Digital trade: the potential threat to women workers in the Global South

One of the key issues at the 12th ministerial conference of the World Trade Organization in June was the moratorium on electronic transmissions that bans countries from charging customs duties on imports of digital products, such as e-books, software, and online video games. As this column explains, how policy-makers in developing countries navigate the challenges of data flows, data localization, and source-code sharing will critically affect economic and social outcomes for women workers in the Global South.

The rapid adoption of digital technologies in product design and development, automation and robotics in manufacturing, and the rise of digital marketplaces, such as Amazon, have been touted as pathways for women’s empowerment. But while digitalization offers significant potential for promoting women’s labor market participation, the benefits are neither automatic nor homogenous. Emerging evidence suggests that digital technologies affect women’s work in complex and diverse ways.

Consider the case of garments manufacturing. Some tasks, such as cutting material, are easier to automate than others, such as stitching, which indicates that automation may displace workers in some tasks but create employment opportunities in others. For example, the deployment of modern cutting lasers in the A-Z garment factory in Tanzania displaced workers engaged in cutting, but the productivity gains in this area of operations led to greater output, creating jobs in the next stage of stitching, which requires relatively more skill and is largely dominated by women.

New jobs in the garments value chain may also be created, for example, in the operation and maintenance of computer-controlled equipment and in occupations related to STEM (science, technology, engineering and mathematics). But women in the Global South are less likely to get these jobs since they continue to lag in analytical and information and communications technologies (ICT) skills, and in social and leadership skills. Workers displaced by automation in developing economies also find it more difficult to move into new jobs elsewhere in the economy than workers in developed economies.

The adoption of digital technologies by ‘lead firms’ – those that set the parameters of production in global value chains – can further reconfigure entire value chains. Levi’s, for example, has invested in digital imaging and automation of finishing tasks in its jeans. While higher-value-added activities such as designing have remained with lead firms​, the subsequent increase in cost competitiveness and the growing demand for mass customizable production may lead to Levi’s bringing its other manufacturing tasks that had been offshored closer to home in the United States.

This phenomenon of ‘reshoring’ could lead to manufacturing job losses for workers in the Global South, disproportionately affecting women in low-skill and routine tasks. Increasing automation in lead garment firms may also have a ‘backstopping effect’, whereby suppliers in developing countries lower wages to remain competitive.

Similarly, in the ‘business process outsourcing’ (BPO) sector, lead firms are adopting digital technologies, such as chatbots and ‘robotic process automation’ – technologies that make it easier to deploy and manage software robots to imitate human interactions with digital systems. There are reports of multinational firms reshoring BPO activities, including the UK’s Virgin Media and Australia’s Telstra and Optus operating in India and the Philippines, while Whirlpool has reshored 400 call centre jobs back to the United States.

BPO jobs held by women that are intensive in routine or repetitive tasks are at higher risk of being automated. For example, chatbots are automating low-end repetitive jobs in call centers, which may disproportionately affect women workers, particularly in call centers where their ‘feminine social skills’ are considered an asset.

Proposed global rules on digital trade: a further entrenchment of gender inequalities?

In parallel to the rapid adoption of digital technologies in economic systems, some countries are negotiating global rules on digital trade. In 2017, the 71 members of the World Trade Organization (WTO) signed a joint statement on e-commerce, announcing their intent to ‘initiate exploratory work together toward future WTO negotiations on trade-related aspects of electronic commerce’.

The proposed e-commerce rules under this joint statement initiative (JSI) propagate a developed country agenda, which can compound the challenges faced by women workers in the Global South differently, necessitating a careful rethinking to prevent a further entrenchment of gender inequalities. For example, under the JSI, the United States is seeking a permanent moratorium on the imposition of customs duties on electronically transmitted products, such as music, software, and video games.

The potential tariff revenue loss from this ban in the period 2017–20 is estimated at $48 billion for developing countries, while the least developed countries (LDCs) have lost an estimated $8 billion. This weakening of the fiscal revenue base will put pressure on care-relevant infrastructure, such as social security nets, disproportionately affecting women, the majority of whom work in the informal economy.

The most effective gender equality policies tend to consist of various forms of positive discrimination in national regulation, such as the gender-sensitive domestic services initiatives in trade agreements. But in 80% of its existing trade agreements, the United States asks for national treatment for American e-commerce firms, and in over 70% of its trade agreements, it does not offer any special provision to facilitate access to e-commerce for micro, small and medium enterprises (in which women tend to be concentrated).

Moreover, the JSI seeks to ban governments from requiring any access to source codes/algorithmic disclosures from transnational digital corporations, such as Google, with no exceptions or special or differential treatment for developing countries or the LDCs. This will obstruct technology transfer, which is an important driver for the development of local digital industry and job creation in developing countries.

In addition, the use of algorithmic techniques in global digital marketplaces can end up unfairly excluding and marginalizing women-run small businesses and women workers in the Global South, including through exclusion from work opportunities or low pay.

For example, there is a gender skew in the delivery of ads on Facebook: the platform displays Domino’s advertisements for delivery jobs – traditionally done by male workers – to a higher fraction of men than Instacart jobs. A majority of women-led enterprises have also been disadvantaged in the data-based scoring processes of Amazon’s buy box algorithm.

Shaping inclusive labor market futures for women in the Global South

Gendered digital inequalities at all levels – from firms and policy-making to skills and education – risk leaving women behind without appropriate policy interventions. The digital divide faced by women in the Global South is five-staged and dynamic, manifesting in the form of access to technology, adoption of technology, participation in the ICT sector, dividends from participation, and technology-related rule-making.

There is a need for targeted digital connectivity policies and new investments in digital industrialization to open up opportunities for women’s entrepreneurship and participation in the digital economy.

National policies need to address gender inequalities in digital access through communal public funds dedicated to expanding internet connectivity. Higher enrolments of women in STEM, as well as technical and vocational education and training, will help to increase the exposure of women to technology from an earlier stage, and promote meaningful representation in national ICT ministries and global rule-making.

Similarly, decisions to automate production at the firm level need to incorporate women in decision-making, while gender-sensitive training in firms can ensure that women workers are equipped to take up new jobs created by digitalization.

National digital trade policy frameworks need to retain policy space to navigate issues on customs duties, data flows, data localization, and source-code sharing. The freedom to impose customs duties on imported digital products could be an important channel through which developing countries can raise taxes, which could then be spent on other priorities. Having the right to access algorithms can enable governments in developing countries to protect the economic and social future of women workers.

 

Author:

Karishma Banga is a Research Fellow at the Digital and Technology Cluster, Institute of Development Studies, UK. She is also a Digital Trade Policy Advisor at the Commonwealth Businesswomen’s Network.