Globalization Effect on
Employee Relations

Globalization effect on employee relations is among many important matters that requires attention if or when your organization has global business operations.

It can also happen that business entities, namely, multinationals, from other countries come knocking at your country's door.

Many industrial relations issues need careful attention.

Globalization's Effects on Employee Relations: What they are

According to Lansbury, Kitay and Wailes of the University of Sydney, there are three views:

  1. Pressures on countries to converge on employment relations
  2. Another view is that national institutions act to maintain divergence in employment relations, and
  3. The third view is that the interaction between global and national forces shapes the outcomes in employment relations.
  4. In the book "Labour and the Challenges of Globalization: What Prospects for Transnational Solidarity?" Devan Pillay (Editor), Ingemar Lindberg (Editor) and Andreas Bieler (Editor):

    • write that neoliberal restructuring of global economy results in new forms of polarisation in the world
    • argue that workers and trade unions, through intensive collaboration with other social forces across the world, can challenge neoliberal globalization

    If you are interested in a detailed explanation of "neoliberalism", Dag Einar Thorsen and Amund Lie had written an article "What is Liberalism?"

    Click here for a short article by Elizabeth Martinez and Arnoldo Garcia on "Neo-liberalism".

    Challenges to International Workers

    International business organizations need to understand the globalization effect on employee relations in terms of the challenges posed by globalization to world's workers.

    Who are these workers?

    Many of them are formalized or legally-documented workers.

    Others include street-traders and homeworkers called by some as "informal workers" at the peripherals.

    Note the following examples.

    Some countries export their expertise such as New Zealand.

    The French tourist industry exports tourism expertise to other countries.

    It is estimated that there are eleven million Filipinos overseas, most of them working as "Filipino Overseas Workers." A lot of them work as house maids.

    Industrial parks in China and India are opening for developed countries to export their expertise.

    There are large groups of workers who can move freely within a common market such as in the European Union.

    There are millions of migrant workers most of them working as maids.

    The presence of illegal or undocumented workers poses various challenges to organizations and national governments worldwide.

    Anyone of them can end up at the wrong side of the law if and when he or she gets involved in undesirable activities.

    Trade Union Strategy

    What can trade union do in response to globalization effect on employee relations?

    It has been accepted that "globalization has proved a complex and multi-faceted process for workers around the world..."

    An International Labor Organization's (ILO) book "examines some of the crucial issues facing the trade union movement."

    Regulation of Labor Standards

    Another globalization effect on employee relations is on "labor standards."

    It is stated that because of globalization, "countries and corporations are under increasing pressure to adopt and follow international labor standards." ("Globalization, Logics of Action, International Labor Standards and National Government Roles" by Sarosh Kuruvilla of Cornell University (USA) and Anil Verma of University of Toronto (Canada).

    Challenges posed by globalization effect on employee relations

    It is said that globalization results in employment challenges that are often difficult to resolve.

    Among other things, J. J. Rodwell and S. T. T. Teo of Deakin University, Australia (29 April 1999) mention that:

    1. "The complications that arise at the level of the national subsidiary suggest that the key test of employment relations depends on being able to balance the demands of efficiencies at the international level with simultaneously maintaining the operational life of the organisation..."
    2. "Multinationals appear to be balancing their strategic human resource management issues by following host-country norms for operational issues and adapting the style in which those practices are carried out to parent-country norms."

    In the face of all the complexities and challenges posed by globalization, organizations intending to globalize need to fully equip themselves to compete successfully in the world arena.

    Many many organizations will fare well. Only those managed by capable senior management having the skills to motivate a diverse workforce will survive in a world of keen competition, unpredictable economic outcomes and stressed relationships.

    Managing Global Human Resources
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