Overview of the Informalisation of Labour in Asia

This article aims to elaborate on the growing informalisation of capitalist labour in Asia. This article is the third of a series in a wider research project on the contemporary form of capitalist labour as a basis for the rejuvenation of the democratic and independent labour movement in the Asian region. The preceding parts of the research have already been published (Chang, 2005a, 2005b) where I addressed the increasing internal and external mobility of capital and the emergence of global supply chains leading to the development of a global factory, which is recapturing Asian labour in a particular social form.1

This article focuses on the social form of labour itself, looking into the way in which capitalist labour becomes a common substance for the Asian population and how informality becomes a common particularity for Asian workers in both developed and developing countries. To be consistent and make the argument easy to follow, the first part discusses what has already been addressed elsewhere, namely capital movement and the global factory by summarising the internal and external movement of capital as intrinsic to capitalist development that led to the emergence of the global factory where capitalist labour becomes ‘the common’ to (almost) all people as a result of the amalgamated movements of capital. The second part critically reviews the existing debates about informalisation of capitalist work where I found the lack of an understanding of informalisation as an overarching global recomposition of capitalist work in both developed and developing countries in the face of the emerging global factory. By relating the informalisation of labour to the growing mobility of capital, I will describe how the emerging global factory gives a particular informal nature to capitalist labour and thereby changes its social form.

1. The movement of capital and the emerging global factory
Over the last century, the increasing movement of capital established a global (scale) factory in which different industries and productions are webbed by so-called global supply chains (Chang 2005b). By its nature, capital is destined to move (Holloway 1995). The movement of capital not only means the movement of money but expansion, recomposition and reorganisation of the social relation in which labour takes a particular social form (capital is a social relation – see Chang 2005a). It moves internally within the same production cycle by taking different forms, such as constant capital, variable capital, or different products and production processes through technological and organisational innovations. It moves externally by relocating its production facilities, investing in a new industry, turning itself into commercial capital or financial capital, etc. As discussed elsewhere, capital movement is rooted in its own mode of existence. On the one hand it suffers from constant competitive pressure and, as a consequence of heated competition, over-accumulation of capital (meaning overly-grown production capacity). On the other hand, it repeatedly faces the growing social cost of exploitation that is mostly caused by growing social and political power of the working class challenging a once innovated way of accumulation (Chang 2005b, p. 5). Therefore, the movement of capital per se is nothing new. However, the way in which it moves has been changed and the scope, scale, and speed of the movement have grown particularly in the last two decades.

In the process of continual innovation of the ways capital moves out of the increasing social cost of exploitation and competitive pressure, as Silver pointed out, methods of spatial, technological, product, and financial movement of capital have been socially invented out of successful and failed attempts of individual capitals (Silver 2003). Capital devised different methods to move and every successful movement won a hegemonic status, adapted partially or fully by other individual capitals. Perhaps the first big success story can be found in the minute division of labour and factory system that led to a tightened control of capital over the production process and products and established modern, industrial capitalism (Chang 2000b, p. 6). Organisational and technological innovation continued by introducing Taylorist labour where workers become de-skilled (or re-skilled in a particular way) and controlled like machinery in terms of time and motion of work and so-called Fordist production where human labour becomes a real form of capital as an appendage to machinery. However, none of them seems to resolve the intrinsic problem of capitalist development. In over 100 years of capitalist development, the workers’ movement developed and challenged newly devised movements of capital (Chang 2005b, pp. 5-8), eroding repeatedly the basis of capital accumulation by organising collectively within the factory, cross-sectorally, and nationally, as well as inventing new methods to threaten the effectiveness of new ways of capital movement, while repeated crises manifested the intrinsic contradiction of capital accumulation, so that capital movement continues on the basis of technological and organisational innovation. Particularly from the 1980s, so-called flexible production and labour has eroded the social and material basis of a unified (at least for their own interests in their own workplaces and nations) traditional working class (Munck 1999) wherever it exists. The Toyota system or its derivations spread in an attempt to integrate hearts and minds of workers, once regarded as completely useless for capital accumulation, into the innovation process. Indeed, it has been possible by dualising labour into the core and periphery and compensate the manual workers’ mental labour at the expense of workers at the supply chain where still soulless workers work for little compensation for their long hours of work. In the face of these combined technological and organisational methods of capital movement, traditional barriers against technological and organisational capital movement (even those once established to promote stable capital accumulation, such as a ‘social contract’ with trade unions) have tended to disappear, particularly so from the 1980s.

Working without protection at over 20 metres above the streets of Hong Kong
Photo: Tim Pringle

Such organisational and technological innovations made spatial movement of capital easier by standardising and fragmenting the labour process and labour and often accompanying a geographical movement of capital within and beyond countries. Capital’s desperate need to avoid constant pressure from competition and increasing social cost of exploitation makes capital always search for the better market and more profitable business place through spatial movement. Global scale movement developed from the early days through inter-country investment and, in relation to developing countries, the development of colonialism through which developed countries extracted raw materials from developing countries. As more and more corporations realised that it is unnecessary to stick to a national workforce, outsourcing production to other developed or developing countries, followed by large-scale flow of international investment and a new international division of labour, in which capital from one country and labour elsewhere are connected either by commercial trade relations or foreign direct investment (Frobel et al. 1980). Finally, globalisation of manufacturing and finance has become a major trend for capital since the 1980s. In the global movement of capital, the major actors are transnational corporations (TNC). As was the case in the technological and organisational movement of capital, state or trade union barriers against such a movement, were severely attacked, accused of being counter-productive. The increasing spatial movement of capital also required all ‘unnecessary’ barriers to the movement of capital to be removed in pursuit of better profitability; trade and investment have been increasingly deregulated, tariffs cut, and the market opened wide. The spatial movement of capital developed production on a wider scale. Now we witness an emerging global factory (De Angelis 2000) where capital moves in and beyond firms and sectors more freely than ever before.

Labour in the global factory: the common substance for human lives
A snapshot of labour conditions in the global factory does not (yet) give a hopeful perspective. Capital rapidly absorbs human lives in underdeveloped and developing Asian countries by, often forcefully, integrating them into global market relations. The unprecedented scale and speed of China’s privatisation of state-owned enterprises has produced millions of jobless people without social protection while foreign direct investment targets the cheaper cost of exploitation in China to make China the ‘world’s factory’ where millions of young, unorganised employees work for TNCs. In almost all Asian countries, measures that protect workers from occupational diseases and accidents are a secondary priority to profit maximisation (Pandita and Shepherd 2005). While occupational safety and health rights apply to a decreasing number of formally employed workers, hazardous industries and products can go where low price is the only concern. Individual organising attempts in mobile TNCs often end in bitter failure because of the threat of, or actual, relocation of production. Regulation over labour practices and markets, either on the basis of state intervention or trade union power, is regarded as an obvious barrier for capital to move internally as well as externally, and was severely attacked in every Asian country.

The first implication of the emerging global factory is that it makes labour a common substance not only for industrial workers (as factory labour), but also for all human lives in Asia (as social labour). As capital moves into other spaces, times, and aspects of our social life, it turns all things concerning human life into commodities and the whole of society into a commodity producing and consuming sphere, rendering all of society ‘permeated through and through with the regime of the factory’. Contrary to some commentators’ premature declaration of the end of capitalist work (Rifkin 1995 for example) ‘the traditional locus of exploitation between capital and labour in the workplace has not been transcended, but expanded’ (Dyer-Witheford 2002, p. 8). As the whole society becomes a factory, the social form of labour has been changed from ‘factory labour’ into ‘social labour’ that is a common substance of all living populations.

In relatively developed countries in Asia (e.g. Japan, Korea, and Taiwan), ‘tertiary’ labour continually expands, representing growth of the service sector. Formerly non-profit-making activities or so-called unproductive labour, e.g. caring and healing, is a new domain of business; work involving these activities is waged while industries considered as ‘public’ are increasingly privatised. Massive populations in developing countries, originally mainly involved in self-subsistence activities, have become wage labourers. The integration of people into global value chains is a brutally coercive process, aimed to prevent all elements of non-capitalist social relations from remaining. Its logic dictates that each aspect of human life should not be organised, even partially, through non-market mechanisms; peasants and farmers whose livelihoods are partially subjected to the rule of the market cannot be exempt. The final moment of enclosure, through which the ‘common’ is forcefully deprived from the people, comes with the massive privatisation of the ‘public’ and the large-scale industrialisation of agriculture that completely marginalises small-scale farming in many developing countries (Midnight Notes Collective 2001). As capitalist labour becomes truly expanded with increasing internal and external mobility of capital, labour everywhere becomes the common substance as social labour. While labour becomes the common in the livelihood of the Asian (and elsewhere) population, it obtains a particular nature; it becomes commonly informal. This is the second implication of the global factory, which organises labour into a particular social form. For the global factory, it is no longer necessary for capital to rely on regular, protected, and formal jobs for the expansion of capital.

2. Informalisation of labour in the global factory
Informalisation debates
One of the most obvious trends in the global factory has been the increasing informal nature of capitalist labour. However, the importance has been only partially recognised. Focus on non-traditional forms of capitalist work is a relatively recent phenomenon. The growth of the so-called informal ‘sector’ or ‘economy’ in developing countries provoked discussions about non-traditional or informal capitalist work. On the other hand, the increasing number of non-traditional irregular work and eroding labour protection in the process of flexibilisation in developed countries cause concerns about non-traditional capitalist work.

Discussion about ‘informal work’ has been championed by the International Labour Organisation (ILO), which focused firstly on labour conditions in particular economic sectors that were outside formal regulation and control in developing countries, particularly in Africa. In the heyday of so-called ‘formal’ capitalist work with stable, secure, and clear employment relations in the West, the existence of a relatively large population working in unregistered and unregulated economic activities was interesting enough to attract many observers who thought it was a by-product of underdevelopment. However, as many pointed out (Munck 2003, pp. 112-3, Castells and Porters, 1989), the informal sector argument was based on an ‘imaginary’ boundary between formal and informal sector and therefore could not offer an explanation for the cross-sectoral penetration and expansion of the informality of labour. This dichotomous approach has been much criticised by ‘informalisation theorists’ who rightly emphasised the process of informalisation as ‘a tendency accentuated by globalisation for work and workers to become informalised’ and ‘recognise that informalisation is a critical component in capitalist globalisation today, particularly but not exclusively in the global south’ (Munck 2003, pp. 112, 115).

Contrary to many expectations that the problem of growing informal economies in developing countries could be resolved with growing national wealth or poverty reduction, the bigger the economy grew, the bigger population came to work informally. Many labour observers, after much heated debate, research, and most of all challenges in reality, recognised that so-called flexible specialisation (Piore and Sabel, 1984) that was presented as a dynamic of advanced capitalist development means only being disposable for most workers in the South and North. Informality seemed no longer to be constrained to unfortunate workers in the South, but expanded to the workers in the formally established economies in developed and developing countries. Perhaps, one of the most important blows to the concept that informal labour was a temporary by-product of underdevelopment in the South, was the erosion of the public sector, which represented secure protected jobs, in the process of worldwide privatisation of state-owned enterprises.

The permanent nature of informal work with which more and more workers in developing countries survive and the fact that informal work exists cross-sectorally and internationally, has been recognised by the ILO. These undeniable factors seemed to cause a transformation in the ILO’s analysis that has changed its focus from informal sector to informal economy.

Increasingly, ‘informal sector’ has been found to be an inadequate, if not misleading, term to reflect these dynamic, heterogeneous and complex aspects of a phenomenon which is not, in fact, a ‘sectoral’ in the sense of a specific industry group or economic activity. The terms ‘informal economy’ has come to be widely used instead to encompass the expanding and increasingly diverse group of workers and enterprises in both rural and urban areas operating informally (ILO 2002, p. 2).

Its seems the ‘informal economy’ approach could largely resolve the problem relating to ‘sectoral’ dualism, admitting that there are informally-run economic activities in the predominantly formal sector. For example, the car industry, known as a formal sector, has informally-run businesses along the supply chain. Likewise, the garment industry even of the most developed countries, which is predominantly formal, can have an informal economy like sweatshops employing illegal migrant workers. These workers in both informal and formal sectors ‘share one important characteristic: they are not recognised or protected under legal and regulatory frameworks’ suffering from ‘a high degree of vulnerability’ (ILO 2002, p. 3). Now informal labour includes not only own-account (self-employed) workers, contributing family workers, and employees in informal enterprises, but also family workers and employees in formal enterprises (ILO 2002, pp. 121-9).

‘Employees are considered to have informal jobs if their employment relationship is not subject to standard labour legislation, taxation, social protection or entitlement to certain employment benefits (e.g. advance notice of dismissal, severance pay, paid annual or sick leave, etc). Reasons may include the following: 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’ (ILO 2002, p. 124).

As Chen pointed out, this move of the ILO from ‘informal sector’ to ‘informal economy’ show that it rightly changed focus from the characteristic of enterprises to the nature of employment (Chen 2003). As the concept focuses on ‘informal employment’, it now incorporates ‘all forms of informal employment’, such as ‘employment without secure contracts, workers’ benefits, or social protection, both inside and outside informal enterprises’ (Chen 2003, p. 4).

However again, the informal economy analysis could not fully overcome the dichotomous nature of such an understanding of informal work. Informal work here still appears to be a peculiar phenomenon in a particular ‘realm of economy’, rather than a process in which a social form of labour has been generally reshaped: an ‘object’ rather than a ‘process’ (Castells and Porters 1990, p. 11). However, despite the recognition that informalisation or the informal economy is an intrinsic part of globalisation, even in ‘informalisation’ theory, informal work appears to be something that exists outside of regulated formal economy, mostly in developing countries.2 Therefore, informal work in the developed industrialised countries is described as an exceptional misfortune of the ‘working poor’ (Munck 2003) or something related to the disadvantaged producers (Chen 2003, p. 3) or in its worst form, the extraordinarily greedy practice of sweatshop owners or users of home workers (ILO 2002, pp. 2, 4, 25), rather than a forceful form-changing process of the global factory. In doing so, informal work discussions are not really challenging the significant growing informality of work in a ‘formal economy’ and ‘within’ the regulatory framework of the state and law that is itself moving toward informal work due to decreasing social power of the labour movement. There is one area that cannot be explained by the regulatory framework: the movement toward informality within the regulatory system.

The labour movement, socialised capitalist labour, and informalisation
The most important missing part from existing informal labour theories, while relying on institutional framework to define the informality of labour, is the power relation in which informalisation is actually constituted. The underlying reason why ‘their employment relationship is not subject to standard labour legislation, taxation, social protection, or entitlement to certain employment benefits’ is in fact not the absence of regulatory framework but the unwillingness of the employer and the incapacity of the labour movement to protect workers. If power relations are missing, one can be blind to in-fact-informal labour, which is within the regulatory framework however not really protected by regulation and continuously moving toward the boundary of formal/informal work within the given regulatory system. Once the constitution of informal work is identified with power relations between capital and labour, it is clear that informal labour is not something existing where a regulatory framework is not established but informalisation is a process that imposes a common social form on labouring activities in both North and South.

To understand the changing social form of capitalist work under the global factory, especially its implication for the labour movement, perhaps it would be useful to look into the historical formation of ‘formal capitalist labour’. At the beginning of capitalist development, capitalist work existed in various forms, which we now might call ‘informal or irregular’, such as seasonal manufacturing or agricultural jobs, work at family-run businesses etc. For most people, making a living relied predominantly on self-subsistence and only partially on commodity-producing labour. Only when large-scale manufacturing emerged did capital begin to organise work into factory labour - ‘industrial workers’ who largely concentrated on manufacturing. Only when industrial workers organised the labour movement did the concept of a ‘standard’ form of capitalist work emerge. Most of the elements of the formal form of capitalist work, such as ‘regular hours and pay, the provision of a designed workplace, with pensions and sick pay arrangements and often the opportunity to join a trade union’ (Bradley at al. 2002, p. 52) emerged since then. Formal employment then became a dominant form of capitalist work at least in developed countries. Furthermore, all the terminology of industrial relations, such as collective bargaining, collective agreement, workers’ council, and tripartite committee, developed on the basis of the particular historical arrangement of capitalist labour: namely ‘factory labour’. Certainly it was a great achievement of the labour movement; trade unions in particular protected workers by institutional regulations that were, more importantly, backed by the solidarity-based power of industrial trade unions.

Even then, for capital, regular, protected capitalist work was not at all the healthy form of ‘capitalist’ work (Castells and Porters 1989, p.13). Although ‘formal employment’ has become ‘the’ definition of capitalist work, the standard form of capitalist work is confined to industrial workers in a few developed countries and certain industrial sectors and various forms of informal employment and unwaged work survived.3 Since the traditional trade union movement achieved a protected and secured standard form of capitalist labour in the core industrialised countries, the labour movement has concentrated only on securing ‘industrial workers’ interest by taking only ‘factory labour’ as ‘normal’ capitalist labour, often excluding non-core members of capitalist economy, such as migrant and women, and leaving them the realm of informal area as a veteran trade unionist recalls:

Also in the context of growth of the informal economy, the narrowing down of the trade union agenda has led to bad surprises. Massive membership losses, particularly in the leading industrialised countries, were not anticipated because of concentrating on servicing the core membership, which is now rapidly shrinking, rather than remaining sensitive to developments in society as a whole, including changes in the working class itself. (Gallin 2002, p. 24)

Indeed, hardly any form of the power of solidarity from trade unions in developed countries protected the interest of unprotected and insecure workers in the South. In the meantime, capital moved beyond protected ‘factory labour’, utilising the forgotten members of the working class, rather than the traditional industrial workers, in developed and developing countries. Capitalist work was no longer constrained within the factory boundary, but expanded to society globally as truly ‘social labour’. This was a significant moment of failure of the labour movement. One of the critical problems of the informal work discussion is that it is still not free from the idea that industrial workers with the factory form of labour is ‘the’ normal and other workers doing non-factory form of labour are somewhat ‘abnormal’. Social labour (which is informalising) is taken not as today’s dominant form of capitalist labour but merely as something to be normalised while the concept of the normal is constantly being undermined by the ‘informalisation of formal economy’ (Gallin 2002), even in industrial heartlands. Therefore, the informal economy argument, rather than calling for a new strategy for the labour movement on the basis of newly recomposed labour, at best recalls the memories of good old days of the welfare state, something that old trade unions want to believe is still ‘normal’, however its basis was a particular context of post-world war boom in the West (and partially Japan) and is eroding critically.

Figure 1 summarises the transition of capitalist labour in the global factory. Capitalist labour is taking a different form to factory labour. It has been truly socialised which now incorporates formal and informal labour, the distinction between them however is getting blurred. In addition, the portion of informal capitalist labour increased as ‘informalisation of the formal economy’ develop and increasing in-fact informal labour within the formal regulatory framework. The equation between industrial workers and formal work is destroyed. In addition, the distinction between self-subsistence non-capitalist labour and capitalist labour is also getting vague as more and more self-subsistence activities are forced to be extinct, as they are not producing value for capital. This shows capitalist labour becomes a common substance for all population through the transition from factory work to social work and at the same time it is given an informal nature through informalisation, through which labour has been recaptured by the global factory. Everybody needs to work for the global factory directly or indirectly. But particularly common is that everybody needs to maximise their contribution and exist as an ideal type of individual source of revenue, a mere factor of production within and outside the existing regulatory framework. Informal labour is neither something additional to formal labour nor compensating ‘factory labour’. It is a common form of social labour that is (or is becoming) the dominant form of capitalist labour in the global factory.

As capitalist labour expanded, so did the contradiction of capitalist labour. The contradiction is no longer confined in the factory, but expanded to society. As far as the labour movement is trying (in vain) to stick to what is seemingly ‘normal’ labour, its strategy cannot but be passive (as the grey area in Figure 1 indicates). By identifying capitalist work with formal employment and ultimatising regular work, organising informalised labour can only be additional work for the labour movement. It is important to notice that in the global factory capital expands without its industrial workers under its factory roof (which was the major method that capital utilised for its accumulation during the post-war boom with the Keynesian-full-employment-based development and so-called Fordist expansion) and the social form of capitalist labour has been reshaped from ‘factory labour’ (the normal) with clear employment relations and social protection to ‘social labour’ without either clear-cut employment relations or social protection however working only for capital’s profit making process. The labour movement is required not to be the movement of industrial workers but to be the movement of social workers (which includes workers in the factory) by moving away from ‘workplace unionism’ and taking a social-labour approach that can incorporate the expanded contradiction of capitalist labour,4 challenging the global factory itself as a movement of social workers.

Notes
1 This essay should be read together with these two articles. There will be a more concrete overview of different forms of informal labour in a future issueof Asian Labour Update.
2 For example, Munck presented Asian Tigers, whose labour was increasingly becoming in-fact-informal within the regulatory system, as in much better shape than other developing countries in Asia in terms of labour informalisation. Indeed, flexibilisation in the North appears to be in nature distinguished from the informalisation in the South.
3 The informal form of ‘employment’ here refers to the wide range of people whose working relation is based on direct and indirect ‘wage relations’. This informal ‘employment’ however does not cover the ‘un-waged’ form of capitalist work, such as many forms of self-employment. Normally, self-employed are related to employers or corporation service users through commercial not wage relations, even if they work for corporations. Although their relations with employers are vague and untraceable and sometimes practically do not exist, they are still doing capitalist work because their work functions to reproduce capital (by reproducing labour power of others, contributing to produced value, etc). It is also obvious that the reproduction of their labour is subjected not to the concrete achievement of their work but to the ‘amount’ of money s/he earns. In many cases, they have no means of production nor are they employees. Furthermore, many of them are getting in and out of employment relations and stay unemployed in between. Many self-employed are as vulnerable as informal employees in that they enjoy no social protection such as social insurance, not to mention union protection.
4 This must be differentiated from ‘social movement trade unionism’ since the social-labour approach is not allied with the new social movement by admitting that the labour movement can no longer integrate diversifying areas of social problems. It is rather admitting the socially expanded area of capitalist labour and building up a new labour movement in the wider sense.

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