Global Economic Development Opportunities and Constraints to Workers and Trade Unions
Introduction
China is considered as one of the most developed countries in the global market. During the first millennium after Christ, China and India enjoyed more than two-thirds of the global trade, but later lost their primacy to West European countries due to their emerging internal political and social problems, as well their inability to seize the opportunity presented by the industrial revolution that began in the United Kingdom[1]. Of major concern for this paper is the industrial relations within these countries, specifically China, which has troubled the world economy with its surplus production and greenhouse gasses.
Global Economic Development has come in many forms since the inception of the capitalist economy, or during the post-socialist market economy. Through a series of stages and reforms, trade unions and worker organizations have assumed newer pictures and ways of operation. Integration into the global economy provides so far the best opportunity for development, both for state economies and trade unions[2]. Though, a deeper look into the economic indicators like Gross Domestic Product, indicates that global market integration has many social costs concerned with labor rights violations; for instance, carrying out export-oriented industrialization. It is thus true to say that just as global economic development and integration provide valuable opportunities for development of trade unions and worker representation bodies, so does it hold high costs and constraints to adequate worker protection thus might be a source of labor rights violation.
By focusing on China’s case, this paper reveals the various international economic developments, and their relationship with industrial relations. The post-socialist market economy opened up several opportunities in terms of legal frameworks and economic rights to tackle the issue of worker representation, so as to better the lives of all laborers across the globe. But has this been the case? This paper proceeds from the thesis that though the capitalist market economy and global integration has contributed tremendously to satisfactory protection of rights of laborers, sufficient setbacks have accompanied the international economic developments, which interfere with the successful operation of trade unions, drawing examples from China’s Multinational Corporations and New industrial Zones.
Global Economic Development Opportunities to Trade Unions and Workers
There are several benefits which have come as a result of globalization and economic development. For instance, there is a better flow of Foreign Direct Investments made especially by China; new technological innovations, research and skills; improved salary packages and agreements between the states and employees; improved working conditions in terms of health and safety rules being incorporated in the global regulations; policies on free movement; professional aspirations; and social awareness[3]. Just like most countries who are members of the global market, these opportunities have served to improve greatly the situation of both the workers and trade unionists.
Flow of Foreign Direct investment
Before the introduction of globalization and initiation of economic reforms and developments, China, particularly, maintained barbaric policies that kept its economy stagnant, very poor, vastly inefficient, centrally controlled and very isolated from the international economy. But as the world opened up to free trade and, market liberalization, China has been among the world’s fastest growing economies, with massive investments in many countries across the globe. China’s annual Gross Domestic Product ranges at 10%, emerging as a major global economic trade power[4]. Currently, it stands as the world’s second largest economic power, the largest exporter of merchandise, and the second largest importer of merchandise. In addition, it it’s the second largest site for Foreign Direct Investments (FDIs), as well as the largest manufacturer, the biggest nation offering credits and the largest nation to offer foreign exchange reserves[5]. Needless to mention, being the largest destination of Foreign Direct Investments, China also heavily invests in other countries; in fact, its surplus production and over-domination of foreign economies has been quoted as a factor contributing to the slow economic growth of developing countries. Economic optimists even think it will be the next world’s superpower, after getting so close to being the world economic powerhouse.
This massive rise in foreign direct investment by China, fueled by the freedom and liberalization of the economic market, China’s unemployment has decreased markedly over the past 33 years. Being the world’s most populated nation, with over 1.3 billion people, rates of unemployment and redundancy are expected to be alarming. But this has changed with time, as China rose to become an economic pillar. Though the global economic crisis of 2008 affected China’s economy, thereby lowering FDI inflows, Multinational corporations’ participation, the country’s GDP and massive loss of jobs, the government moved with haste to implement remedial measures that increased bank lending, and provided more incentives to improve domestic consumption.
New technological Innovations, Research and Skills
The post-socialist market economy, which led to the introduction of the capitalist market economy, has speeded up numerous forms of technological advancements, extensive research and development of skills. Due to the tight demand in the international market and its competitiveness, multinational corporations and various states do not have a choice but to intensify their hold on new technology, research and innovation, as well as developing skills of their manpower. Global economic developments have set very high standards in the international product and labor market, such that participants have to be at per with the newest developments.
China has been on the frontline in adopting new technology, conducting massive research and improvement of workers’ skills. Currently, it is rated very highly in the technological world, as it is the home to some of the best technological corporations. Besides, China’s manpower is highly skilled, and is respected across the globe[6]. This has positively served to empower these employees, increasing their bargaining power in the international labor market. Highly skilled workers also attract more impressive pay packages, thus increasing the government’s revenue earned from its expatriates.
Improved Salary Packages and Agreements between the States and Employees
The main work of trade unions and worker representation organizations is to engage in collective bargaining for improved salary and benefits packages, favorable working condition, favorable working time and general welfare of employees concerning health and safety. During the socialist market economy, the states and employers had autonomous powers to decide on the salaries and benefits of employees, as well as working conditions[7]. The Capitalist form brought with it several reforms, coupled with the restructuring of the global economic market, which have enabled a better representation of workers among the unions. Before the reforms, employees did not have a legal framework to participate in consultations with employers, nor had no legal rights to call for industrial actions. Thus, the nature of industrial relations among the states, particularly China, was wanting, and trade unions registered very few members6.
Global economic development has improved the condition for trade unionists, and strengthened the spirit of collective bargaining. In China alone, binding Collective agreements signed between the state, employers and employee unions were over 2300, in the year 20116. As a result industrial actions/employee strikes have witnessed a diminution, as workers enter into legal, binding agreements with employers. In addition, due to the amendment of the legal framework regarding employee representation and labor rights, most labor disputes are resolved in court, rather than outside in the streets. This implies that trade unions have increased in autonomy, and have the full mandate to sit through negotiations regarding employee pay increases, better working conditions and adjustment of working hours.
Improved Working Conditions In Terms Of Health and Safety
Occupational health and safety regulations have been much improved in the global market since the initial periods of globalization. Policies governing health and safety of employees in the workplace have been improved, thanks to international economic developments. Due to the emergence of many infectious diseases, proper precautions are taken to ensure that the health of employees is heavily safeguarded. In addition, new technologies pose serious challenges to human personnel, as new industries pose hazards to human health7.
There are global labor standards that define the nature of occupational health and safety in all member countries. China has experience a rise in workplace fatality, which stands at about 11.1%. This is a high figure as compared to that of the United States, which is 4.4% for every 100000 workers7. This issue is thus of growing concern among the health care professionals, and there is also intense pressure from the international community for China to correct this. In 2011, this figure had greatly reduced, as only 780 persons suffered from workplace fatalities and accidents[8]. This shows the contribution of international economic reforms to bettering the lives of employees, and the respect and recognition trade unions receive in bargaining for non-violation of labor rights.
Free Movement Policies
The globalization process resulted into the creation of various unions, namely the European Union, which comprise of 27 member countries, as well as the ever existent United Nations. In the former, members of the union can move freely from one country to another, thus removing constraints that would otherwise slow the process of expertise transfer[9]. Consequently, workers can seek for employment in any of the member countries, thereby earning revenue for one’s country, as well as gaining international experience of labor relations and skills.
Furthermore, countries which are not members of given unions still have relatively cheaper means of crossing over to other countries, either to do business, of for expertise development. This has been largely beneficial and availed myriad of opportunities for China, whose population is overwhelming and experiences stiff domestic competition[10]. The Chinese workforce can, as a result of these developments in the global economy, move temporarily into other states and do business for a good period of time. This has promoted foreign direct investments, as well increase the number of Chinese Multinational corporations, thereby curbing the problem of redundancy.
Constraints of Global Economic Development on Workers and Trade Unions
The globalization process, as well as economic developments, has not been devoid of constraints to workers and trade unions. In spite of the numerous opportunities that accompanied these developments, there are challenges and setbacks that employees and trade unions have to contend with. They include: Transfer of low-skill and low-paid jobs; autonomy of Multinational Corporations against the states; exploitation of weak labor; and decline in the number of trade unions.
Transfer of low-skill and low-paid jobs
Due to the introduction of the free movement policy, there has been massive immigration of human personnel from developing countries to developed countries. Basically, there are business and large corporations which deal in transportation of human labor, and sign deals on their behalf. As a result, employers pay these brokers part of the wages of the employee. Most of these employees are not properly trained, and do not have relevant skills to compete in the current economy[11]. They are thus grossly underpaid, which infringes on the rights of employees. As they are not independent employees, they rarely join trade unions and worker representation groups, thus cannot participate in collective bargaining with the employers.
In addition, some developing countries do not have efficient frameworks to adequately train their labor, due to poverty and weak economy. Since the global regulations and development provides for freedom of labor transfer, some of these personnel, who may be lacking adequate skills, are transferred to other countries, where they underperform. China has experienced a taste of this scenario, as people from neighboring countries come into the state as expatriates[12].
Exploitation of Weak Labor
Global economic developments have, in a way, weakened the labor representation unions. This is because of good policies set in place for the overall protection of labor across the board. Consequently, there are weak local worker unions, which have fewer powers to negotiate for salary increases and betterment of working conditions. As opposed to the socialist market economy, where negotiations regarding specific employee-employer conflicts were held at the local/company level, the capitalist market economy introduced a rather central system, where big trade unions are the ones mandated to engage in collective agreements. This system is ineffective, as smaller unions are also weaker.
In 2012, it was reported that some corporations and foreign firms are exploiting employees, who are forced to work overtime, and receive dismal remuneration. Apple has been largely mentioned in this regard, as cases of occupational suicides increased at its branch in China[13]. These companies, which the Labor minister did not mention in his press briefing, were purported to expose workers to long working hours, gross underpayment and less concern for their welfare. Though the contributions of foreign companies in China’s economic development is greatly acclaimed, there are some which exploit the weaknesses of the labor representation unions to mistreat their workers.
Autonomy of Multinational corporations from the State
The relationship between multinational corporations and the state and the implications of such a relationship has been of significant concern in economic development as well as globalization. As such, industrial relations have been largely shaped by the turn of events in the nature of autonomy between MNCs and the state. Initially, the state enjoyed overwhelming autonomy over the multinational corporations (MNCs), controlling their expansion and operation in the economy. However, the expanding size of these corporations has overstepped the control of the state, which is slowly loosing hold of them. With this trend, there is a widening gap between the proponents of private enterprises, and those who are critical of its excesses.
Deeper analysis of their sovereignty reveals that MNCs have acquired a status of dictating the type of leadership in their states, and actually making decisions on the economic pathways they would desire for the country. Multinational corporations do not recognize traditional framework of bargaining, which promoted a multi-party system of negotiations and various sources of power; instead, they prefer a centralized system that defines the standards in the market, and sets general wages and working conditions for workers without active consultation. This has contributed to wakened trade unions, lack autonomy among the worker representation organizations, and decline in conclusion of collective agreements. To sum it all up, the situation of industrial relations will continue worsening as MNCs gain active control over the state[14].
Decline in the Number of Trade Unions
Membership in trade unions in every world’s economy is out of free will, but is provided for in both the local constitutions, and the global regulation of labor. As global economic reforms became very effective, most economies, especially China, witnessed an increase in employment and better remuneration of workers. As a result, most unions slackened in their fight for labor rights, and membership also declined. Besides, many labor unions coalesced to form larger trade unions, thus decreasing their number in the economy.
China, for instance, is governed by the All-China Federation of Trade unions, which tries to unionize over 70% of the companies[15]. Currently, only the All-China Federation of Trade Unions and the government-run unions have the power to operate. Other unions are not legally recognized, and cannot negotiate on behalf of the employees. The former is said to have a membership of only 170 million, which is peanuts as compared to the Chinese workforce. This membership has since gone down, as recent figures show about 90 million registered members. The main reason behind this decline in membership and number of trade unions is because they have lost their autonomy and bargaining power, thus do not satisfactorily represent their members.
As abovementioned, politics have infiltrated the system of trade unionists, which are run based on vested interests. The All-China Federation of Trade Unions, for instance, is highly regulated by the communist party, thus lacks moral obligation and concern for workers[16]. Workers have since rejected this system, and withdrawn their memberships. In a nutshell, the decline in the number and membership of trade unions has affected their bargaining power, with global economic developments and political interference being held culpable.
Conclusion
Global economic developments are applauded for bringing massive changes in the system of governance of trade unions and management of workers among organizations. Myriad of opportunities have thus presented themselves for the betterment of working conditions and industrial relations. Conversely, challenges and constraints have also accompanied these developments, further worsening workers’ conditions and depriving trade unions of their autonomy and right to participate in collective agreements. Thus, lobbying for labor rights has gone low, noticeably in China, which is a fast growing economy. This trend is, conclusively, considered cyclic, hugely dependent on political movements and clearly steering beyond the control of the state.
Bibliography
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Jing Sun. ‘Analysis on Influence and Inspiration of the Localization Strategy of Multinational Corporations in China’, Business Management & Strategy (BMS), 3/ 1 (2012), 87-96.
Jing Sun. ‘Studies on Multinational Corporation’s Management and Developmental Strategy in China’, International Business Research, 3/ 2 (2010), 73-78.
Lina Lian & Haiying Ma. ‘Overview of Outward FDI Flows of China’, International Business Research, 4/ 3 (2011), 103-107.
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Sethi Deepak, Judge William & Sun, Qian. ‘FDI distribution within China: An integrative conceptual framework for analyzing intra-country FDI variations’, Asia Pacific Journal of Management, 28/2 (2011), 325-352.
Yang Xu & Xiaoling Yuan. ‘Research on China’s Regional Differences of Crowding-In or Crowding-Out Effect of FDI on Domestic Investment’, Modern Economy, 3/ 7 (2012), 884-890.
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1Bustillo, Ricardo & Maiza, Andoni. ‘An analysis of the economic integration of China and the European Union: the role of European trade policy’, Asia Pacific Business Review, 18/3 (2012), 355-372.
[2] Belle, Iris. ‘From economic growth to sustainable regional development? the case of china’s tianjin binhai new area’, The Newsletter of the Regional Studies Association, 14/282 (2011), 15-18.
[3] ZHU Ying, WARNER Malcolm & FENG, Tongqing. ‘Employment relations with Chinese characteristics’: The role of trade unions in China’, International Labour Review, 150 /2 (2011), 127-143.
[4] He, Qichun. ‘Gradual financial liberalization, FDI, and domestic investment: evidence from China’s panel data’, Journal of Developing Areas, 46/ 1 (2012), 1-15.
International Business Research, 3/ 2 (2010), 73-78.
[5] Lina Lian & Haiying Ma. ‘Overview of Outward FDI Flows of China’, International Business Research, 4/ 3 (2011), 103-107.
[6] Jing Sun. ‘Analysis on Influence and Inspiration of the Localization Strategy of Multinational Corporations in China’, Business Management & Strategy (BMS), 3/ 1 (2012), 87-96.
[7] He, Qichun. ‘Gradual financial liberalization, FDI, and domestic investment: evidence from China’s panel data’, Journal of Developing Areas, 46/ 1 (2012), 1-15.
International Business Research, 3/ 2 (2010), 73-78.
[8] ZHU Ying, WARNER Malcolm & FENG, Tongqing. ‘Employment relations ‘with Chinese characteristics’: The role of trade unions in China’, International Labour Review, 150 /2 (2011), 127-143.
[9] Bustillo, Ricardo & Maiza, Andoni. ‘An analysis of the economic integration of China and the European Union: the role of European trade policy’, Asia Pacific Business Review, 18/3 (2012), 355-372.
[10] Yang Xu & Xiaoling Yuan. ‘Research on China’s Regional Differences of Crowding-In or Crowding-Out Effect of FDI on Domestic Investment’, Modern Economy, 3/ 7 (2012), 884-890.
[11] Jing Sun. ‘Analysis on Influence and Inspiration of the Localization Strategy of Multinational Corporations in China’, Business Management & Strategy (BMS), 3/ 1 (2012), 87-96.
[12] He, Qichun. ‘Gradual financial liberalization, FDI, and domestic investment: evidence from China’s panel data’, Journal of Developing Areas, 46/ 1 (2012), 1-15.
[13] Sethi Deepak, Judge William & Sun, Qian. ‘FDI distribution within China: An integrative conceptual framework for analyzing intra-country FDI variations’, Asia Pacific Journal of Management, 28/2 (2011), 325-352.
[14] Perry, Amanda J. ‘Multinational enterprises, international economic organisations and convergence among legal systems’, Non-State Actors & International Law, 2/1 (2002), 23-39.
[15] Chan, Chris K. & Hui, Elaine S. ‘The Dynamics and Dilemma of Workplace Trade Union Reform in China: The Case of the Honda Workers’ Strike’, Journal of Industrial Relations, 54 /5 (2012), 653-668.
[16] Jing Sun. ‘Studies on Multinational Corporation’s Management and Developmental Strategy in China’, International Business Research, 3/ 2 (2010), 73-78.
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