Globalisation and Its Effect on Employment Relations - Essay Example

Globalisation and its Effect on Employment Relations Globalisation has engendered vast changes in the international economy. These changes have in turn, significantly affected employment relations. However, in the context of employment relations, there is considerable difference of opinion, as to the nature and importance of the changes that have transpired, on account of globalisation (Lansbury, Kitay, & Wailes, 2003: 62). The notion of industrial relations, originated in the US, and thereafter gradually permeated the other nations. The development of this important concept was uneven, across the world. For instance, it was not until the 1930s that industrial relations made their presence felt in the UK. Subsequently, in the 1960s, Japan was witness to the development of industrial relations in the nation. Thereafter, in the 1970s, industrial relations developed in Germany (Kaufman, 2004: 593). The rest of the world adopted this notion, only in the 1990s. Thus, the erstwhile communist nations of Central and Eastern Europe were comparatively late in developing industrial relations. Finally, this idea was adopted in the countries of Africa, Asia, Europe and Latin America. However, by that time, there was a marked decline in industrial relations in the US, where the concept had originated (Kaufman, 2004: 593). The challenges thrown up by globalisation, in the realm of employment relations, are in general, difficult to resolve. Therefore, it is incumbent upon the human resources manager to balance the requirements, stipulated by efficiencies; whilst ensuring the operational life of the company in the host countries. Some of the affiliate practices could bear a semblance to the practices adopted in the home country of the multinational corporation; a few of the practices could seem to akin to the practices extant in host nation; and other practices could be of a global nature (Rodwell & Teo, 1999: 311). Business organisations have been compelled to enhance their competitive advantage, due to the growing complementarity between capital, location and technology. The value of human resources has been recognised, and they are now deemed to be crucial for achieving a competitive edge in the globalised world. (Rodwell & Teo, 1999: 310). Furthermore, the multinational corporations have to achieve a multiple faceted capability, if they are to improve their competitive advantage in the global market. In the Japanese employment relationship context, it was noticed that there was a convergence, as well as a divergence of practices. Thus, a divergence in operational issues, with regard to the standards of the parent country was noticed. At the same time a convergence with the standards of the host country was also evident (Rodwell & Teo, 1999: 319). National characteristics have a palpable influence on the process of collective bargaining. In the UK, this proves is usually witnessed at the company level, and in its absence, procedures for the application of sectoral agreements are not to be found. In the small and medium enterprises (SMEs), this process is present to the extent of 4%. In the Irish context, the Joint Labour Committees have had some influence on pay and working conditions (Edwards & Ram, 2006). On the other hand, Austria makes it mandatory for SMEs to acquire membership of the Chamber of Economy, and collective agreements are conducted through this institution. The situation in the Netherlands is akin to the Austrian condition, and there are sector level collective agreements, in respect of the SMEs. In Finland, although the situation is almost the same, the pay in the SMEs is not the same as in the larger firms (Edwards & Ram, 2006). Germany and Austria have already implemented conservative welfare governance systems. These systems have decommodifying effects for the economically inactive. The objective behind social policies is to protect workers who cease to be employed, from a substantial decline in their standard of living. These social policies do not address the task of improving job opportunities or mobility (Converging Divergences, 2008: 574). Nations like Sweden, Denmark, and the Netherlands have a social democratic set up. They have implemented policies relating to the labour market and taxation regimes that ensure full employment for all, irrespective of gender. The other aspects covered by these policies are gender equality in the workplace and home, and an equitable distribution of income (Converging Divergences, 2008: 575). During the 1990s, Hungary, Estonia, and the Czech Republic underwent rapid economic and social transformation. Hungary and the Czech Republic responded to these transformations effectively, and established a model of dual earner family. The financial plans under this model conform to the policies of the social democratic systems. At the same time, Estonia adopted a liberal policy, in which the state intervenes to a lesser extent, in family matters (Converging Divergences, 2008: 575). The US and the UK adopted liberal regimes. These are identified by passive labour market policies, and meagre employment opportunities in the public sector. The chief employer is the private sector, in these regimes. This is on account of several important factors, like high flexibility, restricted trade union power, and weak labour legislation (Converging Divergences, 2008: 575). As such, different countries have adopted different employment policies. This difference results in the establishment of a variety of institutions, like work councils, systems for collective bargaining, representation power of unions with employers, enactment of labour laws, and administrative strategies. Due to this situation there was an emergence of distinct variations in national occupational structures and industries; patterns of labour capital negotiation systems; and union power in collective bargaining on wages, job security, work conditions and work hours. The divergence of these systems can be categorised as coordinated and uncoordinated market economies (Converging Divergences, 2008: 576). The operation of the extension of sectoral collective agreements, in the context of employees, who are not signatories, has undergone little change in a few countries, like Spain, France and Belgium. The extent of bargaining has come down to some extent in Germany, from the year 2000 (Edwards & Ram, 2006). The new entrants to the European Union, depicted patterns of interest representation, in their bargaining initiatives. For instance, in Poland, employee representation was solely by means of the trade unions. The implication of this situation, is that the Polish SMEs there was no mechanism of collective agreement. In the context, of Slovakia, the situation is not much better, and a mere 10% of the private sector employees are addressed by agreements, which is substantially lesser than that to be found in the SMEs (Edwards & Ram, 2006). However, the situation in Slovenia is in total contrast to this, and all SMEs come under the ambit of centralised collective agreements. Industrial relations in most of the nations, consists of limited collective bargaining and employee consultation in the SMEs. Belgium has been witness to a protracted debate, in this context. Employers have vehemently defended the existing position, whilst the unions have persistently sought improved rights (Edwards & Ram, 2006). The dispute has gained prominence, on account of the EC Directive 2002/14/EC, which related to the information and consultation of employees. The unions have demanded a reduction to 20 employees, in respect of the minimum number necessary for certain rights (Edwards & Ram, 2006). Globalisation can be perceived as the reduction of technological or legislative obstacles to the economic exchange between countries. It has constituted the chief topic of study, for trade theory, from the initial stages of development (Ethier, 2005: 238). The multinational corporations operate, in a manner that is markedly different, in comparison to the national companies. They wield considerable influence on the national economy, and establish their own order of power. In the US and several European nations, the multinational corporation have emerged as power centres that are capable of destabilising national economies and governments (Waddington, 1999: 193 – 194). Critics in these nations refer to them as imperialistic exploiters and enemies of industrial democracy. They are economically powerful enough to control governments and to ensure that they are not subjected to labour laws. Some of the multination corporations exploit all available resources. They maintain their considerable power, by adopting a policy of divide and rule (Waddington, 1999: 193 – 194). The multinational corporations exercise control over more than fifty percent of world’s total industrial capacity. It has been estimated that they control nearly two thirds of the international trade. They represent a primary manifestation of the internalisation of capital. The capitalist world economy is perpetuated by the internalisation of capital. The multinational corporations differ in their size and in the technology used by them .These conglomerates make foreign direct investments in several nations (Bean, 1994:187). The US has determined to play a dominant role in the world economy. It is its heartfelt desire to influence the world culturally, economically, and politically. The US disregards national legal systems, in its attempt to achieve this goal. It is very much seized with ensuring that no countervailing force emerges. The national and international labour laws maintain a balance of power between organised labour and organised capital, wherein the government act as a mediator (Barnard, Deakin, Hepple, & Morris, 2004: 289 – 290). The United Nations had established the International Labour Organization (ILO) to address the issues pertaining to the labour world. Its fundamental objective is to ensure the availability of productive employment for all people (ILO). The employment should be remunerative and should comply with the principles of social justice and equality. Trade Unions play a significant role in the protection of the rights of workers. Trade unions have international connections and indulge in various activities. The International Trade Union Confederation is an international labour organisation. As an international labour body, the ICTU integrates national trade union bodies. It has 311 national trade union organisations that are spread across 155 countries and territories (Trade unions and globalisation). They represent nearly a 168 million workforce, across the world. Trade unions affiliated to the ICTU maintain connections with other international bodies such as the Global Union Federations. Members of these bodies come from a variety of industries in private and public sector. Moreover, there are separate trade union bodies to represent workers from a specific field. The IUF represents workers in the food and agricultural sectors. On the other hand, the IMF promotes the interests of workers in the metal and electronics sectors (Trade unions and globalisation). The PSI is a body that represents public sector workers. The ITF was established for the workers in the transport sector. The ICTU and the Global Union Federations operate at the international level. These organisations are concerned with the trade union movement, in the international trade unions (Trade unions and globalisation). They negotiate on behalf of the workers with governments and employers, and ensure the proper implementation and enforcement of rights of workers. The ILO is the major international organisation that ensures that these rights are respected in all countries. These labour organisations lobby with the WTO and other international financial institutions for the implementation of rights of workers (Trade unions and globalisation). In the field of employment, the law provides several protections to employees, against unfair dismissal and breach of rights. There are three important issues concerning employment protection. They are, first, the length of the notice period, which an employer has to give to a worker. Second, the amount to be paid to an employee, at the time of termination of services, by the employer. Third, the intricacy of the employment termination process (Brewster, 2004: 369). In the US, workers have very little legal protection, in respect of employment. Moreover, the legislative measures adopted in the US, regarding pay and working conditions, leave much to be desired, in comparison with the European Union. According to the ILO, legislative reforms, in the EU have reduced the average working hours for workers. (Brewster, 2004: 369). In the US, more than 80% of the male workers and 65% of the female workers put in at least forty hours a week, on an average. However, in France, the legal working hours per week, have been limited to thirty-five hours, and overtime cannot exceed 130 hours, in a year. In addition, French law disallows unpaid overtime. Moreover, compelling senior employees to work overtime is also prohibited. In marked contrast, there are no such legal requirements in the US. The EU implements employment contracts, in a more or less uniform fashion (Brewster, 2004: 369). Businesses have expanded tremendously, in the 21st century, and they have acquired an international dimension. The formation of large corporations has increased the number of employees and job opportunities. As a result, the employment relationship have become subject to a wide range of international laws and influences (Globalization, multinational corporations and employee relations, 2007). Human resource management (HRM) policies are crucial to employment relations. HRM practices influence employment relations, and in order to achieve maximum output and healthy employment relations, multinational corporations and large domestic companies, conduct research in the labour markets. They frequently change their HRM practices and policies. A recent study of human resources accountability in the hotel industry, collected data from the multinational and large domestic luxury hotels (Davidson, Guilding, & Timo, 2006: 208). This study disclosed that human resource accountability was not strong, in this industry. The labour turnover was high, the employees were low paid, and the labour market was flexible with high education levels. The hotels provided entry level training to new employees, in order to compensate for high turnover, job instability and variation in the quality of service (Davidson, Guilding, & Timo, 2006: 208). These hotels aimed to maintain the same price structure, in respect of their services. These practices hindered the development of business strategies, HR accountability and further innovation. It was suggested that new decision making policies had to be adopted by the management (Davidson, Guilding, & Timo, 2006: 208). With the advent of broadband Internet, and improved communications, companies outsource many of their processes entities in other countries or within the nation. This new environment has resulted in companies that offer novel services, such as technical support, software development, transactions processing, accounting, and human resource management. Moreover, the integration of certain factors has made it possible to employ low-paid professionals, abroad(Guth, 2009: 257). As such, outsourcing has developed into a major business. The advancement of technology, the liberalisation of national labour markets, the availability of unrestrictive labour markets and competent professional in the developing countries, and the shortage of experienced labour in the developed countries have promoted the outsourcing industry. The improved communication networks have made it possible to remotely operate manufacturing units (Guth, 2009: 257). Globalisation brings about a new kind of skill biased technical environment. Trade and technology are interrelated concepts, and technological change puts forth new challenges (Ethier W. J., 2005: 255). The process of globalisation has far reaching effects. Some of these are the enhancement of the significance of the financial markets; the central role assumed by knowledge, as an important facet of production; and the employment of technology at the international and transnational levels(Jones & Jones, 2004: 410). Moreover, globalisation has brought transnational corporations to the forefront of international economic activity; engendered a concentration of cultural impositions; and generated transnational economic diplomacy. References Barnard, C., Deakin, S. F., Hepple, B., & Morris, G. S. (2004). The future of labour law: Liber Amicorum. Hart Publishing. Bean, R. (1994). Comparative industrial relations: an introduction to cross-national perspectives. Cengage Learning EMEA. 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Retrieved April 21, 2010, from http://www.ictu.ie/globalsolidarity/workersrights/tradeunionsandglob.html Waddington, J. (1999). Globalization and patterns of labour resistance. Routledge. Read More