Socialist Party
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24 July 2004

'Off-Shoring': The Bosses' Global Attack On Workers

ON 17 June HSBC bank announced that it would be cutting 3,500 jobs in the UK. 500 of these jobs would be 'off-shored' to HSBC's call centres in India and Malaysia. Although HSBC said that these changes were to "improve the productivity of the group's UK banking operations" this does not imply that the bank is running into trouble. Last year HSBC made a record pre-tax profit of £6.8 billion.

Jane James

BT are planning to transfer 2,200 jobs abroad over the coming year. The Communications Workers Union (CWU) points out that BT will still charge UK customers 55p a minute but pay Indian workers just 80p-90p an hour.

There is nothing new in companies shifting work to countries where workers are paid lower wages and endure worse conditions but until recently this was confined to manufacturing industry, where jobs are still haemorrhaging.

The Transport and General Workers' Union (TGWU) reports that manufacturing jobs are being lost at a rate of more than 140,000 a year with the risk of a "manufacturing-free zone" within a generation.

Now we are seeing service sector and white collar jobs such as accountancy, computing and telecommuications jobs being off-shored to low wage economies. Up to 200,000 office-based jobs in the UK could be at risk. In the US, off-shoring is predicted to increase by 40% by 2015, resulting in 3.4 million jobs going abroad.

Driving down of wages

THE OVERRIDING reasons for companies to offshore are lower wage costs. Cost savings of 40%-60% are possible for a company sending call-centre work to India, while labour costs in India make up one-third of overall costs compared to 50%-70% in the UK.

Big business is waging an assault on workers worldwide to drive down wages and conditions.

Digby Jones, CBI Director General (the bosses' organisation), has warned that if Britain does not keep a 'flexible workforce' then jobs would go abroad. Last year, 700 Npower call centre workers in Tyneside agreed, by a two-to-one majority, to accept pay cuts of up to 25% in order to keep their jobs.

Thousands of jobs are currently being off-shored to India where we are told that India's telecom and computer sector is booming, creating new and better-paid jobs for skilled workers and developing India's economy.

There are between 75,000 and 115,000 call centre workers in India, mostly in retail banking, insurance and telecommunications.

Some multinationals (such as General Electric and British Airways) moved much of their back office processing there in the mid-1990s encouraged by successive Indian governments who have promoted liberalisation and privatisation. Such measures include tax breaks and financial incentives to companies who relocate, along with labour market 'de-regulation'.

Labour laws have been 'relaxed', some to allow women to work at night. Wages are 70%-80% lower than in the UK or US, often as little as £1,000-£2,000 a year.

Workers face the same stress as call centre workers here but with additional pressures. Having proved they have a high standard in speaking English they are taught to refine their accents and given Western names and identities.

Evening and night work is the norm in order to match peak day-time hours in the West. Working eight to ten hours a day, six days a week, is common and we are not aware of any unionisation in call centres.


DURING THE 1980s and 1990s multinational companies, faced with declining profitability, went in search of the cheapest source of raw materials, finance and labour costs. This usually led to the relocation of jobs to countries where production costs were lower.

Globalisation - the closer integration of the capitalist world economy - has led to bigger profits for big business and a driving down of pay and conditions for workers in both the advanced capitalist and underdeveloped countries. New technology has facilitated relocation especially in the service sector. Telecommunications and computerisation allow workers in any country to access phones and computers worldwide.

Fujio Mitarai the boss of Canon in Japan believes that any process where labour makes up more than 5% of production costs can be relocated to a low-wage economy.

In other words, the more labour intensive the job the bigger profits a company can reap by slashing wages - bearing out Karl Marx who argued that labour creates value and that profit is the 'surplus value' ie the unpaid wages of the working class.

If companies could get away with paying workers in Britain £1 an hour and make no contribution towards the welfare state then they would not need to offshore jobs.

However, the potential strength of the working class in the ACCs (Advanced Capitalist Countries) would respond to such drastic attacks with protests and unrest which, at this stage, capitalism sees no need to trigger. But without a determined struggle from the trade unions, workers' conditions will be further eroded.

Trade unions response

THE UNIONS affected most by off-shoring have all launched campaigns to save their members jobs. The CWU has a "Pink Elephant Campaign" to "stop the UK job stampede". They argue that as "BT is a UK company, it should support the UK economy and jobs."

Tony Woodley, general secretary of the TGWU, in condemning off-shoring calls on the government to protect UK jobs. He argues that other governments such as in France and the US have recently stepped in to save firms and jobs from going abroad. He quotes Schršder (the German Chancellor) who recently described off-shoring as "unpatriotic".

The French government has saved the engineering firm Alstom from being sold abroad, with the loss of 8,500 jobs, by a £1.4 billion rescue.

The US government has implemented selective short-term import controls to stem US jobs going abroad, while Democrat presidential hopeful John Kerry has promised tax credits to companies who take on new workers in industries losing jobs to outsourcing.

Woodley calls on employers to act "responsibly"; for tax and aid policies which 'reward the good employer investor and punish the bad'. While the trade unions need to work out a coherent strategy to prevent jobs from being off-shored, such reformist and protectionist demands are not the solution.

Protectionism within the capitalism economy, whether in the form of subsidies to firms who want to shift production and jobs abroad or import controls to reduce competition from abroad, are no real solution to the loss of jobs.

Such arguments can lead to nationalist demands - that workers should join with 'their' government to save British jobs and against governments and workers in other countries. The impression could be given that bosses and workers have joint interests. This could lead to job losses being blamed on workers in India or Malaysia, thereby playing into the hands of the bosses.

While there is an inherent tendency within capitalism towards globalisation in times of crisis capitalism will turn to protectionism.

Capitalists in many countries resorted to protectionist trade wars during the devastating 1930s world economic recession but that only exaccerbated the crisis.

Even the biggest multinationals rely on the state within the country they are based in order to defend their profits and existence in the face of economic crises, mass movements and social unrest.

Governments could be forced to use state intervention to prop up firms or introduce import controls in order to defend the national economy and stem revolutionary movements.

Under capitalism neither the 'free-market' nor protectionism is a way out for the working class and exploited masses.

When protectionist measures are introduced their aim is to protect the profits and markets of big business and not for the benefit of ordinary workers. In fact, workers would pay more for imported goods that are restricted as they are forced to buy dearer home produced goods.

Nevertheless, where government subsidies or rescues result from a struggle by workers to save their jobs this would be seen as a partial victory. Socialists would then argue that rather than give tax income to big business, the firm should be nationalised under democratic workers' control.

Furthermore, we would go beyond nationalising one or two companies and raise the demand for a planned economy, not only within one country but pointing out the necessity for an international socialist revolution so that the resources and production worldwide could be planned.

Likewise, in a period of heightened struggle where workers took over their workplaces and forced them to be nationalised, socialists would support measures that would protect workers' jobs.

We could not support cut-price and often heavily subsidised imports, nor cheap labour, undermining workers involved in strikes - hence our opposition to cheap coal imports during the miners' strike of 1984-85.

At all times it would be essential to link up with workers abroad to organise united struggles.

The future of off-shoring

HOWEVER, THE future for off-shoring is not plain sailing. Newer technology needing fewer but more skilled workers has convinced some companies to bring production back to their home countries.

Problems have arisen in India with poor infrastructure, political instability and high staff turnover. Moreover, 50 million workers participated in a trade union-called one-day general strike last year against neo-liberalism and privatisation.

With a strong tradition of trade union organisation and recent combativity, the Indian working class will inevitably wage struggles against the bosses of these 'new' industries.

Companies based in the ACCs will find it easier to pull out of off-shored countries where workers have less or no rights to redundancy agreements and pay.

Workers of the world unite

EVERY JOB under attack has to be defended while not allowing the bosses to divide workers on national lines. BT workers, whether in Manchester or Mumbai, are exploited by the same employer.

Trade unionists need to find out where all the employees of their company are employed and if appropriate which subsidiary employs them in order to make links and struggle together against the same boss.

We are witnessing a race to the bottom on pay and conditions and only a united struggle of workers worldwide can halt the attacks. However, as long as capitalism exists workers will be faced with exploitation and endless struggles which is why we must argue for a socialist alternative while fighting against all injustice here and now.

We demand:-