Essay Question Research and critically discuss the impact of globalisation on work and employment.

Lecture 5 Globalisation, Flexibility and Work BUS124 Work and Employment Dr Ahu Tatli

Lecture Outline Globalisation: a myth or reality? Global workforce The global firm and flexibility Global in-sourcing and out-sourcing Convergence vs. divergence Global corporations, ethics and society Next week

Globalisation? Globalisation is a contested concept. Some scholars say it is nothing new. Yet, there have been significant changes in the political and economic context across the globe in recent decades. There has been a radical shift in structure and patterns of employment. These changes have had uneven impact in different parts of the globe.

The context of globalisation Trade liberalisation Global / supranational institutions, e.g. ILO, IMF, WB, WTO, NAFTA, EU MNCs, TNCs Competition at global scale Changes in the organisation of production processes, e.g. J.I.T. production Relocation of production Fordism to post-Fordism Mass production to flexible specialisation Industrial to post-industrial

Globalisation: Key issues The global workforce and the ‘dark side’ of globalization Uneven and creates global inequality Exploitation repackaged as gains Based on individualism – seeks to avoid and discourage collective worker resistance Flexibility, insourcing and outsourcing Divergence versus convergence in management of global workforce The global corporation, ethics and corporate social responsibility (CSR)

Globalisation Karatas-Özkan (2005:40) lists the following factors associated with globalisation: the liberalization of economic policies – the opening of trade which allows goods and services to travel across the world more freely, the opening of capital markets which have increased the flow of money across the world; an increase in foreign investment – companies investing overseas by building subsidiaries, by forming joint ventures or buying stock in foreign countries; the emergence of new international business blocs; the increased mobility of labour across national borders; increased competition in the international context.

Although technological advancements have facilitated transportation of goods, services and information faster than ever before, cultural, social and political systems have remained relatively stable across borders. The new race now is for fostering developments and innovations in the management of people. Management of the global workforce now requires comparative and international insights.

Who are the Global Workforce?

Who are the Global Workforce? International Labour Organization (ILO) Global Employment Trends Report 2011 estimated that there are approximately 3.1 billion employed people in the world Although total employment has continued to grow since the economic crisis, the ratio of employment to population has started to decline since 2008 Increase in the number of ‘vulnerable’ workers Increase in youth unemployment 829 million women live in poverty worldwide, while the equivalent figure for men is 522 million (ILO Equality at Work, 2011 p xi).

Migrant Labour The UN Population Division in October 2002 estimated there were 175 million people living for 12 months or more outside their country of birth or citizenship in 2000, of whom 60% have moved to developed countries. However, there is a serious shortage of information on this issue. Only one-third of countries provide migration data. Migrant labour does not directly compete for jobs with the domestic labour in the countries they move in. Rather there is a pattern of taking up of jobs that the domestic workers do not wish to undertake or creation of markets where migrant labour works in the host country. Migrants versus expatriates?

Impact of globalisation on labour Despite arguments that globalization results in interdependence and convergence, the statistics indicate that globalization has an uneven impact on prosperity/poverty: Geographically – the northern hemisphere faring better than the southern On men and women – with men almost always faring better than women Diversity in terms of People, culture, politics, history, law, education, collective organisation… Labour Standards Increased demands for labour flexibility Growth in part-time and contingent work Growth in migration Vulnerable work

Globalization and Flexibility The arguments are: Globalization leads to greater international competition To compete businesses and organisations need to be tuned in to markets and responsive to changes in demand To do this the workforce needs to be flexible along a number of different dimensions

Types of Flexibility Internal - Flexible Firm (Atkinson, 1984) Functional Numerical Financial Temporal External – global labour markets In-sourcing Out-sourcing

The Flexible Firm Atkinson (1984)

Whose Flexibility? The flexible firm only considers flexibility from the perspective of employers (Dickens, 1992) Some types of flexibility may meet some needs for some groups of employees but not all. Many aspects of flexibility are gendered and are often based on the lower pay and conditions of women workers and other ‘disadvantaged’ groups (Conley, 2002, 2006, 2008; Standing 1999; Rani 2008) Is Flexibility New? Flexibility is a euphemism and may be a cynical attempt to justify much older ways of cheapening and controlling labour (e.g. dual labour markets)

International in-sourcing and global labour flexibility Liberalisation, globalization and migration EU enlargement; China ‘open door’ policy; North American Free Trade Agreement (NAFTA) and North American Agreement on Labour Cooperation (NAALC) Increasing flexibility In-sourcing as a talent management strategy Migration, self-initiation Brain drain

Reasons for international insourcing Macro explanations: World system theory, Dual labour market theory Skill gaps, demand, differentials between countries and regions Global economic imbalances Micro explanations: Pull and push factors Employment Better standard of living Develop language skills, training and experience Promotion

Implications for management of the workforce Transient workforce? Comparable skills/qualifications are comparisons fair and free from discrimination? Culture and language differences Personal and Professional Expectations Pay, Promotion, Permanency Migrant workers and the law Trade union reaction: opposition? Ethical considerations and equality

Two cases from health sector Second Class Doctors – (Oikelome and Healy, 2007) Overseas-qualified doctors in the UK Three-quarters of the doctors qualified overseas They earn more, work for longer hours, have less autonomy and a lower morale Migrant Nurses in the UK (Allan and Larsen, 2003) Workplace experiences: Isolation; Bullying; Discrimination Over qualified/de-skilled; Drop in status Communication problems; Cultural differences in nursing practice

International out-sourcing and global labour flexibility What is out-sourcing? Part of the production of goods or services of an organisation delivered by a third party Can be done within the same country or ‘off-shored’ Difference between outsourcing and off-shoring: CONTROL Off-shoring may be expansion rather than relocation An off-shored production can be out-sourced or undertaken by the primary organisation

Dimensions of Out-sourcing

Why do organisations out-source?

Other Reasons? The case of UK call centres off-shored to India Followed setting up of call centres in UK Problems with attitudes and expectations of the host workforce Customer Satisfaction? Reverse Outsourcing Competing on quality rather than cost? (Taylor & Bain, 2005)

Outcomes of out-sourcing Job losses and job gains Boost for developing economies Poor jobs, lower standards, social dumping? Assessing which functions to be out-sourced or off-shored Assessing skill match Ensuring the adaptability to customer needs and demands; evaluating customer/client fit Control of out-sourced processes Ensuring minimum standards and ethical practice in outsourced processes

Global workforce diversity Employee classification Parent country national (PCN) Host country national (HCN) Third country national (TCN) Managing and staffing approaches Selecting the right candidate Recruiting and retaining talent Host country talent pool Expatriates

Management of diverse workforce globally: Convergence or Divergence? Large corporations’ preference for consistent worldwide systems Smaller companies’ desire for more professional systems Need to follow local laws and customs Development of unique techniques and practices to suit local cultural and legal requirements

Divergence debate: Contextual paradigm Convergence debate: One best-way approach – universalist paradigm (Brewster 2001) Globalization as the driving force: opening of world markets, deregulation, regional integration, improvements in communication and transportation Improving performance through high performance work systems Effective management systems can cross borders Local practices become redundant and should be replaced with ‘one best way’ often the “American” way Divergence debate: Contextual paradigm The Culturalist Approach: Variations in managerial behaviour are consequential to variations in cultures. The Institutionalist Approach: Organisational behaviour is determined by the social-institutional environment and systems

Local versus universal According to Asdorian (1995) a balance needs to be struck between local and universal perspectives to : Prevent the emergence of divisions and divisive perceptions between operations in different countries. Work in each country using the terms of reference used in that country. Avoid the assumption that best practice can transcend national borders. A careful consideration of local and universal perspectives is also necessary to prevent backlash and resistance in host country context.

Tension between universal vs. local approaches Bartlett and Ghoshal (1989) makes a distinction between two approaches to management of human resources internationally: Global integration: transferring successful strategies and practices across borders; Local responsiveness: tailoring strategies and practices to fit the local context There is a tension between these two dimensions. As a response, firms may follow (1) localize, (2) universalize, or (3) transversalize their HRM strategies.

Global business and ethics Do businesses have any ethical responsibility? How to deal with negative impacts of corporate activities? Globalisation and Flexibility or ‘Social Dumping’? Social dumping is a practice involving the export of goods from a country with weak or poorly enforced labour standards, where the exporter’s costs are artificially lower than its competitors in countries with higher standards, hence representing an unfair advantage in international trade. It results from differences in direct and indirect labour costs, which constitute a significant competitive advantage for enterprises in one country, with possible negative consequences for social and labour standards in other countries.

Global corporations and society Impact of corporations on communities, societies and lives of people across the globe Corporate social responsibility: corporate actions “to further some social good, beyond the interests of the firm and that which is required by law” (McWilliams and Siegel 2001:117). socially responsible business practices that are aimed to strengthen corporate accountability, respecting ethical values in the interests of all stakeholders (Business for Social Responsibility 2001). firms to account for “externalities produced by their market behaviour” (Crouch 2006:1534). reduction of negative externalities (e.g. global financial crisis, BP oil spillage) and the promotion of positive externalities

NEXT WEEK . . . Outsourcing and Insourcing of Work Guest Lecturer: Dr. Maryam Aldossary Essential Reading: Beerepoot, N., & Hendriks, M. (2013). Employability of offshore service sector workers in the Philippines: opportunities for upward labour mobility or dead-end jobs?. Work, Employment & Society, 27: 823-841. * Oikelome, F. & Healy, G. (2007) Second-class doctors? The impact of a professional career structure on the employment conditions of overseas- and UK-qualified doctors. Human Resource Management Journal, 17: 134–154