The restructuring of trade into Global Value Chains has had a significant impact on labor markets. Research suggests that today, one in five jobs is related to global supply chains. Now that such fragmented, dispersed and complex patterns of trade through supply and value chains are apparent, there is a need to better understand how these impact the world of work. How do we actively shape this evolution to create inclusive economies where more people benefit from an expanding economic pie?
In 1994, Gary Gereffi’s landmark paper discussed the emerging organization of production into global supply chains that span nations. Cheaper transport, advanced technology and lower tariffs have made it easier to move goods and services across borders propelling a fragmentation of production processes with different degrees of value added at each stage. Today, trade in finished products is no longer the norm. Rather global value chains (GVCs) defined as, the full range of activities that firms and workers do to bring a product from its conception to its end use and beyond define patterns of exchange. Countries from Ethiopia to Bangladesh are competing to stake their claim in these production chains and are eager to leverage integration to propel their economic growth.
In this world of global supply chains, multinational companies and brands are the star players with trade increasingly enacted through private contracts between firms. 80 percent of global trade, measured in gross exports, is linked to the production of multinational firms. With production processes distributed internationally, companies can also engage in rent seeking moving business to countries with weak tax, environmental and labor regulations, and working with suppliers that offer goods at lower cost.
This brief provides a broad overview of the main considerations in examining the relationship between global value chains and work, workers and employment relationships.