Should MNCs Avoid DFI In Countries With Liberal Child Labor Laws - Research Paper Example

Point Counterpoint Paper Questions Question Should MNCS avoid DFI in Countries with liberal child labor laws? The Point- Answer Basically, in myopinion, an MNC regardless of which country they are belonging or in case they are operating in another country other than the residing one; it has to maintain certain hiring standards. It doesn’t matter if a particular country is allowing or you can say supporting child labor. All in all, MNC should not be following such liberty of work. There should be certain hiring standards and MNC should be liable to follow such standards in terms of hiring right people for the right job.

Even there are certain criteria should be defined in the hiring policy of the company. There should be certain standards in terms of minimum and maximum age criteria. Whereas, in any case, minimum age on behalf of hiring a particular employee for a labor related work also needs to be the part of hiring policy of the MNC. According to the research paper by Sarna, R. Visiting Researcher. The Japan Institute for Labour Policy and Training, Tokyo, Japan. The impact of core labour standards on Foreign Direct Investment in East Asia.

The prevalence of child labour increases the supply of unskilled labour, resulting in low labour costs and thus increasing comparative advantage of a country in the unskilled manufacturing sector. Labour costs could be also kept low by discriminating against children and paying them less compared to adults. This is the main logic behind how ban on child labour can affect FDI inflows. Even if foreign firms are not directly involved in hiring child labour, their supply chains or associates could be involved in it.

This is suggesting that the due to high influence of child labor in manufacturing related industry, now we can have continuous supply of unskilled labour. A labor which doesn’t have required skills to perform a particular task or job, especially in the manufacturing related sector. That is the reason, why most of the MNCs prefer to have skilled labor, which can contribute to the success of the company.The Counterpoint-AnswerTo my opinion, an MNC can easily create employment opportunities for needy children.

If the working conditions are feasible and suitable environment can be provided to the child labor, then there shouldn’t be any issue to have child labor in such facilities. In South-Asian countries, we have seen plenty of child labor, especially in manufacturing industries. Thus there is a plus point for having child labor in the aspects of the MNCs; they can have labor on cheaper rates as compared to what they have to pay to the skilled labor. However, FDI encourage the child labor, especially in the third world countries.

If an MNC is providing helping hands to the child labor in terms of providing educational facilities or some sort of educational grants, then it would be beneficial for the children working in such MNC. They can get the money on behalf of their working hours but also educate themselves to further enhance their career in the same organization or any other place. According to the research paper by Parcon, H. Department of Economics. University of Hawaii. Labor Market Flexibility as a Determinant of FDI Inflows. 2008. “The literature on labor market effects on FDI inflows has mostly focused on the impact of labor cost as part of the firm’s production cost.

”Lastly, I would like to take the stand on the point which I have mentioned above regarding the MNCs should have some hiring standards. The reason behind my stand is just so simple, which I have also mentioned that you can’t have access to the skilled labor until or unless you stop hiring child labor for the completion of labor work in your MNC. Therefore, in order to avoid unusual circumstances, an MNC must hire the skillful labor instead of hiring unskilled labor. According to the research paper by Neumayer, E.

& Soysa, I. London School of Economic. Trade Openness, Foreign Direct Investment and Child Labor. “Child labor is problematic on a number of counts, ranging from the welfare, health and physical integrity of the affected children to downward pressure on adult wages.”Hence, in the context of foreign direct investment, an MNC should not hire child labor in order to have cheap labor resources and considering the cost minimization factor, especially in manufacturing sector, where a lot of work has been done by child labor.

Specifically, when you talk about Asian countries. ReferencesNeumayer, E., & Soysa, I. (2005). Trade Openness, foreign direct investment and child labor. London: London School of Economics.Parcon, H. (2008). Labor Market Flexibility as a Determinant of FDI Inflows. Hawaii: University of Hawaii.Sarna, R. (n.d.). The Impact of COre Labour Standards on Foreign Direct Investment in East Asia. Tokyo: The Japan Institute for Labour Policy and Training.