International Business: Davos 2010 and Labor - Coursework Example

International Business: Davos and Labor Labor is one of the forces of globalization that has tremendous effects, both negative and positive, particularly on poorer countries. It is even reasonable to say that the labor environment highlights the inequality that the integration of the international market produces. As it is, globalization forces countries and enterprises in many industries to compete for investment by achieving the lowest possible labor costs and, unfortunately, these result to the exploitation of workers in weaker economies. Child labor is a case in point. It presents a problem in most developing countries and even in industrialized nations. According to Kawachi and Wamala (2007), while child labor is not specifically an effect of globalization, it is exacerbated by the commercial pressures of such phenomenon. (Kawachi and Wamala, p. 144) As previously mentioned, countries today are involved in cutthroat competition and the availability of cheap labor is an essential advantage because investors are looking for the best opportunity to cut costs. The International Labour Office (ILO) estimates that more than 350 million children worldwide are economically active and more than half of these were below 15 years of age. The sorry state of labor practices brought about by globalization is due to the lack of regional and world trade agreements that incorporate labor standards. Here, the use of sweatshops and child labor grew since, in globalization, there is a natural desire to produce more goods for export. (Brown 2003, p. 94) Currently, very few countries have legislated against child labor, sweatshops and other unfair labor practices because governments from most undeveloped countries want to increase export. With globalization, labor was one of the things that were commoditized and deregulated. Besides the labor exploitation in poorer economies, there is also the rise of the gap between the wages of skilled and non-skilled workers. With the increase in globalization and the role that technology plays, there is now a pervasive shift in demand for labor that has favored skilled workers at the expense of the unskilled sector and that, according to von Brau and Mengistu (2007), this may translate into increased poverty or at least increased inequality. (p. 2) At the most extreme cases, globalization has led to worsened poverty in some countries as well as the violation of human rights and it has also highlighted the growing economic inequality spurred by the increased integration of the global market. Multilateral and international cooperation is still the best approach in order to address the weak points of the globalization economic model. The United Nations, the World Trade Organization and the ILO are just some of the formal bodies tasked to address its adverse effect such as poverty and exploitation on peoples and economies. However, there is a need for industries and direct players in the international market to be involved in addressing the consequences of globalization. The World Economic Forum (WEF) is one of such initiatives, providing a platform for both business and political leaders to join together and cooperate. In WEF 1999, for instance, the then UN President Kofi Annan made an appeal, in front of thousands of businessmen in attendance, for a global compact to give a human face to the global market because “the spread of markets outpaces the ability of societies and their political systems to adjust to them, let alone to guide the course they take.” (McIntosh, Waddock and Kell 2004, p. 28-29) Davos 2010 The annual WEF idealizes and promulgates the US-style capitalism. Particularly, in its history – since its inception in 1982 – it has promoted globalization. The WEF 2010 is actually not that different in the sense that it again aggressively pursued and promoted the globalization theme. This time, however, this has been done in the context of current economic issues that the world faces, which is the US financial crisis and its repercussions on the global economy. Essentially, the focus of the meeting of the world’s most powerful business and political leaders was how to address the financial crisis. For example, French President Nicolas Sarkozy, in his opening address, stressed that it will not be and protect against future crises if the economic imbalances that are root of the problem are not addressed. (WEF 2010). After the meeting ended, new plans were suggested and drafted, including reforms in the banking industry amidst the criticisms in regard to the failings of the financial system. Besides banking reform, one of the most important messages that came out of Davos this year was that fair job creation and fair free trade are still the key ingredients to the global economic recovery. WEF and Labor The WEF 2010 at Davos has direct impact on the labor market. As previously stated, this element in globalization is one of the keys to the global economic recovery after the global economic downturn. The improvement of workers’ lives and the steps taken in order to narrow the gap on workers wages are fundamental in the stability of the global economic landscape. And so, what is important here is that Davos 2010 involved the direct players in the international labor market. Whatever policies that would directly impact labor across the globe could trace its roots here. There were plenty of opportunities for this issue to be raised. There is the Davos Congress Centre wherein chief executives sat on session panels plus there were the industry conclaves called governor’s meetings wherein companies discuss their affairs with each other, with partners and all other stakeholders. A businessman, for instance, was quoted in a report by Weber (2010) saying, “I’ve got 70 meetings with business partners back-to-back, 30 minutes each.” He emphasized that the relevance of the WEF 2010 is that its purpose is to bring together bright minds and create opportunities to network. With this kind of environment, it is easier to discuss, tackle and perhaps do something about labor problems that are created by globalization. This area, after all, is a crucial element in any economic development path, a number of which were certainly discussed in the Davos conference. On another note, those concrete actions and initiatives to address the global economic crisis and spur economic growth that came out of Davos can affect the global labor market directly. It must be underscored that because of the economic slowdown, workers have suffered declining real earnings as industrial sectors contracted. Betcherman and Islam emphasized this as they noted that earlier experiences suggest that the upswing in labor markets during recoveries progresses more slowly than the downswing during contractions. (Betcherman and Islam, p. 30) With significant effect on global economic recovery, WEF 2010 could credit itself as one of the events that contributed to the improvement of the labor market this year. All in all, while, Karsten Ronit (2007) put it, the World Economic Forum arrogates decision-making power without legitimacy (Ronit, p. 139); the presence of political leaders, financial watchdogs and central banks enforces a high degree of efficacy especially on commitments made by companies on issues including improving the global economy, labor and fair labor practices. There are similar other initiatives and conventions in existence like the WEF that aim not only to promote globalization but also to address the problems it creates. The United Nations Conference on Environment and Development is one of these. This conference places more emphasis on the environment and labor in the face of the increased integration of the global market. In recent years, it has achieved several important milestones, which include: The promotion of rights to establish trade unions; the ratification of relevant ILO conventions; the establishment of mechanisms with bi- or tripartite composition for safety, health, and sustainable development; the increase in the number of treaties on labor market partnerships; the improvement of workers’ safety and health (including the improvement on the statistical reporting of those); and, the increase of training for workers. (Kawachi and Wamala, p.153) Another summit, which has adopted a sort of anti-Davos theme but focusing more on labor and the ill effects of globalization, was the World Social Forum. Here, there is an agreement that there are benefits to globalization but that there is the aim to urge countries and businessmen to blunt the sometimes brutal impact on communities and labor forces. (Headlee, p. 152) Recommendations Starting in the year 2010, the organizers of the Davos forum have invited political leaders especially those coming from poorer economies. The invites are also extended to non government organizations (NGOS), including those that represent the labor sector. This is quite significant in terms of policymaking or drafting concrete and enforceable actions that could effectively address the problems that result from rapid globalization. The multilateral nature of plans and initiatives that would be developed in several meetings and conclaves at Davos could prove to be more effective than before. Headlee underscored this by stressing that in the past, the WEF was a private affair of about 1000 financial and corporate business leaders as well as a handful of selected economists and government officials. (Headlee, p. 151) Inviting global political leaders to the annual summit is not exactly aimed at politicizing the whole event. The aim is to achieve a more effective and easier way to develop plans, actions and policies, create favorable business climates, among other benefits that could promote and improve the globalization system. Countries, especially, weaker economies could benefit from this. Leaders representing them could directly address the collective mass behind the global capitalist system in order to urge them to action or adopt initiatives that could lessen global economic inequalities. For example, when the President of Tanzania was invited, he immediately unleashed a barrage of criticism and appealed to his WEF audience to address the widening of the wealth gap in the world as well as the digital divide. The then South African president Nelson Mandela also asked: “Is globalization only for the powerful? Does it offer nothing to the men, women, and children who are ravaged by the violence of poverty?” (Fischman 2005, p. 92) The WEF, among other similar forums, could serve as platforms for countries to pressure businessmen and here, they could call businessmen and powerful economies to spread the wealth, keep economies growing and capital flowing to weaker economies. This is quite significant today as globalizers and capitalist fear the backlash on globalization. This is, hence, the best time to demand for radically new policies that would help poor countries, regulate the rich and provide more power to working people. Conclusion Unarguably, globalization is still the best economic model for the global economy. The UN, both the poor and rich countries, even globalization critics admit that this is so. The only problem is in regard to its adverse effects especially in cases wherein it aggravates poverty and promotes poor labor practices. The challenge now is for all the stakeholders to work together in order to deal with the loopholes and in the process produce the best globalization model that benefit everyone, creates and distributes wealth evenly and hence effectively solve the problem of poverty and in the area of labor. Economic fora such as the WEF are essential in this area. As highlighted by this paper, it allows for the cooperation of policymakers and major players of globalization to directly address problems such as those concerning labor. References Betcherman, Gordon and Islam, Rizwanul (2001). East Asian labor markets and the economic crisis: impacts, responses & lessons. World Bank Publications. Brown, C 2003, Globalization and America since 1945. Rowman and Littlefield. Fischman, G 2005, Critical theories, radical pedagogies, and global conflicts. Rowman & Littlefield. Headlee, S 2002, A year inside the beltway: making economic policy in Washington. Greenwood Publishing Group. ILO 2002, Every child counts: New global estimates on child labor. Geneva: International Labour Office. Kawachi, I and Wamala, S 2007, Globalization and health. Oxford University Press. McIntosh, M, Waddock, S and Kell, G 2004, Learning to talk: corporate citizenship and the development of the UN Global Compact. Greenleaf Publishing. Ronit, K 2007, Global public policy: business and the countervailing powers of civil society. Routledge. Weber, T 2010, “Davos 2010 ends with bankers on the defensive.” BBC. viewed 16 Mar. 2010, http://news.bbc.co.uk/2/hi/business/8489946.stm. Von Braun, J and Mengistu, T 2007, “Poverty and the Globalization of the Food and Agriculture System”. International Food Policy Institute, viewed 18 Mar. 2010, http://conferences.ifpri.org/2020Chinaconference/pdf/beijingbrief_vonbraun.pdf World Economic Forum (WEF) 2010, "President Sarkozy calls for a new Bretton Woods." Word Economic Forum, viewed 17 Mar 2010, http://www.weforum.org/en/events/ArchivedEvents/AnnualMeeting2010/Wednesday27/index.htm. Read More