Globalization

Introduction:

There is rarely a day when we do not hear news about globalization nowadays. Globalization is a driving force in global economic development today. It concerns all actors in the economy, ranging from individuals and households to governments. Globalization will greatly affect the social partners, as traditional labor relations will have to deal with entirely new and very dynamic situations. Migration, relocation, changes in human capital and technology are only a few of the challenges that social partners are currently facing. Several factors - that is, a changing labor force composition, a shift from blue-collar to white-collar workers in developed countries, rising self-employment and a growing informal sector of the economy in developing countries - put trade unions increasingly under pressure to maintain or expand their current membership levels and/or coverage rates. If industrial relations systems do not adjust to the globalizing world economy, the danger arises that companies will relocate their production to countries with fewer restrictions on business activities, such as countries with less regulated labor markets and lower labor costs.

Globalization can be defined as a process of increasing global connectivity, integration and interdependence in the economic, social, technological, cultural, political and institutional spheres. Globalization refers, for instance, to the processes that reduce barriers between countries and involve greater integration in world markets, thus increasing the pressure for assimilation towards international standards.

The economic aspects of globalization are the most visible and important ones. These include intensifying economic competition among nations, rapidly expanding international trade and financial flows and foreign direct investment (FDI) by multinational corporations (MNCs), disseminating advanced management practices and newer forms of work organization and in some cases sharing of internationally recognized labor standards.

Globalization enhances competitiveness, both at company level and national level, which leads company management and governments to adopt strategies designed to increase labor effectiveness in terms of productivity, quality and innovation. In general, globalization involves economies that are opening up to international competition and that do not discriminate against international capital. Therefore, globalization is often accompanied by a liberalization of the markets and the privatization of productive assets. At the same time, globalization has obviously contributed to raising unemployment, increasing casual employment and weakening labor movements.

This paper aims to outline the current developments and impact of globalization on industrial relations, by looking at all of the components of the industrial relations system affect working life, particularly with regard to labor productivity, employment and income distribution.

The purpose of this paper is to analyze the pressures of globalization on national industrial relations models, in particular examining the global pressures from competitive countries and the challenges facing industrial relations.

LITERATURE REVIEW:

Globalization:

Globalization can be defined as a process of rapid economic, cultural, and institutional integration among countries. This unification is driven by the liberalization of trade, investment and capital flow, technological advances, and pressures for assimilation towards international standards. Globalization has reduced barriers between countries, thereby resulting in intensification of economic competition among nations, dissemination of advanced management practices and newer forms of work organization, and in some cases sharing of internationally accepted labor standards. On the other side globalization has evidently contributed to unemployment, increase in contingent labor force and a weakening of labor movements.

(Fraser, 2007) States that Globalization is a word on every commentator's lips nowadays, but is very difficult to define satisfactorily, for it arises in so many different contexts: economic, sociological, political, cultural and environmental. He himself defines it in a broad sense as “the growing interconnectedness of all aspects of society”, while warning that not all the aspects listed above may actually be a single phenomenon. The anti-globalization movement, on the other hand, appears to use the word in a narrower sense, to mean the effects of an increasingly global capitalist system operating on the basis that state intervention is, and ought to be, minimized. Ironically these opponents organize and publicize themselves by methods which are an example of globalization in the more general sense. He goes on to admit that a dictionary on this new and controversial subject can scarcely be written in a totally objective way. The book is aimed at “students and policy-makers”, but the general reader would also find it informative.

The whole world is one family, according to (Akteruzzaman.Md, 2006) globalization can be explained as the interconnectedness of nations and regions in economic domain, in particular, trade financial flows and multinational corporations. On the other hand refer to the concept of globalization which is means that the world is getting smaller as well as bigger. He mentioned that, the world becomes smaller in terms of communication networks and lowering, trade barriers. However, the world is getting bigger in terms of boundary-less markets.

(Akteruzzaman.Md, 2006) Mentioned that globalization can contribute to evolving pattern of cross-border activities of firms, involving international investment, trade and strategic alliances for product development, production, sourcing and marketing. These international activities enable firms to enter new markets, to exploit their technological and organizational advantages and to reduce business costs and risks. Therefore, globalization is a social phenomenon that defines the geographical boundary in terms of many different issues.

(Brinkman, 2002) Assert that globalization as a triumphalism light, as the penetration of capitalism into every corner of the world, bringing with it the possibility for all of the world's population to participate in the fruits of the international division of labor and market economy.

On the other hand, (ALI, 2005) refer to the globalization which is can be distinct as a process of rapid economic, cultural, and institutional integration among countries. This unification is driven by the liberalization of trade, investment and capital flow, technological advances, and pressures for assimilation towards international standards. Globalization has reduced barriers between countries, thereby resulting in intensification of economic competition among nations, dissemination of advanced management practices and newer forms of work organization, and in some cases sharing of internationally accepted labor standards. On the other side globalization has evidently contributed to unemployment, increase in contingent labor force and a weakening of labor movements.

Challenges of globalization and its effects

Globalization can be defined as a process of increasing global connectivity, integration and interdependence in the economic, social, technological, cultural, political and institutional spheres. Globalization refers, for instance, to the processes that reduce barriers between countries and involve greater integration in world markets, thus increasing the pressure for assimilation towards international standards.

According to (Harris, 2002) every change has its positive and negative aspects. These stimulate driving or resisting forces toward the alteration of the status quo. This is most evident relative to both globalization, and the resulting spread of the global organization. Four factors that are pushing globalization have been identified as:

- The market imperative.

Impact on national economies of larger, transnational markets characterized by free, convertible currencies; open access to banking, and contracts enforceable by law. One outcome is the rise of international banks, regional trade associations, transnational trade lobbies, world news organizations (CNN), and transnational corporations which increasingly lack national identity.

- The resource imperative.

Growing interdependence of nations and their activities on one another, fostered by the depletion of natural resources; misdistributions of arable land, mineral resources, and wealth; as well as overpopulation. The poor nations need the capital, technology, and brainpower of the wealthier countries, while the First World economies are increasingly dependent on the natural and human resources of the Third World or developing nations.

- The IT imperative.

Advances in glob communications, science and technology are contributing toward universalization or planarization. The quest is shifting toward descriptive principles of universal application, the search for universal solutions to particular problems, and the requirement of objectivity and impartiality. Science and business depend on rapid, open flow of information, facilitated by new, cheaper hardware and software, as well as by orbiting satellites: thus, the universal and continuing demand for improved computers, televisions, cables, fiber optics, microchips, and satellites. The trend is toward more integrative and interactive communications networks that give access to the masses of the earth's peoples.

- The ecological imperative.

Globalization does impact the ecologies and environments of nations, requiring safeguards that mitigate the negative effects rather than exploiting without regard to such concerns. Global warming negatively impacts all life on earth. Unfettered industrialization and pollution by the economically advanced nations needs to be curtailed for the benefit of all humanity, especially in the developing world nations. Burning fields or tropical rain forests in poor countries can cause ill health elsewhere, especially by the greenhouse effect. Whether on land, sea, or in the air, responsible world citizens avoid upsetting the delicate balance of nature.

On the other hand (ALI, 2005) mentioned that globalization has obviously contributed to raising unemployment, increasing casual employment and weakening labor movements.

The various dimensions of globalization affect the world in different ways.

- Economic globalization is the convergence of prices, products, wages, interest rates and profits towards the standards of developed countries. The extent to which an economy will globalize depends on the importance of certain processes at play, such as labor migration, international trade, movement of capital and integration of financial markets.

- Political globalization relates to the increasing number and power of international organizations which influence or govern the relationships among nations and which safeguard the rights of countries arising from social and economic globalization.

- Informational globalization refers to the rapid development of ICT worldwide, such as a global Telecommunications infrastructure allowing for greater cross-border data flow.

- Cultural globalization means greater international cultural exchange and growth of cross-cultural Contacts between nations and people. It also involves the expansion of multiculturalism and improved individual access to cultural diversity, as well as the growth of international travel and tourism, while at the same time developing and establishing a set of universal values.

The effects of globalization are particularly difficult to categorize as they are often interrelated in rather complex ways. The following discussion highlights some of the globalization effects in relation to the economy, society and labor market; therefore, these aspects are also important concerning future developments of industrial relations.

Effects of economic globalization

(Macdonald, 1997) Mentioned that increased of competition in global markets has created the demand for more specialized and better quality items. This has led to a higher volatility in product markets and shorter product life cycles which, in turn, requires companies to respond quicker to changes in market demand. In terms of production organization, new technologies increase the scope for greater flexibility in the production process and resolve any information and coordination difficulties which previously limited the production capacity of enterprises in different locations around the world.

The most important effects of economic globalization include the following:

- Increasing integration of global economic activities.

- Rising competitiveness.

- Relocation of economic activities.

- Structural changes in the economy.

- Rapid technological advancements and innovation.

At the same time (Macdonald, 1997) argue that the companies increasingly focus on the demands of international and domestic niche markets in a way that contributes to a growing individualization and decollectivism of work. In cases where enterprises are servicing more specialized markets, smaller and more limited production processes are involved. Moreover, new technology has made it possible to produce the same level of production output with fewer workers. In both situations, an increased emphasis is placed on workers having higher value capacities and skills to perform a variety of jobs. This development has blurred the functional and hierarchical distinctions between different types of jobs and between labor and management in general. In addition, efforts to improve products through innovation, quality, availability and pricing have led companies to set up cross-functional development teams, thus transcending the traditional boundaries between engineering, manufacturing and marketing. These developments have been accompanied by the erosion of the standardized, segmented, stable production process which had facilitated collective industrial relations.

These changes are also associated with a continuing shift in employment from manufacturing to service-oriented industries - in other words, jobs shift from traditional manual occupations to various forms of white-collar employment.

Labor market effects

(CHRISTA VAN WIJNBERGEN, 2003) Argue that there are conflicting views. One body of work holds that globalization pushes all countries toward neoliberalism and deregulation, encouraging firms to lower labor costs and increase labor market flexibility while undermining the power of unions to prevent these.

On the other hand he argues that the impact of globalization will vary considerably according to the institutional arrangements within each country that influence employer strategies and interests, producing more neoliberalism in the so-called liberal market economies but not in the coordinated market economies where firms have a stake in preventing deregulation.

In terms of the labor market, the most influential effects of globalization include the following:

- Flexibility of labor markets;

- Increasing labor migration;

- rising atypical and non-standard forms of employment;

- Changes in work content and working conditions;

- Skills mismatch multi-skilling and the need for lifelong learning.

Industrial relations

According to (Macdonald, 1997) industrial relations is essentially collectivist and pluralist in outlook. It is concerned with the relationships which arise at and out of the workplace. It is the relationships between individual workers, the relationships between them and their employer, the relationships employers and workers have with the organizations formed to promote and defend their respective interests, and the relations between those organizations, at all levels. Industrial relations also includes the processes through which these relationships are expressed such as, collective bargaining; worker involvement in decision-making; and grievance and dispute settlement, and the management of conflict between employers, workers and trade unions, when it arises.

Actors

Processes

Outputs

Impacts

(Macdonald, 1997) Argues that globalization has a contradictory impact on industrial relations. On the one hand, it is accelerating economic interdependence between countries on an intraregional and interregional basis and encouraging similar business approaches of individual companies in competitive markets. This may lead to some convergence in industrial relations arrangements worldwide. On the other hand, evidence exists that industrial relations in some countries resist the convergence trend; such resistance from industrial relations actors is based on particular national and regional circumstances, such as in Europe and Asia.

At the same time he mentioned that IR is not a self contained area of activity. It can only be understood clearly by reference to the persons, groups, institutions and broader structures with which it interrelates including, changing product markets, the processes of labor market regulation, and the education and training system within a particular country, as well as to influences arising from beyond its borders. The development of global enterprises, the changes occurring in the course of industrialization and the impact of new management systems particularly HRM require a broader perspective to be taken on employment relationships.

(Thelen, 2003) They believed that the influence of globalization on industrial relations; can reflect two directions:

- Globalization pushes all countries towards economic liberalism based on the interests of a free market and minimal government interference, namely neoliberals and deregulation. Globalization processes thus encourage companies to lower labor costs and increase labor market flexibility while undermining the power of trade unions to prevent this trend.

- The impact of globalization varies considerably according to the institutional setting within each country, since the institutional framework influences employer strategies and business interests. Therefore, a stronger emphasis on economic growth based on free market forces and reduced government regulation will emerge in the liberal market economies but not in any of the coordinated market economies where companies have a stake in preventing deregulation.

Industrial relations actors

Trade union

(Aminuddin, 2007) Mentioned that there are three reasons which explain why workers join trade unions. They are:

- To improve their economic situation.

- To ensure their rights are protected.

- For social reasons.

According to (ALI, 2005) the purpose of the unions has always been to educate and organize the masses of the workers to support the laws and regulations of the government. The new law provides a lot of changes but still unions are not considered as a vehicle of social change and reform. The three tier union system-enterprise union, county level and nationwide organization still is being used as an organ to improve production efficiency. trade unions, in reality, have taken the role of department of labor management in enterprises. The quality of cadre was always low and still is, and the economic reforms have not changed anything in this practice. The discretionary power of trade unions has gradually been reduced.

The role of government

(Macdonald, 1997) Asserts that the role of government with its promises of greater FDI, higher export earnings and more employment, globalization provides a powerful incentive for governments in Asia and the Pacific to liberalize and open their economies. The essential challenge for governments in the region in the face of globalization is to seek to encourage and regulate foreign participation in national economic development in a manner that promotes balanced growth with equity. Achieving such an objective is made difficult, however, because of increasing competition between governments for FDI. In the absence of regional cooperation to establish and enforce a common framework of terms and conditions of employment based on international labor standards, individual governments may be reluctant to improve\ protection to workers if this would place their countries at a competitive disadvantage with their neighbors.

In addition, globalization means that governments have less control over economic planning, and will force policy changes by them, where there is a reluctance to respond. This does not necessarily mean, however, that the role of the State in IR becomes less important under globalization, merely that its role is different in certain areas. Traditional interventions will still be required at policy and legislative levels, to establish and enforce minimum employment standards. There is a need to ensure that the economic reforms currently being implemented in various countries are accompanied by proper safety net programs. A new emphasis will be needed on promoting labor-management cooperation mechanisms and facilitating greater flexibility in enterprise level arrangements.

The role of workers and their organizations

On the other hand (Macdonald, 1997) goes on to say that there is no question that trade unions still have a role in Asia and the Pacific. But there is a need for more effective unionism. This means it has been described as a form of unionism which focuses on working with employers and their organizations, in implementing strategies to improve enterprise competitiveness and the quality of work through improvements in work organization, labor management relations and skills development, on the basis that an equitable share for workers in productivity gains will be achieved. This form of unionism is therefore proactive and strategic in approach, and is no longer concerned with union actions which are restrictive in nature. The development of effective unionism is contingent on the recognition and application of the rights of freedom of association, to organize and to bargain collectively.

Globalization and industrial relations

Globalization impacts directly and indirectly on industrial relations systems and its actors. According to Report of an independent high-level study group established on the initiative of the President of the European Commission which is mentioned that European economy is a good example of illustrating the different effects of globalization on industrial relations. This is due to the fact that, over the past years, Europe has had to deal with strong challenges stemming from globalization in the form of intensified competition, the transfer of investments, production relocation outside of Europe, job losses, unemployment and rapid structural changes. Europe's performance has diverged from that of its competitors in North America and Asia: in this regard, the productivity gap has widened and the investments in research and development (R&D) have been inadequate.

At the same time European labor markets are currently facing major challenges. On the one hand, high expectations exist related to the competitiveness of the European economy. This means that labor markets will have to become more flexible as employers demand further deregulation of the labor market in order to successfully cope with worldwide competition. The actualization of labor is also growing due to economic liberalization, changes in ownership and technology, in addition to cost-cutting competitive strategies of employers. On the other hand, the European social model underlines the importance of employment security and social cohesion as workers seek greater job security in light of rapid structural change and job relocation outside of Europe. The key issue is how to find a balance between a modernized European social model and the flexibility of labor markets while remaining competitive.

Pressures of globalization affect employment relations and industrial relations at regional, national vend international levels. These pressures interact with national characteristics of: the economic and political system; the type of government; legislative developments; industrial stages; the exposure to globalization; the influence of labor and the state in each country; and different policies regarding Industrial relations.

Discussion

Globalization is a driving force in industry today, affecting all actors in the economy, not least the social partners. Migration, relocation, labor shortages, competition, and changes in skills and technology are just a few of the challenges that social partners are currently facing. This report looks at Globalization and its impact on industrial relations systems. It explores the most significant effects of globalization, including labor market flexibility, increasing labor migration, the rise of atypical employment forms, as well as changes in work content and working conditions. Through an analysis of the various components of industrial relations systems actors, processes, outcomes and impact, it tries to identify which type of social model may survive in terms of global competition. It highlights that the key issue for the social partners in the future is to strike a balance between a modernized social model and labor market flexibility.

Changes in organization and workplace practices are nonstop under globalization. We can see some drivers behind it: First, technology, which is changing how certain products are produced and at the same time altering the size and the quality of labor that is required to produce those products. Second, policies of economic liberalization that leads to the opening up of the economy, free flow of goods and capital, and integration with the world economy. Third, pressures of competition, businesses have to adjust to the ever increasing global and domestic competition. The competition is cut throat and companies which are not prepared or undercapitalized should either try to upgrade themselves or be destroyed by bigger global transnational corporations.

Globalization strongly influences the social partners' attitudes since traditional labor relations have to cope with entirely new and very dynamic situations. Each of the globalization dimensions considered in this study - the internationalization of markets, increasing competition, the free movement of capital and labor, ICT and the rising importance of markets - has an impact on working life and represents serious challenges for national industrial relations systems. This includes the social partners' role in society, the significance of negotiations on different aspects of working life and the importance of workers' participation. The various pressures arising from globalization affect employment and industrial relations at all levels, notably at company, sectoral, regional, national and international levels.

Conclusion

Globalization is here to stay, it would be ridiculous on the part of the nations of the world to close their eyes to it and wish it away. Any country that wants to be on the economic map of the world would have to enter this competitive environment.

In addition to helping to achieve the improved efficiency and productivity which is driving enterprises in responding to a more competitive business and trading environment, the changes required to IR arrangements must provide stability in relations between managers and workers and ensure equitable participation by workers in the benefits of increased enterprise development and growth. That is, the essential challenge for each country is how to achieve a stable and flexible IR system which balances "efficiency" with "equity.

However, the most significant effects of globalization include labor market flexibility, increasing labor migration, the rise of atypical employment forms, as well as changes in work content and working conditions. At the same time, globalization brings about greater job skills mismatches and the need to promote lifelong learning and multi-skilling.

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