Other side of growth

The killer fire that consumed nearly 300 lives of garment workers in Pakistan’s commercial hub of Karachi has reignited a core question dogging the process of globalisation: Which section of society in developing countries benefits from economic growth and integration into the international economic order?

The victims in the ill-fated factory had been trapped with no exits, behind locked doors and metal grills, as the inferno raged. It was a ghastly illustration of a flawed design of modernisation based on the outsourcing model and the global supply chain.
The Ali Enterprises outlet in Karachi, the site of the incineration and asphyxiation of poor wage labourers, is one of several suppliers to international textile brands which invest in developing countries due to the cost and operational advantages of cheap labour and lax regulations. KIK, a German apparel retailer, is the only company that has come forward and accepted that it had contracted part of its production process to Ali Enterprises, which churned out denim, knitted wear and hosiery, and is said to have had a capital base of $10 million to $50 million. News reports hint that Italy’s Diesel jeans brand could also have outsourced production to this factory, but the full list of foreign patrons may not be uncovered due to the seedy nature of Ali Enterprises and the cosy relationship of the factory’s Pakistani owner with the local bureaucracy and state machinery.
As the blame game for the tragedy spreads within Pakistan (where a cottage shoe factory in a residential area of Lahore also went ablaze on the same day as the Karachi accident and claimed 25 more lives), statistics reveal that the apparel industry is a backbone of the national economy. In 2011, garments accounted for 7.4 per cent of Pakistan’s GDP and employed a whopping 38 per cent of the country’s industrial labour force. Sixty per cent of the total export income of the country is generated by this sector.
Given its centrality to Pakistan’s limping economy, the factory mishaps in the garments industry have sadly become acceptable as occupational hazards that cannot be avoided for the sake of “progress”. Local entrepreneurs who guarantee the best of terms to global retail and fashion brands are hoping that they can go back to business as usual, which is a prison-complex model of manufacturing where desperate workers with no better choices are herded in with no guarantees of safety or decent wages.
The New York-based self-regulatory standards authority in the apparel sector, Social Accountability International (SAI), is also complicit in the affair as its inspectors recently gave a clean chit to Ali Enterprises. SAI is an industry-funded entity with no independent perspective, least of all empathy for workers. Self-regulation by corporations is a ruse that can never substitute for honest and functional state regulation. But the discourse on corporate globalisation has dissed the state’s legitimate role in the economy. This ideological, globally propagated abhorrence of state intervention in the markets, coupled with local crony capitalism and institutional weakness on the ground in developing countries, is the root cause of industrial hazards which routinely occur in low-wage manufacturing hubs like Pakistan, Bangladesh, China, Indonesia, Vietnam and Thailand. It is a state failure reinforced by market failure from top (global) to bottom (grassroots).
The International Labour Organisation notes that occupational fatalities are declining in industrialised countries but steadily rising in developing and late industrialising countries because of “the export of dangerous jobs” from Global North to Global South. If states in the Global South defend workers’ rights vis-à-vis multinational corporations and their local contractors, they risk capital flight and migration of Foreign Direct Investment to rivals.
By structuring incentives in the global economy in a way that attracting and retaining foreign capital are core functions of states and absolute imperatives for “development”, loss of lives of a few thousand workers every year are now tolerated as part of the bargain and as incapable of disturbing the linear march of the global economy. Globalisation, as many leaders of developing countries keep parroting, is “irreversible”.
It is in this ideational milieu that the ongoing explosive standoff between the South African government and the mining workers of the platinum and gold belts is transpiring. It has rocked the post-apartheid political space and raised questions about the trade-offs between satisfying foreign investors and crushing workers’ rights. After the South African police shot dead 34 striking miners demanding pay rises in the Marikana platinum mine, unrest spread like wildfire and the ruling African National Congress has pressed in the Army to face down the protesters.
The insensitive response of the state to grievances of labourers has shocked ordinary South Africans, who were used to such impunity during the dark days of white minority rule. Since platinum and gold are mainstays of South Africa’s economy, as in the case of textiles in Pakistan and Bangladesh, the workers’ agitation is being painted by sections of the black elite establishment as a blackmail tactic for ruining the nation’s onward trek to prosperity. South Africa’s Reserve Bank governor has expressed alarm that succumbing to miners’ demands for better wages is a bad precedent which could worsen the inflation rate.
“Economic apartheid” indeed seems to have never ended. President Jacob Zuma is “reassuring” foreign investors and dousing fears that the Marikana massacre and the resultant wage increase will scare away incoming capital from Europe. South Africa’s mines are still largely owned by financiers trading in the City of London. A charitable interpretation of the state’s handling of the labour dissent in South Africa is that it is balancing between the interests of the poor and the need to keep registering economic growth which is dependent on the goodwill of foreign investors. But why have these two goals entered a zero-sum game logic? Can we not have better working conditions along with high GDP growth?
The rising frustration and pain of workers toiling in inhuman conditions warrants a review of the capitalist modernisation project under way in the developing world. If human life is still deemed expendable in pursuit of macroeconomic objectives, we have not evolved intellectually since the excesses of the Industrial Revolution in Europe two centuries ago.

The author is a professor and dean at the Jindal School of International Affairs