Unit
1
Globalization
and employment relations
I.
Objectives
1.
Discuss the concept, definitions of, causes
and consequences of globalization
2.
Identify the role of multinational
enterprises in globalization
3.
Differentiate between types of
multinationals and their characteristics
4.
Analyze divergent industrial relations
strategies
5.
Chart the trends of labour unionization in
Asia-Pacific
6.
Discuss union strategies and government
policies in Asia-Pacific
II.
Introduction
1.
International trade and foreign direct
investment (FDI)
1.
integrated financial system and
transnational business networks are the indicators of the emerging global
economy
2.
Key issues associated with globalization,
particularly managing the workforce
3.
Greater cooperation is needed between the social
partners
4.
Such as employers, workers, organizations
and government
2.
The concept of globalization
1.
Explaining what it means, in relation to
multinational enterprises and local firms
2.
Distinguish between MNEs at different
stages of globalization before focusing on the human resource/industrial
relations (HR/IR) challenges
3.
Including changing coporate stetegy,
structure and culture, and developing HR/IR policies
3.
Challenges posed by globalization for
workers and unions
1.
Workers respond flexibly to change
2.
Having some voice in the change process
3.
Most vulnerable citizens from the adverse
effects of change
4.
Ensure that labour markets operate
efficiently of the government policy
4.
Understand the implications of future
globalization scenario
III.
Globalization: What does it mean?
(A) The concept of globalization
1.
The processes
1.
Bring people of different countries closer
together, the final result being an absence of barriers to economic or social
relationships (Waters 1995:3)
2.
Occurs through closer international
economic integration of trade and investment
3.
Such as Vietnam and India, Hong Kong and
Singapore, South Korea and Japan
2.
Globalization is controversial for a number
of reasons:
1.
More uncertainty
a.
Increasing competition attendant on more
trade and investment
b.
That result of deregulate product and
labour markets
c.
Privatize inefficient state enterprise
d.
These change often endanger the security of
managerial and workers’ job
2.
Existing institutional power bases in
society
a. Trend
to take power away from governments
b. Shifting
it towards international markets and large firm
c.
Workers become controlled by forces beyond
their control and probably at a distance form them
3.
Loss of sovereignty to the most
economically powerful countries
3.
Globalization offers the possibility of
stronger economic growth
a. Particularly
if trade and investment flows are internationally regulated to prevent large
fluctuations in money and share markets
b. Lending
to IMF involvement were a consequence of a precipitous change in investor
sentiment
c. Focused
on governments abruptly as they sought to restore investor confidence,
institutional foreign investors
d. Ensure
that the constant drive for efficiency, expanding poverty and environmental degradation
e. Labialization,
agreement to minimize national and regional barriers to capital and product
markets
(B)
Causes and evidence
1.
MNE is the primary engine of change,
creating complex international networks of product
1.
Distinguish the globalization era from
earlier periods based on simpler forms
of international integration
2.
Extends far beyond the world’s urban
centers
3.
International trade has grown increasing
from 25% of world GDP in 1970 to 45% in 1990
4.
Newly industrialized counties tripled their
share of manufactured goods as a proportion of exports from 20% in 1960 to 60%
in 1990
5.
Asia-pacific have benefited particularly
from trade policies that have emphasized export promotion
2.
The international financial system has made
capital flows easier
1.
The government have more difficulty in
implementing macroeconomic policy
2.
Less control over capital flows, hence over
exchange rates and the money supply
3.
More movement of people in absolute terms
4.
Immigration flows to and from DCs are, no
greater relative to population size than in 1970s
(C) Globalization and production networks
1. Implications for employment and labour relations
3 main common transnational networks of relationships:
a.
Producer-driven chains (PDCs)
b.
Buyer-driven chains (BDCs)
c.
Service-provider chains (SPCs)- Mainly Intra-organizational
2. Intra-organizational
a.
Linkage business units of the same
organization across national boundaries
b. Extensive networks that
include local suppliers and/or distributors
(D) Product-driven chains
1. Close ties with external companies, or
subsidiaries of the same corporation, to supply components or services
2. Contractors, subcontractors and
subsiderations are often located in DCs and NICs according to cost and quality
consideration
a. Singapore and Malaysia have raised their
skill and wage levels, had to compete for the production of higher value-added
inputs
b. Vietnam and
China to supply more labour-intensive components
3. MNEs often establish strategic alliances
4. This type of close but limited collaboration
between competitors may hasten workforce rationalization
5. Joint ventures are also a feature of PDCs in
countries that require, or strongly encourage, local partnerships as a
condition for FDI
(E) Buyer-driven chains
1. Multinational retailers with strong brand names
2. Contract out the manufacture of final goods
according to strict specifications
3. Benefit from close ties with the retailers
along lines of relational contracting
4. For example: Nike
5. NIC-based companies are moving out of low
cost, labour-intensive production to supply skilled services
6. Creating their own international brand names
across a wide variety of consumer goods
7. Finding competition tougher as they attempt
to move up the value chain
8. Come into direct competition with European and US firms
(F) Challenges associated with globalization
1. For firms
a.
More intense competition associated with
globalization requires constant change
b.
Business strategies and organizational
structures need to be recast continually
c.
HR and IR polices that explicitly
acknowledge the cross-cultural context and the diverse backgrounds and values
of employees
2. For workers
a.
Structural adjustment creates uncertainty
over the availability
b.
Quality of jobs and the terms and
conditions of employment
c.
HR/IR decisions becomes more important for
workers
d.
Protection against long-term unemployment
and securing reasonable pay
e.
Working conditions and benefits remains a
fundamental issue
3. For government
a.
Globalization represents a challenge in 3
main areas:
(1) Required
to preside over structural change
(2) Industries
will be declining while others will become more important
(3) Policies
are needed to modernize such enterprises
b.
Labour standard
(1) What
standards are governments committed to enforcing in order to protect employees
from exploitation?
c.
Concerns government policy and involvement
in regional and global alliances
(1) Promote the national interest within the
emerging global economy
*Employers
and unions have a rightful role to play in influencing government thinking
IV.
Issues mainly relevant to corporations
(A) MNEs and many domestic firms are part of a dynamic, global environment
1.
Management is forced to reconsider its
business strategies, organizational structure and HR policies
2.
Identifying and taking advantage of current
and emerging core corporate strengths
3.
Being able to combine aspects of local
comparative advantage and more general organizational attributes in novel ways
4.
Ensuring that economies of scale can be
harmonized with flexibility and innovation
(B) Maintaining competitiveness
1.
Outsourcing of some functions in order to
focus on core competencies
2.
Downsizing
3.
Automation in pursuit of reduced costs and
productive efficiency
4.
Tendencies have had far-reaching consequences:
a.
Reducing employment growth in the advanced
industrial areas
b.
Contributing to employment growth in less developed
regions
5.
Low-skilled labour becomes more expensive
and the local structure of employment evolves towards a more skilled pattern
6.
Workers’ job declined while management and
professional employment increased
(C)
Corporate social responsibility
1.
Typically includes a broad commitment to
employees
2.
Minimum requirements for independent
contractors and joint venture partners
3.
Both which support freedom of association
4.
National business associations may promote
labour-management relations norms
a.
Fair and sound labour-management relations
b.
Expansion of learning
c.
Providing promotion opportunities for local
employees
5.
Reflects 4 factors:
a.
Retain a motivated, skilled workforce where
labour shortage is a persistent problem, or global network of production for
export markets
b.
Retain a positive image in host countries
c.
Productivity is higher than in local firms
d.
Apply pressure on management to improve
wages and conditions
(D)
Unions and collective bargaining
1.
MNE country of origin that reflects a
particular tradition of management-labour relations
2.
Largely peaceful and cooperative
relationship with unions
3.
Confounding effects of industry, profitability,
size of establishment and so on
4.
Clues are evident from 3 MNE sources:
a.
Behaviour on these issues
b.
Behaviour with regard to FDI
c.
Involvement in industrial conflict
5.
HR strategies to transcend the constraints
are related to 4 factors:
a.
MNEs towards the adoption of global
strategies, structures and cultures
b.
Organizations becoming internally more
homogeneous with respect to technology and employee requirements
c.
MNEs as managers seek to adjust production
and costs
d.
Less direct regulatory role in the 1990s
6.
MNEs operate in the local labour environment
ask the question:
a.
“Does the management of these organizations
prefer to deal with unions through collective bargaining?”
b.
The answer is “No”, the indirect evidence
comes from governments attempting to attract FDI
c.
Export processing zones (EPZs), such zones
are significant in China and Southern Asia
7.
Manufacturing triangles
a.
MNEs and local firms are based on highly
developed urban centre
b.
Cheap labour for simple manufacturing in an
adjoining underdeveloped region
8.
MNEs prefer to be unconstrained by external
organizations
a.
Absence of consistent union density in
foreign affiliates
b.
Typically the in-house or enterprise union
variety
c.
Why MNEs more prone to industrial conflict?
(1) More
stridently oppose union recognition and less co-operative in their approach
than local companies
(2) More
profitable that having a greater capacity to pay
d.
MNEs generally perfer not to recognize
unions or to bargain
(1) Pragmatic and will do so where local labour
laws strongly encourage or require such behavior
(E)
HR/IR policies and practices in the local
situation
1.
4 implications of global integration based
on international network:
a.
Efficiency in terms of price, quality and
delivery time
b.
Tend to disperse resources and power among
strategic business units and product line headquarters
c.
The purpose of monitoring
(1)
Track actual costs against budgets and
compare performance between business units
(2)
Product specialization in the context of
larger markets, inter-affiliate competition for investment funds is likely to
be increasing
d.
Internal and external benchmarking and an
emphasis on organizational learning
2.
Organizational learning
a.
Lessons of superior performance can be
captured and effectively transmitted to management and employees
b.
Achieved in a less than systematic manner
c.
Large consulting firms appear to play an
increasingly influential role
(1) Determining
what constitutes best practice and in promoting change
d.
MNE management face the challenge
(1)
Sustaining continuous improvement
(2)
Knowledge dissemination across business
units
(3)
Introducing practices in ways
3.
Changing the HR/IR function
a.
Focus on negotiating and maintaining rules
b.
Providing advice on employee relations
matters to taking a proactive role as a business partner in fostering support
for innovation
4.
The pattern of cooperative dependence
includes the following attributes:
a.
Employment security for key employees,
combined with temporary contracts for a minority of other employees
b.
Broad and challenging jobs that include an
emphasis on teamwork, process improvement and awareness of obligations to other
sections or production units
c.
Facilitative supervision rather than
hierarchical control
d.
Continuous employee training
e.
Systematic individual appraisal
f.
Performance-related reward
g.
Workers representation either through a
formal council and /or via a union in a single bargaining unit
(F)
Managing in a changing, complex
environment: Joint ventures in China
1.
2 major kinds of problem in managing joint
ventures:
a.
First stems from state ownership and control
b.
Implications for people management
2.
State hegemony has encouraged Chinese
managers:
a.
Stand back from responsibility
b.
Look towards the state for direction
c.
Well-developed sense of corporate identity
and goals
3.
As Chinese managers tend to:
a.
Be unsystematic in their approach
b.
More parochial in their attachments
c.
More accepting of quality defects than
their MNE counterparts
(G)
Union involvement
1.
The party
a.
Typically reluctant to relinquish control
of the HR function to foreign management
b.
Barred by law from having an official
presence in joint ventures
c.
The party secretary or deputy secretary
(1)
Works close with Chinese management to
ensure control of the workforce
(2)
Protects employees from what are regarded
as overzealous efficiency measures
d.
Foreign managers to introduce modern
personnel techniques, especially performance-related reward systems
2.
Strong union/party presence in US and
European-owned
a.
more technologically advanced joint
ventures
b.
Dominated by local bureaucrats who have an
interest in keeping unions weak that they can profit from successful joint
ventures
c.
Attracting further foreign capital
d.
Western joint ventures are encouraging
Chinese managers to take more personal responsibility
3.
Conclusion with 3 points:
a.
Change can be devised at divisional or
corporate level, but this has to take account of local institutional and
cultural factors, play a major role in the economy
b.
Local managers be given considerable
autonomy to manage their business units and be encouraged to document key
insights and lessons
c.
Change towards a more sophisticated HR/IR
approach should not be seen as being confined to MNEs
(1)
Local firms can learn by benchmarking
exercises, and through informal contact with companies they do business with
(2)
Encouraging firms to experiment and adopt ‘best
practices’ techniques
(3)
Most appropriate in various institutional
settings are matters for further investigation
V.
Issues mainly relevant to workers/unions
(A)
MNEs
1.
Domestic employers seek to limit their
statutory obligations
2.
Workers cannot rely on government for
effective implementation of the law
3.
3 characteristics seriously affect workers:
a.
Locational flexibility
b.
Substantial resources
c.
Remoteness of decision making centers from
union activity
4.
MNEs can more easily relocate production,
outsource certain activities and redirect their investment
5.
Decision making often complex, involving
mangers at subsidiary, regional or divisional and corporate levels
a.
Involving managers at subsidiary
b.
Regional or divisional
c.
Corporate levels
6.
2 factors strengthen the union position:
a.
Highlighted by ‘just-in-time’
manufacturing, at least in the short term, to strikes and other output
restrictions
b.
Management is especially sensitive to
adverse publicity, based on alleged unfair employment practices
(1) Unions
must rely more than ever on their own initiatives and resources to meet the
traditional goals of their membership (UNCTAD 1994:341)
(B)
Unionism in Asia-Pacific
1.
Highlighting 2 important points:
a.
The low density figures, unions are weak,
by the role of party and local government bureaucrats
b.
Many governments have been fostering
enterprise-based unionism, an organizational form that restricts union power
2.
The defensive in dealing with MNEs
a.
Union density in most advanced countries
where MNEs are based has been decling rapidly
b.
Unions are appropriate institutions in an era
of globalization, or whether they remain relics of more primitive forms of
capitalism
c.
Unions can impede efficiency through
forcing the price of labour above competitive rates and by tolerating
restrictive practices
d.
Unions can impede efficiency through forcing
the price of labour above competitive rates and tolerating restrictive
practices
3.
Effective unionism
a.
Building skills,
b.
And participating in strengthening
workplace competitiveness through work organization and labour relations
improvements based on achieving mutual gains
c.
Receiving an equitable share of
productivity gains, job quality improvements and skill enhancement
opportunities
d.
Effective unionism requires augmentation at
higher organizational levels to ensure that policy frameworks support
4.
Describe the function of unions under
global capitalism as follows:
a.
Unions can supplement ineffective state
regulation of employment relations
b.
Unions raise wages and limit unilateral
employer power that prevents exploitation and increase worker motivation
c.
Constructive role in fostering productivity
and quality and encouraging workers’ adaptation to change
d.
Promote internationalization of fundamental
workers’ rights as a basis for the conduct of free trade
(C)
Union strategies and MNEs
1.
Conventional strategies:
a.
Emerging strategies-how the expansion of
international trade might be based on minimum labour standards
b.
Unions have sought to bargain with
subsidiaries at national, industry and workplace levels, IR is a relatively
decentralized process in MNE decision making
c.
Unable to extend collective bargaining
coverage beyond a small minority of employees
d.
Unions have had very limited success in
influencing MNEs at the international level
(D)
International union organization
1.
Unions have organized internationally in 3
main ways:
a.
By joining and supporting international
alliance
(1) 2
largest of which are the International Confederation of Free Trade Unions
(ICFTU) with 124 affiliates
(2) Smaller
World Confederation of Labour
b.
National unions with common industry or
occupational interest
(1) Specific interests and fostered primarily
through the International Trade Secretariats (ITSs)
c.
Unions work with other groups in
campaigning for improved wages and working conditions for employees
2.
The principal issues addressed by the OECD
code:
a.
Locational flexibility by providing stable
employment opportunities
b.
Union recognition
c.
Unfair bargaining tactics
d.
Access to decision makers
e.
Information disclosure
f.
Innovative working practices
3.
The function of ITSs
a.
Collect and distribute information to
affiliated unions
b.
Provide forums for discussion
c.
Coordination of international union actions
d.
Organizing campaigns directed at MNEs
e.
Organized world company councils in an
estimated 30 to 40 MNEs
4.
Implementation of strategies
a.
Attract more workers into unions by
improving recruitment
b.
Offering better service
c.
Communicating more effectively
d.
Maintain support and influence in the
workplace
(1) Build
and maintain a vigorous workplace union organization oriented to achieving
productivity
(2) Quality
improvements
(3) Equitable
treatment for workers
e.
Providing efficient services to members and
comprising professional
f.
Responsive union leaders capable of working
cooperatively with leaders of other unions under the umbrella of a single
national federation
(E)
Linkage workers’ rights to international
trade
1.
Expanded international trade associated
with the growth of free trade does not occur at the expense of fundamental
workers’ rights
a.
Major international trading bloc, North
American Free Trade Area (NAFTA)
(1) Hold
as The North American Agreement on Labour Cooperation
(2) Regulates
IR under NAFTA
(3) Occupational
safety and health, child labour and minimum wage standards
(4) Provides
a foundation on which to build worker protection in the future
2.
In summary:
a.
Unions face formidable problems in
representing workers within MNEs
b.
Organizational capability domestically and
internationally
c.
Secure the support of governments
(1)
Vulnerable to criticism for failing to
adequately uphold minimum labour standards in an era of unprecedented change
associated with intense global competition
VI.
Issues mainly relevant to governments
(A)
Globalization requires Government:
1.
Open their economies to FDI and their
markets to international competition
2.
Increasingly emphasizing domestic
efficiency and export-oriented strategies
3.
Focusing the role of governments in
responding to globalization
4.
Emphasis on creating and sustaining
effective labour markets
(B)
Policy options available to governments
1.
Closing years of the 20th
century does represent a new stage in the evolution of capitalism
b.
Ensure that their national interests are
not to be adversely affected
c.
State the globalization as developing in
tandem and highlights the adaptation of the state to the emerging conditions
2.
The competitive state broadly comprises 2
key elements:
a.
Generating economic growth and raising standards
of living
(1) Policy
areas traditionally defined as domestic
(2) Includes
education, transport, health and taxation
b.
The manner in which governments execute
competitiveness policies
(1) Shifted from predominantly demand-side
measures to supply measures
3.
Government restructure to position
effectively in a global world:
a.
Join together to create larger markets or
to enhance competitiveness through access to regional diversity in terms of the
type and cost of resources
b.
Fusing of public and private sector
interests and capabilities and a relatively autonomous economic management
group
c.
Social democratic model of selective
integration into the world economy
(1) Economy
are opened up to the global economy and may display a high level of
competitiveness
(2) Less
able to compete in world markets
(3) Universal
education and innovation which can enhance competitiveness
(4) The
social benefits of a more cohesive and homogeneous society
d.
The world economy through size and power
(1) History has shown that such a position may not be sustainable
e.
For smaller and poorer economies, the
choice of strategy may be more limited
(1)
Such as Indonesia
(2)
Allowing the conditions of production to be
pushed download in an attempt to attract foreign investment
(B)
Government and labour market policy
1.
The primary function of labour markets
a.
To allocate labour efficiently to
enterprises
b.
To ensure certain basic human rights
(1) Sustaining people at or above a reasonable
living wage without endangering their health and without discriminating
unfairly against particular categories of person
2.
Government have to balance encouragement of
investment
a.
Due attention being given to the interests
of prospective and actual employees
b.
Dilemma is starkly where DC governments
compete to attract cost-conscious MNEs
3.
Export processing zones (EPZs) are the most
common vehicle for attracting this kind of FDI
a.
The challenge is to improve labour
standards while remaining attractive to foreign investors
b.
More likely to contribute to the host
society
4.
Globalization encourage growth in some
sectors and contraction
a.
Workers with opportunities and threats
b.
Imbalance in power between employees and
employers needs to be redressed so that employees are not treated as commodities,
bought and sold as at an auction
c.
Globalization requires:
(1)
Rights to organizes and bargain with
employers
(2)
Proscription of forced
(3)
Child labour
(4)
Protection against discrimination
(5)
Government support for near-full employment
(6)
Tripartite consultation over labour market
policy
d.
Government support:
(1) Union
rights to organize
(2) Bargain
and take strike action
(3) Potential
adverse economic
(4) Political
effects
e.
These rights are subject of ILO conventions
which have moral, not force unless supported by relevant national laws
5.
In an era of globalization when changes
a.
Division of labour place additional strain
on the flexibility of national labour markets
b.
Governments equip workers with skills to
take up new positions
c.
Move from declining to growing industries
d.
Labour market policies is to facilitate
structural adjustment in an equitable manner
6.
Government support for union as follows:
a.
To organize, bargain and take strike action
that concern will send wrong signals to MNEs
b.
Potential adverse economic and political
effects, such as inflationary wage rises and challenges to state authority
c.
Responsibility for determining union
coverage, bargaining and restricting the availability of strike action
d.
Tend to encourage enterprise or
decentralized unionism
e.
Provides an independent mechanism for the
constructive engagement of workers in decision making at organizational levels
(C)
Human resource development
1.
The provision of a skilled, dependable and
creative labour force is a key factor affecting FDI and economic growth
2.
Vocational training that open to governments,
including
a.
Collaboration with large companies
b.
Investment, particular industries
c.
Payroll levy/ training subsidy schemes
3.
Take bolder and more comprehensive approach
to human resource development
a.
Covered recruitment policy
b.
Job design
c.
Skill formation
d.
Training
e.
Unionization
f.
Worker-management cooperation schemes
(D)
Public services and globalization
1.
Government policy:
a.
Regarding the extent of family provision
b.
The balance between income transfers for
temporary alleviation of hardship
c.
More permanent support
d.
Determine the funding of unemployment
benefits
e.
Severance pay
2.
Government faces problems:
a.
Restructuring the public services to meet
the challenge of globalization
b.
MNEs also concerned about “red tape” that
delays implementation of policy or makes it more expensive
3.
The narrow and reactive role
a.
Labour or human resource ministries
currently
b.
Seeking to work more actively with
development
c.
Finance ministries to generate development
options
d.
Coordinate and implement coherent public
policies
4.
The public sector is beginning to learn
from private sector organizations
a.
HR strategies to increase motivation and
efficiency
b.
Being ‘poorly motivated’ and ‘unproductive’
c.
Employment practices
(1)
Selection processes based on informal
criteria
(2)
Low pay
(3)
Rigidly defined jobs
(4)
Promotion by seniority have exacerbated
d.
Beginning to learn from private sector
organizations that use a variety of HR strategies to increase motivation and
efficiency
e.
Use of work teams, delegation of authority
and decentralized bargaining
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