The Multinational Monitor


W O M E N   &   M U L T I N A T I O N A L S

The New Factory Girls

Around the world, multinationals use women to keep labor costs down and profits up

by Annette Fuentes and Barbara Ehrenreich

In the 1800s, farm girls in England and the northeastern United States filled the textile mills of the first Industrial Revolution. Today young Third World women have become the new "factory girls," providing a vast pool of cheap labor for globe-trotting corporations. Behind the labels "Made in Taiwan" and "Assembled in Haiti" may be one of the most strategic blocs of womanpower of the 1980s.

In the last 15 years, multinational corporations, such as Sears Roebuck and General Electric, have come to rely on women around the world to keep labor costs down and profits up. Women are the unseen assemblers of consumer goods such as toys, the hardware of today's "Microprocessor Revolution," and designer jeans.

Low wages are the main reason companies move to the Third World. A female assembly line worker in the U.S. is likely to earn between $3.35 and $5 an hour. In many Third World countries a woman doing the same work will earn $3 to $5 a day.

U.S. corporations call their international production facilities "offshore sourcing." To unions these are "runaway shops" that take jobs away from American workers. Economists, meanwhile, talk about a "new international division of labor," in which low-skilled, labor-intensive jobs are shifted to Third World countries. Control over management and technology, however, remains at company headquarters in developed countries like the U.S. and Japan.

The electronics industry provides a good example of the new international division of labor: circuits are printed on silicon wafers and tested in California; then the wafers are shipped to Asia for the laborintensive process in which they are cut into tiny chips and bonded to circuit boards; final assembly into products such as calculators, video games, or military equipment usually takes place in the United States. Yet many American consumers don't realize that the goods they buy may have made a global journey-or that the "foreign" products that worry U.S. workers may have been made in factories owned, at least in part, by U.S. corporations.

Since the 1960s, multinationals have scattered factories across the globe as export-oriented industrialization-touted by the United Nations Development Organization (UNIDO), the World Bank, and the International Monetary Fund-has become the favored strategy for Third World development. Third World countries roll out the red carpet for foreign investors and become "export platforms" producing goods for the world market. In return, "host governments" are promised jobs, technology, and foreign exchange.

Free trade zones, or export processing zones as they are also known, have emerged as key elements in this export-led development. The free trade zone is a haven for foreign investment, complete with electricity and other infrastructure and a labor force often housed in nearby dormitories.

Free trade zones-there are now over 100-mean more freedom for business and less freedom for people. Inside, behind walls often topped with barbed wire, the zones resemble a huge labor camp where trade unions, strikes, and freedom of movement are severely limited, if not forbidden. A special police force is on hand to search people and vehicles entering and leaving the zones.

There are over one million people employed in industrial free trade zones in the Third World. Millions more work outside the zones in multinational-controlled plants and domestically-owned subcontracting factories. Eighty to ninety percent of workers, whether the product is Barbie dolls or computer components, are women.

She works hard for the money

Since multinationals go overseas to reduce labor costs, women are the natural choice for assembly jobs. Wage-earning opportunities for women are limited and women are considered only supplementary income earners for their families. Management uses that secondary status to pay women less than men and justify layoffs during slow periods, claiming that women don't need to work and will probably quit to get married anyway.

Women are the preferred workforce for other reasons. Multinationals want a workforce that is docile, easily manipulated, and willing to do boring, repetitive assembly work. Women, they claim, are the perfect employees, with their "natural patience" and "manual dexterity." As the personnel manager of an assembly plant in Taiwan says, "Young male workers are too restless and impatient to be doing monotonous work with no career value. If displeased, they sabotage the machines and even threaten the foreman. But girls, at most they cry a little."

Multinationals prefer single women with no children and no plans to have any. Pregnancy tests are routinely given to potential employees to avoid the issue of maternity benefits. In the Philippines' Bataan Export Processing Zone, the Mattel toy company offers prizes to workers who undergo sterilization.

The majority of the new female workforce is young, between 16 and 25 years old. As one management consultant explains, "When seniority rises, wages rise"; so the companies prefer to train a fresh group of teenagers rather than give experienced women higher pay. The youngest workers, usually under 23 years old, are found in electronics and textile factories where keen eyesight and dexterity are essential. A second, older group of women work in industries like food processing where nimble fingers and perfect vision are not required. Multinationals can get away with worse conditions in these factories because the women generally can't find jobs elsewhere.

Corporate apologists are quick to insist that Third World women are absolutely thrilled with their new-found employment opportunities. A top-level management consultant who advises U.S, companies on where to relocate their factories said, "The girls genuinely enjoy themselves. They're away from their families. They have spending money. They can buy motor bikes, whatever. Of course it is a regulated experience, too-with dormitories to live' in-so it's a healthful experience."

By earning money and working outside the home, factory women may find a certain independence from their families. Meeting and working with other women lays the foundation for a collective spirit, and perhaps, collective action.

But at the same time, the factory system relies upon and reinforces the power of men in the traditional patriarchal family to control women. Cynthia Enloe, a sociologist who organized an international conference of women textile workers in 1982, says that in the Third World, "the emphasis on family is absolutely crucial to management strategy. Even recruitment is a family process. Women don't just go out independently to find jobs: it's a matter of fathers, brothers, and husbands making women available after getting reassurances from the companies. Discipline becomes a family matter since, in most cases, women turn their paychecks over to their parents. Factory life is, in general, constrained and defined by the family life cycle."

The nimble fingers of "Oriental Girls"

Half a million East Asian women are estimated to be working in export processing zones. Women are heavily employed in export manufacture outside the zones as well. In South Korea for example, women comprise one-third of the industrial labor force.

A great percentage of these "Oriental girls" come from rural areas, drawn to the burgeoning urban centers by reports from friends or older sisters who've landed an assembly job. Companies often recruit in the countryside as well, frequently enlisting the help of village authorities and the fathers and brothers of factory-age women. In Taiwan, large companies work with junior high school principals who offer up busloads of recent graduates to labor-hungry plants. For the majority of women, it is their first job experience. They may even be the first wage-earners in their families.

While some women live close enough to factories to remain with their families and commute by bus, most workers are forced to find accommodations near the plant. Housing is scarce and expensive for their meager wages. Access to clean water is often nonexistent or severely limited. Company dormitory rooms are small and crowded, with beds shared by as many as three shifts of workers: as one worker gets up to go to the factory, another returning from work takes her place in bed. As many as 20 women may be crammed into a tiny space.

The great majority of the women earn subsistence level incomes, whether they work for a multinational corporation or a locally owned factory. While corporate executives insist that their wages are ample in view of lower standards of living, the minimum wage in most East Asian countries comes nowhere near to covering basic living costs. In the Philippines, starting wages in U.S.-owned electronics plants are between $34 and $46 a month; the basic cost of living is $37 a month for one person. In Indonesia, the starting wages are about $7 less per month than the basic cost of living. And that basic cost of living means bare subsistence: a diet of rice, some dried fish and water, lodging in a small room occupied by four or more people.

Contrary to corporate belief, most women don't use their wages to buy motor bikes and personal luxury items. Meager as their wages are, most women are important wage earners for their families. A 1970 study of young women factory workers in Hong Kong showed that 88 percent were turning more than half their earnings over to their parents.

Subsistence wages are only part of the picture. Most women work under conditions that can break their health or shatter their nerves within a few years, often before they've worked long enough to earn more than a subsistence wage.

The price of factory work

Consider first the electronics industry, generally thought to be the safest and cleanest of the export industries. Inside the low, modern factory buildings, rows of young women, neatly dressed in company uniforms or t-shirts, work quietly at their stations. There is air conditioning, not for the women's comfort, but to protect the delicate semiconductor parts they work with. High-volume popular music is piped in to prevent talking.

Electronics is near the top of a list prepared by the U.S. National Institute on Occupational Safety and Health of high health-risk industries. Open containers of dangerous carcinogenic acids and solvents, giving off toxic fumes, are commonplace in electronics factories. In a Hong Kong clinic survey of workers who use chemicals, 48 percent had constant headaches, 39 percent were often drowsy, and 36 percent had frequent sore throats.

Electronic companies require perfect vision in new employees, but most women need glasses after a few years on the job. During the bonding process, women peer through microscopes for seven to nine hours a day attaching hair-like gold wires to silicon chips. One study in South Korea found that most electronics assembly workers developed eye problems after only one year of employment. The companies treat these health complaints with indifference. "These girls are used to working with the scopes. We've found no eye problems. But it sure makes me dizzy to look through those things," said a plant manager at Hewlett-Packard's Malaysia operation.

Women factory workers are in a precarious situation, treated like temporary workers, always under the threat of layoffs. Sick leave, holidays, and vacations are almost unheard of. A probationary or apprenticeship period of six months or so, during which pay is only three-quarters of the regular wage, is common. By laying off workers just before the end of their probation, companies save the expense of a full wage. Workers are so used to this practice that they refer to themselves as "permanent casuals."

Stress and high anxiety permeate the women's work lives, contributing to health problems. Most factories operate several shifts, requiring workers to rotate day and night shifts every week or two. These irregular schedules wreak havoc with sleep patterns and foster nervous ailments and stomach disorders. When production deadlines draw near or 'there are rush orders, women may be forced to work overtime for as much as 48 hours at a stretch without sleep. Management often provides pep pills and amphetamine injections to keep the women awake and working; some of the women have become addicts.

Sexual harassment is another hazard of factory work, especially for women who are out late at night working the graveyard shift. In the Bataan Export Processing Zone in the Philippines, sexual harassment is a common practice among male supervisors. "We call our company 'motel', says a worker at Mattel, "because we are often told to lay down or be laid off. It is hard to know what to do when that happens because we can't afford to lose our jobs."

Company-sponsored recreational activities are designed to waylay demands for job improvements. A U.S. plant manager in Malaysia says, "We've developed recreation to a technique," with sewing classes, monthly shoe sales, singing competition, and sports events.

Multinationals pit women against each other, not only as workers, but also as sex objects, superimposing Western notions of femininity and consumerism upon local cultural stereotypes. Beauty contests are an integral part of factory life, with each company sending its own beauty queen to the yearly "Miss Free Trade Zone" contest. Bathing suit and "Guess-whose-legsthese-are" contests are also popular. On pay day, vendors are often let into factories to sell cosmetics (promoted in company-sponsored cosmetics classes), jewelry, and other luxury items.

Factory work does offer women some autonomy, earning power, and freedom from parental control. But the price of this freedom may be high, Because of their relative independence, Westernized dress, and changed lifestyles, women may be rejected by their families. "Factory girls," especially those living away from their families in company dormitories or urban housing, are thought to be "loose" sexually. They are often scorned by men as unsuitable marriage partners. Although pressure to marry is great, women have a harder time finding a mate after spending their prime marriageable years in the factory. Competition among the workers for eligible husbands is intense.

Linked hands

Women all over the world are becoming a giant reserve army of labor at the disposal of globetrotting multinationals. No woman can feel job security on the assembly line as long as the profit motive guides multinational activities. Runaways are now occurring within the Third World. Sri Lanka, which recently opened an export processing zone, has become a haven for companies fleeing labor militancy in South Korea and the Philippines.

But some corporate strategists are suggesting that offshore factories are no longer viable. An editor of Semiconductor International argues that "if political turmoil begins to haunt the world, especially in those areas where U.S. companies have their assembly operations, it would be a disaster for the U.S. semiconductor industry." The solution? Automated facilities in the United States to assure cheap labor and stability.

Automation without worker control and full employment is a threat to women workers. In the electronics industry, women are assembling the very components which may be used to make their jobs and those of other women obsolete. Faced with sexual and racial discrimination, women will be further hurt as remaining technical and managerial jobs go mainly to white men.

Another threat to women's jobs is the current world economic crisis. During the recession of the mid-1970s, there were massive layoffs of factory workers in the electronics industry. In the present recession, a decline in world demand for consumer goods is resulting in similar layoffs in Third World assembly plants. In the Philippines many factories are going to a three or four day schedule. Subcontracting arrangements between multinationals and local Third World entrepreneurs are proliferating as Western corporations seek greater flexibility to change production rapidly in response to market gyrations without worrying about their own factories sitting idle (see p 8). For U.S. women, the world economic crisis has meant high unemployment, falling real wages, and a rise in sweatshops and homework.

When even low-paid jobs are hard to come by, it is especially easy for companies to play off their employees against each other. Women in a Tennessee garment factory are threatened with competition from Mexican workers while women in the Philippines are threatened with competition from Sri Lanka. It's a competition in which all workers are losers: wages are driven down everywhere, and health and safety conditions deteriorate, but job security is never achieved.

Rachel Grossman, a researcher who has studied women in Malaysia, argues, "Protectionism and nationalist attitudes that view Third World imports and workers as competition are lagging behind the times. The international nature of production has been an economic reality for some time now. Multinationals don't deal in terms of individual countries, but on a global scale."

One important strategy is to foster an information exchange between Third World activists and their counterparts in the industrialized countries. The most difficult, yet most important task in confronting multinational domination, is to create direct links between women workers around the world.

It may take years before such international links are extensive and powerful enough to successfully challenge multinational corporations and the governments which support them, but women's lives grow closer all the time. "We all have the same hard life," wrote Min Chong Suk, a Korean garment worker. "We are bound together with one string."

Annette Fuentes, who researches and writes about women around the world, lives in New York. Barbara Ehrenreich is a fellow at the Institute for Policy Studies and a contributing editor to Ms. magazine. This article is excerpted from a pamphlet, "Women in the Global Factory, " to be published in the fall of 1983 © by Institute for New Communications in New York City.

From Sea to Shining Factory

Norah works in a textile factory in the Bayun Lepas Free Trade Zone in Penang, Malaysia. A forty-year-old widow with four young children, she lives in a tiny wooden house that she and her husband built in what used to be a fishing village on the shore of Penang Island. The sea has now been filled in with tons of sand dumped there as part of a past "development" project designed to build a bridge to the mainland and to construct hotels, businesses, and factories. Marilee Karl who works with ISIS, an international women's information center in Rome, interviewed Norah in Fall 1982 in Penang

What was life like before the sea was filled in, in front of the village?

My husband was a fisherman. He had a small boat and caught fish and sold them. Lift was good then. We didn't have much money but we had enough to eat. But after a while the catches started getting poorer and poorer. That started ten years ago, just after the factories opened in the free trade zone a few miles down the road. Some people said that the factories were putting poison into the sea and killing the fish.

What work did you do then?

I didn't work then. I stayed at home with the children. I cooked the food for my husband and the children. I used to collect driftwood for the fire to cook on. There is a water pipe down the shore. I take the clothes and wash them there. I used to bake rice cakes and my children would sell them in the village.

What happened after the sea was filled in with sand in front of the village?

My husband couldn't catch any fish anymore. He tried to find another job but he couldn't find any. It was terrible. We didn't have anything to eat. Finally a friend of mine who was working in this textile factory in the free trade zone told me they needed someone to clean the machines. I was very lucky to get the job, because most of the women working there are young and unmarried. It is very hard for an older woman to get a job, but my friend spoke to the boss about me. I was only earning Malaysian 14,30 [about U.S. $1.50 a day] and I couldn't miss any days because we are only paid for the days we are there. It was just enough to buy a little rice for ourselves and the children.

What did your husband do while you were in the factory?

He stayed home and took care of the children. But he felt it was a great shame for a man to do a woman's work. The other men also made fun of him. He also became very depressed because he couldn't find any work. Finally, he felt so bad, he became sick in the head and died four months after our fourth baby was born.

How did you manage after your husband died?

I don't earn enough money to pay someone to take care of my children so I put the three oldest ones in an orphanage. It's a religious one [Muslim] and it's free. A neighbor takes care of my youngest boy. I feel bad because I can't visit them very often. I have to take two buses to get there and that costs too much.

Now I am earning more money than before but it still is not enough, Recently I got a promotion - now I am in the weaving room tending the bobbins on the looms, but it is very difficult because I must oversee so many machines. I can't keep up with the work and I am afraid I will lose the job. At first I couldn't hear at all after I left the factory because the looms are so noisy. I have adjusted to that now, but I am so tired all the time. My side aches and I have trouble breathing, I don't know how I can stand it, but I have to.

Does your factory have a union?

Yes. (It is one of the few factories in the Zone with a union.) The Textile Workers Union is very strong, so it got in. Fifty percent of the workers have to join before it can come in. It is very good for the workers. Now we get higher wages than before and we even get paid public holidays off. The management can't fire workers for any old reason now. The union will stand up for the workers except in cases of stealing.

What about the future?

My mother keeps tellings me to marry again but who would marry a widow with four children? Only a widower with half a dozen children of his own. Then I would only have to work harder to take care of him and his children. No, there is no use in marrying again. But I worry about being able to work when I am old. I am so tired, but I have to keep going until my boys are old enough to work. I worry that they won't be able to find jobs like my husband. We also heard rumors that they are going to destroy all our houses [the villagers are all squatters] and build skyscrapers here. I don't know where I will go then. Some of the housing projects are so far away. It's lonely and I don't know if the factory would send the bus to pick me up.

Contracting Poverty

Most Third World women employed in manufacturing operations on the global assembly line are part of a recent corporate trend: international subcontracting.

Under this strategy, manufacturers based in developed countries subcontract the most labor intensive stages of production, for example sewing or assembly, to the Third World nations where labor is cheap. Once assembled, the multinational re-imports the goods - under generous tariff exemptions - to the developed country instead of selling them to the local market. The subcontractor may be the multinational's own subsidiary - as in the case with nearly all women assembling electronics or garments for foreign companies in free trade zones - or the subcontractor can be an independent firm or an agent who further subcontracts the assembly work to women who work in their own homes.

While global recession has markedly slowed trade and investments worldwide since 1979, international subcontracting has boomed. By 1981, subcontracting challenged foreign direct investment as the major form of corporate overseas expansion in the developing world.

The shift has not been given the attention it deserves by critics of multinationals. Particularly where the subcontractor is a national firm or women in their homes, the shift is of monumental significance. In these cases, multinationals are freer to resist militant workers, revolutionary upheavals, and even economic downturns. Also, in these instances, labor conditions are often worse than in foreign factories.

International subcontracting is possible and profitable because companies today can break up production lines and locate different stages of assembly in factories around the globe. It is particularly attractive in two kinds of industries:

  • where the product is highly standardized, for example, cars and electronics
  • where certain stages of the production process are far more labor intensive than other stages, for example, in the garment industry, where assembling clothes involves a high degree of labor
Recently, international subcontracting by U.S. corporations has expanded at a phenomenal rate. The amount can be approximated from U.S. import figures under U.S. tariff items 806.3 and 807. Adopted in 1930 and 1963, respectively, these items give corporations an incentive to subcontract items for processing abroad: when imported back to the U.S., the items are taxed only on the "value added" overseas (an amount calculated from the cost of labor plus the usually minimal cost of machinery and infrastructure to produce them).

The dollar value of imports into the U.S. under these two tariff items has skyrocketed from less than $1 billion in 1966 to more than $18 billion in 1982, doubling the share of subcontracted goods from 7 to 14 percent of U.S. manufactured imports.

The rapid growth of subcontracting appears to signal a shift in corporate expansion in the Third World. Traditionally, U.S. corporations' main involvement was through direct investment in either fully-owned subsidiaries or joint ventures.

Since the most recent global economic downturn in 1980, however, banks cut back on new loans, and U.S. direct investment in the Third World declined. After years of steady growth, new investment did not even hit the $6 billion dollar mark in either 1981 or 1982. In contrast, subcontracted imports in the U.S. from the Third World exceeded $7 billion in both years. Between 1979 and 1982, subcontracted imports rose steadily from 21 percent of manufactured imports from the Third World to 26 percent.

The Third World receives only a quarter of U.S. investment overseas while attracting almost half of U.S. subcontracting. The business is also highly concentrated geographically. In 1981, ten countries accounted for 92 percent of 806.3/807 subcontracting in developing countries, including Mexico, and countries in the Caribbean Basin and Southeast Asia.

In the subcontracting agreements in these regions, one figure stands out: for the Third World's two major subcontracting industries - semiconductors and apparel - less than two fifths of the value of the final imports to the U.S. are added in the developing countries. This compares with an average of more than three quarters of the value added for all categories of subcontracted goods. It is important to ask whether Third World governments could not be gaining more from the resources they pour into attracting multinationals than the few jobs which subcontracting of subsidiaries create.

As with every new development in the international economy, some groups stand to gain and others to lose. International subcontracting has enhanced corporate power and flexibility at the expense of workers and government in several ways. Since subcontracting arrangements through national firms or home workshops involve no new capital investment, it is easy for a multinational to break a contract in the face of political upheaval and reestablish a similar one in another country. In addition, the multinational can avoid the risk that its investment will be nationalized under unfavorable terms.

Likewise, in the uncertain atmosphere of the current economic crisis, multinationals can more easily slash production orders without letting their own factories lay idle. Finally, since the multinational is often the sole buyer from the subcontractor, it is able to dictate the price and conditions in the contract from a position of monopoly power.

Workers are more exploited under subcontracts with national firms than under subcontracts with multinational subsidiaries. National firms (owned by local capitalists) are typically in a far more precarious financial situation than multinational subsidiaries, which have the best access to financing through the multinational banks. Hence, whle wages offered by multinational subsidiaries are usually not much more than those offered by national firms, the latter often have a far worse record in paying wages on a regular basis. And, while multinational subsidiaries often use dangerous industrial chemicals and eye-damaging microscopes, workers in national firms often face the dangers of old, poorly maintained machinery. Conditions deteriorate further when work is subcontracted to the home, as is often the case with apparel. Here, women work in isolation, receiving even lower wages, no social welfare benefits, and, since they usually work on a piece rate basis, are totally at the whim of the multinational supplier. Homework involves no overhead costs (e.g. electricity) for the multinational and minimizes the chance of labor uprisings. Certain corporations, such as the Filipino-Chinese firm Uniwear, have responded to growing worker militancy by dismantling factories and resorting to more and more homework subcontracting.

While international subcontracting and overseas investment bolster corporate control over workers, particularly women workers, they simultaneously reinforce the need and potential of international worker resistance. The eighteen-year-old Indonesian woman welding microscopic lead wires to semiconductor wafers for $2.10 a day sits on the same production line as a lab worker in Dallas, Texas, thousands of miles away. By taking part in isolated resistance activities, either could lose their job to women in the Philippines or Silicon Valley. Only by collective action can they create a viable threat to Texas Instruments' global profits.

Such networking between workers becomes even more difficult when homeworkers in the rural areas of the Third World are part of the production chain. New strategies will be required to pull these workers into alliances of collective resistance.

This report was contributed by John Cavanagh and Joy Hackel who work on the Transnational Corporations Project at the Institute for Policy Studies.

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