The aim of the following essay is to define and explain the subject of Global Division of Labour.
This definition will be analysed to assess the positive and negative impacts of global division of labour on various parties involved in the process, across different continents and economies. A practical example of a furniture manufacturing business in Italy will be discussed.The unique African situation will be raised as well. The analysis and discussion of the social issues surrounding the use of this system, which largely depends on inequality, will draw certain conclusions. The conclusion will show that this is a subject that has challenges and implications for disciplines in society including; social policy makers, labourers and financiers. It will be shown that this process also has an impact on secondary markets.
Definition and explanationIn simple terms “Global Division of Labour “ is the process of dividing the job function, from production to point of sale, between different countries, for the purpose of producing items at the lowest cost and thus maximizing profit. The idea behind it is to shift production from developed countries to undeveloped countries, where the cost of labour is cheaper. Larger corporations are able spend significant sums of money training and developing a labour pool in those cheap regions. Such pools in various geographical locations will be established to avoid regional disturbances that could disrupt their supply. They will often build labour pools closer to their raw materials and production facilities in order to keep all the elements of the production process in one place thus cutting transport costs. Often value added services applied to semi-finished products will happen in another geographical locations.
This is all in the name of cost reduction. All these financial decisions have many social implications.The economic effect of this is that the output of developed countries is lowered and output of developing countries increases. The perception is that global division of labour has a negative impact on employment. This implies a negative social impact.There are different levels of global division of labour ranging from firms that export products to other countries, firms that outsource from abroad the production of some of the intermediate inputs, firms that own foreign plants abroad and firms that do more than one of those activities.
” Models are created to assess the different levels of globalization and the financial and social effects thereof. (Ougheas. 2008) Research has shown that “offshoring activity” leads to higher job turnover in the short run. In the long run it has been shown that it has not lead to higher unemployment.
Research also shows that it seems to negatively affect the unskilled labourer but higher skilled employment expands. Therefore, the proportion of skilled to unskilled employment changes. First world countries move from being a manufacturing to a service oriented society as a result of globalization. (Gorg H.
2011)Services are being more commonly transferred from the Global South to the Global North. Migrant women move from their country of birth to care for wealthy families in the North. Men also move from rural to urban areas for work opportunities. People move as result of global inequality and unequal distribution of resources.
It has been suggested that, “globalization is shaping the world into two opposing classes, a global capitalist class and a global working class” (Robinson 2000)Often these class divisions are gender and race based. This is a flaw in the concept and there is evidence to suggest that this is not sustainable.Winners and losersAn example of the effects of ‘off-shoring is as follows: Italian furniture makers have traditionally been embedded in industrial districts where stages of production are carried out. Small to medium sized firms define this production system. These craftsmen have become very vulnerable to the effects of global division of labour. The work is slowly being outsourced to large manufacturers in China, who, with economies of scale can produce at lower costs.
This change creates ‘winners and losers’.The positive impact is that the cost of the product becomes more competitive and this increases the financial gain of the Italian supplier. He is able to compete again in the market. He has a superior product at a competitive price.
China increases its GDP by creating manufacturing opportunities. Thus the Chinese entrepreneurs benefit. However low wages cannot be maintained in the long term. Adam Smith, a famous modern philosopher, criticizes the division of labour saying it leads to a 'mental mutilation' in workers; they become ignorant and insular as their working lives are confined to a single repetitive task. (Adam Smith 1776)The Italian craftsmen become ‘losers’ as their unique skills become obsolete.
These workers do not have other skills and cannot find alternative or equally satisfying employment. (The division of labour affects people that have not formerly been exposed to the forces of globalisation, namely those workers with skilled jobs.) These Italian workers suddenly become vulnerable, might slip into unemployment, or might see their wages fall relative to demand.The African continent still has time on it’s side to use the best of what global division of labour has to offer and the opportunity to avoid some of the pitfalls.Many African states are in their economic infancy. There is an advantage in that they have the opportunity to examine existing inequalities and thereby try to avoid these inequalities creeping into society.
By creating an educated and skilled workforce, these countries can avoid being categorized in the “global south” context. If the leaders study the global division of labour and the concepts that drive the process, they will learn how to keep their educated masses within their borders.ConclusionGlobal division of labour has far reaching effects on society. It is complicated and it is a challenge to maximize its benefits and reduce its inequalities.
There is a responsibility to do so as people are affected in the process. Some people benefit directly from it by increasing their business profits. (Example of the Italian furniture company). The knock-on effect is that sustainable businesses create employment. Employment needs to however shift and this impacts on an existing population. Therefore, before these global decisions are made, it should be mandatory for businesses who are planning to divide labour globally, to prepare the workforce for this event, by educating and preparing them for changing employment opportunities.
In this way a manufacturing and labour intensive society could in theory become, in time, a skills-based and entrepreneurial society.
