Globalization of Labor Market - Research Paper Example

It is not a new phenomenon as trade between countries has been in existence since the world war but modern globalization has been intensified by the use of new technology and conversion of governments into free market economies. It has led to a lot of positive as well as negative impacts on the economy. It leads to growth of the economy and creation of employment for a large population hence reducing poverty. Skill transfer between nations is also evident leading to labor productivity. However, it has been blamed for eliminating jobs and widening the pay gap between the skilled and un-skilled labor force.

The growth of multinational companies has also led to a lot of changes in the labor market such as; low wages, segregation of women in service jobs and creation of sweatshops where women work under poor conditions. The paper will discuss the effects of globalization on the labor market. Effects of Globalization on the Labor Market Globalization has had a lot of positive and negative effects on the labor market. The IMF and OECD view globalization as contributing to positive change in the labor market.

They argue that trade liberalization; improved technology, and foreign investments which characterize globalization are key drivers of the economy leading to creation of employment. . To them, globalization is the worst thing that could have happened to the labor market as it leads to unemployment, migration of workforce, emergence of multinational corporations which are less concerned with workers welfare, widening pay gap between the skilled and un-skilled laborers, loss of jobs due to advanced technology, and emergence of export processing zones which mistreat workers (Winkler, 172-226).

Liberalization of trade has led to emergence of network enterprises with diverse network of suppliers. The MNCs give contracts to those suppliers thus changing the nature of work from permanent employment to flexible employment where workers are employed on temporary basis or become part-timers and on-call workers. Most of the part-time jobs require less skills hence are dominated by women. Though some may argue that it is creation of jobs for women, these women earn low wages and work in poor conditions.

This is because the MNCs threaten to take their jobs elsewhere if the working conditions are improved for example, to countries where labor is cheap. These jobs are mostly available in export processing zones. Furthermore, flexible employment has led to loss of job security as it is difficult to define the periods during which those workers are entitled to benefits such as unemployment benefits. Those workers who work under contracted suppliers or organizations do not know who their boss is thus they don’t know where to air their views (World Bank 101-120).

Globalization has led to increased unemployment especially in the developed countries. For example, the unemployment rate of Germany rose from 5.7% in 1991 to 9.0% in 2007 (Winkler, 6). This is as a result of establishment of EPZs in the developing countries where labor is