"Describe the impact that the deregulation and decentralisation of labour markets is having on both developed and developing economies"
Globalization can be viewed in many views involving macro or micro aspects. In one way of view it can be said as the process of integration of national economies while on the other view it has a significant change in markets (product and financial) assisted by their common liberalization and deregulation (Rowley & Benson, 2000). Globalization can be defined as the process by which the world's economy is transformed from a set of national and regional markets to one that operates without regard to national boundaries (Inoguchi & Marsh, 2008). For Zhu and Ray "Globalization reflects three integration processes: financial and currency markets, production, trade and capital formation across national boundries, functions of global governance partially regulating national economy social and environmental policies " (Rowley & Benson, 2000) The below essay discusses about the impact of the deregulation and decentralization on the labor market in both developed and developing countries.
The effect of globalization is on various factors like individuals, organizations and nations are undeniable. The areas of human resource and labor movement have been attributed to globalization with loss of jobs, labor displacements and in deteriorating living standards. (Ali, 2008). There has been a two folded nature that has been resulted due to the negligence of the labor both as an agent and victim of changing global state relations. Due to this globalization the state workers are the once who remain unionized in many countries trailing their benefits in both metropolitan and non-metropolitan states. (Fairbrother & Rainnie, 2006). Globalization has not benefited the labor force but it has developed rivalry between labor moments at national and industrial levels resulting in highlighting of global division in labor. (Rowley & Benson, 2000).
Globalization has made social relationship between the human beings to go globally linking groups and societies to reach all though the globe covering all directions. This also indicated a high influence in the technology development; increase in transport and in the information revolution. (Fairbrother & Rainnie, 2006).globalization has given way for emergence of new model of production and also paved way for the foreign direct investment (FDI) and also the inability of the national government in regulating multinational corporations (MNC). (Rowley & Benson, 2000)
Globalization started with interdependent linkage between production and exchange. According to Abbott "developing countries often seek to underpin economic growth via FDI attracted by cheap and complaint labor". This also resulted in providing opportunities for domestic market holders to go globally in setting up new business and in establishing new source of supply market. According to Petrella "economic globalization is a new phenomenon, putting an end to the national economy and national capitalism as the most pertinent and effective basis for the organization and management and production of wealth". (Rowley & Benson, 2000)The result of globalization has also shown other side of development in giving opportunities for more skilled labor and in making the organizations to be viable in establishment according to the location and also helped in cheap labor resources with profit in organization (Rajagopal & Bernard, 1993).
@@Now we will be discussing about the pre globalization and post globalization employment relation in developed countries.
In the pre globalized economy the activities of an economy are centralized and regulated. Centralized economy means all the economic activities are directed by a central authority so that the people are subjected to a hierarchical control. (Winder, 1961). In an easy detailed way centralized can be said as terms and conditions that are preset for the employees regarding their wages, hours of work, leave, allowances, penalties and classification structures and in this the employees are not free to modify their rules and the work practices are inflexible and regulated. During this time the career of the employees require only minimal training and skill development and the organization is least considered about the employee education and knowledge. The employees are given a job and made to work under supervision and sometimes the employees are punished if they do not finish their job in the given period. (Shin, 2004)
The development of the globalization has changed the face of the developed countries. After the globalization the labor market is decentralized and deregulated. This has given way for decentralized collective bargaining and the employees at the work place have the freedom to develop their rules and regulations like the flexibility in working hours, wages, allowances, penalties and work practices. (Shin, 2004). In this the job that are associated requires more training and skill development rather that the less skill required when in pre globalization. Depending on the job the employees are given opportunities based on their education and knowledge and the company helps in developing them. Globalization main aims are the task focus and like in pre globalization the employees are not punished but are given the rewards, support and growth depending on the outcome of their results and the work or job done in this is mainly on the team work only. (Muta, 2000)
Due to the deregulation the foreign companies have shown interest in investment in the developed countries this resulted in reducing the unemployment and an increase in employee importance. Now we will see the case study of Singapore which supports our theory discussed above.
The post-independence period in Singapore was generally marked by the security of employment, regulated employment relations. (Rowley & Benson, 2000). The globalization has showed and speed with the economy growth and expansion of the labor rights but the favorable right for labor right has also developed challenges for globalization. The deregulation came into Singapore with the internationalization of production and capital in 1965. Singapore being less in many natural resources has thought to develop its economy by attracting the foreign direct investment by providing them with good infrastructure, tax and other incentives. The other thing that attracted towards Singapore was low-skilled, labor intensive industries. (Rowley & Benson, 2000) By 1979 it has developed its economy with full employment and also provided all the basic requirements. It also set up Central provident fund and Skill development fund. With the help of MNCs investments it has managed to gain access international markets. In the recent years globalization and labor deregulation have allowed the trade unions to play a more active role in wage negotiations. This challenges of the globalization was responded by Singapore with a strategy of managed flexibility. By this it has provided benefits not onlt for foreign investments but also provided protection for workers. (Rowley & Benson, 2000) . They were given enhanced right to organize and the assistance for third parties was enhanced and the right to bargain collectively is extended.
Now we will be discussing about the pre globalization and post globalization employment relation in developing countries.
In the pre globalization time there were weak laws and institutions to protect workers in the developing countries and the trade unions are very weak, due to this there has been an increase in large portion of informal works and the collective bargaining was limited only. The working employees were provided with less goods and services than needed for the job. They were also not given wages that is suited for the job and the works are made to work for long time and only very little was paid to them. (Rowley & Benson, 2000) the labor laws regarding the employment of the individual like the child labor were nowhere found. So there was an exploitation of women and children in the work place. The skilled labor is rarely found and traditional workers are found using their traditional methods and their education levels are very limited.
The globalization has changed the way of the developing countries. The globalization has resulted in improving the laws and institutions to protect workers with forming strong trade unions and by expanding collective bargaining. This improvement has resulted in reduction in informal workers. There was also an improvement in the wages of the employees by paying them higher wages with low working hours. The improvement in production has alternately increased the productivity growth and poverty and also the treatment of the women and children in the workplace have improved. The skill labor are trained and there is an improvement management knowledge. The globalization has helped the developing countries to improve their economy. This has opened doors for foreign investment.
Now we will discuss about the impact of the globalization in the developing country Indonesia.
Globalization and Indonesia's increased integration with the world economy has contradictory effects on Indonesian labor. The options available to Indonesian workers are very limited due to the bargaining position of the labor internationally. The product of struggles was beginning in nineteenth century only but due to the undermined tasks of the labor activities has resulted in more daunting in Indonesia. the rapid industrialization and greater integration with the world economy has ensured a slow developed economy. Due to the political instability and control the labor sits very uncomfortably. The institutional framework is unraveling during the post Soeharto period, (Rowley & Benson, 2000)it is clear that Indonesian workers are on a different historical trajectory from their counterparts in the advanced industrial countries. The imminent flourishing of western-type social democratic trade unionism is highly unlikely. After the 1957 ,the army took control over the nationalized foreign companies and also some of the major political and administrative positions. It was then the trade union federation opposed the leader ship of the army management. During the 1997 the Indonesian government has undertaken the minimum wage policy. With the development and government and individual interest in developing Indonesia have given respect for the labor standards, such as the right to organize and right to bargain. (Rowley & Benson, 2000)
The foreign investment was not allowed by all the developing countries in this globalization time. In such countries their exists some rules that are set by the high official of the economy and that rules have to be followed by the employees of that company or the society.
This essay discusses about the impact of the globalization internationally in the developed and developing countries. The essay has also discussed about the developments in the globalization and deregulation and how they helped in improving the economy and its negative effects. The employment relationship during the pre-globalization and during the post globalization are discussed both in developed and developing economy with considering an cases from Singapore as an developed country and Indonesia as an developing country.
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