Migration Influence in the Global Labour Market - Essay Example

Management Table of Contents Introduction 3 Labour market 4 Advantage of opening global labour market 5 Disadvantage of opening global labour market 7 Conclusion 9 Reference List 10 Introduction Labour markets establishes the relationship between labour forces, population, demand for the services or goods and technology (Hall, et al., 2012). The population aims at limiting the size of labour force in any country, which has the ability to constrain the number of products and services that can be manufactured. The demand for these goods ascertains the employment status in certain industries. The technology has encouraged the manufacturing of products and services; however, the use of technologies may often make the production of goods obsolete. This is due to the inappropriate skills of the employees who are responsible for managing the use of technology and the manufacturing process. After examining the previous history of changes and identifying the future modifications, the labour market force can be determined for the future (Hall, et al., 2012). In the earlier times, human beings were in search of shelter, food and the necessities for their survival. The human societies at that time concentrated on the hunting and have little possessions (Lazear and Oye, P., 2004; Hall, et al., 2012). They did not focus on the organizational structuring and planning for future. With the passage of time, human has gained experience for developing tools for efficient hunting and also for technological purposes. For the development of a labour market, many factors can be considered and the most important among them is technology. It has made the life easier and happier in a society from the stand point of communication and production (Garcia, Hernandez and Lopez-Nicolas, 2001). The beginning of mechanized production and industrial revolution has encouraged and increased the productivity of the labour market. During the period of 1980s and 1990s, the labours from India, China and Soviet Union had entered the global labour pool and their economies had thus joined the global consumption and production system. Since then, the global economy has experienced expansion in global labour market (Garcia, Hernandez and Lopez-Nicolas, 2001). Globalization is observed to the main driver of the labour market. It has induced fear in the hearts of manufacturing workers as it changed the technological development (Lazear and Oye, P., 2004; Hall, et al., 2012). With the advent of globalization, surging imports and outsourcing had destroyed jobs of the domestic labours. Before the recession period, the wages of the labours in the US and other developed countries were stagnant and after the period unemployment ruptured the economic condition to a great extent. The global labour market has grown stronger over the past few decades as there are more skilled labours (Garcia, Hernandez and Lopez-Nicolas, 2001). However, it is worth mentioning the global labour market has also imposed huge challenge on the global economy during the financial crisis on 2007-2008. In light of this the advantages and disadvantages of the global labour market are depicted in the report. Labour market Labour market indicates the interaction between labour supply and demand. The demand for labour is identified as the amount of workers companies requires for manufacturing goods and services. However, the labour supply is determined with the help of size of population in an economy (Anderton, 2008). The labour market can be further classified into internal labour market and external labour market. The internal labour market refers to those who are hired in the entry level jobs and the higher level labours are recruited front h within the organization. The wages are ascertained internally and are free from market pressure. Nevertheless, the external labour markets refer to that market where the workers have the freedom to move within the companies and there are ascertained by the aggregate processes, which does not allow any discretion on setting the wages (Garcia, Hernandez and Lopez-Nicolas, 2001; Anderton, 2008). Advantage of opening global labour market The internal and external labour market contributed towards the development of underdeveloped and developing economy (Canal and Rodriguez, 2008). It helped in strengthening the productivity of the agricultural or industrial sectors. The markets are not globally integrated in traditional sense as few labours have the tendency to migrate (Canal and Rodriguez, 2008). Even if the labour market is integrated, the workers in the developing countries are not paid lesser than that in the developed ones. However, direct measures are taken in the international labour market for integration; these measures have failed to undertake the changes that have taken place worldwide. This change is obviously brought by globalization. The changes have resulted from the forces such as technological innovation, which has increased the investment, trade and migration for jobs. These have brought combined changes in the global labour market (Canal and Rodriguez, 2008). Labour markets are integrated in such a manner that the workers have competed for the similar type of jobs rather than applying for different jobs. The opening of labour market in the global scale has encouraged ease in communication and transportation. It has helped in adopting labour saving technologies in the developing countries, which have helped the integration more easy and healthy (Canal and Rodriguez, 2008). The advantage of opening labour market is directed at increased international integration as there is reallocation of humanity, which forms an important resource. The labour force also forms the part of comparative advantage that helps the world production facility to expand by giving emphasis on the individual welfare (Bernanke, 2012; Blanchard and Portugal, 2001). However, labour churning and widening domestic distribution of income has been encouraged by the technological changes. It is also associated with the increased equality that exists between the workers with respect to income. Hence, it can be proved that global labour markets have encountered changes that have provided brought benefits and disadvantages worldwide. The changes are such that the income distribution is many developing countries have decreased i.e. the higher level of inequality in income having gone down as the average wages have increased. Hence, the developing and developed countries are benefited from the labour market due to the increased productivity of the economy (Bernanke, 2012). In the internal labour market is transaction costs are observed to be low and if there is any mismatch in the market it is overcome very soon (Ohkusa, Brunello and Ariga, 1997; Bernanke, 2012; Blanchard and Portugal, 2001). The quality of the internal labour market is directed by the skills and job capacity of the labour. Good internal labour market permits considerable jobs with higher wages and enhanced employment security. In such a market the best skills are accumulated and there is upward mobility (Treble, et al, 2001). The internal labour market can be classified into three types, which are beneficial for development of economies worldwide. The first one is classical or blue collar internal labour market, which has entry ports for the low qualified workers. This market has strict job position and is dominated by the qualifying ladders of workers (Nickel, Nunziata and Ochel, 2005; Treble, et al, 2001). The second type is stratified market where the entry ports are defined by the certification levels and there is upward mobility. These structures are basically observed in the public sector of Germany. Thirdly there is occupation based labour market in Germany where vocational trainings are provided for educating the labours regarding transferable skills and languages that are spoken by the locals. These trainings are precondition for the entry levels and carriers in internal labour market. This internal labour markets helps the economy to produce labour which the ability to increase the overall productivity at each level of entry (Belot, Boone and Van Ours, 2007). Disadvantage of opening global labour market In addition to the above mentioned advantages, there are several disadvantages that have triggered the financial crisis of 2007-2008. The economic activities and consumption has reduced, which have diverse reaction on the exports in countries such as Siberia. There is severe decline in the income of the population, which have resulted in decrease in demand for the imported as well as domestic goods (Pierre and Scarpetta, 2006; Belot, Boone and Van Ours, 2007). The decline in demand for goods in the domestic and international market has led to reduction in demand for labour as this factor can be directly derived from the economic activities. This event has lead to fall employment level and even reduction in wage hours. However, in countries, where there is strong labour market, there is a right for collective contract; there is no reduction in wages, employment and working hours. Similarly, the companies are forced to liquidate and lose the adjustments that exist in the labour force (Alesina, Baqir and Easterly, 2000). The crisis affected the labour force at both urban and non-urban areas worldwide. In both informal and formal sector, the employment rates decreased with higher rates in the formal sector. An example is cited in this case; in Serbia, the employment level grew in the urban areas before the crisis period by 0.7%; thereafter it fell drastically after the economy is affected by the financial crisis (Saint Paul, 2002; Alesina, Baqir and Easterly, 2000). Conversely, the level of employment in the non-urban areas in Serbia decreased basically due to the agricultural disaster. The loss of employment was observed in the informal sector such as agriculture, trade and construction. Nevertheless, with respect to formal sector, the manufacturing lost the higher number employees. The trend indicated that informal sector had continued to be flexible part of the labour market as it was able to adapt the crisis much faster. The employment pattern in the formal sector has identified that there is higher inertia and it has the tendency to adapt to the uncertain circumstances (Bassanini, Nunziata and Venn, 2009; Ichino, Polo and Rettore, 2003). Due to the global labour market there is change in unemployment level. Unemployment goes in line with the economic and financial crisis and is considered to be the most unfavourable result. The consequences are not only seen in the economic activities; however there is a scope for reduction in the business costs such as labour cost (Blundell, et al, 2004). This is done in order to avoid loss and make some profit. Hence, it can be stated that reduction in labour force does not encourage efficiency of the company. An example is cited in order to depict the situation. The Labour Force Survey identified that there has been signs of crisis as unemployment grew in the labour market of Serbia. However, as compared to other developing countries, the unemployment rate in Serbia is relatively low. The rate experienced a decline from 13.3% during April 2008 to 14.0% during October; however it increased to 15.6% in 2009 (Kluve, 2010; Pissarides, 2010). The increase has resulted from the joint effect of growth in unemployment and reduction in employment. In Serbia, there was growth in unemployment level among women in the first quarter of 2008; however, it decreased during the second quarter (Blanchard and Portugal, 2001). Conclusion Global labour market has provided an opportunity for increasing communication within the countries. The labour migrate to other countries in search of jobs thus opening a global labour market is quite profitable for any economy. The labour market aims establishing relationship between the demand for service and goods, labour forces and population. The population plays an important role in the driving the demand and supply of the labour in a particular economy. The population of an economy has the ability to constrain number of services and product that are produced. Hence, the demand for the products also ascertains the employment rate in the industries. The internal and external labour market is very significant in an economy. Both have equal contribution towards the development of the country. However, there are various disadvantages too, which has the ability to affect the economy drastically. The unemployment rates worldwide have increased drastically during the financial crisis of 2007-2008 as the companies were downsizing their workers in order to cut down the cost. Hence, it can be depicted that the global labour market has contributed towards the development of the economies around the world but at the same time affected its financial condition. Reference List Alesina, A., Baqir, R. and Easterly, W., 2000. Redistributive Public Employment. Journal of Urban Economics, 48(2), pp. 219-241. Anderton, A., 2008. Economics. Essex: Pearson Education. Bassanini, A., Nunziata, L. and Venn, D., 2009. Job Protection Legislation and Productivity Growth in OECD Countries. Economic Policy, 24, pp. 349-402. Belot, M., Boone, J. and Van Ours, J., 2007. Welfare-Improving Employment Protection. Economica, 74(295), pp. 381-396. Bernanke, B., 2012. Recent Developments in the Labor Market. Remarks to the National Association for Business Economics. Blanchard, O. J. and Portugal, P., 2001. What Hides Behind an Unemployment Rate: Comparing Portuguese and U.S. Labor Markets. American Economic Review, 91(1), pp. 187-207. Blanchard, O. J. and Wolfers, J., 2000. The Role of Shocks and Institutions in the Rise of European Unemployment: the Aggregate Evidence. Economic Journal, 100, pp. 1-33. Blundell, R., Costa-Dias, M., Meghir C. and Van Reenen, J., 2004. Evaluating the Employment Impact of a Mandatory Job Search Program.Journal of the European Economic Association, 2, pp. 569-606. Canal, J. and Rodriguez, C., 2008. Analysis of wage differences between native and immigrant workers in Spain. Spanish Economic Review. Garcia, J., Hernandez, P. and Lopez-Nicolas, A., 2001. How Wide is the Gap? An Investigation of Gender Wage Differences Using Quartile Regression. Empirical Economics. 26(1), p. 14967. Hall, J., Jain, M., Lee, S., Potion, A. and Skucha, K., 2012. Future Labour Markets - Technology Assessment. Infosys224, pp. 1-12. Ichino, A., Polo, M. and Rettore, E., 2003. Are Judges Biased by Labor Market Conditions? European Economic Review, 47(5), pp. 913-944. Kluve, J., 2010. The Effectiveness of European Active Labor Market Programs. Labour Economics, 17 (6), pp. 904-918. Lazear, E. and Oye, P., 2004. Internal and External Labour Markets: A Personnel Economics Approach. Labour Economics, 11, pp. 527- 554. Nickell S., Nunziata, L. and Ochel, W., 2005. Unemployment in the OECD since the 1960s. What do we Know? The Economic Journal, pp. 115, 1-17. Ohkusa, Y., Brunello, G. and Ariga, K., 1997. Occupational and Internal Labour Markets in Japan. Industrial Relations, (36), pp. 446-473. Pierre, G. and Scarpetta, S., 2006. Employment Protection: Do Firms’ Perceptions Match with Legislation?", Economics Letters, 90, pp. 328-334. Pissarides, C., 2010. Why do Firms Offer Employment Protection? Economica, 77, pp. 613- 636. Saint Paul, G., 2002. Employment Protection, International Specialization, and Innovation. European Economic Review, 46, pp. 375-395. Treble, J., Van Gammeren, Bridges, E.S. and Barmby, T., 2001. The Internal Economics of the Firm: Further Evidence from Personnel Data”, Labour Economics, 8, pp. 531-552. Read More