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Sara Hsu Slide 2 Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. -- Abraham Lincoln Dignify and glorify common labor. It is at the bottom of life that we must begin, not at the top. -- Booker T. Washington Slide 3 Multinational Corporation (MNC): A corporation that manages production or delivers services in more than one country.. Labor Market: The market in which workers compete for jobs and employers compete for workers. Slide 4 Elimination of forced and compulsory labor Abolition of child labor Elimination of discrimination in respect of employment and occupation Freedom of association and collective bargaining Slide 5 Labor relations have two opposing perspectives. Those who are pro-globalization argue that MNCs provide jobs to developing countries resulting in a rise in living standards. Those who are anti-globalization argue that labor is exploited by MNCs and that the globalization process has increased inequality. Slide 6 Slide 7 Karl Marx believed that the working class was always exploited by capital class. In Marxs Labor Theory of Value, the only social cost of producing commodities was labor. Capitalists strove to exploit workers to make a profit from their labor, driving wages downward and working hours upward. Slide 8 In China, labor standards have improved overall. At the individual level, workers are no longer tied to their workplaces; fluid labor markets, and opportunities elsewhere, afford workers a bargaining power that was previously impossible. However, lack of legal enforcement in China has made it difficult the ensure that labor standards are actually being implemented. Slide 9 The All-China Federation of Trade Unions was founded on May 1st, 1925, and is organized under the Communist Party. The ACFTU is the leading body of trade union federations at local level and industrial unions at national level. The ACFTU is the only legal trade union federation in China, and membership is mandatory. Slide 10 Indian labor laws are some of the most complex and restrictive in the world. These regulate the work day, minimum wage, overtime, government approval for firing, and more. India's labor unions are strong--Ex: On November 5, a 45-day strike by 3,000 workers at Rico Automotive Industries in Haryana, a state in northern India, adjacent to Punjab was called off by the AITUC (All-India Trade Union Congress). A settlement between Rico, AITUC and the Haryana state government was reached just hours before thousands of workers at other plants were expected to hit the bricks in a sympathy strike in support of Rico workers. Slide 11 Labor supply is the number of total hours that workers wish to work given the going wage rate and other working conditions. Labor demand is the relationship between the number of job opportunities which exist at a given wage rate and other conditions. Labor supply meets labor demand at a certain point, and excess labor supply is called unemployment. Slide 12 Declining competitiveness and rising wages. Ex: While in the 1980s Indonesia maintained its competitiveness vis--vis its regional neighbors through relatively low unit labor costs, it began to lose this advantage in labor-intensive industries after the adoption of a minimum wage policy in the 1990s. Concerns over the impact of the minimum wage policy have increased since decentralization started in 2001, as minimum wages are now set by the regional governments. Large informal sector, Ex. In the Philippines, most of the job generation can be found in the informal or unorganized sector. Informal sector occupations are characterized by low productivity, modest fixed assets, long hours of work, and low wages. Slide 13 Slide 14 Rural to urban migration, transition from agriculture to manufacturing, Ex: During the 1980s and 1990s, China underwent considerable employment restructuring as a result of economic development. In particular, employment growth was rapid in the countrys manufacturing industry. As such, labor migrated from rural to urban areas.Slide 15 Thanks to the openness of global trade and foreign investments advocated by WTO and responded by national authorities, together with the advancement of transportation and communication technologies, MNCs are able to rapidly expand with fewer obstacles than before. Slide 16 Slide 17 John Kenneth Galbraith was a famous Canadian and American economist who believed that economic theory in and of itself was insufficient, particularly in the presence of greed. Galbraith's main ideas focused around the influence of the market power of large corporations. He believed that this market power weakened the widely accepted principle of consumer sovereignty, allowing corporations to be price makers, rather than price takers, allowing corporations with the strongest market power to increase the production of their goods beyond an efficient amount. Slide 18 As the world globalizes, multinational corporations are also coming under more scrutiny, as questions about their accountability are also being raised. Multinational corporations have influenced labor relations by: Tacitly supporting military interventions Pushing for economic policies that are heavily weighted in their favor Foreign investment treaties and other negotiations designed in part to give more abilities for corporations to expand into other poorer countries possibly at the expense of local businesses. Following an ideology which is believed to be beneficial to everyone, but hides the realities and complexities that may worsen situations. Slide 19 The Asian multinational has been defined by global brands such as Toyota, Honda, Hyundai, Samsung and Sony Japanese and South Korean companies that emerged on the global scene in the 1970s, 80s and 90s A new generation of companies emerging from Asia Pacific is poised to have a similar impact on the way the world does business. Companies such as Tata Steel and Infosys in India and Lenovo, Chery Automotive and Haier Group in China already have become major forces in their respective industries Slide 20 This new breed of Asian multinational arrives on the scene with some built-in advantages, including enormous domestic markets that provide significant scale and momentum. Consider that the 2009 Fortune Global 500 list includes 145 Asia Pacific companies, 29 percent of the total, including nine newcomers this year from China alone. High domestic savings rates, government support and companies willingness to make bigticket acquisitions and strike high- profile partnerships also fuel outward expansion. Slide 21 Ex. Haier Group is Chinas largest appliance company. Founded in 1984 in Qingdao, Shandong Province, Haier manufactures and markets products in more than 90 categories, including refrigerators and freezers, air conditioners, dishwashers, microwaves, televisions, vacuums, mobile phones and computers. In China, Haier has more than 30 percent market share in four main product categories refrigerators, refrigerating cabinets, air conditioners and washing machines and it exports its products to more than 100 countries around the world. Slide 22 Ex. Tata Group companies operate in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea, Indian Hotels and Tata Communications. The companies primarily are based in India, but have significant international operations. In 2007-2008, the group had 350,000 employees worldwide and total revenues of US$62.5 billion 61 percent of which came from business outside of India. Slide 23 Child labor refers to the employment of children in any work that deprives children of their childhood, interferes with their ability to attend regular school, and that is mentally, physically, socially or morally dangerous and harmful. ILO estimates that there are about 250 million economically active children (individuals below 18 years old) worldwide. Sixty one percent or roughly 153 million of these workers are in Asia. Around half of the economically active children are working full time and 20-30%, or about 30 to 46 million are in exploitative conditions or worst forms of child labor. Slide 24 Gender inequality in labor markets remains a persistent phenomenon, albeit to varying degrees depending on regional, national and local contexts. Asia is unique in both its relatively low female unemployment rate and its positive male-female gap (the regional unemployment rate for women was 4.3 per cent in 2009, compared to 4.7 per cent for men and well below the global female rate of 6.5 per cent) But the relatively low unemployment rate for Asian women is most likely attributable to the persisting high demand for low-wage female labor in export- oriented manufacturing and to the fact that most women cannot afford to be unemployed and have to find work in the informal economy. Slide 25 Pros and Cons? Slide 26 Questions?