Surendra Pratap and Annavajhula J.C. Bose
In production chain capitalism, informality and precarious work are systematically created in and built into the value chains to reduce the cost of production and maximize profits. Using a case study on the automobile industry in India, this paper shows that fluctuations in workforce generally occur more at the lower ends of the value chain, artificially created by buyers at the higher end of the value chains as part of a strategy to minimise the bargaining power of suppliers and put downward pressure on the prices of parts. Therefore, engaging contract workers is part of a bigger strategy of profit maximization that exploits cheap labour not to meet the needs of flexibility. The value chain dynamic itself also creates informality of small enterprises at the lower ends of the value chain, which blocks any upward mobility of these enterprises. Thus, the presence of effective trade union movement at the firm level, in the case of larger firms, and at the industry level, in the case of small enterprises, emerge as the most important factors that can potentially minimise the pains of informality and precarious work.