchers that we spoke to in Jalandhar city indicated that piece rates had not increased for the last ten years. Finally, the downward pressure on piece rates was exacerbated by the fact that contractors (and sometimes subcontractors) were now involved in transporting the panels to be stitched and returning the finished footballs to the factory, although some male home-based stitchers living near the factories would do this job on their own. Usually, the contractors would take a commission of two to four rupees per ball for this work, reducing the value generated by home-based workers by 10–20 per cent.
Our fieldwork in Jalandhar also indicated that home-based football stitching was part of a highly gendered local economy, although there were also some commonalities in the working conditions of both male and female football stitchers. The home-based stitchers often assembled in the common room (or living room), and stitched under poor lighting conditions, as the rooms were dark and power cuts frequent. The home-based units were primarily located in Jalandhar city and its nearby villages. Both the male and female stitchers we interviewed in Jalandhar city tended to have football stitching as their only occupation. They worked between seven and eight hours a day on average, six days a week, and had an approximate monthly income of INR 2,864 (US$60). None of the home-based stitchers we spoke to had a contract, received the minimum wage or were covered by any kind of social protection scheme. At the same time, home-based football stitching was associated with occupational health and safety risks for both male and female football stitchers as they were stitching footballs in a hunched position, sometimes leading to chronic backache. In addition, many stitchers suffered from poor eyesight, possibly due to inadequate lighting conditions, had cuts in their fingers from the pricking of needles and received no financial support to deal with these work-related injuries.
In spite of these commonalities home-based football stitching appeared to have been institutionalized within the Jalandhar cluster in a way that favoured men over women. First, female stitchers usually had to attend to activities in both the sphere of production (football stitching) and social reproduction (child-rearing and domestic household work). In fact, when asked about their daily routine, some of the home-based female stitchers explained that they began stitching footballs after finishing their daily household chores, while they also had to attend to guests, provide lunch and look after the children in their household. The outcome was that it became virtually impossible for female home-based stitchers to access higher paid, higher skilled, factory-based work on a full-time basis outside their homes. Second, in outlying stitching areas such as the town of Batala, mostly female workers were employed in the stitching profession in a part-time capacity, sometimes stitching footballs in addition to being engaged in various household duties and child-rearing. The availability of stitching work in Batala was highly uneven as the Jalandhar-based manufacturers would only shift their orders to Batala during times of peak demand. In fact, female stitchers sometimes did not receive orders for several months, and when they did the stitching rates were as low as INR 5 (US$0.1) for stitching half a football (known as a khokha). Half footballs involved joining a couple of panels without fully stitching or closing the ball, with the final, more added value of closing the ball was carried out by the contractor. While we did not conduct any in-depth investigation of why stitching rates were so low in these locations, one possible explanation might be that the availability of stitching work was so irregular that female football stitchers in Batala found themselves in a ‘take it or leave it’ position once football stitching orders finally emerged.
Phase II
Our analysis now turns to the second phase of value chain restructuring in Jalandhar in which some home-based units were shifted to stitching centres. Returning to our analytical framework, we can say that it was once again changing international demand and labour standard pressures that made it financially more viable to externalize the football manufacturing process. On the one hand, the international demand for footballs remained seasonal, requiring local manufacturers to retain access to a flexible cheap workforce that could be called upon when needed. On the other hand, the Industrial Disputes Act was still in force, making it financially unviable to internalize the football stitching process. In other words, ‘buying’ the football stitching process through market-based transactions (i.e. the subcontracting system) still appeared to be more financially viable than establishing the in-house capacity to stitch footballs.
The existence of the subcontracting system also appeared to prevent workers from organizing themselves in such a way that they could effectively negotiate their interests vis-à-vis their employers. While a stitchers' union, Lal Jhanda, was formed in 1985, its membership and influence was limited. In theory, representatives from this trade union would negotiate with factory owners on an annual basis, demanding an increase in the piece rates of workers. However, the scope for wage increases was minimal as the Jalandhar manufacturers were competing in the lower-end, highly price sensitive segment of the global football manufacturing industry. For example, in one year the rate would increase by INR 0.5–1 per ball, and in other years the rate would not increase at all. Moreover, the union representatives sometimes received payments from the manufacturers aimed at curbing their demands. In sum, the scope for trade unions playing a role in articulating workers’ demands in the Jalandhar football cluster was highly constrained.
However, by the mid-1990s, the costs associated with outsourcing the football stitching process were beginning to increase as the Jalandhar producers were now faced with pressure from international NGOs and their buyers to eliminate the use of child labour in football stitching. In 1997, UK-based NGO Christian Aid and the South Asian Coalition on Child Servitude published the report ‘A Sporting Chance’ on child labour engaged in football stitching in the Jalandhar cluster. The report led to a great deal of publicity and negative reactions from the sporting goods industry that took issue with many of the claims contained in the report. Hence, the establishment of 30–40 stitching centres by the top-tier manufacturers in the cluster could be seen as a way of convincing international buyers that the manufacturers were actively taking steps to eliminate child labour from the cluster. It also reduced the costs associated with monitoring the presence/absence of child labour in widely dispersed home-based units and increased the manufacturers' ability to monitor and control the stitching quality, which was very difficult in home-based locations.
Improving and controlling the quality of football stitching appeared to be a central factor in the way in which the stitching centre system was institutionalized in Jalandhar. At the end of 2009, most of the stitching centres situated in Jalandhar city were all-male centres, engaging less than 100 workers and owned by the manufacturer. The products were top quality match/training balls, which were difficult to stitch, and only male, skilled workers were therefore hired. These centres had one or more contractors, who brought their own stitchers to work in the centre. The work timings coincided with factory timings, although some of them were open until late evening. However, the centres located in villages near Jalandhar were exclusively female, owned and operated by a company-registered contractor. The footballs stitched in these centres were promotional balls. The contractor was responsible for providing the space, electricity, washroom and water. He also took attendance, distributed the football panels, inspected the quality of stitched footballs and delivered them back to the factory van. These centres worked for only half a day as the company vehicle brought the football panels to the centre at between 1.30–2 p.m. each day. The vehicle then departed at approximately 6 p.m., transporting the stitched balls to the factory in Jalandhar.
Outcomes for labour
A number of distinct differences could be observed in the working conditions of football stitchers in the stitching centres based in Jalandhar and those situated in rural areas such as the village of Adampur. In the city-based stitching centres, the stitchers worked for approximately nine hours a day. In the rural-based stitching centres, female stitchers worked for approximately four to five hours per day. There were also sharp gender divisions in the earnings of football stitchers, as male centre-based football stitchers we interviewed had a mean income of approximately INR 3,417 (US$72), whereas the female centre-based stitchers had a mean income of INR 800 (US$17). This gender difference was explained by male stitchers working on better quality balls with higher rates, working more hours and stitching more footballs per day (4.3 on average) than their female counterparts (1.8 per day). The piece rates for stitching top quality footballs in a stitching centre ranged from INR 28–36 per ball (US$0.59–0.75). There were also urban–rural and gender differences in the bargaining power of the stitchers. Male stitchers were able to shift between different centres in search of more work and better rates. However, the female stitchers in the rural stitching centres did not have the same freedom to choose their work location. Some women stitchers in Adampur told us that the contractor threatened to stop giving them any work if they shifted to a new centre. Consequently, they might be compelled to work in a particular centre even though there might be more work available in another centre. Nevertheless, almost all centre-based stitchers owned their accommodation and many of them had durable assets such as a refrigerator and television. However, as was the case with the home-based units, all the households we visited lacked productive assets and any form of savings. Furthermore, the workers in the stitching centre reported that none of them had ever taken loans or failed to construe the advances taken from the contractor as a form of debt.
Phase III
We now turn to the third phase of value chain restructuring in the Jalandhar football manufacturing industry, which commenced in 2008 and is still ongoing. This phase of value chain restructuring marked a fundamental change in the incentives that local manufacturers faced in relation to the choice of whether they should internalize or externalize the football stitching process. In early 2011, changes in the nature of international demand and the need to access new production technologies acted as drivers in internalizing the football stitching process within the Jalandhar-based firms. On the one hand, international demand for hand-stitched footballs was sharply declining. Instead international buyers preferred to buy machine-stitched balls. However, machine-stitching would only be efficient if carried out in production lines with a work team responsible for running the line. This would be necessary in order to generate economies of scale, thus minimizing labour unit costs and keeping production costs down. On the other hand, there were no subcontractors in the Jalandhar cluster who specialized in the production of machine-stitched footballs at this time. Hence, the football manufacturers in Jalandhar had very strong incentives to build up their internal production capacity in the area of machine-stitching – at least if they were to survive in the short term within the industry. The alternative, outsourcing the machine-stitching part to specialized machine-stitching suppliers in China would be very costly, time-consuming and inefficient in a world of rapidly changing demand, and international buyers demanding ever shorter lead times. During our last visit to Jalandhar, three or four of the top manufacturers in the cluster were thus in the process of rapidly making the switch to machine-stitching.
In terms of labour standard pressures, it was becoming increasingly evident that externalizing the process of football stitching, particularly to home-based locations, was becoming very costly. In 2008, two NGO reports documented the use of child labour and poor working conditions in the Indian football stitching industry. These reports were followed by the US-based HBO cable channel airing a programme entitled Real Sports with Bryant Gumbel, alleging that children were involved in stitching Mitre footballs in the supply chains of local Jalandhar-based manufacturers. This programme led Mitre to file a multi-million dollar lawsuit against the HBO channel, alleging that the news channel had fabricated the story by offering local children money to pretend to be child stitchers in front of the television cameras. In addition, one of the largest suppliers in the cluster had to refuse to accept a major football order from the International Football Federation in the run-up to the 2010 World Cup as its top management felt unable to guarantee that children would not be involved in football stitching, and because the prices given for these footballs were very low. In other words, the outsourcing of football stitching to home-based locations in particular was beginning to cause substantial reputational damage to the industry, directly affecting its ability to handle large orders for promotional footballs. At the same time, internalizing football stitching within the main factory premises appeared as perhaps the only viable option if the industry was to effectively eliminate this reputational risk as the presence/absence of child labour could be more easily monitored and/or controlled in centrally-located factories.
Outcomes for labour
Whereas we did not undertake a fully-fledged series of interviews with the machine-stitchers working on the new production lines inside some of the Jalandhar-based firms in April 2011, we did manage to establish that these were not former hand-stitchers who had shifted from home-based stitching to factory-based work. Instead, the workers engaged in machine-stitching had often had previous training in the stitching of garments or leather items such as gloves that allowed them to relatively quickly pick up the skill of machine-stitching. The salary of a machine-stitcher working inside these factories was approximately INR 5,000 a month (US$105) according to one of the factory managers who we interviewed. As the monthly income had been approximately INR 2,370 (US$50) for centre-based stitchers and INR 2,864 (US$60) for home-based stitchers during our fieldwork in late 2009, factory-based stitchers received a substantially higher income than either centre- or home-based stitchers had done. In addition, the new factory-based stitchers were covered by the social security provisions established under the Industrial Disputes Act.
However, while the new factory-based machine-stitchers only numbered approximately 500 workers at the time of our visit in early 2011, it appeared that increasing numbers of (mostly female) home-based stitchers were being forced out of the football manufacturing supply chain. One of the leading manufacturers had significantly reduced the radius from which they outsourced hand-stitched footballs in Jalandhar. At the same time, the company's supply chain taking in Batala had completely disappeared. Another leading manufacturer of promotional balls had employed between 4,000–5,000 hand-stitchers in its supply chain prior to the 2006 World Cup. However, these home-based hand-stitchers were now out of a job. The outcome of this process of value chain restructuring appeared to have hit female, home-based football stitchers particularly hard as they were often not able to move beyond two to three kilometres from their residence for work purposes. Once again, we observe that value chain restructuring in the Jalandhar football manufacturing industry produces highly gendered outcomes for labour. At this point, it was particularly home-based female stitchers who were at the losing end as the availability of work for these stitchers was rapidly declining, if not totally disappearing.
Conclusion
In this article, we made a contribution to the literature on labour in GVCs by outlining an analytical framework that sought to explain why first-tier suppliers in developing country export industries might internalize or externalize the most labour-intensive aspects of production. We did this with reference to the GVC approach. We believe that this framework might be helpful in relation to explaining what drives labour standards compliance or avoidance among first-tier suppliers in developing country export industries. In our view, it is not so much a question of managers' personal ethical choices or the effectiveness of current auditing methods that are able to secure better working conditions in GVCs, although these subjects are often debated in the literature on CSR in GVCs. Instead, we have argued that labour standards compliance or avoidance among first-tier suppliers is largely a function of what transpires to be the most economically efficient way for local suppliers to produce a good. Our findings thus bolster the arguments made by authors such as Barrientos et al. (2011) that industrial upgrading and downgrading are likely to create both winners and losers among workers, as was the case in Jalandhar.
In the 1950s and 1960s, increasing international demand for footballs and the enforcement of national labour laws prompted the football manufacturers in Jalandhar to outsource football production from factory- to home-based locations. This was seen as necessary in order to reduce production costs, remain adaptable and be able to call upon a flexible, non-unionized workforce that could undertake the most labour-intensive aspect of football manufacturing – the stitching process – without simultaneously being protected by Indian labour laws. The outsourcing of football stitching provided an opportunity for large numbers of women workers to enter the workforce, but also meant that football stitchers had to work with no social protection, and that piece rates for stitching footballs were pressurized in a downward direction.
In the second phase of value chain restructuring in the late 1990s, the football producers were increasingly incentivized by international NGOs, media reports and their buyers to eliminate child labour from the football stitching process. However, as the demand for international footballs was still seasonal, the Jalandhar firms had to ensure that they responded to this challenge in a way that allowed them to maintain production flexibility and access to a cheap workforce. The stitching centre model became the solution that permitted the football manufacturers to still outsource the football stitching process but simultaneously convey the message that the presence/absence of child labour was now being strictly monitored. The emergence of centre-based football stitching was highly gendered as males were almost exclusively working on better quality footballs on a full-time basis with higher pay in centres in the central part of the city, while lower-quality, promotional balls were worked on by females on a part-time basis in the villages surrounding Jalandhar.
Finally, during the third phase of value chain restructuring, the continued non-compliance with international labour standards in home-based settings and technological upgrading imperatives in the form of machine-stitching strongly incentivized the Jalandhar firms to begin the process of internalizing football stitching inside the factory premises. Once again, this had gendered outcomes for labour as large numbers of (mostly) female, home-based stitchers were losing their occupation and income.
In terms of policy implications, our analysis highlights that improving labour standard compliance among first-tier suppliers in developing countries is directly related to getting their economic incentive structure right. While some buyers and suppliers already co-operate in relation to demand forecasting and production planning, we suggest that far more could be done in this area to ensure greater predictability of demand, thus reducing the need for local suppliers to constantly hire and fire workers. At the same time, labour laws in developing countries could be reformed in such a way that local manufacturers are not given perverse incentives to outsource the most labour-intensive aspects of production to non-unionized workers who lack social protection. In other words, minimum wage and social protection measures need to be extended to centre- and home-based workers to level out the playing field. At the same time, we suggest that factory-based work could be made more flexible to accommodate the dual roles that women perform inside and outside of their homes. This could be done by allowing female workers to determine their own work timings, the quantity of work to be carried out and the ability to enter and exit factories in line with their need to balance domestic and factory-based duties.
Footnotes
Acknowledgements
The authors would like to thank UNIDO and the Danish Social Science Research Council for financing the fieldwork related to this study. The views expressed in this article should not be attributed to either of these agencies. The articles draw upon earlier discussions with Khalid Nadvi, Anita Chan and Hong Xue as part of the study of CSR in the global football manufacturing industry. We would like to thank Khalid Nadvi, Peter Gibbon, Anjum Fayyaz, Martin Hess and the participants at a workshop held in Copenhagen in December 2010 for commenting upon earlier drafts of this article.
1
The industrial cluster literature has also explored how joint action initiatives through industry associations and public–private partnerships may facilitate compliance with social standards demanded by national regulators or international buyers (see, for example, Nadvi & Barrientos, 2004; Nadvi, 2007; Damiani, 2008; Puppim de Oliveira, 2008; Mezzadri, 2009; Lund-Thomsen & Nadvi, 2010).
2
Scheduled castes or dalits refer to historically disadvantaged lower castes in India that have been traditionally discriminated against in economic, social and cultural spheres of life.