Impact of Globalisation on Employment Relations in Japan and Korea - Case Study Example

IMPACT OF GLOBALISATION ON EMPLOYMENT RELATIONS IN JAPAN AND KOREA Name Institution Professor Course Date Abstract Globalisation holds weighty impacts on employment relations. Increased international competition has affected Korea and Japan in both negative and positive ways. Trade unions in Japan and Korea demonstrated akin reactions to globalisation and to some extent demonstrated diverse reactions. Globalisation creates incentives for the nations to adopt more market-based employment relations policies including individualism and decentralisation of bargaining, more contingent forms of employment and individualised payment systems. In reactions to effects of globalisation on, both Japan and Korea private firms and the governments transformed from an enterprise-oriented approach to a market-driven approach. Introduction Globalisation entails the process of integration and interaction among organisations, government and people of different nations. It is a process steered by international trade and investment and assisted by information technology. The process affects the culture, political systems, environment, human physical wellbeing, prosperity and economic development in the global societies. Employment relations entail the legal connection between employee and employers. Employment relations exists when an individual perform services or work under given conditions in return for remuneration. It entails the body concerned with upholding employee-employer relationships that lead to satisfactory motivation, morale and productivity. Although globalisation is the driving force behind global economic development, it involves all aspect of the economy. Globalisation greatly impacts the social partners because conventional employment relations have to deal with absolutely novel and dynamic situations. Globalisation apparently impacts employment relations and holds differential effects across varieties of capitalism. This essay aims to describe and evaluate the impact of globalisation on employment relations in Japan and Korea. Globalisation and Varieties of Capitalism: Japan and Korea Shifts in the global economy commonly known as globalisation hold upshots for national blueprints of employment relations. However, there are competing opinions regarding the significance of globalisation and kinds of transformation it produces. According to Nick, Russell and Anja (2009, p. 90), globalisation instigates convergence in labour principles across regions and nations. Some empirical studies of relative shifts in employment relations offer little support for the view that globalisation instigates convergence in labour standards. The Varieties of Capitalism (VoC) theory suggest that the effect of globalisation on employment relations differs across dissimilar forms of market economy. The VoC perspective compared to other forms of capitalism such variegated capitalism rejects the idea that there is a better way to structure capitalism. This theory points to the responsibility played by complementarities amid organisational arrangement in moulding the function of market societies. Nick, Russell and Anja (2009, p. 90) confirms that one major impact of VoC approach is that globalisation hold differential effects on employment relations outcomes and processes across varieties of capitalism. Increased international competition create incentives for firms to adopt more market-based employment relations policies including individualism and decentralisation of bargaining, more contingent forms of employment and individualised payment systems. In some occasion, augmented international competition strengthens instead of undermining conventional types of coordination between employees and employers. The VoC blueprint has become considerably influential in employment relations and helps in explaining cross-national disparities in Union density and membership, vocational training systems, employee participation and gendered temperament of labour markets. Compared to variegated capitalism, VoC presumes that a firm in a coordinated market economy will be improbable to withdrawal from institutional relationship bound by non-market coordination. VoC rests on the assumption that more coordinated political economies can converge toward more liberalised models of capitalism. Besides, VoC enhances understanding of institutional variability among advanced capitalist economies while variegated capitalism explicates processes and establish uneven development within and beyond late capitalism ( Dixon 2014, p.53). Voc is directed to attain high levels of national growth and examines distinct local, national, regional models as rivals on the same level while variegated capitalism studies tension and complementarities across scales in global and singular manner. Unlike variegated capitalism, VoC predicts a sector specialisation of the whole national economies leading to a comparative institutional home advantage against other national contexts (Hsuptmeier & Vidal 2014, p.102). As nations and companies embrace the trend of globalisation and become more diverse, particular shifts are surfacing. Globalisation instigates increased cultural diversity within the labour force thereby requiring nations and firms to adopt means of dealing the increased cultural diversity. Nations are adopting novel guidelines and policies for workers (Phillip 2013, p.557). As nations hold access to overseas firms that provide outsourcing, wages have transformed for scores of workers in Korea and Japan. The outsourcing in most nations has instigated lowered earning ability for workers. Ethnic, religious and cultural diversity in the workplace prompts a call for employee training. Nations have had to execute policies and provide training to employees to protect novel employees from discrimination. Nations have to offer improved workplace condition principles and safety. Globalisation impacts indirectly and directly on employment relations systems. In both Korea and Japan, pressures to adopt globally accepted labour standards and strategic reactions to increasing competition. As the Japan and Korea joined the developed world economy, employments relations became exposed to the global environmental shifts. Both management and labour experienced direct pressures from the global economy. Mid-career workers even have been made to go on early retirement with public employers and private firms reducing the number of job openings for novel college graduates. Overall, globalisation influenced labour market upshots, employment relations and human resource management (Axel 2006, p.1092). Due to globalisation, the bargaining power of trade unions declined significantly in Korea and Japan. According to Dong-one, Seongsu and Motohiro (2001, p.67), the ratio of employee compensation to Gross Domestic Product declined from 64.2% in 1996 to 59% in 1998. However, the rate of employee compensation reached 59% in 1999 indicating labour’s power recovery in Korea (Dong-one, Seongsu & Motohiro 2001, p.67). Globalisation has introduced novel trends in HRM centring on augmenting efficiency. These trends appear to be the dominant technique of managing human resources in big firms. The sharp rise in the contingent workforce in 2000 influenced employment relations in a great way. It weakened the unity of labour, complicated means of managing the diverse labour force and worsened income distribution in Korea. Also, unemployment became more chronic with unemployed people increasing by 4.2% in 1996 to 15.5 % in 1999 (Dong-one, Seongsu & Motohiro 2001, p.68). As regard pressures to adopt global labour standards, globalisation has prompted expansion and improvement of employee rights as per the international standards. Since 1990s, different global firms have taken a crucial role in enhancing the standards of labour in Korea (Dong-one & Seongsu 2003, p. 341) Labour and economic linked global organisations such as OECD and ILO have greatly influenced employees’ rights in Korea. Korean governments have addressed international pressures to adopt the ILO conventions entirely. ILO and OECD have instigated reforms in Korean labour laws in the favourable direction. These organisations have led to an acknowledgement of the trade union pluralism principle, freedom of public servants to form workplace associations, legitimisation of teachers unions and recognition of KCTU as a national trade centre. Globalisation through the WTO advocated for a relationship amid liberalisation of global trade and global labour standards. Additionally, globalisation led to the established of freedom of association, prohibition of forced labour, equal treatment of employees, minimum wage and the right to collective bargaining as per the ILO standards. According to Kihl (2005, p.160), Korea during IMF experienced greater external pressures to transform from a state-centred to a market-oriented neoliberal state. The intention was to make the country’s economy more competitive in the global marketplace. In this reform process, Korea acquired an increased capacity to initiate novel programmes and policies in attempt to mediate social conflict amid big firms and organised labour and to revive economic health through confronting global pressures. Globalisation made Korea to join ILO conventions, legalised and recognised multiple unions at industrial and national levels, eradicate prohibition of third party intervention in employment disputes, established of Works Consultative Committees for public servants and extension of workers’ rights. More so, globalisation instigated reduction in the lawful maximum working hours in a week and amnesty for employees convicted or arrested for legal union activity. Labour laws were reinforced to enhance employee wellbeing. According to Wilkinson, Wood and Deeg (2014, p.350), financial crisis instigated by globalisation instigate considerable weakening of lifetime employment practices. Lawful shifts to the Korean labour laws that legalised temporary work agencies and dismissals for managerial reasons allowed firms to adopt more numerical flexibility. Involuntary dismissals and early retirement plans following the 1997 financial crisis increased Wilkinson, Wood & Deeg 2014, p.350). In recruitment, physical appearance, educational history, competency and personality have gained importance in both Japan and Korea. The effects of globalisation have made companies in Korea and Japan to cut down workers development costs and centre their development and training efforts on smaller groups of core employees such as engineers. Following globalisation employment security have become the central focus of negotiations, hence a reduction in collective bargaining (Wilkinson, Wood & Deeg 2014, p.351). The impacts of globalisation in Korea are mixed. The positive effects are seen in areas of enhanced labour standards and employees rights while the negative effects are seen in deteriorating employment practices and working conditions. The Korean employment structure has transformed remarkably over the last two decades. Between 1985 and 2010, the percentage of workers in manufacturing dropped from 30.8% to 24.7% while employment in the service sector rose from 44.3% to 68.5% (Wilkinson, Wood & Deeg 2014, p.349). Reflecting such structural shifts, Korean HRM practices have changed considerably. Similarly, the Japanese labour market underwent major structural shifts between 1985 and 2010 (Wilkinson, Wood & Deeg 2014, p.345). Employment in manufacturing decreased to 25.5% while service sector currently employs more than 70 percent of employees (Wilkinson, Wood & Deeg 2014, p.345). Reacting to worsening domestic conditions following the burst of the nation’s bubble economy, Japanese firms reacted by reductions in hiring freezes, overtime reassignments and temporary transfers. Following globalisation that made Japan join OECD, the country holds some of the highest levels of employment protection (Wilkinson, Wood & Deeg 2014, p. 346). For instance, employers must attain strict conditions before dismissing workers. These conditions include being in severe financial difficulties, exhausted other efforts to prevent redundancies, consultations with employees and labour unions and rational selection procedure to decide on redundancy candidates. New hiring remains limited with older employees taking early retirement. Following globalisation, the rate of regular employees in Japan decreased to 62% in 2007 with other forms of non-regular employment gaining substantial importance Wilkinson, Wood & Deeg 2014, p.346). . Seniority –oriented pay practices have changed since 1990s with the abolishment of regular pay rises. Pay on performance has gained importance (Peter 2006, p.119). As regards industrial relations, labour management joint consultations systems at the organisational level have become essential means for discussion of working conditions. Wage determination remains part of collective bargaining process at the organisational level. Although union membership has declined in Japan, most unions in the country are organised by establishment or enterprise. More enterprise unions within similar industry join industrial federations of unions, which belong to national centres such as JTUC. The ILO offers members with service or advice on labour conditions and employment conditions in Japan. Contemporary Japanese employment relations are comparatively stable with a significant rise in atypical employment. In every three employees, one of them is in non-regular employment (Suzuki 2010, p.388). Similar to the situation in Korea, regular employees in big companies in Japan decreased with the ratio of non-regular employees increasing from 27% in 2002 to 35% in 2006 (Wilkinson, Wood & Deeg (2014, p.350). According to Kim (2001, p.76), globalisation compelled the management, labour and the Japanese government to seek for novel means of addressing the challenges and upholding global competitiveness. Conclusion Globalisation entails the process of augmenting global integration, connectivity and interdependence in technological, institutional, political, cultural, social and economic spheres. Globalisation is a driving force in worldwide economic advancement and involves all actors in the economy. Globalisation considerably affected the social partners because conventional labour relations had to address the dynamic and new situations. Globalisation has instigated a change in the composition of the labour force and had mounted pressure on trade unions to uphold or develop their present coverage rates and membership levels. In reaction to challenges of globalisation, private firms and the government all pointed to the need of changing from an enterprise-oriented approach to a market-driven approach. Reference List Axel, D 2006, ‘ Does globalisation affect growth: Evidence from a new index of globalisation’, Applied Economics, vol.38, no.10, pp.1091-110. Dixon, A 2014. The new geography of capitalism. Firms, finance and society. UK: Oxford University Press. Dong-one, K & Seongsu, K 2003, ‘Globalisation, financial crisis and industrial relations: The case of South Korea’, Industrial Relations, vol.42, no.3, pp.341-367. Dong-one, K , Seongsu, K & Motohiro, M S 2001, ‘ The impact f globalisation on industrial relations: A comparative study of Korea and Japan’, Seoul Journal of Business, vol.7, no.1, pp.61-86. Hauptmeier, M & Vidal, M 2014. Comparative political economy of work. Australia: Palgrave Macmillan. Kihl, Y 2005. Transforming Korean politics: Democracy, reform and culture. USA: M.E Sharpe. 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