COST Expert Meeting Methods for Studying Firm Restructuring and the Impact on Workers

1. COST Expert MeetingMethods for Studying Firm Restructuring and the Impact on Workers Leuven, Belgium, 28-29 April, 2011 Value chain restructuring in Europe in a Global Economy Ursula Huws Professor of Labour and Globalisation University of Hertfordshire, UK Director, Analytica Email: ursulahuws@analyticaresearch.co.uk

2. globalisation, restructuring, and the mobility of work – a double process • increasing movement of people to jobs (‘migration’) • increasing movement of jobs to people (‘offshoring’) • a new typology of jobs is emerging • ‘fixed’ jobs • ‘footloose’ jobs • ‘fractured’ jobs • one of the ironies of the present phase of globalisation is that the ‘fixed’ jobs are increasingly done by ‘footloose’ people, whilst the ‘footloose’ jobs are done by ‘rooted’ or ‘fixed’ people • The ‘fractured’ category covers many permutations of fixedness and mobility in a complex and rapidly-changing dynamic with mutual interference between the ‘real’ and present and the ‘virtual’ and distant.

3. the fixed jobs • many activities require a physical presence on a particular spot of ground, e.g.: • cleaning • construction • infrastructure maintenance • agriculture • personal care services • food preparation • mining • some production activities • jobs are typically physically strenuous and low-qualified • increasingly likely to be filled by migrant workers • strong tendency of informalisation of these sectors of the economy • jobs are typically precarious, low-paid, stressful and carry many health risks

4. the footloose jobs • enabled by: • access to cheap and reliable telecommunications infrastructure • digitisation of information • interoperability of systems • spread of ICT literacy • increasingly generic software packages • increasing use of global languages (especially English) • liberalisation of trade (including trade in services; IP) • there is now a new global division of labour in information-processing work as well as in manufacturing • Restructuring of employment in space and time can best be understood in a broader context of industrial reorganisation • A dual process of decomposition and recomposition of sectors, organisations, labour processes and skills

5. there is a need for an overarching conceptual framework for analysis that shows how the two are interlinked • this requires a model that looks at how units of labour are interconnected • within national economies, and • internationally • the traditional units of economic analysis (enterprises, establishment, sectors, occupations) are inadequate for this purpose, inter alia: • because of convergence between sectors • because of technological change • because of lack of consistency in how they are categorised • because of the way categories are culturally constructed within national institutional frameworks

6. Instability of existing classifications– STILE experiment • STILE project, funded by EU DG Information Society and Eurostat, led by HIVA (2001-2004) • Produced 150 fictionalised establishment descriptions typical of those that might be involved in offshoring and asked coders in 6 national statistical institutes to code them to NACE at 2-digit and 4-digit level (Netherlands, UK, Ireland, Hungary, Germany – federal level; Germany – regional level) • Produced 157 fictionalised occupational descriptions typical of those to be found in the ‘new economy’ • Asked experienced coders in four contrasting EU Member States (Netherlands, UK, Hungary, Ireland) to code these to ISCO according to their normal practices • Analysed the results to provide insights into classification and coding of new sectors and occupations • Aim: to ‘find’ the new sectors and occupations in the existing statistics using an inductive method

7. The results – a shock! SECTORS • Of 150 establishment descriptions only 12 (6%) were coded the same at TWO DIGIT level NACE in all 6 institutes • at FOUR DIGIT level, only 1 case of total agreement (0.75%). (only 5 institutes involved at 4-digit level) • There were 11 cases where each of 6 institutes gave a different 2-digit code OCCUPATIONS • Of 157 job descriptions only 40 (25.5%) were coded the same in each country at SINGLE DIGIT level ISCO • 23 were coded the same at TWO DIGIT level (14%) • 18 were coded the same at THREE DIGIT level (11.6%) • Only 6 cases were coded the same at FOUR DIGIT level (3.8%)

8. Sectors - one example (NACE 4-digit) ‘R&D of telecoms hardware products aimed at SOHO sector’ was coded as: 73.10 (Research and experimental development on natural sciences and engineering), 32.20 (Manufacture of television and radio transmitters and apparatus for line telephony and line telegraphy), 52.48 (Other retail sale in specialised stores) and 74.13 (Market research and public opinion polling).

9. Occupations – one example (ISCO – 3-digit): ‘team leader in sales call centre’ was coded as: • UK – 911 ‘street vendors and related workers’ (‘elementary occupations’) • Ireland – 419 ‘other office clerks’ (‘clerks’) • Hungary – 343 ‘administrative associate professionals’ (‘technicians and associate professionals’) • Netherlands – 122 ‘production and operations department managers’ (‘legislators, senior officials and managers’)

10. 18th century theoretical origins • three concepts, going back to the 18th century Enlightenment • the division of labour (Adam Smith, 1776) • the labour theory of value (Adam Smith, 1776, refined by Karl Marx, various) • The theory of comparative advantage (also in Smith in rudimentary form, refined by Ricardo, 1817) • put these together and you have a model of a ‘value chain’/’network’/’filiere’ in which: • ‘businesses’ are broken down into trades/branches/functions • the more specialist the division of labour the more value is added in each operation • the comparative advantage of regions make it profitable to introduce a spatial dimension to the division of labour (but this may be constrained by limits to free operation of markets and movements of capital) • centralised governance is necessary for it to function effectively

11. the French tradition • Francois Quesnay (1758) introduced key concept of flows and modelled national economy in terms of inputs and outputs • used a functional approach with population divided into classes ( this leads to a model of the division of labour further developed by Marx (1861-64) who used the term ‘functions of labour capacity’ ) • this approach can, perhaps, be seen as underlying the 20th century French concept of ‘filières’ (e.g. Lauret, 1983, Lorenzi et al 1980, Schméder, 1984, Morvan, 1985, Griffon & Hugon, 1996) • emphasises ‘flows’ (especially in process industries) and economy-wide interconnections.

12. other 20th century approaches • World systems theory (e.g. Wallerstein, 1974, Arrighi & Silver,1984) discusses ‘global commodity chains’ which are made of ‘boxes’ making inputs and outputs to each other to form a ‘world system’ with a single division of labour spread across multiple cultural systems • this approach also followed in Froebel, Heinrichs & Krey (1974) in their analysis of a ‘new international division of labour’ • Porter (1985) uses concepts of ‘value chain’ and ‘business function’ in management theory • developed by Gereffi et al (1994) bringing together insights from economic geography/development theory & organisational theory to analyse ‘global value chain governance’ – research based only on manufacturing industries • Castells (1986) introduces concept of ‘networks’ as a way of explaining new interactions between firms (‘networked society’) more readily adapted to service industries

13. each of these approaches has strengths and weaknesses • ‘network’ metaphor fails to capture direction of flow or power relationships • ‘filière’ metaphor captures flows within national economies but is weaker for analysing international flows; also fails to capture power relationships • ‘chain’ metaphor can be used to analyse power relationships in relation to contractual and spatial variables but is weak for modelling economy-wide interactions. It is stronger for analysing the ‘vertical’ organisation of production chains than the more ‘horizontal’ relationships in service supply • each approach is compatible with an analysis that sees the total chain/flow/network as an aggregation of tasks and processes that feed into each other, with each stage adding value to a final commodity. • in order to understand restructuring at the level of the total economy it is therefore necessary to understand restructuring at the intermediate levels of the sector, the region, the firm and, finally, the labour process. • Here we can draw on insights from Taylor (1911) and Braverman (1974)

14. The underlying dynamics of structural change • The transformation of tacit knowledge into codified knowledge • Standardisation of existing processes; which in turn makes possible: • Management by results (or performance indicators); which in turn makes possible: • Remote management – displacement in terms of both time and space • Organisational disaggregation (either internally or externally); which in turn leads to: • Elaboration of value chains – contractually (proliferation of separate legal entitities) or spatially or both • The result: an increasing modularisation of processes

15. Reskilling New working practices separate cost centre market testing benchmarking Individual freelancers/ consultants outsourced to dependent company Outsourced to SME Outsourced to global supplier outsourced to strategic partner Outsourced via intermediary Different forms of restructuring in-house outsourced Use of temp agency staff body shopping spin-off company external supplier working on premises Transfer of personnel to outsourcer on the original premises Remote back office home teleworkers nomadic workers Own workers on clients’ premises Own workers in other branch on a remote site There are no inevitable trends – these are alternative options for employers. And they encounter different forms of resistance in different locations

16. Some of the factors that shape decisions about value chain restructuring • Availability of skills • Standardisation/quality standards • Availability of infrastructure • National regulatory environment • Tax regimes • Transparency • Language and culture • Historical path dependency • Workers’ resistance

17. essentially the same logic applies to manufacturing and service industries • Services are increasingly becoming commodified and subject to their own internal processes of standardisation, fragmentation and the introduction of a spatial division of labour • New sectors are emerging to supply business services with their own internal value chains. • the increasingly generic nature of services has greatly extended the possibilities for modularisation • major new multinationals are emerging to supply standardised services on an outsourced basis – often many times larger than their customers (20% of top 100 companies now in services.) • ICTs have played a strong enabling role in this • services and manufacturing are integrally linked in a complex matrix of inputs and outputs. • the emergence of a ‘new’ ‘knowledge based’ service economy is simply an effect of the increasingly elaborate division of labour.

18. A new unit of analysis: the ‘generic business function’ • Trialled in Mumbai and Malaysia in 1996-7 • Used systematically in EMERGENCE survey and case studies (2000-2005) www.emergence.nu • Adopted by Bureau of Labour Statistics in USA for Mass Layoff Statistics (2007 on) • Used (and further developed) in Eurostat European Sourcing Survey (2008-9) • Used in WORKS project (2005-9) www.worksproject.be • Strengths: • Very well understood by survey respondents (high response rates; few ‘don’t knows’) • Corresponds with concepts taught in business schools and everyday business language • Has shown its worth in both quantitative and qualitative research • Weaknesses: • Cannot be easily triangulated with existing data sets • Until repeated surveys have been carried out, difficult to detect longitudinal trends • Resistance from academics used to working with other concepts

19. Conceptual map of the eOrganisation

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