Global competition has profoundly affected the labor/management relations in the US. Countries are competing in numerous ways and all aspects, but this paper will focus on a more refined area on how countries are outsourcing labor to ensure that their businesses remain competitive and relevant in the global marketplace. One thing that is clear is that the US is losing a lot of jobs to other countries across the world such as China and India. The manufacturing industries in these countries are taking in many American citizens making the US be adversely affected concerning labor/management relations. In simple terms, other countries are outsourcing labor from the US and the causes are rarely addressed. In an article by Gavin, (2007) they maintain that the cause of outsourcing is a doing of the US because of its high labor costs. As a result, they argue that the US should make the production of goods competitive through labor costs or other approaches to ensure that jobs are retained (Gavin, 2007). However, the effect of globalization cannot entirely be directed to the outsourcing of labor from the US but also on how the US outsources labor from other countries and how such approaches affect the labor and management relations. Through this paper, I will discuss how global competition through globalization has affected labor/management relations in the US.
Positive and Negative Effects of Global Competition
Globalization and global competition are principles that have affected numerous economic aspects. Labor/management is one of the aspects that have both been positively and negatively affected especially in the US. It is critical first to identify the importance of studying the effects of global competition in the labor market. The importance of studying the effects of global competition is that earnings from the labor market are a primary source of income for most countries across the world. Therefore, outsourcing of labor to other countries from a country will adversely affect a nation's income, and the US has been suffering from the enormous labor that is outsourced from it by other countries across the world. However, the effect is not entirely negative since there are some benefits from the outsourcing of labor that the US enjoys. For example, it helps the United States companies remain competitive in the global market. That is, companies such as Samsung that have overseas branches in China can sell labor to the branches keeping labor costs in those countries as low as possible. As a result, the goods that will be produced will be of a lower price when they are shipped back to the US. However, global competition has had more negative than positive effects on the US labor/management relations.
Global competition increases the US rates of unemployment. For example, out of the fourteen million jobs that are outsourced from the US, nearly double the number of citizens are unemployed (Michael, 2011). Therefore, if all the jobs are returned in the US, then the many unemployed citizens would be hired to a full-time position rather than a part-time basis. However, it is paramount to understand that for that to happen there is an assumption that all jobs will return to the country. In the US, a majority of the foreign employees are hired to help with local marketing and language (Michael, 2011). Another assumption is that the unemployed American citizens have the required skills to occupy such occupations as local marketing and language. In the new Trump's administration, he maintained that he would try to bring back jobs into the US. The move will be characterized by the imposition of tariffs on Mexican and Chinese imports. As a result, the US-based companies will benefit and hurt foreign-based ones. The result would be an increase in employment levels in America and bring back the outsourced labor from America.
In the US, labor unions are declining due to the rise of globalization. The country is facing a loss of industrial jobs, and this has affected the higher wages that union members have in the past enjoyed. Also, employees are losing trust in unions because a few decades ago 35% of the workers were union members compared to the less than 13% today (Michael, 2011). The statistics cannot entirely be blamed on the loss of trust but also on the competing forces brought about by globalization. For instance, employers make it clear that high union wages and benefits are a thing of the past and cannot be afforded in the cutthroat world economy where companies must keep costs as low as possible. A common phenomenon that exists among employers is that they cannot have embraced the idea of a union because it will increase their competitiveness in the global market. That is, they cannot effectively compete if they are unionized. One thing that is clear is that the world economy has marginalized union in the US. Due to union busting and the ever changing local and global economy, the workers are continuously being offered little benefits and wages.
The issue of illegal and legal immigrants adversely affects the labor/management relations. One important aspect is on how they affect unions. In the past, the prevailing idea was to keep immigrants out since they were competitors that led to low wages or Native American workers. However, the idea has changed, and unions are trying to organize the immigrants rather than beat them. However, unions cannot organize the union members whether they are immigrants or not if they do not have numbers, resources, and support from all quarters. Therefore, the unions have been trying to adopt a strategy where they spend on candidates vying for legislative seats so that they can formulate laws that favor the unions (VOA, 2009). However, some labor officials believe that the money should not go to such endeavors but to build union membership. Without a doubt, the problem of immigrants into the US has brought a lot of controversial issues and solutions ought to be adopted fast if feasible solutions are to be obtained.
Causes of Adverse Labour/Management Relations
Understanding the effect of globalization on labor/management relations requires understanding the forces in play that govern international labor relations. Usually, labor relations across the world are affected by the globalization of economic activity (Katz, Kochan, & Colvin, 2015). As a result, this raises the importance of two major international organizations, the International Monetary Fund and the World Bank. The two international institutions have tools that they use to influence the design of national labor policies effectively. For example, the major goal of the IMF is to promote international monetary sustainability to facilitate international trade. On the other hand, the Word Bank ensures that it provides sustainable private sector investments in emerging countries and such policies affect national labor policies (Katz, Kochan, & Colvin, 2015). More often, the two nations will impose conditions on governments before they advance a loan whether they like the conditions or not. Therefore, a majority of the countries will adhere to the conditions to gain access to loans. Also, the two institutions favour government policies that promote labor market flexibility that gives employers a lot of authority when dealing with employees. Such policies by international organizations have a profound effect on the American labor relations.
The loss of jobs at a tremendous rate in the US to other countries in the US ‘makes the National Labor Relations Acts seem like an outdated piece of legislation’ (Gavin, 2007). The causes of the idea are numerous, and they explain why the US is continuously losing jobs to other countries. One primary reason is that of relative regulatory costs (Rajendra, 2006). It has been known to the word and many others that the United States is one of the most expensive places to run a business, and therefore many business men opt to start their businesses in other countries. Also, there are the issues of comparative labor costs among different countries (Rajendra, 2006). Theorists have maintained that labor costs in the US are outrageously high when compared to other countries. For example, when comparing the US with China, it has ten to thirty times more labor costs. Furthermore, there is the idea where the nation is lifting trade restriction statuses such as NAFTA that can be attributed to the global loss of jobs (Rajendra, 2006). The US is continuously losing jobs where employers consider working in other countries other than the US at a time when the world has become a global village; there is the global prevalence of English language skills and changes in logistics costs. Solutions to the problem have to be formulated fast if the US is to retain the many jobs that it so much requires.
As it has been discussed, global competition has positively and negatively affected the US labor/management relations. Outsourcing of labor is a major concept in the paper where countries outsource labor from the US, and the US outsources labor from other nations across the world. The idea is brought about by global competition and the aspect of globalization where the US has suffered and benefited. One major advantage is that global competition through outsourcing of labor from the US enables companies to remain competitive on the world market through the production of low-priced goods that are later taken into the country. Global competition has also led to adverse effects such as increased rates of unemployment, the decline in labor unions, and the problem of immigrants. The causes of adverse global competition have been discussed as the effect of international institutions such as the IMF and the World Bank among other reasons that make the Labor Relations Acts seem like an outdated piece of legislation.
Gavin, A. (2007, January 11). How Globalization Affects Labour-Management Relations. Retrieved February 10, 2017
Katz, H. C., Kochan, T. A., & Colvin, A. J. (2015). Labor Relations in a Globalizing World. Cornell University Pres.
Michael, S. (2011). The Impact of globalization on income and employment: The downside of integrtaing markets. Foreign Affairs, 28-41.
Rajendra, K. (2006). Globalization and Labor-Management Relations: Dynamics of Change. South Asian Journal of Management, 13(2), 342.
VOA. (2009, October 29). Decline of Labor Unions Linked to Rise of Globalization. Retrieved from A VOA Web site.