Trade unions and Telework

Report produced for the International Trade Secretariat FIET, Autumn 1996

D. Relocation of work internationally

The international migration of work

The previous section of this report looked at the relocation of white-collar 'information' work within the borders of individual countries. This section takes this idea further, to look at the transfer of work internationally.

This phenomenon is sometimes described as 'offshore' information processing. It is not something new. However, the possibilities for offshore working are enormously increased with the digitisation of data and by the use of sophisticated international telecommunications links.

Another term which has been coined to describe some aspects of this international trade in service jobs is 'social dumping', the implication being that jobs can be exported away from countries where workers enjoy a high level of social protection and good working conditions to those where wages, controls and employment benefits are low.

Some examples of the internationalisation of white-collar work:

* Singapore newspapers, including the Straits Times, are partly sub-edited and designed in satellite offices in Sydney (Australia) and Manila (Philippines). Copy and artwork is sent electronically between these offices. The parent company, Singapore Press Holdings, has adopted this policy to cope with a shortage of journalists within Singapore itself.

* About 120 staff in Loughrea, Republic of Ireland, process about 4,000 medical insurance claims each day for the US financial services firm Cigna. Staff in Loughrea have access to the company's central databases through two fibre optic data lines to Connecticut and process and authorise claims on-line.

* SwissAir's ticket accounting, computer entry queries and discount scheme is now centralised in a single office in Bombay, where 370 staff work. The airline also undertakes ticketing for Austrian Airlines.

Data entry

Offshore working can mean many things, and it is appropriate to distinguish between low-status, relatively mechanical work and higher-status information processing where more skills and experience are required.

Data entry (inputting of text or data via keyboards) falls into the former category. The work is by definition often repetitive and boring. One Brazilian study described a workplace where staff were electronically monitored, were not permitted to talk at work and where several workers complained of tenosynovitis. "We are in the slavery age, working as a slave and being whipped, not in our bodies but in our minds," one data entry clerk told the researcher. [The Hard Life of the Unskilled Workers in New Technologies: Data-Entry Clerks in Brazil; A Soares; in Human Aspects in Computing ed H-J Bullinger, 1991]

Conditions need not be as inhuman as this to give rise to concerns. A report in the French telework magazine Télétravail [June/July 1996] described recent moves by French publishing companies to use typesetting companies in (among other countries) Mauritius, Morocco and Madagascar. Increased global competition has led to typesetting costs falling over a 7-8 year period by two-thirds, with wage levels in France driven down in consequence.

According to a 1992 study funded by the World Bank, the Philippines is ranked first in the market for remote data entry. The study commented: "Presently there are 2000 keystations in the country producing over 100 billion keystrokes per year... The country's major edge lies in its relatively lower manpower cost (data entry clerks in the US charge $65 for 10,000 keystrokes, while the going rate in the Philippines is between $4 to $6 for the same number of keystrokes) and high accuracy rate (99.7%)." [International Software Studies: India's Software and Services Export Potential and Strategies, by InfoTech Consulting Inc (Maxi/Micro Inc), 1992]

Other countries which compete for remote data entry work include Jamaica, Korea, Malaysia, Mexico, Sri Lanka, Malta and Cyprus.

Mechanical data entry work is threatened by developments in optical character recognition and scanning technology. Countries with data entry industries have the task of attempting to attract higher value added information processing work less likely to be overtaken by technology.

Offshore information processing in the Caribbean

The English-speaking islands of the Caribbean are close geographically to the United States, share the same language but also have much lower wage levels. The offshore information processing industry is associated particularly with Barbados and Jamaica, and has existed for at least 25 years. More recently other countries including St Lucia, St Kitts/Nevis, St Vincent, Grenada and the Spanish-speaking Dominican Republic have seen data processing facilities opened.

In the early days, the raw data to be processed was sent offshore by ship cargo. Later this was generally replaced by air freight arrangements, still in use by some companies today. In both Jamaica and Barbados, however, the telecommunications infrastructure has been developed to provide on-line alternative means of sending data. The 1988 Jamaica Digiport International free zone development at Montego Bay, for example, included a satellite earth station and digital switcher for companies located in this area of the island.

The Caribbean information processing industry was the subject of a detailed FIET report by Dennis Pantin of the University of the West Indies, published in 1995. This report explores the current scale of the industry, the working conditions encountered and likely future trends.

"The most common characteristic found among firms surveyed across the Caribbean was a sensitivity if not hostility to requests for information about working conditions as well as marketing issues. The latter can be explained as fear of 'industrial espionage'. However the former suggests that firms are aware that their working conditions leave something, if not much, to be desired."

[Export Based Information Processing in the Caribbean, with Particular Respect to Offshore Data Processing, FIET 1995]

Dennis Pantin estimates that about 2,300 workers are employed in offshore processing in Barbados, about 3,500 in Jamaica, 1,000 in the Dominican Republic and about 500+ in other Caribbean countries. Hourly wage rates for data entry work are given as $0.80-$1.00 in Jamaica, $2.00-$2.88 in Barbados and $7.00-$8.00 in the USA.

According to Dennis Pantin, the bulk of offshore work undertaken in both Barbados and Jamaica is data entry (88% and 76% respectively). In Barbados, Caribbean Data Services is the major employer with about 1100 staff. Established by American Airlines in 1983-4, Caribbean Data Services has since diversified from its initial role of processing airline ticket stubs into a profit centre for its parent company, offering insurance claim processing and other general processing work for other clients.

Staffing

"Our evidence suggests that the women workers in offshore offices are being used only as a low-wage labour force, acquiring little valuable training or skills."

[The Internationalisation of Clerical Work: A Study of Offshore Work Services in the Caribbean, by Annie Posthuma, SPRU 1987]

The vast majority of workers in the data entry and information processing industries in the Caribbean are women (90% in Jamaica and over 80% in Barbados, according to Dennis Pantin, but as high as 98% in some companies according to other studies). Shift working is the norm, with many companies operating three shifts (including night working).

Most workers also tend to be young, in the 17-29 age range. An academic writer Ruth Pearson suggests that, in Jamaica at least, most data entry workers are recruited from high school with no previous job experience. She adds, "Most keyboard operators tend not to stay in the job for more than two or three years, largely because of the absence of promotion opportunities for all but a very small minority. Although there is no documented evidence in Jamaica, it is believed that eye strain, back injuries and repetitive strain syndrome are major health hazards for women working under the relentless pace and conditions required of keyboard operators in Jamaica." [Gender and New Technology in the Caribbean by Ruth Pearson, in Women and Change in the Caribbean, ed Janet Momsen,1993]

However, Ruth Pearson challenges the idea that the information processing industry is necessarily simply a repeat of the sweatshops of the textile industry. She argues that the skills learned by the women could help to create a more highly skilled information services sector in the Caribbean, though she admits that this has yet to happen.

Call centres

"BA [British Airways] has used [Automated Call Distribution] technology to take advantage of different time zones. Centres in the US and UK take each other's calls outside their respective office hours. This has now been extended so that calls are automatically passed from one country to the other if lines are busy, and around 15% of calls generated in the US are answered in the UK, which also handles calls from Sweden and Zurich out of hours."

[New Technologies at Work - Consultation Document, Trades Union Congress (UK), 1996]

Call centres are increasingly operating across national borders. The phenomenon has become most marked in western Europe, where a number of companies have chosen to establish a single call centre to handle telesales or teleservice enquiries from across most or all of the countries participating in the European single market.

This means that customers in, say, France, Germany or Britain who ring local numbers in their own countries may unknowingly have their calls answered by staff speaking their own languages but based at a call centre in another country. This is what happens, for example, for hotel reservation enquiries for a number of large international chains (including Best Western, Sheraton, Ramada/Renaissance and Radisson), where the European call centre for each chain has been located in the Republic of Ireland. Ireland also hosts a number of computer sales and technical support call centres (such as Dell and Gateway 2000) which service customers from other western European countries.

Over the past five years, the Irish government has made a particular effort to target US companies planning to establish call centres for the European market. This follows an earlier Irish strategy which saw a number of US financial services companies encouraged to set up back offices, typically handling insurance claims, in relatively remote areas of western Ireland.

"Ireland: the Call Centre of Europe.

Many large European and American companies have recognised the value of setting up a pan-European call centre to serve each of their international markets...

Ireland can.. offer a well educated, multilingual and flexible workforce at a lower cost. Add in a substantial tax benefit and you have the most effective Call Centre in Europe."

[Advertising copy for the Industrial Development Agency, Ireland, 1995]

Ireland is facing competition from other areas of Europe, including Scotland. Digital recently centralised its European technical support call centre operation to Scotland. This move affected Digital staff from other European countries. In Italy, for example, some staff were invited by the company to emigrate, following their jobs to Scotland.

International telemarketing to the north American market is also being undertaken to a limited extent from Caribbean centres.

Software engineering

One of the best known examples of globalisation in service provision is that of the burgeoning software industry in India, focused in particular in the cities of Bombay and Bangalore. One estimate is that Indian software exports could within a few years be worth $1 bn.

According to the Delhi-based National Association of Software and Service Companies, around 330 companies are involved in software exports from India, employing between them about 14,000 technical people. The largest company, Tata Consultancy Services, currently has about 20% of the market. Its recent contracts include a multi-million dollar securities clearing system for a Swiss client and a project for a major United Kingdom insurance company. Whilst Tata Consultancy is an Indian owned company, others in this market are jointly owned ventures with western companies.

One such joint venture is BAeHAL Software. A report in the Financial Times newspaper in 1995 described how BaEHAL uses telecommunications links to undertake software programming for a British client:

"At BAeHAL Software's offices in Bangalore, in southern India, a computer programmer keys in a change to a programme he is writing for a UK client. The computer he is using, via a satellite link, is at the client's site in Bristol. Because it is morning in Bangalore but still night in England, there are few users and the computer responds faster to him than it would to a user on the client's site, during the working day there. By the time the client comes to work, the changes will have been completed and tested." ['Wired to the rest of the World', by S.K.Juggy Pandit, FT, 10.1.95]

Future developments

The assumption must be that the next few years will see a marked increase in the globalisation of clerical and white-collar work, particularly with improvements in the ease with which data can be transmitted electronically between continents. Whole new industries may be able to develop, taking advantage of cheap labour costs and overheads outside the developed world.

"Once it becomes possible to transmit and switch video signals without overloading networks, a whole new range of opportunities open up for developing countries. The World Bank, for example, has trailed the idea of security cameras in American shopping malls being monitored by people in Africa. "There is potential for African countries to come into the global economy through these types of technologies," a spokesman said.""

[The Guardian (London), 15 Oct 1994]

It is possible to identify some of the factors which will affect the degree to which this process takes place. They include:

- the cost of telecommunications

- technological constraints and limitations

- labour costs

- other cost considerations

- language/ cultural considerations

- protectionism

- taxation/grants to businesses

- quality of workforce

- corporate inertia

We can note that the trend is for both the cost of international telecommunications and the technological constraints to be reduced. Trade barriers, which may be applied to defend internal markets for manufactured goods, are hard if not impossible to impose in the service sector, especially where services are delivered virtually. Commentators increasingly argue that lower-status information processing work will gravitate almost inevitably to low-waged areas of the world, whilst the developed world attempts to maintain its share of higher-value work through a strategy of workforce training.

Trade union representation

The developments outlined in this chapter pose considerable challenges to trade unions, in countries at both ends of the process of international migration of work.

At present, it would appear that the majority of workers engaged in offshore information processing work are not unionised. A report for the ILO commented that: "The situation regarding data entry employees' rights to organize in labour unions is.. unclear. In many situations, employment in free trade zones precludes the right to organize, although this has not been the case in the manufacturing sectors of Jamaica, Mexico and the Philippines, it has been the case in Malaysia and the Republic of Korea." [Global Information Processing: the Emergence of Software Services and Data Entry Jobs in Selected Developing Countries, by Swasti Mitter and Ruth Pearson, ILO, 1992]

In both Jamaica and Barbados, trade unions have made efforts to recruit inside the data processing centres. As early as 1984, for example, workers at one Barbados establishment tried to organise, but were threatened with dismissal after the company concerned threatened to relocate. Dennis Pantin in his report for FIET summarises the current situation in both countries as follows:

"The union representatives indicated that workers in this industry in Jamaica were not unionised. However, they also reported that there had been one successful attempt to organise some 200 workers in one data-entry firm which has been operating in Kingston for the past 15 years. In the first instance, workers at this Kingston-based firm had staged a strike in 1994 while seeking unionisation.. Official recognition was given in April 1995... However on 5 June, the workers were served letters on arrival at work indicating that 'due to financial problems' the company was closed until further notice...

"The trade union representatives in Barbados, in particular at the BWU, indicated that they had made several attempts to organise workers in the data-entry industry including those at the largest company [Caribbean Data Services] and in fact did have a few union members at this company. Most of the workers, according to the BWU, did not seem to consider themselves as factory workers... The inference being that, in this particular case, the difficulty in organising workers came from their own perception rather than company resistance."

Interestingly, this suggests that a parallel with the situation in European call centres (see previous section), where a predominantly young (and predominantly female) workforce tends not to be unionised or to identify particularly with the traditional union movement.

The next section of this report will consider possible union responses to teleworking in all its manifestations.

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