The Impact of Globalization on Labour

By: Farmala Jacobs

Overview

IntroductionWhat is Globalization?Impact of Globalization on workers and

employment Social and Economic ImpactChanging Nature of Work Impact on Trade UnionsWhat can be done?

Introduction

Since the early 1970’s and the end of Bretton-Woods , economies have increasingly moved towards deregulation, international trade liberalization, and interdependence.

There has been a dramatic shift away from manufacturing and towards service sector employment over the past quarter of a century

Globalization

“The integration of countries and people of the world” He points at the emergence of new institutions and the growing importance of internationally active corporations moving capital, goods, and technology across borders. For him globalization is governed by economic and financial world institutions such as IMF, World Bank and WTO. Stiglitz (2002:9)

IMPACT OF GLOBALISATION ON WORKERS

Informalisation of formal sector Privatisation causing millions of workers jobless and

cut down of public services TNCs apply effectiveness system:

piece-ratemulti-skill [service sector]

Deregulation of private sector Closing down of factories Media being used as a tool against trade union

movement Create inequality among people and nations leading to

social unrest Increasing working hours

Impact on Employment

Flexible work environment - working from home and online systems

Feminization of Labour Greater demand for skilled workers at the

expense of the un-skilled and the income gap been the two groups has grown

FDI’s ,TNC’s and trade liberalization lead to job losses

Privatization also leads to unemployment

Privatization

Privatization is the total or partial sale of government-owned or controlled corporations or institutions to the private sector. Example is the sale of formerly government owned and managed water and electric companies to private businesses.

Liberalization

Liberalization -the reduction and eventual removal of barriers to the flow of goods, services and capital from one country to another. Example is the reduction or removal of tariffs or taxes on imported agricultural products.

Foreign Direct Investment

Creates large numbers of new jobs but also causes job destruction

The ILO offers two reasons for rising unemployment as a direct result of FDI’s: (1)the drive for higher efficiency in order to be competitive in the global market, and (2) the introduction of technology to raise productivity.

ILO notes that job losses have fallen most heavily on unskilled workers.

FDI in the services sectors in Barbados, Jamaica and the OECS countries has contributed to job creation. The tourism industry has emerged as one of the largest employers in many Caribbean countries.

However, the positive contribution of FDI to job creation may have been offset by job losses in the manufacturing sector especially in Jamaica, owing to trade liberalization.

Role of Remittances

A major effect of labour migration has been the growing role of remittances

These flows have been significant in Haiti, Jamaica and the OECS countries with the exception of A&B.

This has been facilitated by the development of more efficient intermediation channels, such as electronic funds transfers.

Remittances have grown in both absolute and relative terms.

By 1999, such flows represented 17% of Haiti’s GDP and 11.7% of Jamaica’s.

Remittances have also been significant in Grenada and in St. Kitts and Nevis (ECLAC, 1998f).

Migrant labour tends to flow from lower-income to higher-income countries (for example, from Haiti to the Bahamas and the Dominican Republic and from Guyana to Trinidad and Tobago).

Migrant workers are mainly unskilled agricultural workers or workers in construction and service industries. Although they can have a positive impact on countries experiencing economic booms, such as Trinidad and Tobago, they pose economic as well as political problems for small and fragile economies such as Antigua and Barbuda, where about 30% of the labour force is made up of citizens of other Caribbean countries.

Muti-national Corporationso Like any other profit-oriented business, MNCs

base their decision on where to produce on the most competitive combination of (i) labor, (ii) technology, (iii) structural advantages, and (iv) the right business environment, which includes among others, low profit taxes and political stability.

It is well documented that at least the 1990s saw an intensification of a competitive pressure to lower labor costs and taxes, especially in high- and middle-income countries

Mergers and Acquisitions

M&A which represent genuine expansion or product development may lead to job creation in the long term

On the other hand, M&A can lead to job losses through “post-acquisition rationalization”- after realizing two sets of employees are doing the same job, the work force may be reduced to avoid duplication

Impact on the Nature of work

The emergence of new technologies

In order to realize how fast and dramatic these technical changes occur it is sufficient to remind ourselves that it is only since the 1980s that the computer began to enter our work and private life to any noticeable extent. Today, practically every second work place in many parts of the world is affected by the ‘‘smart machine”.

One consequence of new technology has often been noted: the switch from physical work demands to mental, information handling, ‘‘intellective "operations with their concomitant stressors like undue increase of mental workload.

This virtualization of work and the switch from physical to mental activities has been labeled by Zuboff (1984) as desensualization of work.

In the last 25 years in Europe and North America there has been a rise in non-traditional work arrangements.

i.e. increases in the proportion of the labour force employed part-time, and shift work, self-employed, and in the proportion of workers holding multiple jobs and casual/temporary jobs

Virtual Jobs

As the WTO confirmed in one of its latest annual report, “Firms have increasingly relied on outsourcing across national frontiers as a means of cutting costs and increasing efficiency” In these cases, foreign investment is almost certain to lead to job losses.

Easy Come, Easy Go…Workers are unable to move with the same

ease as capital, are faced with insecurity if employers choose to move operations elsewhere. Workers are therefore at a disadvantage.

This can place "labour" at a relative disadvantage, in that "capital" can now employ "labour" in different countries, at lower cost and on a basis which can prejudice the continuing employment of workers in the originating country.

Feminization of Employment

Since 1980 women’s labour force growth has been “substantially higher” than that of men in every region of the world except Africa

The reason given by the UN description for this is “the widespread perception that female employees are more tractable and subservient to managerial authority, less

prone to organize into unions , more willing to accept lower wages, less likely to except upward job mobility and easier to dismiss using life-cycle criteria such as child birth and marriage.”

However women have been the first to lose their jobs in times of retrenchment.

IMPACT ON UNION

• Anti-union attitude of MNCs, local employers, and government,

• Aggressive approach toward organized workers

• Weakening CBA power.

IMPACT ON WORKERS

• No social security • No job security• Minimum wage is not respected • Cut down of the real wages• Create devastating unemployment• Working in unhealthy and inhuman working

condition• Family life is ruin• women and children are the worst placed• Trafficking and migration of labour within and

out countries

Strengthen trade union organization both nationally and globally.

Educate member of union on impact of globalization and it’s consequences.

Equip members with necessary skills. More Research and development on the

impact of globalization, corporate practice. Build alliances with other partners such as

NGOs, civil society, and people movement.

What can be done?

WHAT TO DO End to unfair wage practices, i.e. piece rate

wages. Lobby and pressure on legislators to respect

ILO conventions and recommendations to protect workers rights.

Strengthen the fight politically to face the devastating impact of Globalization.

Create mass opinion against unfair trade agreement and financial arrangement.

Create awareness among people at the large. Joint global pressure to ensure social security

schemes.

What can be done? To mitigate the impact of Globalization on labour,

Caribbean countries have introduced educational and skills-training programmes to enable workers to meet the demands of the constantly changing economic environment. In addition, technical and vocational institutions have been restructured to make them more relevant to the needs of labour markets. Some countries, notably Barbados, have expanded the curricula at the secondary level to offer a wide range of courses in business studies, information technology, clothing and textiles, and industrial arts.

IMPACT OF GLOBALIZATION ON WORKERS

Informalisation of formal sector

Privatisation causing millions of workers jobless and cut down of public services

TNCs apply effectiveness system:

piece-ratemulti-skill [service

sector] Deregulation of private sector Closing down of factories Media being used as a tool

against trade union movement

Create inequality among people and nations leading to social unrest

Increasing working hours Changing Nature of work

Work from homeCall Centre'sVirtual Jobs

• Anti-union attitude of TNCs, local employers, and government,

• Aggressive approach toward organized workers

• Weakening collective bargaining agreement(CBA) power

• More Research and Development to the viability of unions

• Emergence of Human Resource Departments and Internal Conflict Resolutions

IMPACT ON

UNION

• No social security • No job security• Minimum wage is not respected • Cut down of the real wages• Create devastating unemployment• Working in unhealthy and inhuman working condition• Family life is ruin• women and children are the worst placed• Trafficking and migration of labour within and out countries

IMPACT ON

WORKERS