Globalisation as a Catalyst for Western Job Loss - Essay Example

Globalisation as a Catalyst for Western Job Loss By YOU YOUR ACADEMIC ORGANISATION HERE December 23, 2007 Globalisation as a Catalyst for WesternJob Loss Introduction The argument has been proposed that within fifteen years’ time, due to globalisation, there will be no jobs left in the West because increasingly work can be undertaken in lower cost locations. The evidence suggests that this is a very accurate assessment, as contemporary businesses continue to reach for new cost reduction methods to diminish the volume of resources necessary to sustain the company. Domestic labourers can be sacrificed in favour of a new variety of worker, who is foreign in residence and can be paid wages which are considerably lower than their domestic counterparts. Further, globalisation provides the foundation for an imbalance between domestic product output and the volume of importations experienced by Western nations each year; especially the United States. Though to say that complete elimination of domestic jobs will occur would be somewhat unrealistic, it is clear that due to an aggressive push toward globalising the corporate West, substantial domestic job loss is likely inevitable. Multiple Perspectives on Globalisation and Job Loss Scott (2003) provides ample support for continued job loss stemming from globalisation by highlighting a series of statistics in the U.S. domestic job market. The author points out how the imbalance between import and export goods which is created when previously-domestic production facilities are shifted to overseas markets. To illustrate this point, Scott further suggests that during the 1990’s, the U.S. experienced considerable job growth, due to phenomenon he identifies as the boom and bust period where consumer consumption levels were high, driving domestic production. However, in 2001, unemployment levels began to rise as new trade opportunities provided by the North American Free Trade Agreement (NAFTA) shifted production to foreign soil, in favour of tremendous savings in the form of labour wages. In fact, the author cites that 2.4 million jobs were lost in the American economy between 2001 and 2003 (Scott). Boyes & Melvin (2006) suggest that this trade imbalance, from an macro-economic perspective, also tends to disrupt the stability of the country’s entire economy, thus taking away more jobs domestically when market and business conditions no longer make domestic facility construction a viable business opportunity This can be illustrated by considering the following scenario: A domestic business experienced tremendous growth in the U.S. economy, thus being heralded by its investors for its favourable business practices. However, when the eventual fall of domestic consumption levels occurs due to high levels of unemployment, regardless of the point of manufacture, revenue from sales will be diminished. Investor confidence is then affected, which often lowers the market value of the company’s stock, providing even fewer assets to work with. As in most Western economies there are considerable interdependencies between a stable regional economy and the success of large-scale business, an unpaid and unemployed domestic workforce will weaken a nation. Swaim & Torres (2005) further support the notion that undeniable levels of job loss occur in globalisation efforts, however these authors take a somewhat opposite approach to defining the scope of the problem. They suggest the problem stems from a matter of corporate, regional, and governmental policies which fail to provide adequate adaptation to internationalisation and globalisation efforts. The authors somewhat applaud the efforts of businesses to displace their employees in this manner by suggesting it is a matter of good corporate governance. Thus, with many businesses seeing more profit stemming from diminished labour-related expenses, satisfying the stockholder contributes to job loss as they drive the majority of the market conditions in which the company either sinks or thrives. It is somewhat interesting to lay the proverbial blame on the corporate and governmental entity as the catalyst for this job loss phenomenon, as strategies for overseas manufacture of product would appear to require contingency plans in the event of domestic economic slowdowns. As a further example, statistics illustrate that UK job loss, as a perceived outcome of globalisation efforts, is not as critical as the condition of its Western U.S. counterpart (Klein, Shalahan & Derby, 2003). Through merely observation, it is quite apparent that the United Kingdom works rather diligently with EU member nations to identify fair and consistent levels of trade and the benefit of mutually-rewarding policies for economic relationships. Displacement statistics tend to illustrate that governmental policies domestically focus on radical redevelopment of jobs training so as to create a labour force readily adaptable to changing market conditions. Hence, it is often cited that technology positions are created in close proportion to jobs related to manufacturing as an outcome of governmental policy flexibility (Grossman, 2001; Jackson-Anderson & Meuvera, 2003). All of the aforementioned tends to illustrate that job loss can be more severe in one Western region, whilst less of an impending catastrophe within another. One of the more interesting notions to discuss is the nature of how information is reported by various companies and governmental institutions, especially prevalent in the United States. To illustrate, Lindsey (2004) who supports that idea that job loss is understated as a factor of globalisation suggests that from 1993-2000, the country continued to add jobs. This is supported by the aforementioned previous researchers. However, the reporting table clearly illustrates a rapid change to job loss, in the millions, post-2000. The author attempts to use the argument that it is a product of local issues (those within the facility of domestic companies) and not the outcome of national policy or trade initiatives; hence suggesting that local improvements are required to increase jobs and cannot be contributed to globalisation efforts. This particular argument was highly relevant to deciding a firm stand on the proposed question of whether total job loss will be diminished in fifteen years time, as there is clearly the indication that responsible corporate and governmental entities are realizing something must be done to prevent domestic labour crises. Tax incentives for businesses to remain on domestic soil is a common practice in the United States, especially for individual states which have experienced economic difficulties due to high volumes of displaced workers (Nickels, McHugh & McHugh, 2005). Thus, whether this will ultimately be a correct strategy long-term for sustaining domestic facilities is somewhat irrelevant to supporting the argument that steps are, indeed, being proposed so as to avoid massive unemployment levels and total economic instability. This would tend to suggest that all jobs will not be eliminated in a fifteen year time frame. However, it is quite appropriate to offer additional conflicting viewpoints from the expert’s perspective, as it would appear that many are suggesting that fifteen years timeframe is not an unreasonable scenario, due to the rapidity of foreign investment growth in countries such as India and China; and other emerging nations in Asia. Both China and India received $66 billion or £122 billion in direct foreign investment in 2005 (Prime, 2006). In countries such as the United States, which is currently facing concerns over an impending recession economy, such high levels of foreign investment in a period where domestic growth is stagnated might suggest that other nations will not view U.S. foreign investment to be a practical long-term objective for profit maximisation. Hence, shifting corporate facilities to overseas markets may also serve to eliminate much of the domestic workforce as an outcome investment-related trends. Thus, there may be a likely attitude amongst many corporate leaders of companies of foreign ownership that they will ride on the profit and positive infrastructure outcomes of U.S. and UK business investments and continue to invest in their own economic stability rather than supplementing the foreign, Western economy. This represents a potential shift in investor practices, which could serve to further weaken the availability of domestic employment. Further, since economies like that of India are currently highly-centralized, small- to medium-sized enterprises as we know them in the West do not exist in high volumes in emerging economies (Prime). Hence, when one group of Indian investors decides not to invest in foreign markets in the West, no new direct investment can be achieved from this region, further weakening Western economies. Thus, international business practices, and the trends of their leadership, can be added as another element to what drives job losses, both in support of globalisation as a catalyst and against. Douglas (2005) highlights another emerging trend as the propensity of the United States to characterise its small-scale achievements, such as adding several thousand service sector jobs to the national or regional economy. Often, these improvements are represented by fast food enterprises and other manual service industries, which are known throughout most Western nations for providing some of the least competitive salaries on the job market (Hence, new jobs creation in these sectors do not enhance economic stability on the basis of available funds for consumer spending, which also suggests that in economies such as the U.S. as one job is lost to globalisation, another is replaced by low-wage service positions. Thus, could globalisation be contributed to a total job loss for the region or merely as a means for weakening the economy, diminishing corporate profitability, and ultimately wreaking havoc on the available jobs market? It is clear that jobs will be lost, however consumer lifestyle shifts are likely inevitable as one must adjust from a competitive wage to a minimum-wage position as the only course of immediate employment opportunities when industry is moved overseas. Conclusion Making the statement that all jobs will be lost as a factor of globalisation is not supported by the research on this topic of study, hence concluding with support for the notion would be an irresponsible assessment. However, it is abundantly clear to witness that globalisation maintains the direct ability to weaken the Western consumer-driven economy due to changes in both corporate administration of internationalisation policies and firms’ willingness to remain functionable on domestic soil. Cost-savings initiatives will greatly diminish the volume and quality of jobs available, however trends in the social and economic perspectives will likely drive some form of employment as a replacement for displaced workers. This has been the trend observed most recently in the United Kingdom and which can be extrapolated from research regarding the U.S. economy. Despite any projections, it is quite important to discuss the differences between direct investment from foreign companies and its relation to consumer behaviour. Demand is driven by a multitude of factors, one of which is tied to the public consciousness. Globalisation clearly enhances the lifestyle capabilities of most of the world, as with improvements in domestic infrastructure and product manufacture come renewed consumerism. However, when domestic companies begin to compete with other foreign companies (on foreign soil), the company which left its country of origin to find cheaper production environments will experienced minimised demand there as well. Hence, demand from domestic and foreign consumers can drop, greatly weakening the long-term profitability of all entities tied to the country of origin. The end result, in some fashion, is an unstable economy which loses a great majority of its available career positions. Hence, the most logical conclusion to draw is to suggest that the original argument cannot be supported by appropriate research literature. The lower cost location as a means of corporate business strategy does not necessarily spell impending disaster on the domestic job market, however it substantially weakens it. There are a variety of methods currently being constructed by policy administrators to combat the issue, however it does appear that the United Kingdom, over that of its U.S. counterpart, is making much more progressive efforts to combat the problem. Perhaps this could be attributed to the geographical proximity of the UK to its foreign facilities, thus able to create stronger interpersonal and business relationships with many of its trade and investment neighbors. Hence, problems can be identified first-hand, where those in the U.S. who are considerably distanced from many of their overseas investments must rely on competent leadership and financial reporting to understand how best to address issues with globalisation efforts. Bibliography Boyes, W. & Melvin, M. (2006). Economics. 6th ed. Houghton Mifflin Company: 261-265. Douglas, B.C. (2005). ‘The harsh reality of the American service sector’. Executive Leadership. 31(2): 44-47. Grossman, Michael. (2000). Measuring Inward and Outward Influence on Internationalisation. Thomson South-Western, United Kingdom: 115-119. Jackson-Anderson, C. & Meuvera, L. (2003). Lifting the Trade Tariff: Concerns for Global Expansion. Hoffman Press: 108. Klein, C., Shalahan, A. & Derby, V. (2003). Globalisation and the New European Economy. Blackwell Publishing: 84. Lindsey, Brink. (2004). ‘Job Losses and Trade: A Reality Check’. Center for Trade Policy Studies. Retrieved 19 Dec 2007 http://www.freetrade.org/pubs/briefs/tbp-019.pdf Nickels, W., McHugh, J. & McHugh, S. (2005). Understanding Business. 7th ed. Pearson Prentice Hall, London: 314. Prime, Penelope B. (2006). ‘Research on India and China: Interconnections and Comparisons. Indian Journal of Economics and Business. Vol. 1: 1. Scott, Robert E. (2003). ‘The high price of free trade: NAFTAs failure has cost the United States jobs across the nation’. Economic Policy Institute. 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