The Impact of Globalization on Jobs and Employment Relations - Essay Example

? Introduction The role of foreign direct investment remains a key pillar in the broadening of economies and industrial relations at large. Although, the term globalization lacks a precise definition, it captures the elements of prevalent perception that there is a widening, intensifying and speeding up of world-wide interconnectedness in every aspect of life whether cultural, social, economic, or environmental (Kelly 2002, p. 183). The paper explores the impact of globalization on industrial relations and how different countries relate in terms of high-road vs. Low-road responses to increasing global competition. As a result of globalization, the flow of labour, as well as capital, has increased. Over the years, globalization has had a notable impact on the technological advancements, which have taken place in most parts of the world (Elliott and Freeman, 2003). Employment relations have been affected by globalization in a number of ways (Leisink 1999, p. 3). The impact of globalization on jobs and employment relations Number of jobs Globalization can impact on the number of jobs available within the economy, which, in turn, influences key macro-economic variables including the unemployment rate. For instance, off-shoring can result to job losses in a certain economic activity of one country and job gains in the host country. Structure of jobs Globalization can also impact on the structure of jobs based on their distribution across economic activities. Jobs linked to certain economic activities may tend to fade away giving way to emergent activities fashioned out of the changing competitive strengths and patterns of specialization (Block et al. 2001, p.259). Composition of jobs Globalization also alters the composition of jobs or the mix of skilled and unskilled jobs within the economy. For instance, low-skilled workers within developed countries have grappled with rising unemployment owing to competition from developing countries’ employees’ resultant of technological progress. Job Earnings Globalization may impact on job earnings by enhancing the overall efficiency of the economy (productivity), which yields to a rise in real incomes, as well as by facilitating movement of products and production factor, which ultimately, impacts of price of labour (job earnings). Employment conditions Employment conditions comprise part of the competition evident between economic locations, which, in turn impacts on labour costs. Globalization has led to a rise in competition between countries and links to lower safety requirements, extended working hours, or even a ban on trading union in a bid to attract MNCs or spur offshoring (Leisink 1999, p.4). Challenges of Globalization Globalization poses a number of challenges: ensuring that the benefits of globalization shared by all countries; confronting the fear that globalization yields instability; and, addressing the fear within the industrial world that heightened global competition will yield inevitably to a race to the bottom in wages, employment practices, labour rights, and the environment (Edwards 2003, p.3). Threats of Globalization The impact of globalization on employment frequently perceived as a central issue within contemporary political economy. From the perspective of workers within developed countries, globalization remains a threat as conventional industrial jobs relocate around the world. As job markets increasingly become over-saturated with employees, it is likely that wages will drop, and employees will be compelled to demand much longer working hours with reduced benefits for workers (Bamber, Lansbury and Wailes 2011, p.4). The impact of globalization on employment relation is likely to be influenced by a number of interconnected factors economic development strategy; the intensity of globalization; government responsiveness to employees; and, labour market features (Edwards 2003, p.4). Discussion The rise in the international mobility of capital within the last two decades has called into question the capability of individual nations to support a unique set of social policies. As such, countries with high-cost social policies depicted as having no choice but to cut back on social programs given that they have increased the cost of doing business, which contributes to a decline in international competitiveness, which consequently yields to a decline in domestic growth and employment (Gall, Wilkinson and Hurd 2011, p.160). The international financial market liberation has rendered some of models of social protection and cooperative labour relations ineffective. Recent experiences in Sweden, Germany, Canada, France, the U.S., and other industrialized countries indicate instances of slow erosion of the social safety net. When threatened by rising international competition, firms may respond by minimizing wages and worsening working conditions or by promotion their skills and equipment. Those which have chosen high road, such as Japan, Ireland, U.S., and the U.K., their strategies encompass establishment of social capital, upgrading skills, investment in education highlighting significance of high value added goods and services, and introducing technology (Bach 2005, p.39). Other countries such as China, Indonesia, Mexico, and Vietnam (mostly emerging economies appear to be selecting low road strategies such as removing high taxes and social charges and regulations on aspects such as employment, wages, health and safety and environment perceived as burdens to employers (Lansbury, Bamber and Wails 2004, p.30). High Road Response The high-road can be perceived as instances in which the government, inclusive of sub-national governments institute suitable programs and avail tax and regulatory framework that guarantee that social goals are met, as well as the objectives of economic growth (Potter 2001, p.209). High performance model relates to flexible work structures and streamlined production systems. Similarly, high-road strategies fashioned at advancing solutions to economic issues that also foster solutions to environmental sustainability, sustain, and generate high quality jobs, as well as critical societal needs. In this model, the job quality increase, and even the entry-level jobs avail good wages, autonomy, and skills development (Wiseman 1998, p.134). Competitive advantages can be derived from the concentration of businesses that combine high levels of quality in terms of technology, skill, and innovation. Low Road Response The Low growth strategies can be viewed as one in which policies focus on eradicating perceived barriers to the growth of existing enterprises inclusive of high taxes, regulations and wages, mainly in response to perceived threats from lower cost locations (Sigh 2008, p.494). The low-road model mainly features union avoidance, enhanced utilization of two-tiered work and wage structures, separation of the inner core of skilled employees from a periphery of cheaper part-time and temporary employees, and sub-contracting as a way of minimizing the size and cost of core labour (Keating, Loughlin and Deschouwer 2003, p.34). In conclusion, high-road to growth aligns with the notion that economic prosperity can be derived from enhanced productivity and expanded training opportunities to allow all people work in the trades. A low road to growth, on the other hand, links to the notion that economic prosperity can be generated by minimizing wages, limited worker rights and benefits, and enhanced freedoms to enable employees dictate the terms of employment. High-road response is typified by the pursuit of competitive position through enhanced quality; increased employee Voice; and an increase in trust, security, productivity, HR processes, employee involvement and participation. Low-Road response is typified by flexible contracts; casualization of the workplace and reduced formality; and, a desperate “race to the bottom” as demonstrated by exploiting emerging economies. Low-road economic and business strategies characteristically foster economic growth and industrial competitiveness at the expense of safeguarding the environment, labour standards and good jobs, quality public services, as well as other social goals. Conversely, high-road solutions highlight attainment of economic objectives by incorporating broad, labour, environmental, and social aims. As such, the high-road model can be successfully employed to problems within economic, business, and workforce development, and fostering of environmental sustainability. The strategies encompass participative management, self-directed teams, highly sophisticated employee incentives, and job rotation. References List Bach, S. (2005). Managing Human Resources Personnel Management in Transition, Oxford, Blackwell Pub. Pp.39-40. Bamber, G. Lansbury, R. & Wailes, N. (2011). International and Comparative Employment Relations, London, Sage. Pp.4. Block, R. et al. (2001). Models of International Labor Standards, Industrial Relations 40 (2), pp 258-292. Edwards, P. (2003). Industrial Relations Theory and Practice, Oxford, Blackwell Pub. Pp.3-4. Elliott, K. A. & Freeman, R. (2003). Can Labor Standards Improve Under Globalization? Institute for International Economics. [Online] Accessed May 3 2013. Available at: http://scholar.harvard.edu/freeman/publications/can-labor-standards-improve-under-globalization Gall, G., Wilkinson, A., & Hurd, R. (2011). The International Handbook of Labour Unions Responses to Neo-liberalism, Cheltenham, Edward Elgar Pub. Pp.160. Keating, M., Loughlin, J., & Deschouwer, K. (2003). Culture, institutions and economic development: a study of eight European regions, Cheltenham, Elgar. Pp.31. Kelly, J. (2002). Indutrial relations: Critical perspectives on business and mangement, New York, Routledge. Pp.183-184. Lansbury, R. D., Bamber, G., & Wails, N. (2004). International and comparative employment relations: globalisation and the developed market economies, London, Sage Publications. Pp.30-34. Leisink, P. (1999). Globalization and labour relations. Northampton, Ma, Edward Elgar Pub. Pp.3-5. Potter, J. (2001). Devolution and globalisation implications for local decision-makers, Paris, OECD. Pp.209. Sigh, B. D. (2008). Industrial relations Emerging paradigms, New Delhi, Excel Books. Pp.494. Wiseman, J. R. (1998). Global nation?: Australia and the politics of globalisation, Cambridge, Cambridge Univ. Press. Pp.134-135. Read More