The Aspects of Multinational Corporation doing Business - Essay Example

Is a multinational corporation doing business in a developing country obligated to pay its employees (contracted or subcontracted) a living wage? Global labor standards have become an area of concern since the mid-90s (Rivolli 223). Socially responsible investors took the interest in establishing high labor standards for employees in developing countries. Before, they were subjected to harsh working conditions. They proclaimed that persons must be respected, as they are free and rational as well; they have an intrinsic value.  There has been unjust exploitation of workers in developing countries by multinational corporations and their suppliers. There were allegations of “sweatshops” and exploitative labor practices; especially in manufacturing and distribution systems of retailers. This attracted increasing attention from public pension funds, religious investors, mutual funds, educational institutions, and individuals (Rivolli 223). This became necessary with the proclamation that a person’s desires, aspirations, and goals should be given due consideration. Persons have a right to well-being and freedom therefore other persons should not interfere with those rights. These rights also correspond to duties of employees and their organizations. Multinational Corporations (MNC) managers must respect the rights and well-being of their employees. Managers on activities undertaken on behalf of their employers must implement these constraints. Managers should undertake industrial relations to ensure employees are paid adequate wages. Industrial relations involve firms, states, workers, civic organizations, international agencies, and public interests groups involved in work and employment in developing countries. The importance of industrial relations is that it affects the pace, scale, scope and industrial relations and the economic change and characterization of industrialization in the society. Industrial relations in developing countries are subjected to social forces; social scales ranging from local to extra-local forces. Large scale political and economic influences on industrial relations such as neocolonialism, development of post-colonial states, national and international economic cycles, changing political orientation, Ecological and demographic features of also affect industrial relations of a particular country. Critics have intensely risen against contracting arrangements within multinational companies. The critics who are usually labor activists and human rights activists charge these companies with exploiting workers (Maitland 598). They call these companies “international workshops” accusing them of chasing cheap labor across the globe. Additionally, they are accused of failing to pay their workers living wages, using child labor, turning a blind eye to abuses of human rights, being complicit with repressive regimes in denying workers the right to join unions and failing to enforce minimum labor standards in the workforce and so on (Maitland, 2004, pg. 598). Shifts hours are at least ten, and they are usually forced overtime. In these conditions, factories have strict rules, which include talking or going to the bathroom, and supervisors are abusive in matters of policy (Young 366). Working conditions can be very dangerous; places are overheated with little protective equipment. For example, health benefits and pension plans are rarely mentioned and there is no job security. Workers who protest are usually intimidated or fired. Women workers face sexual harassment and verbal abuse. Wages for such workers are low below the local legal minimum wage; they fall below the workers’ need for subsistence. Workers are defined as temporary workers where their employees can escape legal laws (Young 366). A person has a right to freedom and well-being. No labor right should be undertaken that violates a worker’s freedom and well-being. Labor activists should also enforce occupational health and safety standards. Freedom and well-being are basic rights hence it is important for them to be respected. Multinational companies have a unique position of respecting these rights by virtue of their vast resources and power. The United Nations state “Society no longer accepts the view that the conduct of global corporations is bound only by the laws of the country they operate in. According to them, by virtue of their global influence and power, they should accept responsibility and be accountable for setting up high human standards. This becomes necessary especially when multinational corporations already have well defined internal decision structures that provide an internal mechanism of enforcing human rights standards. Moreover, morally innovative managers are well equipped in playing a constructive role in ensuring that the rights of workers in developing countries are respected. Having freedom consists of having the general conditions required that would make a worker to act in a manner consistent with second-order preferences. Therefore, they should regard paying living wages to their employees as one of the constraints of basic human rights in their developed internal structures. Education and publicity about condition under which apparel is sold in affluent countries is made less in developing countries. The World Trade Organization considers exploitative effects of liberalized trade as a “backslash” especially in products that utilize a high degree of unskilled labor (Rivolli 223). As a result, employment in high wage areas has been failing due to employment in low wage areas. Five basic labor rights have nearly covered a wide variety of labor codes, however, there is a list of specific rights endorsed in numerous codes and documents that failed to justify that right. This comes especially with the complexities of setting up industries in developing countries. Furthermore, varieties of tactics have been implemented to suppress union activity; union activists and workers have been discriminated. Additionally, the codes may inadequately address MNC’s obligation to employees. Additionally, the five worker’s rights put an incomplete extension of the rights to freedom and well-being in the workplace and other rights should be implemented to suit these needs.  The sixth right, for example, attains that it is a right for the employees to be given a living wage. Furthermore, critics of MNCs proclaim that MNCs must have the moral obligation of providing workers with a living wage for employees working 48 hours a week. Moreover, a country should have a specific method of what this wage should be. The MNC has an ethical obligation to respect this right.  However, this provides a challenge as they battle within adhering to this right as well as being competitive in the global market. MNCs should have the responsibility of improving working conditions and the wages of workers (Young 365). Nonetheless, multinational corporations should pay a living wage to its employees. It is important to address the worker’s conditions; one has to look at globalization pressures and the poor conditions of developing countries.  There is a large disparity globally in wages plus living conditions in developing nations; a working condition in one nation may be well sought in another. Companies that profit in atrocious working conditions face constant criticism from the media and consumers. It disburses the cliché exposed by the media that companies in developing countries run through sweatshops; horrible working conditions. Despite all these controversies, there have been efforts by firms to improve these working conditions. Their ambition is to improve the working condition through innovating health and safety programs within the working place. Productivity increase and employee productivity in companies can detract companies’ respect for basic rights by paying a living wage and improving conditions. On the contrary, there are consumers who will pay more for products that are produced from organization that respect human rights.  Human rights activists have charged companies with the exploitation of workers. Some have named those companies sweatshops. They are accused of chasing cheap labor globally and not paying those living wages using child labor and failure to adhere to basic human rights (Maitland 597).   Defining living wage in developing may pose a challenge in developing countries. Therefore, people use the same approach used by the US government in defining poverty. Some believe a living wage is a methodology that arose to account for the purchasing power of wages across countries. In order to calculate a minimum wage, one calculates the market basket of food that meets minimum dietary requirements and the cost of other basic needs The Council on Economic priorities uses the same approach to define a wage that meets basic needs in different countries. They require adherence to minimum health and safety standards (Rivolli 224). International corporations, at minimum, should pay a minimum wage. An international corporation should pay the living wage, even if it is not paid by local firms. According to human rights activist DeGeorge,”A living wage should allow a human being to live in dignity” (Maitland 599). He further states that corporations should pay subsistence wages that fend a worker and his or her dependents such that they are able to stay in a home that reasonable with dignity. This allows corporations to respect the human rights of its workers. Such provisions also allow the development of the general state of the society (Maitland 599). DeGeorge strongly believes that is better not to be employed than to be paid a living wage. Living wage has become a major standard in international corporations, or rather international sweatshops, according to critics. He further states that multinational corporations should pay the same wages in international countries as those paid in the US Unfortunately, the level of wages in developing countries is not clear. Furthermore, some companies pay “starvation wages” or “slave wages” (Maitland 599). Kernaghan, another critic, insists that workers should be paid enough to support their families as well as a living wage and “be treated as human beings” (Maitland 600). Wages should be fair and decent; the living wage should be adequate for supporting one’s family (Maitland 600). There have been controversies claiming that human activists are against international companies. On the contrary, they are not against international companies but state that such employees should be paid a living wage and be treated as human beings. Despite the strong support for living wages, there are controversies that undermine. In some developing countries, it is impossible to pay living wages when the host country does not have the statutory minimum wage or minimum wage. The current dilemma reveals real scenarios and case studies.  This also looks at examining emerging economy contexts and the exploration of the specific business risks by this dilemma. The ILO Convention No. 31 on Minimum Wage Fixing 1970 that requires a signatory member to implement minimum wage mechanisms at a national level.  Although, despite the declaration of minimum wage at a national level, the article fails to provide adequate means stated in the ICESCR. Or rather, they are not reinforced effectively or current with the law provisions. In such a situation, a company may pay minimum wage as required by the national law but fail to respect the rights of its workers by paying living wage as required in order providing a decent living for them and their families. As a result, there is a growing focus on living wage on “living wage” payment.  This brings its description as wage that is sufficient to provide the basic needs of an average-sized family in a specific economy. Therefore, payment of a living wage is of great importance today. In conclusion, multinational corporations should pay its employees living wages. However, they need to look at all considerations before venturing into the same. Business, governments, trade unions and other labor organizations lack a distinct consensus of what a living wage means. Not only that, the means of its calculation, and implementation can be generically or for a specific economy.  An added challenge can be found when in jurisdictions, where there are no industry standards on the benchmark, or no minimum wage levels. This makes it complicated for designing a living wage for a company especially when a business wants to respect these rights.   This would ensure that costs are not off balance while running or working in a company. Living wage is important to maintain a decent living for a worker and his or her company. It also upholds the employee to be more effective in order to maintain a social state. Works Cited Maitland, Ian. "Sweatshops and Bribery: The great Non-Debate over International sweatshops." Ethical Issues in International Business September 1997: pp. 240-65. Rivolli Pietra. Labor Standards in Global Economies: Issues for Investors. Journal of Business Ethics. 2003: 223-232 Young, I. M. "Responsibility and Global Labor Justice." The Journal of Political Philosophy (2004): 365–388. Read More