LABOR MARKET DIFFERENCES
LABOR MARKET DIFFERENCES!
External Reference Points
Typically, a company setting up a new operation in a foreign country is duplicating, perhaps on a small or slightly altered scale, a product, process, or function being performed at home. Past experience will have shown company officials what type and how many employees are needed for the size of operation being built. The company will probably have job descriptions for each category to be filled, and from past experience will know what types of people ideally fit into specific positions.
Appropriate Technology
There is some danger in a firm's attempting to duplicate organizational structures and job descriptions abroad, particularly in LDCs. For one thing, labor-saving devices that are economically justifiable at home, where wage rates are high, may be more costly than labor-intensive types of production in a country with high unemployment rates and low wages. Labor-intensive methods also may ingratiate the firm with governmental officials, who must cope with unrest from the unemployed portion of the population. Because of differences in labor skills and attitudes, the firm also may find it advantageous to simplify tasks and use equipment that would be considered obsolete in a more advanced economy.
Critics have argued that MNEs have too often established capital-intensive rather than labor-intensive production methods, thus not contributing fully to the decrease needed in LDC unemployment. The term appropriate technology refers to that technology which best fits the factor endowment where it is used. The term usually is used to mean technology that is more labor-intensive than would be cost-efficient in an industrial country.
The evidence of whether MNEs do alter production possibilities to the extent that is cost-feasible is very mixed. On the one hand, there are undoubtedly engineering biases toward duplicating facilities with which the firm has recent experience; these are the plants built to save labor in industrialized countries. Management control systems also may place heavy emphasis on output per person, which is more relevant to production needs in industrialized countries. Likewise, many governmental authorities within the LDCs are anxious to have showcase plants to promote the message that the countries
are modernizing rapidly. On the other hand, case studies point to substantial alterations by MNEs, such as replacing mechanized loading equipment with human efforts, because of local costs and availabilities.43 As long as unemployment continues to be a major social and economic problem within LDCs, controversies will continue over the amount of labor that should be employed in the production process.
International Labor Mobility
Extent At the same time that most developing countries have faced critical unemployment problems, many industrialized nations and the underpopulated oil producing countries have been short of workers to run their facilities. This has created a great deal of pressure for increased immigration, which in turn has been tempered by legal restrictions to minimize the economic and social problems for the countries absorbing large numbers of aliens.
Reliable figures on the amount of international migration are unavailable because of the large number of illegal aliens. However, the fragmentary evidence is rather startling. For example, remittances home from workers from such countries as Jordan, the Republic of Yemen, Pakistan, and Egypt exceed the value of exports from those countries.44
Work-Force Stability Problem Migrant workers in many countries, such as New Zealand's workers from Fiji and Tonga, have permission to stay for only short periods of time, such as three to six months. In many other cases, workers leave their families behind in the hope of returning home after saving sufficient money while working in the foreign country. In the mid-1970s, for example, France had a net loss in its work force as large numbers of Spanish workers returned home. In the late 1980s, the U.S. had a net loss of Korean scientists and engineers. Another uncertainty is the extent to which governmental authorities will restrict the number of foreign workers, and there are pressures in all industrial countries to expel foreign workers in order to protect job opportunities for domestic workers or to promote a more homogeneous culture. Even if cutbacks are accomplished during a slack period in the economy, so that a firm may switch to using local rather than foreign workers, a firm then may face the costly process of training workers who may leave as soon as the economy improves.
Employment Adjustments The ability of multinational firms to mobilize capital, technology, and management has fed the demand for migrant workers in remote parts of the globe. To operate facilities where minerals are located or in previously unoccupied areas of oil producing countries, firms have had to bring in large numbers of skilled and unskilled workers from abroad. In doing this, MNEs have had to construct housing and infrastructure and to
develop social services to serve the new population. Even in populated areas, housing shortages might prevent the influx of temporary workers if a company did not make provisions.
The influx and use of workers from different countries create additional problems in the workplace.45 In the United States during the early twentieth century, large numbers of foreign laborers were secured to work in city industries, for railroads, and in construction. It was common for each nationality group to work under the auspices of its own interpreters and to do particular types of tasks. Barracks and kitchens, provided by employers, were separate, so ethnic separation was perpetuated. Similar practices exist in parts of Western Europe today, particularly as Poles, Czechs and Slovaks, and Romanians have arrived to work from Central Europe. Some of the results are the relegation of certain nationality groups to less complex jobs owing to the language problem in training, the development of homogeneous ethnic work groups at cross-purposes with other groups in the organization, and the emergence of go-betweens who can communicate with management and labor.
External Reference Points
Typically, a company setting up a new operation in a foreign country is duplicating, perhaps on a small or slightly altered scale, a product, process, or function being performed at home. Past experience will have shown company officials what type and how many employees are needed for the size of operation being built. The company will probably have job descriptions for each category to be filled, and from past experience will know what types of people ideally fit into specific positions.
Appropriate Technology
There is some danger in a firm's attempting to duplicate organizational structures and job descriptions abroad, particularly in LDCs. For one thing, labor-saving devices that are economically justifiable at home, where wage rates are high, may be more costly than labor-intensive types of production in a country with high unemployment rates and low wages. Labor-intensive methods also may ingratiate the firm with governmental officials, who must cope with unrest from the unemployed portion of the population. Because of differences in labor skills and attitudes, the firm also may find it advantageous to simplify tasks and use equipment that would be considered obsolete in a more advanced economy.
Critics have argued that MNEs have too often established capital-intensive rather than labor-intensive production methods, thus not contributing fully to the decrease needed in LDC unemployment. The term appropriate technology refers to that technology which best fits the factor endowment where it is used. The term usually is used to mean technology that is more labor-intensive than would be cost-efficient in an industrial country.
The evidence of whether MNEs do alter production possibilities to the extent that is cost-feasible is very mixed. On the one hand, there are undoubtedly engineering biases toward duplicating facilities with which the firm has recent experience; these are the plants built to save labor in industrialized countries. Management control systems also may place heavy emphasis on output per person, which is more relevant to production needs in industrialized countries. Likewise, many governmental authorities within the LDCs are anxious to have showcase plants to promote the message that the countries
are modernizing rapidly. On the other hand, case studies point to substantial alterations by MNEs, such as replacing mechanized loading equipment with human efforts, because of local costs and availabilities.43 As long as unemployment continues to be a major social and economic problem within LDCs, controversies will continue over the amount of labor that should be employed in the production process.
International Labor Mobility
Extent At the same time that most developing countries have faced critical unemployment problems, many industrialized nations and the underpopulated oil producing countries have been short of workers to run their facilities. This has created a great deal of pressure for increased immigration, which in turn has been tempered by legal restrictions to minimize the economic and social problems for the countries absorbing large numbers of aliens.
Reliable figures on the amount of international migration are unavailable because of the large number of illegal aliens. However, the fragmentary evidence is rather startling. For example, remittances home from workers from such countries as Jordan, the Republic of Yemen, Pakistan, and Egypt exceed the value of exports from those countries.44
Work-Force Stability Problem Migrant workers in many countries, such as New Zealand's workers from Fiji and Tonga, have permission to stay for only short periods of time, such as three to six months. In many other cases, workers leave their families behind in the hope of returning home after saving sufficient money while working in the foreign country. In the mid-1970s, for example, France had a net loss in its work force as large numbers of Spanish workers returned home. In the late 1980s, the U.S. had a net loss of Korean scientists and engineers. Another uncertainty is the extent to which governmental authorities will restrict the number of foreign workers, and there are pressures in all industrial countries to expel foreign workers in order to protect job opportunities for domestic workers or to promote a more homogeneous culture. Even if cutbacks are accomplished during a slack period in the economy, so that a firm may switch to using local rather than foreign workers, a firm then may face the costly process of training workers who may leave as soon as the economy improves.
Employment Adjustments The ability of multinational firms to mobilize capital, technology, and management has fed the demand for migrant workers in remote parts of the globe. To operate facilities where minerals are located or in previously unoccupied areas of oil producing countries, firms have had to bring in large numbers of skilled and unskilled workers from abroad. In doing this, MNEs have had to construct housing and infrastructure and to
develop social services to serve the new population. Even in populated areas, housing shortages might prevent the influx of temporary workers if a company did not make provisions.
The influx and use of workers from different countries create additional problems in the workplace.45 In the United States during the early twentieth century, large numbers of foreign laborers were secured to work in city industries, for railroads, and in construction. It was common for each nationality group to work under the auspices of its own interpreters and to do particular types of tasks. Barracks and kitchens, provided by employers, were separate, so ethnic separation was perpetuated. Similar practices exist in parts of Western Europe today, particularly as Poles, Czechs and Slovaks, and Romanians have arrived to work from Central Europe. Some of the results are the relegation of certain nationality groups to less complex jobs owing to the language problem in training, the development of homogeneous ethnic work groups at cross-purposes with other groups in the organization, and the emergence of go-betweens who can communicate with management and labor.
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