Labour market effects of integration into GVCs: Review of literature

r4d Working Paper 2015/10 by Anirudh Shingal

ABSTRACT: The relationship between trade and labour in a world with GVCs is the subject of relatively recent research. In this paper, we review this developing literature. Our review suggests that integration into GVCs is associated with greater employment opportunities, income gains for workers and better working conditions. However, these bene˝ts depend on the position of the ˝rm in the value-chain and may have also con-tributed to the skilled-unskilled labour divide. Moreover, despite greater opportunities for employing women, gender di˙erences continue to exist and competitive pressures emanating from lead buyers in GVCs a˙ect the nature and sustainability of any gains. Recognition of these attributes has also led to research on the development of workforce linked to GVCs as this is an important tool for facilitating the integration of domestic ˝rms into GVCs, value-chain upgradation and managing the consequent adjustment process for workers. This literature also highlights the crucial role that ˝rms, industry associations, NGOs/international agencies and the government play in bridging the skill-gap between developing country workers and the requirements of global industries.