Transferring Risks, Microproduction, and Subcontracting in the Footwear and Garment Industries of Lima, Peru - PowerPoint PPT Presentation

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Transferring Risks, Microproduction, and Subcontracting in the Footwear and Garment Industries of Lima, Peru

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By, Annelou Ypeij Presented by, Whitney Pankonin – PowerPoint PPT presentation

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Title: Transferring Risks, Microproduction, and Subcontracting in the Footwear and Garment Industries of Lima, Peru


1
Transferring Risks, Microproduction, and
Subcontracting in the Footwear and Garment
Industries of Lima, Peru
  • By, Annelou Ypeij
  • Presented by, Whitney Pankonin

2
Present-day footwear and garment industries in
Lima
  • Characterized by two related phenomena
  • 1) Growth of small-scale and micro sector
  • 2) Increase in subcontracting by large enterprises

3
Worldwide process of economic informalization and
decentralization of industrial processes
  • Article aim
  • 1) understand the ways in which this
    restructuring process is expressed
  • 2) show its consequences for workers (especially
    female) working in large-scale and small-scale
    microenterprises

4
Terms
  • Note she uses informal sector and small-scale
    and micro sector interchangeably
  • informal sector
  • Micro-enterprise type of small business (5 or
    fewer employees)
  • Macroeconomy branch of economics that deals
    with performance, structure, and behavior of a
    national economy as a whole

5
  • Peruvian economy severely affected by almost two
    decades of recession and growing urban and rural
    poverty
  • 1975-1992 GDP dropped 32
  • Permanent jobs being eliminated on a large scale
    in the past decade
  • 1980-1993 real urban minimum wages decreased by
    90
  • Increased pressure on urban economy

6
Miraculous Recovery
  • 1993 political situation stabilized,
    investments and exports expanded
  • Peruvian economy one of the fastest growing in
    Latin America

7
  • Large parts of the population forced to generate
    income by creating their own work (self-employed)
    or hire themselves out as workers to
    microenterprises
  • As a result, the informal sector showed
    considerable growth

8
Lima, Oct 1990-Dec 1991
  • This article based on analysis part of material
    during Ypeijs anthropological fieldwork on
    microproduction
  • 1) identifies different forms of subcontracting
  • 2) shows that subcontracting is not a
    gender-neutral process
  • 3) identifies links between small-scale and
    large-scale sectors

9
Forms of subcontracting
  • Concept of petty commodity plays important role
    in theories concerning informal sector
  • Refers to direct subordination of small-scale and
    microenterprises to large-scale enterprises
    through subcontracting

10
Ypeijs Definition
  • Subcontracting partial or complete
    manufacturing of products by enterprise A
    (small-scale or microenterprise) with the aim of
    delivering them to enterprise B, which sells
    final products with its own labels attached to
    them

11
Two distinctions between subcontracting links
  • 1) partial and complete subcontracting
  • 2) nonequivalent and equivalent subcontracting

12
Partial Subcontracting
  • Subcontracting enterprise assigns part of the
    production process to a subcontractor, providing
    the latter with raw materials and/or semi
    manufactured products for this purpose

13
Complete Subcontracting
  • Subcontracting enterprise assigns complete
    manufacturing of a product to a subcontractor
    (provides only labels and packing materials)
  • Subcontractor is responsible for almost all
    stages of production process

14
Calzado Superior
  • Example of how multinational footwear
    manufacturer produces for national market
  • Establishes partial and complete subcontracting
    links with other enterprises
  • Complete subcontracting relationship between
    Calzado Superior and Vargas enterprise

15
Partial and Complete Subcontracting
  • Not mutually exclusive practices
  • Instead form poles of a continuum
  • Ex) depending on individual business agreements,
    Calzado Superior may provide models, lasts, and
    leather subcontractor will add glue, thread,
    laces, and insoles

16
Non equivalent Subcontracting
  • Concerns the relationship between two enterprises
    of a clearly different size (between large-scale
    and small-scale enterprises)

17
Equivalent Subcontracting
  • Subcontracting involving enterprises of more or
    less the same size
  • Very common among small-scale and micro producers
    in Lima

18
Large Enterprises Policies on Subcontracting
  • Subcontracting to small- scale and micro sector
    economizes labor costs for large industries
  • Carbonetto, Hoyle, Tueros employee working in
    the informal industrial sector earns 50 less
    than an employee in the modern sector
  • Differences in policies on subcontracting

19
  • Footwear production declined drastically (at time
    of article)
  • Ypeij drew on interviews with the management of
    Calzado Superior to analyze the corresponding
    policy of the large-scale footwear industry
    toward the general drop of production

20
  • Calzado Superior attempted to reduce production
    costs by reducing the number of permanent jobs,
    and at the same time increasing subcontracting
  • 1990 production of more than half the shoes
    sold by the enterprise involved small-scale and
    microenterprises
  • Managers subcontracting is so important that
    without it the enterprise would be at risk of
    survival

21
Garment Industry Managers
  • Large-scale and medium-sized garment firms
    subcontracting is common and increasing
  • Managers prefer to subcontract (instead of
    generate new jobs within their plant)
  • 1) profit from lower wage level of informal
    sector
  • 2) many informal sector microproducers willing
    to establish nonequivalent subcontracting
    relationships with large-scale enterprises

22
  • 3) garment managers sell in national and
    international markets reducing or increasing
    production can be reached without problems
    (layoffs or investment costs)
  • By subcontracting, management transfers risks to
    the informal sector and indirectly generates
    jobs within that sector

23
Comparison of footwear and garment industry in
Lima
  • Subcontracting takes place in a situation of both
    decreasing and increasing production volumes

24
Reasons for subcontracting by large enterprises
  • Lower production costs by economizing on labor
    costs
  • Transfer risks by avoiding investment
  • Increase flexibility to respond to market
    fluctuations
  • Weaken trade unions
  • Respond to specific demands
  • Take advantage of special technology of
    small-scale enterprises

25
Subcontracting and Gender
  • Not a gender-neutral process
  • Managers, small-scale producers, workers all
    agree on which production tasks are feminine or
    masculine
  • Large industries those stages of production
    process (many females work) that are frequently
    subcontracted to the small-scale and micro sector

26
Reasons for this?
  • Wage gap between women and men
  • (1979-1993 women earned an average 45 less than
    men)

27
Subcontracting Female Tasks
  • Allows management of large industries to profit
    from even lower wages female workers earn in the
    small-scale sector
  • Female workers are part of the most
    labor-intensive stages of the production process

28
Female Tasks
  • Footwear production
  • Women stitching uppers, planing pieces of
    leather, finishing/inspecting tasks
  • Garment industry
  • sewing of garments
  • Female characteristics such as
  • Dexterity, speed, precision, patience

29
ANOTHER REASON FOR Subcontracting Female tasks
  • Without any experience in production workplace,
    women already possess knowledge that is
    transformed into workplace skills
  • Process of socialization and gender formation in
    the home female characteristics, such as
    nimble fingers

30
A Continuum of production
  • By subcontracting, large-scale footwear and
    garment enterprises and the small-scale and
    microenterprises become increasingly interwoven
  • Interconnection actual manufacturing of
    product, purchase of materials, marketing final
    product

31
Examples of continuum
  • Ex) complete subcontracting with Calzado Superior
  • - small-scale producers are responsible for
    buying materials
  • - Calzado Superior sells final products made
    with materials from small-scale traders
  • Ex) garment industry interconnection of large
    and small enterprises
  • - small-scale producers also buy materials from
    large-scale enterprises

32
  • Linkages between large-scale and small-scale
    sector large-scale industries transfer jobs to
    small-scale sector
  • Footwear and garment industries in Lima reflect
    worldwide trend toward informalization and
    decentralization of production processes

33
Small-scale and microproducers and subordination
  • Again, petty commodity production refers to
    direct subordination of small-scale and
    microenterprises to larger enterprises through
    subcontracting
  • Degree of independence of a producer measured in
    terms of
  • 1) ownership of machinery and tools
  • 2) control of production and labor processes
  • 3) direct contact with purchasing and sales
    markets

34
Small-scale and microproducers motives for
establishing subcontracting links
  • Sales down
  • Working and fixed capital hard to obtain
  • Investments too dangerous
  • Fierce competition
  • Forced to spread risk and economize on production
    costs

35
Equivalent subcontracting
  • Can help producers avoid investment, increase
    production temporarily, and lower production
    costs
  • Ypeij emphasizes many microproducers take orders
    AND assign tasks

36
testimonies
  • There is always a large number of small-scale
    producers out there, waiting to take over my
    job.
  • Señora Marta Torres, garment producer

37
Complete subcontracting
  • Subcontractor usually forced to provide working
    capital
  • Payment afterwards (sometimes months)
  • Verbal agreements for assignments
  • No guarantees of subsequent agreements
  • Relationship between subcontracting enterprise
    and subcontractor is temporary causes
    insecurity

38
subordination
  • Complete subcontracting producers depend less
    on subcontracting enterprise (until moment of
    delivery they are owners of the product gives
    producers certain degree of autonomy)
  • Partial subcontracting control over production
    process is more limited (engaged in only one
    stage no direct contact with purchase and sale
    markets)

39
  • Many small-scale and microproducers
    simultaneously produce for themselves or plan to
    again in the future
  • Encounter problems with own production look for
    assignments as temporary way of keeping their
    enterprise in production
  • Heading an enterprise leads to feelings of
    self-esteem, dignity, liberty, and independence

40
Hired workers and the chain of subordination
  • small-scale and microenterprise employees
    compared to large-scale industry employees
  • Lower wages
  • Lack security of income
  • Lack continuity of employment
  • Verbal agreements
  • Constant renegotiated working conditions
  • Poorly ventilated and illuminated workshops
  • Frequent eye and respiratory diseases

41
Cont.
  • In general, working conditions not protected by
    law
  • Most small-scale and microenterprises lack
    registration
  • Peruvian law unionization required only for
    enterprises with more than 20 workers
  • Almost impossible for workers to take collective
    action

42
  • Small-scale and microproducers forced to shift
    part of subordination they experience to their
    workers
  • How is this possible?
  • Workers vulnerable position in the labor market
  • Workers desperate for income
  • Few job opportunities outside informal sector
  • Temporarily lack opportunity to go in to business
    themselves
  • In other words, subordination creates a chain of
    subordination

43
Calzado superior producer
  • I really cant tell you how much I will pay my
    workers at the end of the week. The producer I
    work for collects his fee, then I collect mine,
    and part of that I will pass on to my workers.
    At this moment the fee I have to accept is very
    low. The producer told me that for the moment
    Calzado Superior is paying very little and that
    they may pay a month after delivery. I dont
    know how much and when the producer is going to
    pay me. When he pays I will have to share the
    money with my workers.

44
Female workers and the chain of subordination
  • Important differences between female and male
    workers
  • Ypeij interviewed female workers
  • Worked almost 8 hours more a week than male
    coworkers
  • Earned 10 less
  • Female labor position more unstable one reason
  • Widespread practice of equivalent subcontracting
    among small-scale and microproducers

45
  • informal sector female workers incorporated
    into easily subcontracted stages of production
  • Despite low earnings many women forced to work
    income-generating activities that can be combined
    with care of children and household chores

46
Male producer
  • The woman is the most exploited. She works in
    an unstable situation because of the various
    production options available to the boss in
    regard to her tasks. Her work can also be done
    in the home, where she is forced to work at an
    even lower wage.

47
Sexual intimidation and harassment of females
  • Widespread and common in small-scale and micro
    workshops
  • Producers demand sexual favors in return for jobs
    or in order to keep them
  • Male workers sexually intimidate female coworkers
  • Sexual harassment helps keep female labor force
    docile, wages low, and use of female labor
    flexible

48
Final difference
  • Majority male workers expressed wish to start own
    business (obtain knowledge, contacts, and
    capital)
  • Women expressed doubt about possibility of
    starting own business
  • Statistics show overwhelming majority of owners
    of small-scale and microenterprises are male

49
Comparison of female and male workers makes clear
  • Employment policies of small-scale and
    microproducers female workers are more
    vulnerable than male coworkers
  • Their vulnerable position within the small-scale
    productive enterprises is an expression of their
    general subordinate position fact that women
    are discriminated against in the labor market

50
Female workers
  • Income-generating opportunities very limited
  • Involved in limited number of tasks within
    small-scale production
  • Many forced to combine childcare and/or household
    duties with income-generating activities
  • Obliged to accept whatever work with whatever
    conditions, more than men
  • Partial transfer of subordination by small-scale
    and micro subcontractors likely to affect female
    even more than male workers

51
conclusion
  • Footwear and garment industries in Lima
    characterized by
  • Growth of small-scale and micro (informal)
    sector
  • Increase in subcontracting by medium-sized and
    large industries
  • Because large industries divide and decentralize
    their production processes, many production tasks
    (or jobs) are transferred to the small-scale
    sector
  • Harmful effect on working conditions

52
Cont.
  • Because of subordinate position many small-scale
    and microproducers obliged to transfer their
    risks to their workers leads to further
    deterioration of conditions
  • Instability of income and employment increases
  • Unionization severely hindered

53
  • Consequences of changes in production and labor
    organization are even more severe for female
    workers than for male coworkers
  • Subcontracting process is NOT gender-neutral
  • In large-scale industry jobs held by women are
    first to be subcontracted
  • Women lose their jobs sooner than men

54
  • Female working conditions less favorable
  • Women earn lower wages
  • Employment more unstable
  • Have to endure sexual harassment
  • Do not consider starting their own business as a
    realistic option

55
  • The working conditions of many workers,
    especially female ones, seems to me to be in a
    descending spiral.
  • Ypeij
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