The future of work and the future of poverty

Alf Gunvald Nilsen

Global production networks create economic growth, and thus are often said to be good for development. But if that’s true, why do so many poor people live in middle-income countries? 

On 8 October 2018 we published the BTS Round Table on the Future of Work, in which 12 experts explain recent changes to the nature of work and offer new ideas in labour policy, organising, and activism. This piece has been written in response.

In demarcating the most important changes in the nature of work in recent years, Anannya Bhattacharjee, a participant in BTS’s recent Future of Work Round Table, rightly points to the emergence of global production networks as a crucial development. Moreover, she is absolutely correct in calling attention to the fact that employment relationships in these global production networks are very often short-term, insecure, and poorly paid. “In India,” she argues, “job creation is really the creation of miserable jobs”. This is no exaggeration. Despite very high levels of economic growth since the early 2000s, more than 80% of India’s workers scramble to earn a precarious living in the informal sector. The richest 1% of the population, meanwhile, corner more than 70% of all wealth generated in the economy.

In addition to being a sharp diagnosis of the emerging world of work under capitalism in our times, Bhattacharjee’s observations also point us towards an important insight about poverty in the Global South. It is created and reproduced through global production networks.

The emergence of global production networks since the late 1970s has been propelled by transnational corporations relocating parts of their production process – in particular labour-intensive manufacturing – from the Global North to the Global South. The industrialisation of Southern economies has, in turn, resulted in a massive increase in the size of the global working class. In fact, the global workforce doubled between 1980 and 2005.  This transformation also accelerated economic growth, and low-income countries became middle-income countries as they were integrated into global production networks.

The economic growth lifting countries from low-income status to middle-income status is profoundly unequally distributed.

Consequently, actors such as the World Bank and the OECD consider participation in global production networks to be an important precondition for successful development. However, there is an inconvenient fact that is often left out of these policy narratives.  As development economist Andy Sumner demonstrated in his book Global Poverty, as many as 70% of the world’s poor currently live in what the World Bank refers to as middle-income countries. Put slightly differently, one billion poor people live in countries that, since the early 1990s, witnessed economic growth precisely because of their integration into global production networks. These countries are, in principle, capable of ending poverty among their citizens.

This paradox reveals that the economic growth lifting countries from low-income status to middle-income status is profoundly unequally distributed. It also reveals a fundamental aspect of global production networks: they are comprised of different value tiers, and that different groups capture different amounts of the value created in these networks. Workers in the Global South capture the least value. The work they carry out is poorly paid, temporary, and unstable. Their working conditions are poor and their access to social protection is restricted. Indeed, the share of national income paid to workers in Southern economies has been falling since the 1990s. We also know that some 55% of workers in the world economy have no access to social protection, while 60% lack a permanent contract. The majority of these workers are citizens of Asian, Latin American, and African countries. In short, precarious workers live in poverty in middle-income countries in the Global South.

This means that to discuss the future of work is to discuss the future of poverty. In a context where the livelihoods of the majority of the world’s population are dependent on wage labour, the struggle against poverty has to be a struggle for decent, stable, and well-paid work. It must be a struggle for social citizenship that advances redistribution in favour of the working classes in the Global South. I use the word struggle quite deliberately, for it is nothing short of delusional to think such changes will come about without organising and mobilising workers to challenge the power of transnational corporations and political elites. Power, as we know all too well, concedes nothing without a demand. It never has, and it never will. /OD