Globalisation in Diversity in Industrial Relations - Essay Example

Globalisation has not reduced diversity in industrial relations Executive Summary The countries have differed a lot in terms of their industrial relations and globalization, far from convergence has led to divergence of industrial relations. This phenomenon has been highlighted in the paper with respect to the developing country Malaysia and the developed nation United States. The countries have differed a lot with respect to their managerial skills. Diversifications have been led by management decisions. There has been divergence of national labor market institutions due to different labor models adopted by countries. The unions have also been found to play different roles in terms of collective bargaining and dealing with international pressures. Thus there has been divergence in industrial relations in terms of labor market institutions and different approaches adopted by countries for structuring. All these facts help to support our argument that globalization has not reduced diversity in industrial relations. Globalization refers to only one connection system existing for the entire globe. Such a system can exist between commodity and capital markets and with respect to flow of information. With the emergence of globalization in the current period it can be termed as the global age (Cooper 2001). The era of globalization has allowed business houses to acquire investors from across borders and expand their businesses. Globalization has allowed countries to develop with spreading technologies and has helped to develop global capital markets (Blanpain 2009, 196). There has been internationalization of businesses mainly with promotion of international trade. But still it is found that globalization has not been that effective when it comes to industrial relations between Asian and Western countries. The strategies adopted for the industrialization and the role of the state has been different for both the type of countries. This has not let the two types of countries converge in terms of their industrial relations (De Silva n.d). The South Asian country, such as Malaysia, and the Western country of the United States can be cited as examples where globalization has not been able to reduce diversities that are concerned with industrial relations and has led to more divergence. The current paper tends to argue in favor of this issue through various findings and analysis. Globalization has invented and led to usage of technically advanced techniques for the countries, especially the developed countries. This has in fact led to more divergence between the developed Western countries and the developing Asian countries. The economic growth achieved through industrialization has led to different kinds of development in employment relation. While developing and newly industrialized Asian countries like Malaysia are experiencing labor shortages, Western countries like the United States are improving participation of workers in the labor force through industrialization and economic growth (MacDonald 1997). Industrial Relations in Malaysia in the Globalization Era Malaysia is developing country expected to develop very soon. Governmental role and recent foreign investments have made active contributions for such rapid industrialization. It has lowered its dependence on agriculture and primary products and is looking forward to promote exports. But still more flexibility is required for development of private enterprises especially in terms of industrial relations. (Kinuthia 2009). Questions can also be raised on the system of management found in Malaysia. The laws and practices relating to industrial relations in Malaysia appear to agree with the norms set by the International Labor Code in terms of conventions as well as recommendations. Workers are given the right to form and join a trade union. They are given the rights for collective bargaining and they can also form the collective agreement. But the government here considers this organization of trade unions to be obstructing the objective of industrial development (Antaraman n.d ). The 1997 Asian crisis followed by another series of economic and social crisis had fallen heavily on the developing countries, such as Malaysia developing within them anti-globalization sentiment. They also expressed dissatisfaction with some of the agreements and terms and conditions proposed during the Uruguay Round. As a result, the Millennium Round of Multilateral Trade Negotiations could not be launched in Seattle in the year (Siew-Yean 2004). The commitments for Malaysia in terms of UR tariffs have been presented in the tabulated format below: Table 1: Table showing Tariff Commitments of Malaysia under UR Products Tariff lines Fish Product 74 Mineral Products 56 Chemicals 509 Rubber Products 214 Paper Products 197 Wood Products 170 Source: Siew-Yean 2004 The Malaysian trade union Act of 1959 was directed towards promoting bilateralism in industrial relations. The act provides immunity to the trade unions from conspiracies but at the same time trade unions should not oppose those provisions that are governing union acts. In that sense less freedom is provided to unions than those recommended under international labor standard (Antaraman n.d). Malaysia is gradually moving towards advanced technology and is adopting capital intensive techniques of production. However, the wholesale technology pattern has proved to be inappropriate for a developing country like Malaysia. This was mainly because Malaysian workers are found to have less skill compared to that in developed countries. The technological models adopted by Malaysia are small and medium sized enterprise innovative model, foreign direct investment leveraging model. But these models have failed to yield the desired level of outcomes. Thus, currently Malaysia is sticking to national development plans to reach its goal of economic development (Mun Chow Lai and Su-Fei Yap 2004). The infrastructure and role of the state has played an active role in developing handicraft industries in Malaysia which was set up in 1951 by Rural and Industrial Development Authority. The importance of handicrafts industries to Malaysian economy is to such an extent that it has been recognized as a sector under the Fourth Malaysian Plan. However, the size of the market has been the major obstacle to development of this sector. Better wages also need to be paid to overcome bottlenecks in labor supply. Constraints have also existed in the tourists’ markets because of less opening up of the Malaysian handicrafts to the world economy. There has been a neglect of handicrafts in the recent industrial strategies by the Malaysian government for economic development, whereas handicraft industries remain the main source of employment for rural people in Malaysia (Marof Reziduan and Fariborz Aref 2011, 257-259). Industrial Relations in US in the Globalization Era Industrial Revolution has provided the necessary breakthrough to the United States that has emerged as one of the most powerful and developed nations in this era of globalization. Rise of factories have facilitated the US economy to number of skilled workers within its labor force (Kim 2007). However the US economy has mostly experienced fluctuations in employment. There has a slowdown of job prospects in the recent years. Government has considerably reduced the federal jobs and the bulk of work has been given to private enterprises. Private sector workers have also experienced a hike in wages. There has been an increase in non-traditional employment. Illegal immigration has also drastically increased in US (Sweeney 2005). The main reason for industrial development in United States was the inferior variety of agriculture. The country has seen massive transformation of agricultural laborers into industrial workers and working in shoe factories. Some even went to work in cotton textile mills in England (David R. Meyer, 1987, 33). Overtime payments are provided to workers for working for more than 40 hours per week. FSLA has also categorized jobs into executive and professional for overtime exemption (Sweeney 2005). The emergence of globalization was influenced by strategies of neo-liberalism helping to introduce global competitive markets and the strategy adopted to achieve democratic imperialism. This development has been accelerated by the emergence of industrialization. Deregulation of markets, as advocated by globalization, is chiefly responsible for occurrence of financial crisis in 2008 (Fabbrini 2010). The recent era has seen exemption of white collar jobs from overtime. This has lead to a conflict between employers and unions (Sweeney 2005). Research studies show that union membership has been decreasing in the US (Arthur and Dworkin 1991). Convergence/Divergence theory The convergence theories that exist in economics refer mainly to the case of convergence of per capita output. Such convergence theories point to the fact that low income developing countries exhibit a faster economic growth than those developed nations with high income. Thus inequality may be expected to get reduced in due course of time. With the emergence of globalization more countries have been able to import advanced technical knowhow for development of industries (Rassekh 1998). Globalization is known to have enormous impact on the convergence of the relations of national employment. Globalization was expected to bring at the international level common patterns with respect to employment. But cultural diversities existing between countries , difference in their behavior and capital labor relations as well as difference in managerial skills have contributed towards divergence in industrial relations across countries. With the advent of globalization at a time when different countries are at different stages of economic development, globalization has increased the diversities with respect to labor market institutions and the role of players such as unions (OPPapers). Industrial Relations between Malaysia and United States Post Globalization With the impact of globalization, rising competition has increased economic interdependence and collaboration between the nations. The new noticeable feature of globalization has been outsourcing. The developing countries have comparatively lower wage rate than developed nations and, hence, can provide cheap labor. Thus, developed nations are shifting their functions to developing nations like Malaysia or Philippines to reap the advantages of cheap labor. Big American Automobile Companies like Ford, General Motors, as well as other companies like Nestle, are outsourcing many of their jobs. With global co- operation such production and consumption of products and services produced abroad are expected to match the tastes of consumers. But the force of divergence is acting upon those areas concerned with selection of strategies for businesses and their plans for capturing the markets. They are found to be totally different for developing and developed countries (“Trends in Organizational Change”). For Malaysia and United States, their patterns of industrialization have been quite different leading to different industrial relations. They possess different kinds of capital labor relations. Although Malaysia has transferred to export oriented industrialization from the previous import substitution strategies, its produced techniques have been labor intensive, which has been more suitable for unskilled labor. In contrast, the United States possessing larger number of skilled worked has adopted an advanced export orientation containing those production techniques that are more capital intensive (Kuruvilla 1995). These differentiated industrial relations have led to divergence of industrial relations between Malaysia and the United States. Globalization has thrown a challenge to business management. There are possibilities to for entry in new markets and at the same time existing markets have undergone structural changes (Park and Hirowatari 2002, 223). Difference in managerial skills and role of gender has led to divergence of industrial relations between Malaysia and United States. The role of the females has been found to be very different in the workplaces of the two countries. In Malaysia, just like most other developing nations there is male domination in the society and even in the workplaces. Females are being controlled by these dominating males. The country experiences high gender discrimination. However, the society has always catered towards maintaining peace and harmony. Peace has always been given more priority to competition. Gender discrimination has most often resulted in lower ranks of women in the workplace and management. In contrast, the society of the United States generates a more competitive female character and female population is looking forward to take over the role of the males (Oluwabusuyi 2011). Issues regarding gender discrimination at workplace have been brought down considerably after 1980s with better managerial skills (Cross 2000, 73). This leads to diversified role of female mangers in the workplace and, thus, has resulted in divergence of industrial relations between the US and Malaysia even with the emergence of globalization. ILO Decent Work Agenda The underlying objective of the agenda has been to provide employment to maximum possible number of individuals in order to generate more income in the economy and also eliminate gender discrimination. To fulfill such an objective, International Labor Organization (ILO) has undertaken Decent Work Country Programs (International Labor Organization). Through such programs they have aimed towards creating more jobs and increase social protection. The aim has been to set standards with respect to labor for domestic workers comprising a large number of female workers. They work in households in their own countries or abroad in return of salaries or wages. Such workers have not been given fundamental labor rights and are also subjected to work under forceful circumstances. Such an agenda of ILO is also expected to help in preventing child laborers. Such an agenda will be effective particularly for Asian countries which have neglected needs of these workers while implementing social policies. This is mainly because private households are not considered as standard workplaces under the law (home). Even with globalization there are 205 million unemployed individuals worldwide. Job crisis is still prevalent and, in fact, has risen with the recent financial crisis of 2008. 603 million are still living in extreme poverty, as per the US data, and are not even protected socially. Now the challenge is before to provide working opportunities to a large of immigrants who migrate abroad in search of work (Pascual-Teresa 2011). Role of globalization in maintaining Industrial Relations Globalization has not been quite significant in removal of cultural differences that exist in the social systems of the nations. Diversity is caused by presence of heterogeneous population in society. In fact, globalization has led to massive competition between nations who are ethnically different (Salawu and Hassan 2011). The achievement of globalization can be thought of as promoting international trade. But such trade has still not widened employment opportunities and not even reduced growing inequality, particularly for developing countries. Globalization is criticized for being uneven (Vivarelli and Lee 2006). The impact of globalization on employment relations have not been significant enough to remove the varied diversities prevailing within the national economics. In fact, such a trend leads to globalization of businesses, and multinational tie ups are putting a thrust on the economy of the countries. Far from convergence it has led to divergence of industrial relations across countries. Here divergence among institutions for the industrial relations has been discussed. Such an instance is proved by the industrial relations prevailing within the German framework. Globalization had created a lot of economic pressures on the German industrial relations, since it possesses a dual system. The Institutionalist approach which the German unions had adopted has enabled them to bear the pressures of globalization. The German unions have been more deeply involved in changing the structure of industries in Germany as compared to other foreign counterparts like USA and Sweden. Specifically unions have played different roles for handling international pressures across different countries. Such different roles adopted by unions have been responsible for divergence. Such globalization pressures have been more on the German economy as compared to that of the United States or Sweden. The reason has been different levels of unionization in structuring of industries that is totally with respect to each country. Decentralization of collective bargaining by unions has been behind the comparatively greater burden of pressures for Germany than other countries (Bamber, Lansbury and Wailes 2004, 31-32). Globalization has not led to expected convergence of industrial relations and labor markets, as expected. It has instead led to divergence of national labor market institutions across countries. Such changes in models of labor market are preceded by the ongoing changes in the structure of capitalism brought about by globalization. The changes in such models can be traced out by different political goals adopted by different countries. For some countries labor markets have been deregulated while for others this is not the case. The diversity noticed in industrial relations is an outcome of such divergence in national labor market institutions. There have been several changes in economic structure under the influence of globalization and associated capitalist form of development. But this new concept of development have ignored and missed out several factors, like the role of institutions, political impact on the economy and the process of learning which play a key role in changing economic structure and related social changes. Capitalist development has been criticized for lacking uniformity. Although globalization has to some extent achieved economic integration by deregulating international markets, there has been divergence in terms of governance and management of businesses in national economies. Increased interdependence among nations has not been able to wipe out the production system that has shown a regional dominance more than international unity and globalization (Dolvik 1998, 5-8). Even deliberate attempts of Anglo- Americans for convergence have not been able to integrate labor markets completely. The American managerial culture has been more glamorized quite different that what is seen in Asian countries like Japan. Moreover different countires have adopted different measures for regulations creating such diversities in industrial relations. Integration for products as well as national markets used to be much more before globalization (Zeitlin and Herrigel 2000, 47). Participation of unions has provided different explanations with respect to decision making (Cohen 1993). Globalization has faced criticisms for making labor mobility low and resulted in widespread unemployment. As evident from the industrial relations between Western developed and Asian developing countries, globalization has a negative impact upon wages and the conditions of work faced by laborers in the workplace. This is specifically for developing nations (Frenkel and Kuruvilla 2002). Globalization has been biased towards the developed nations and the negative effect on the labor conditions of developing countries has been the outcome of such an instance. Such globalization has also put immense pressures on the economies of developing nations (Ali 2005). The reduction in tariff barriers and the ongoing exchange of culture with the emergence of globalization was expected to bring about convergence (Drezner 1994). But employment relations have remained diversified in terms of labor market regulations and management decisions. The pattern has been different for unionization and collective bargaining across nations. Such differences show a case of divergence within industrial relations and failure of globalization to eliminate the prevailing diversities (Upchurch 1999, 211). Such diversities have been considered helpful for companies for realizing market growth and identifying change in consumers (Davidson and Fielden 2003, 19). Management of diversity is becoming more problematic under the increasingly competitive scenario of globalization (Henderson 1994, 3). Cultural diversities have led to problems in communications (Kikoski 1993, 31). Moreover, the removal of cultural diversities is also not supported on the logic of preservation of species (Ward and Bochner 2001, 17). Malaysia: divergence in Industrial Relations The newly industrialized nations like Malaysia are experiencing variations with respect to patterns of employment with respect to other countries. With the emergence of globalization rather than convergence this divergence within industrial relations appears to be increasing. Different logic is followed in this country for protection to employees and competitive rules. With globalization there has been increased competition which is leading to more changes in workplace pattern of Malaysia with respect to other countries, particularly the developed Western countries like USA. However the Malaysian workplace pattern shares some common features with similar developing countries like Philippines and India. Countries like Malaysia has always attempted to built upon a central system to determine wages. The chief motive was to eliminate competitive factor in case of wages (Frenkel and Kuruvilla 2002). A case study of Malaysia had revealed that its industrial relations were deeply influenced by its strategy for industrial relations. It has been found that industrialization strategies of Malaysia including import substitution for maintenance of stability and low cost export promotion strategy for suppressing unions is very different for strategies of industrialization that is adopted by developed nations like US. With emergence of globalization and increased competition the countries diverged more in industrial relations in an attempt to meet the economic goals for development (Kuruvilla 1996). In contrast, the developed nation of the Netherlands has achieved such flexibility in industrial relations without alterations in labor conditions (Pot 2000, 200). Conclusion Globalization has led to integration through market deregulation and has also helped most countries to industrialize rapidly. But at the same time, its effects have been uneven. It has helped more developed nations in economic development and also led to unemployment in developing nations. Moreover, such globalization has also been unable to reduce diversity in industrial relations. This has been proved in respect of two countries- the developing Asian country Malaysia and the United States. Rather than convergence that was expected for tastes and preferences of consumers, such globalization has led to divergence in the way of adoption of business plans and strategies, as well as the labor market conditions across nations. The divergence in industrial relations of Malaysia has also been in favor of the argument. 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