Conflicts and Tensions between Expectations of Society - Essay Example

Conflicts and Tensions Between Expectations of Society, the Aims of Business and the Roles of Government as Exemplified in the Pharmaceutical Industry I. Introduction The diversity of roles played by different sectors of society leads to varied expectations. In the relationships between government, business and the public, we find conflicts and tensions in terms of management systems and economic impact of business activities, government regulations and the demands of the public. More often than not, the aims the core aims of business which is to gain profit and sustain its operations come into conflict with the interest of the public. In the same manner, government regulations, which are aimed at protecting the consumers and the general public, may come into conflict with the aims of business. There are several areas upon which impact of these conflicting interest are greatly observable. In our case scenario, we take the pharmaceutical industry as our case model. However, our discussions will only be limited on the interrelations between outside factors namely government regulations and the expectations of society vis-à-vis the internal management systems and responses of the company, especially in terms of labour and production. We will deal mostly on the aspects of labour and how it is affected by the business cycles and trends. Hence, we will focus more on the management aspects and less on the activities and developments of the pharmaceutical industries. II. Economic Cycles and their influence on the Labour Market Economic cycles can be viewed in terms of predictable long-term1 pattern of changes in the national income of a given country. Based on established patterns, we have a traditional business cycles which involves four stages namely expansion2, prosperity3, contraction4 and recession5. This is a cycle whereby at the end of the recession period, the expansion stage kicks-up again. During these economic stages, we can observe chain reactions in the different aspects of the business sector. Common characteristics in these cycle of events in the impact it has on the labour in terms of changing employments, the productivity where there may be more of less production depending on the cycle and the rise and fall of interest rates depending on the cycle involved.6 To illustrate this scenario, let us look back into our economic history. In the 1970s up to the 1980s, a steady rise of unemployment rates in Europe can be observed. This steady rise was then attributed to mostly to the demand and supply of labour force where it was perceived that supplied skills and expertise of labour did not match with the demand. Not only was there a mismatch in the supply and demand of labour, there was also a perceived discrepancy between wages and productivity level. As the cost of labour increase and productivity in the decline, we experience mass lay-offs where hundreds of our workforce found themselves without a job (Estivao 2003). This prompted the government to introduce possible solutions to the labour crisis through the introduction of policies grouped under the label of “active labour market policies” (ALMPs)7. These policies were made to assist the labour sector as well the business management sector. The direct relationship between labour and production can be clearly gleaned in our business cycle. Where there is more production, we see more jobs and more demand in labour but where there is a decline in the production aspect, we also see less and less employment opportunities. III. Influence and Control of Government Policies on Business As a means to counter the free market rules of labour and production, government strive to come up with rules and regulations. These government interventions can be clearly understood under the theory of John Maynard Keynes8 who started the Keynesian economics where mixed economy is promoted. Under theory of Keynes, the state and the private sector have roles to play in the promotion of the economy. Contrary to the belief of most classical economist, Keynes asserted the importance of an aggregate demand for goods as the driving force for the economy. He marked the end of the laissez-faire9 era (Keynes 1936). For the followers for Keynes, in order for the economy to effectively function, central government must maintain the conditions required for the decentralized transmission of information. Government must maintain order both internally and externally, create legal framework – including laws on contract, property, tort, labour and the likes (Marks 1985). Thus in our present economy, governments like the European Union strives to come up with laws and regulations which would allow for market control and direction. However, not all government interventions and control are favourable to the potential labour force. Take the case of France for instance where protest actions greeted the new labour laws. According to the Economist, “Although the aim (of the law) is to encourage job creation in a country with 9.6% unemployment, resistance is intense.” The primary grievance in this government regulation has been on the “contrat premiere embauche” or the first job contract devised by Dominique de Villepin, the Prime Minister. Under this rule, employees of individuals under 26 years old are allowed to shed workers without justification, although they may be given notice and some compensation during their first two years of work. After the first two years of work, they may now be protected under the same terms and standards of permanent job contracts (The Economist March 18, 2006). Although the original intent of the law may be to reduce unemployment rate in times of difficulties, this is clearly in conflict with the personal interest of the labour sector and it is clearly unacceptable. We must remember that where the labour sector is prejudiced already, such government regulations must be deemed unserviceable. In the pharmaceutical industry, government regulations have been used as direct tools for frightening off investors. According to the Economist (March 18, 2006) “Two years ago, the French Government frightened off a bid by a Swiss drug company for a French one, by threatening to deploy regulatory levers.” This a clear display of the governments powers to intervene in the natural flow of the market. In some cases as in the French Government, measures are used as tools to give favours to certain sectors as the disadvantage of another. Clearly, such actions of the government affects the internal management systems of a company as it will directly come into conflict with the interest of business. IV. Influence of Technological Advancement on Labour Part of the woes of the labour sector is the ever expanding and advancing technology. Although the advancement in technology is clearly advantageous to management10, it does not hold true on the labour sector. Where automation is employed fully in an industry such as the pharmaceutical business, we find more and more people out of work as machines take over the jobs they normally perform in the past. V. Globalisation Trend and its Impact on the Market Globalisation is now an emerging trend in the market, which is quite favourable to the business sector. The fourth quarter of the 20th century heralded the new trends in business, which is outsourcing. The rapid advancement in technology, transportation and communication systems coupled with the evolution of different government policies across the globe contributes to the integration of world economy. In the United Kingdom, vigorous debates on the impact on the impact of globalisation are a t hand. For advocates of trade liberalization and globalisation, arguments revolve around gains from trade, efficiency gains, the elimination of dead weight losses and comparative advantage. Unfortunately, throughout hundred of discussion forums on globalisation, there is very limited discussions in terms of income distribution consequences. Taking this scenario into the pharmaceutical industry, let us look into government regulations in the offshoring of production of drugs. More and more companies are now outsourcing and taking their production plants out of the European continent as labour and materials are cheaper in other countries, especially in third world countries. As the giant companies start sending jobs abroad, there is a sharp shift in demographics as more and more jobs are taken out and given to other countries. Naturally, since there is also an existing supply of cheap labour in areas where offshore plants are located, companies would prefer to hire locally. Although highly favourable and profitable for companies, this scenario has a negative impact on the labour sector. VI. Concepts and Mechanisms Within Regionalisation As a response of the European Union to globalisation, a concept of regionalisation is introduced through Europe. The idea of regionalisation is the integration of economic activities within a certain coverage area. It implies the organization of regions including sub-national regions such as provinces within a state and supra-national regions, which by its nature involve macro coverage.11 The European Union is now leading model for regionalisation where there is integration in the governance system. It must be noted that under the European Union, policies and legal instruments are now being consolidated in order to serve as one big governance system, which will have an integrated decision-making and policy-implementation mechanism. “The single market is being strengthened by cross-border mergers’ (the Economist March 18, 2006). All across Europe, merger is underway, transcending national boundaries and may change the face of Europe in the next few years. The pharmaceutical industry is one of the sectors most affected, as Europe is known as the traditional seat for the Pharmaceutical industry. With this development of mergers and consolidations, we see huge changes coming in terms of economy, management and labour. Arguments from different sectors of society have been quite loud when it comes to the future of our industries. As European governance in the past have relied heavily on legal frameworks, the question now is that will government interventions cause losses in both labour and business sectors? European Court of Justice so far has been serving as vanguard of European Laws. However, they are things are still unclear like to what extent should the rule of law be the dogma referring to the on-going labour crisis in France brought about by the new labour laws imposed by the government? VII. Perspectives on Legal Ethics and Ethical Delimna in Business Another issue, which will have profound effects on labour and management, is ethics. There are so many ethical risk involved in companies such as the pharmaceutical industry. As our companies continue to send their processing plants abroad, we come to several ethical dilemmas not only in terms of labour but also on the safety of the public as well. In countries where most of these offshore plants are located, there a limited regulations in terms of clinical testing and its subjects. Although the pharmaceutical industry follows three basis principles in testing their drugs such as respect for their patient, beneficence and justice, these rules are often not followed in plants located in third world countries (Wise J. 2001). Often times, the patients themselves would demand to be subjects of the clinical test since there are so many people in third world countries who cannot afford medical treatment. The only way these people sometimes get medical attention is when they volunteer for clinical testing. In other instances, demand for certain drugs and the cost involved in its production would force pharmaceuticals to hasten the research process.12 This clearly involves ethical issues on the part of the company and its management. VIII. Conclusion After discussing the conflict points which generate tensions between government, business, labour and the general public, we come to the conclusion that these factors should be taken together as an aggregate in making informed management decisions. Laws and regulations issued by the government are sometimes in conflict with business and labour interest and need to be resolved before we can achieve sustainable development. Although the European Union is way advanced in terms of integrated governance compared to other unions, there are still gaps that need to be addressed fully such as labour policies and the effect of the on-going market strengthening and unification. Globalisation should also be part of the equation. Although there is no clear showing that closed economy is better than global economy, this does not purport to say that globalisation is always favourable. On issues of ethical concerns, the government should look closely into these issues to protect the interest of the public. We said earlier in this paper that the aims of business are profit. However, that does not give license to these industries to maximize profit at the expense of public safety. Bibliography 1. Angell M (2005) The truth about drug companies: How they deceive us and what to do about it. New York: Random House. 336 p. 2. Brooks and Weatherstone (2000) The Business Environment Challenges and Changes 2nd Edition 3. Brown .s & Siegel L. (August 2005) Mass layoff data indicate outsourcing and off shoring work . Monthly Labor Review also available online at http://www.findarticles.com/p/articles/mi_m1153/is_8_128/ai_n15966580 4. De Angelis C, Drazen JM, Frizelle FA, Haug C, Hoey J, et al. 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