What Impact Has Globalisation Had On Employment Relations - Essay Example

? ‘What impact has globalisation had on employment relations?’ Introduction The one man, Robinson Crusoe economy no longer exists in the modern days.In the current epoch, state of affairs in the economy, society, politics and cultural dimensions of the world have highly transformed. Globalisation is the process that involves the international integration between countries in terms of exchange of new products, global views and different aspects of culture and ideas. Globalization in the world economy had commenced from 1980 and eventually, had spread all across the globe. According to Ronald Robertson, globalization is “the compression of the world and the intensification of the consciousness of the world as a whole” (Cuyvers, Lombaerde and Rayp, 2011). If it is assumed in terms of single nature, then globalization is the process that comprises of different magnitudes of cultures, disciplines and communities. On the basis of the principle stated by David Ricardo, globalization allows the countries to progress in terms of their core competences (Ricardo, 1992). Employment relations are defined as the relation that exists between the management of an organization and their employees. It encompasses the various types of grievances, collective bargaining, unions and problem resolutions that exist in the labour market. This essay would explain the impact of globalization on the employment relations of the world. In the context of the essay, the researcher would focus on the actual impact of globalization on the employers, the employees and the unions. At the end, before concluding on the research analysis, the researcher would analyse the impingement of globalization on a state or nation. The learnt from the essay will help to understand the changes in the business-employee relations in the global economy that has resulted from globalization (Harbridge and Walsh, 2002). Arguments on impact of globalisation on employers For Globalization in the world economy has increased scale and scope of business operations for different companies. Giant profit-making business firms in the domestic market of developed countries had undertaken their decision of internationalization in business. The managers of these organizations had taken the opportunity of globalized market and decided to expand their business across their domestic borders by exploiting their competitive factor resources. These employers found that the cost of labour resources in the developing economies were much cheaper. This is the reason for the managers of the corporate companies in the developed nations to expand business in the less developed nations like, Russia and India, by recruiting more of their individuals (Arnold, 2008). At the same time, after the emergence of globalization, the business managers in the developing nations like, China and Brazil had started to experience higher degree of competition in their domestic business environment. This was due to the increasing foreign company internationalisation in these nations. After experiencing a higher degree of competition in the domestic market, the business companies in these developing economies have turned out to be more efficient. As a result, the degree of extent of employment opportunities expanded in their companies. The rising level of national incomes in most of the countries, post-globalization, denotes the fact that the scale of operations for most of the companies in the world have increased, which implies that the income thresholds of the employers have also increased. The employers of the companies like, Ford Motors and Tesla have expanded in order to get access to the wide and cheap base of labour resource (US Census Bureau, 2000). Also, similarly, the companies from the developing countries like, Toyota and Tata have expanded their business in the developed nations. Against It should be considered that the degree of labour mobility in the global market have become high after the emergence of globalization. This is why the supply of labour market to the employers had become highly elastic. Thus, the labourers gained access to a wide range of options in their workplaces. In order to sustain the problem of high labour mobility, the employers started to face competitive wage rates in the market of labourers. Moreover, the rules and regulations in the labour market became internationalized too. It was observed that the foreign employers had been recruiting more individuals from the less developed nations than their own domestic economies. It has been found that the level of domestic employment opportunities in the rich nations had decreased after globalization. Globalization integrated the market of education and technological knowhow, which gave the labourers in the world market the opportunity to become more skilled. Thus, this phenomenon enabled the employers of different companies to get access to good quality manpower for their business. However, the relative supply curve for the labour market increased the bargaining power of the labourers during dealing with the employers (Milanovic, 2005). Arguments on impact of globalisation on employees and unions The rising business opportunities in the global market after the incidence of globalization denote the fact that employees have experienced better scopes in the workplaces. A detailed study would highlight the various arguments on this issue. For After globalization, there were many companies which transformed into multinational corporations. Even the level of foreign direct investments in the developing nations had significantly increased. For example, software companies such as, Accenture and Dell, have made much investments in India. This has increased the employment opportunities of the labourers in these nations. The employees also experience high degree of mobility and thus, can explore various work places in the world. The intra and inter country mobility of labourers have increased due to globalization. Potential employees in the non-productive regions have achieved the scope to expand their knowledge and opportunity by gaining access to seek jobs in the productive regions in the world economy. Globalization has provided with a new dimension to the field of Information Technology, thereby resulting in the evolution of new software companies in the developed nations that aim to outsource employees from the rest of the world (IMF, 2007). Against On the other hand, there are other market researches claiming that globalization has made the worker (employee) market highly competitive in nature. It is often found that in workplaces, the young employees need to compete with efficient, well-experienced workers while job-hunting (Thomas, 2001). It is also claimed that globalization have vested the rich developed nations with more power. The term, “brain drain”, is a modern jargon. With the facility of improved transportation services, the companies in the developed nations enjoy access to labour resources at unethical and cheap costs. It is believed that the workload that is actually shared by these workers is much more than the wages offered to them. Moreover, there were situations of extensive disturbances in the labour market of the developed nations as their domestic employment opportunities had started to fall post-globalization. Certain economists have claimed that globalization had led to the problem of ‘labour fragmentation’ in the market, which in turn had created instabilities in the economies. The above context explains that there are various positive and negative impacts of globalization on the employees. However, this phase had also witnessed the emergence of trade unions in the markets. These unions looked after the interests of the skilled, semi-skilled and unskilled workers in the labour market. Figure 1: Effect of Union (Source: Author’s Creation) As stated in the above graph, the unions in the labour market often bargain about the labourer wage rates with the monopoly companies. In such cases, these companies had to experience a situation of perfect competition in the market (Firebaugh, 2006). Many companies had started to face the situation of bilateral monopoly in business. This is characterized by a situation where the union acts as a monopolist in the industry along with the producer. Thus, the emergence of more unions in the market, after globalization, had gradually decreased the power of corporate companies in the market. Arguments on impact of globalisation on State Globalization brought about ginormous changes in the structure of a state or country. It was the underlying driving force which fostered the political evolution of a state. On the active contribution of the World Trade Organization, globalization could expand the trading activities in nations. The degree of imports and exports had started to rise significantly after the emergence of globalization in 1990 (Amirkhanyan, 2012). However, the contribution of the Multinational Corporations in the domestic economies of different countries had turned out to be crucial. It was found that these companies had led to a significant rise in the service sectors of different countries. In primary agricultural nations like, India, about 60% of the gross domestic products were seen to arrive from the service sector. The prosperous growth of the developing nations was termed as the service sector led growth. Different international agencies like, the International Monetary Fund, World Trade Organization and the World Bank, had started to influence the powers of the fiscal policies undertaken by the states. Privatization or Disinvestment became common jargons of economies. It was only after globalization, when many loss-making public companies were sold to the private organizations of the world. Most of the countries were encouraging foreign direct investments in their nations in order to generate more employment opportunities and income scopes for them. The processes of imperative planning of the states were also changed into indicative planning after globalization. The economists analyzed and claimed that free market principles followed by mixed economic systems were the best approach for acquiring the true potential of the human capital. Indeed, after the emergence of human capital development in nations, they had shown better performance in the business segment than before. Owing to globalization, the countries have truly started to experience the essence of economic development as opposed to a mere economic growth. It was found that the living standards of the people worldwide had started to reflect genuine improvement. Moreover, the other dimensions of the society like, health status and education, have also improved as a part of the after-effects (Das, 2010). Against The countries had been imparting a notion among the public, which states that “Self Help is the Best Help”. Before globalization, many of these countries strongly abided by the norms of socialistic economies (Baldwin, 1999). The duty for looking after the social and welfare thresholds of the countries were levered by the governments of the countries. However, post-globalization, the role of governments in maximizing the welfare of the countries was reduced as this authority was allocated more to the individuals of the society. It was also true that globalization had increased the power of developed nations of the world. The growth of the developing nations, that is experienced currently, is actually unproductive growth. A withdrawal of the foreign investments can abruptly dampen the economies of these nations. Therefore, the developing economies in the modern world are facing an economic crisis due to the recessions in the developed nations. It is also true that globalization has generated extensive commercialization in the market. This is why necessary services like, health care treatments, have turned out to be luxury consumptions in the modern world instead of a necessity (Abeles, 2001). Conclusion It can never be possible for a country to grow without the essence of comparative cost advantage. International trade is very importance for sustaining the long-term progress of a nation. Nations should only concentrate on the production of those goods and services over which it has a comparative cost advance. International trade has received a new identity after the occurrence of globalization (Debrah and Smith, 2000). It is true that globalization have substantially influenced the extent of employment relations in the contemporary business world. Therefore, the employers in the developed world have managed to gain access to cheap and wide base of labour resources from the developing nations. However, the supply of labour has become relatively elastic in the market after globalization. The high mobility of labourers has generated more power in the hands of the working class in the market. The emergence of trade unions and the collective bargaining power of the firms clearly signify the exclusive authorities enjoyed by the working class, in the current epoch. However, it has been analyzed that globalization have bestowed more powers to the rich developed nations than the developing ones. Also, the business employment relations have surely improved. Equal opportunity in the work life is very important. However, complete progress cannot be experienced without the help of equal opportunities as the wealth distribution across different nations is unequal in the contemporary world. Employment relations are a social as well as an economic matter of concern and thus, all the authorities of a nation must try to enhance it in the long run (Ilyin and Rozanov, 2013). Reference List Abeles, T. P., 2001. The Impact of Globalization. On the Horizon, 9(2), pp.2 – 4. Amirkhanyan, 2012. Globalization and International Relations. [pdf] CDAC. Available at: [Accessed 7 December 2013]. Arnold, R. A., 2008. Macroeconomics. Connecticut: Cengage Learning. Baldwin, R., 1999. Two Waves of Globalization: Superficial Similarities Fundamental Differences. [pdf] NBER Available at: [Accessed 7 December 2013]. Cuyvers, L., Lombaerde, P. D. and Rayp, G., 2011. The Labour Market Consequences Of Globalisation And Regionalisation. International Journal of Manpower, 32(3), pp.252 – 256. Das, D. K., 2010. Financial globalization: a macroeconomic angle. Journal of Financial Economic Policy, 2(4), pp.307 – 325. Debrah, Y. A. and Smith, I. G., 2000. Globalization, employment and the workplace: responses for the millennium. Management Research News, 23(2), pp.1 – 106. Firebaugh, G., 2006. The New Geography of Global Income Inequality. Harvard: Harvard University Press. Harbridge, R. and Walsh, P., 2002. Globalisation and Labour Market Deregulation In Australia And New Zealand: Different Approaches, Similar Outcomes. Employee Relations, 24(4), pp.423 – 436. Ilyin, I. V. and Rozanov, A. S., 2013. The Impact Of Globalization On The Formation Of A Global Political System. Campus-Wide Information Systems, 30(5), pp.340 – 345. IMF, 2007. Globalization and Inequality. [pdf] IMF. Available at: [Accessed 7 December 2013]. Milanovic, B., 2005. Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Surveys. World Bank Economic Review. 19 (1), pp.21-44. Ricardo, D., 1992. David Ricardo: Notes on Malthus's: Measure of Value. Cambridge: Cambridge University Press. Thomas, B., 2001. The Public Employment Service in a Changing Labour Market. International Journal of Public Sector Management, 14(6), pp.522 – 525. US Census Bureau, 2000. The Changing Shape of the Nation’s Income Distribution. [pdf] Census. Available at: [Accessed 7 December 2013]. Read More