We sometimes speak about the global economy as if it were a force of nature, or as a patient with uncertain health. It can be tamed or unleashed, wounded or healed. The specific language used can reveal a great deal about how people think about economic processes and government policies. As any economist can tell you, the main bone of contention is often the role of regulation. Why and when is regulation required, and what form should it ideally take? Over the last three decades, this enduring debate has taken on new features, since so much of what now gets consumed comes from factories and workers in other countries. Instead of making goods in-house, corporations now subcontract many aspects of their production processes to partners in developing countries with lower wages, less regulation, and fewer protections for workers.
There is no question that global supply chains are good for corporations, but do they work for workers? As you might expect, this question can be answered in many ways, with different responses covering the full spectrum of yes, no, maybe, and sometimes. In a world where jobs are scarce there will always be claims that nearly any job is better than no job at all. Yet this begs an obvious question regarding the types of jobs that have been created. Major corporations use their market power to drive down costs by securing favourable contracts with suppliers, since their suppliers frequently have limited scope to negotiate better returns, better conditions, or less demanding production cycles. This combination of low prices and high expectations means that companies further down the supply chain frequently experience sustained pressure to depress pay and conditions, to the point where forced labour can appear as an unavoidable business strategy.
The limits of existing regulations
It is at this point that the question of regulation takes centre stage. Thanks to a steady stream of investigative reports, it is now widely accepted that some factories and companies have been seriously abusing and exploiting their workers. According one study, “71% of companies believe there is a likelihood of modern slavery occurring at some stage in their supply chains”. However, there continues to be heated debate regarding who should be held responsible when forced labour is found to have taken place. Most researchers and analysts talk in terms of widespread patterns, rather than isolated cases, suggesting that we have a serious global problem.
