INFORMALISING LABOUR IN ASIA’S GLOBAL FACTORY BY D.

CHANG
Movement of Capital and the Global Factory
• The movement of capital is the expansion, recomposition, and reorganisation of the
social relation in which labour takes a particular social form.
• Capital is a social relation through which concrete (living) labour is subordinated to
abstract (dead) labour, creating a vicious cycle of over-production and constant
competitive pressure. To avoid these pressures and keep accumulating, capital needs to
move.
• The scope, scale and speed of its movement have grown remarkably in the last two
decades, shaping capitalist development into a particular form.
• Silver (2003) has pointed out that methods of spatial, technological, production and
financial movement of capital have been socially invented through both successful and
failed attempts by individual capitals to avoid the increasing social cost of labour and
competitive pressures.
• The first big success story in this process was the minute division of labour and the
factory system, which led to a tighter control of capital over production and products,
and established modern, industrial capitalism.
• Capitalist development has introduced Taylorist labour, Fordist production, and
flexible production, but none of these have resolved the intrinsic problem of capitalist
development. In response, capital movement continues to introduce technological and
organisational innovation, such as flexible production and flexible labour, which have
eroded the social and material basis of the traditional working class.
• The "Toyota system" and its derivations spread in the attempt to integrate the hearts
and minds of workers, once regarded as useless for capital accumulation, into the
innovative process of capital. This innovation divides labour into core and periphery,
and management can compensate manual workers" "mental" labour at the core by
squeezing workers on the supply chain who perform "physical" labour with little
compensation for long hours of work. This innovation has disappeared since the 1980s
in the heartlands of industrialisation.
• The spatial movement of capital began in the early days of capitalism through
investment between countries and colonialist modernisation. As international trade and
investment grew, more and more corporations realised that it was unnecessary to stick
to a national workforce for capital accumulation. This led to a large-scale flow of
international investment and a new international division of labour.
• The globalisation of manufacturing and finance has become a major trend among
individual capitals since the 1980s. In the global movement of capital, the major actors
are transnational corporations (TNCs). State or trade union barriers against such a
movement were accused of being counter-productive by TNCs and international
financial organisations. Trade and investment have been increasingly deregulated,
tariffs cut and the market opened wide, leading to an emerging "global factory" where
capital moves in and beyond firms and sectors more freely than ever before.
Labour in the Global Factory
• Capital rapidly absorbs human lives in underdeveloped and developing Asian countries
by forcibly integrating them into global market relations. This has produced millions of
jobless people without social protection, while foreign direct investment targets the
cheaper social cost of labour in China.
 • In almost all Asian countries, measures that protect workers from occupational diseases
and accidents remain a low priority compared with profit maximisation. Regulation
over labour practices and markets, either based on state intervention or the power of
trade unions, is under severe and constant attack in every Asian country.
• The emerging global factory makes labour a common substance not only for industrial
workers in factories, but also increasingly for all human lives in Asia.
• This commodifies the conditions of human life and the entire society into a commodity-
producing and consuming sphere. Contrary to some commentators' premature
declaration of the end of capitalist work, the traditional locus of exploitation between
capital and labour in the workplace has not been transcended, but expanded.
• In developed countries in Asia, "tertiary" labour has been rapidly expanding, replacing
non-profit-making or so-called "unproductive" labour. Work involving these activities
is waged while industries considered as "public" are increasingly privatised.
• Meanwhile, massive populations in developing countries have become wage labourers,
partially or completely. The global factory is a coercive process aimed at annihilating
all elements of non-capitalist social relations. This integration does not exempt peasants
and farmers whose livelihoods are partially subject to the rule of the market.
• The industrialisation of agriculture also marginalises small farming in developing
countries in Asia. As capitalist labour expands with increasing internal and external
mobility of capital, labour everywhere becomes the common substance as "social
labour".
• However, it obtains a particular characteristic, it becomes commonly informal (or
formless). This is the second implication of the global factory, which organises labour
into a particular social form.
Informalisation of Labour in the Global Factory
• The growth of the so-called informal sector or informal economy in developing
countries has sparked discussions about non-traditional or informal capitalist work.
• The International Labour Organisation (ILO) has championed the concept of
informalisation, which is a tendency accentuated by globalisation for work and workers
to become informalised.
• However, the informal sector argument was based on an imaginary boundary between
the formal and informal sector and could not explain the cross-sectoral penetration and
expansion of the informality of labour. The erosion of the public sector, which
represented protected jobs, in the world-wide privatisation of state-owned enterprises
has also been a blow to the concept that informal labour is a temporary by-product of
underdevelopment in the South.
• The term "informal sector" has been used widely to encompass the expanding and
increasingly diverse group of workers and enterprises in both rural and urban areas
operating informally.
• The ILO has recently recognised the permanent nature of informal work and its cross-
sectoral and international existence. Informal labour includes not only own-account
(self-employed) workers, but also family workers and employees in formal enterprises.
• Employees are considered to have informal jobs if their employment relation- ship is
not subject to standard labour legislation, taxation, social protection or entitlement to
certain employment benefits. Reasons may include the employee or the job is
undeclared, the job is casual or of a short duration, the hours of work or wages are
below a certain threshold, the employer is an unregistered enterprise or a person in a
 household, or the employee's place of work is outside of premises of the employer's or
customer's enterprise.
• The ILO has changed its focus from the "informal sector" to the nature of employment,
focusing on "all forms of informal employment" such as "employment without secure
contracts, workers' benefits, or social protection".
• However, informal work still appears to be a peculiar phenomenon in a particular
"realm of economy," rather than a process in which the social form of labour has been
reshaped. In this way, informal work discussions are neither addressing nor challenging
the growing informality of work in a "formal economy" and within the regulatory
framework of the state and law.
The Labour Movement, Socialised Capital and the Informalisation
• The most important details in this text are that informal labour is not subject to
standard labour legislation, taxation, social protection, or entitlement to certain
employment benefits due to the unwillingness of employers and the incapacity of
the labour movement to protect workers. This is because informalisation is a process
that imposes a common social form on labouring activities in both developing and
developed countries.
• At the beginning of capitalist development, capitalist work existed in various forms,
such as seasonal manufacturing or agricultural jobs, work at family-run businesses,
and so on.
• Only when large-scale manufacturing emerged did capital begin to organise work
into "factory labour" industrial workers who were largely concentrated in
manufacturing. This created the concept of a "standard" form of capitalist work,
such as regular hours and pay, the provision of a designed workplace, pensions and
sick pay arrangements, and the opportunity to join a trade union.
• The traditional trade union movement has concentrated on securing "industrial"
workers' interests by taking only "factory labour" as "normal" capitalist labour. This
has led to massive membership losses, particularly in the leading industrialised
countries, and the failure of the labour movement to protect the interests of workers
in developing countries.
• Capital has instead expanded to society globally as truly "social labour". The
informal economy argument is not free from the idea that industrial workers with
the factory form of labour are the normal form and other workers doing non-factory
forms of labour are somewhat "abnormal".
• Social labour is taken as something to be normalised, while the concept of the
normal is constantly being undermined by the informalisation of the formal even in
industrial heartlands.
• This transition from factory labour to social labour is given an informal nature
through informalisation, through which labour has been recaptured by the emerging
global factory. It is a common form of social labour that is becoming the dominant
form of capitalist labour in the global factory.

Informal Sector
• The growing informal sector is a result of lack of institutionalised labour protection,
economic expansion, and forced integration of the population into capitalist social
relations.
 • It involves self-employed workers, such as home workers, teleworkers, street vendors,
and other street service providers, as well as non-self- subsistence small-scale farmers
and artisans.
• In India, the size of informal sector employment is reported to exceed 90% of all non-
agricultural employment, and in Indonesia, more than 70% of the workforce is reported
to work in the informal sector.
• Laid-off workers in the formal economy often end up with "invented" jobs, self-
employment, family businesses or other informal sector jobs due to the number of
formal employees stagnating or decreasing while the number of economically active
population is increasing.
• In China, the state-led project to lay-off so-called surplus workers in SOES, officially
named xiagang, lasts for three years and workers who cannot find work within that time
become officially unemployed.
• In Southeast and East Asian countries, the portion of formal jobs to total employment
decreased from 36% in 1999 to 32% in 2002, and this trend continued as the Indonesian
economy's recovery was sluggish following the crisis.
Self-employment in the Formal Sector
• The increase in self-employment in Korea shows the second pathway (labour leaving
the regulated labour framework) to informal work. This form of employment is called
"special employment" and most of the workers involved are in very small businesses.
• In many cases, the self-employed have certain employment relations that are subjected
to managerial authority in areas such as their workload, hours and codes of conduct.
• However, people in these forms of employment have been regarded largely as not
officially being workers since the firms introduced freelance-like employment contracts
in the early 1990s.
• In Korea, the private tutoring industry is the biggest in this sector and golf caddies,
ready mixed concrete and other construction-related truck drivers, and delivery service
providers are not legally recognised as workers but as self-employed.
Contractualisation
• Contractualisation and agency work are increasing informalisation in the
manufacturing sector of most Asian countries, replacing permanent workers with short-
term contract workers.
• These forms of informalisation do not remove formal employment relations as
completely as self-employment, but they increase the number of informal workers in
the formal sector by making the employment relation unstable and often indirect. Short-
term employment allows employers to adjust their workforce according to production
scale.
• Contractualisation accelerated in 1998 when the labour law was revised to allow
contracted workers in Thailand.
• In China, laying-off workers through the xiagang system has been used to cut off
"surplus labour". Changed the nature of employment relations. Employ migrant
workers for cost optimisation.
• In Indonesia’s electronic industry in Batam, temporary workers account for 80% of the
workforce.
• In the Philippines, employers set up different layers of job status that involve a year of
training, two years as apprentice, and then "promotion" to one- or two-year contract
workers. Short-term contracted workers are outside the regulatory framework and
 cannot exercise freedom of association. Protective measures that ban companies from
using temporary workers for more than six months create precarious conditions for the
workers as employers recruit workers on a six-month basis.
• Contract work in the construction industry is the most common form of contract work
in Asian countries, with 95% of workers hired on a short-term and project basis.
• Only a small portion of the workforce enjoy formal employment, while "guerrilla
workers" organise an informal team of 5-20 workers with the skills needed for a
particular construction process. At the bottom of sub-contract chains, daily hired
workers suffer serious occupational safety and health problems and often receive wages
in arrears.
Agency or Dispatched Workers
• Contractualisation involves increasing agency work, but not all contract workers are
employed through agents. Firms increasingly exploit indirect forms of employment by
affiliating to small sub-contract firms, which are in fact recruitment agencies.
• Local government and labour ministry offices are also involved in managing labour
agents. In Thailand, government officials, labour ministry officers, and military and
police officers own labour dispatching agencies.
• Even Toyota, one of the most cutting-edge of automobile firms, employs agency
workers.
• Large-scale enterprises, such as Samsung in Thailand and Hyundai Motors in Korea,
have also increased the number of agency workers on the same production lines as
permanent workers.
• The electronics industry in Taiwan and Korea is increasingly using agency workers,
who were formerly permanent workers and took early retirement as recommended by
employers. This trend is becoming a trend in the electronics industry in Korea as well,
with electronics firms in Thailand and the Philippines also employing agency workers.
• By making employment relations more indirect and untraceable, management can
escape their legal obligations as direct employers and adjust the number of workers
easily.
• Outsourcing particular labour processes and services also contributes to the changing
employment structure, assemblers rely heavily on cheap daily and temporary workers,
and cleaning and catering are the most commonly outsourced services to recruitment
agencies.
Migrant Workers
• Migrant workers are a major group of informal workers in Asia, often neglected by
unions. They form a large part of workforces in the informal sector, such as fishing,
domestic work, and unregistered micro- enterprises, and their employment contracts
are often irreversibly temporary.
• Employers often hire them with wages well below minimum standards and abuse
workers' rights, leading to extreme violence and terrible outcomes.
• Unregistered migrant workers in the most labour-intensive sectors have no or very few
rights to protect themselves and must tolerate being placed at the very bottom of the
pile of informal workers.
• This suggests that informal workers in many Asian countries are much higher than most
data suggest.
Formal Workers in the Formal Economy: are they Formal Labour?
 • Atypical workers, such as part-timers and temporary contract workers, are not legally
informal in the legal sense.
• In Japan, the number of fixed-term employees doubled between 1992 and 2001, while
that of workers dispatched from manpower agencies tripled.
• In Thailand, trade unions need to organise more than 20% of the whole workforce to
represent workers in developing collective bargaining agreements.
• In the Philippines, unions have to go through a union certification election to recognise
the union as their representative. This proliferation of workers to be organised.
• It is questionable whether hundreds of millions of Chinese workers are "formal" due
to the lack of solidarity action taken or pressure mobilised for workers laid-off
unilaterally by management.
• Millions of migrant workers in Japan, Korea, Taiwan, Singapore, Hong Kong,
Thailand and Malaysia are also excluded from solidarity protection. In most Asian
countries, the role of government has been transformed from regulator to deregulator,
leading to informalisation within the given regulatory framework.
• In late 2006, governments in Indonesia and Korea were pushing aggressively forward
with further deregulation through the use of dispatched workers, while in China there
was discussion about whether the government should openly allow dispatched work.
• Workers themselves often try to reduce solidarity-based protection as informal workers
are considered as a threat by formal workers. Lack of protection for informal workers
ultimately means that labour forces are individualised in relation to capital.
Conclusion
• Capital moves, resulting in changes in social relations and capitalist labour becomes
the common substance in the livelihood of the population in Asia and elsewhere, and
that the boundary between formal and informal, or regular and irregular labour, is being
blurred as informalisation develops as an overarching process.
• In developing countries, informalisation appears in the form of violent integration of
the working population into an ever-growing informal "sector" or sheer union-busting
by less advanced individual capitals and the state.
• In developed countries, it takes a more subtle form, silently under-mining established
labour rights with complicated human resource management.
• The labour movement must develop a new solidarity strategy against the recomposition
of global labour and differentiated tools of organising labour according to particular
forms of informalisation.