MULTINATIONAL OWNERSHIP AND COLLECTIVE BARGAINING MNE Advantages
MULTINATIONAL OWNERSHIP AND
COLLECTIVE BARGAINING MNE Advantages
Job Security It is often argued that, when the number of jobs is not growing, workers are concerned about employment stability rather than other work conditions. If MNEs have exported jobs from industrialized countries, then it should follow that labor demands in those countries have been tempered in the process. Yet it is difficult to conclude whether MNEs have increased or decreased home-country employment by making direct investments abroad.
The composition of work forces in industrial countries has moved more toward white-collar than blue-collar jobs. Although some of this internal realignment in work-force composition may be inevitable with or without MNE activities, the result is nevertheless a shrinking of traditional bargaining units made up of blue-collar workers.65 The white-collar workers have been less prone to join unions in the United States than they have in other industrial countries. But even when they are organized by unions, they may not be as adverse to management as blue-collar workers are, since they may look forward to moving into management positions themselves. MNEs may rationalize international activities by setting up production facilities in countries with low wages and high unemployment while simultaneously concentrating such functions as accounting, R&D, and staff support in industrialized countries. To the extent that they do this, they are contributing to work-force composition changes that weaken the size of traditional production bargaining units in industrialized countries.
Product and Resource Flows If, during a strike in one country, an MNE can divert output from facilities in other countries to the consumers in the country where the strike occurs, there is less client pressure on the MNE to reach an agreement. Furthermore, since the operations in a given country usually comprise a small percentage of the MNE's total worldwide sales, prof-
the cost-saving advantages of moving its production location against the losses in terms of cutting back at existing facilities, creating bad will, and becoming vulnerable through decreased diversification. A national company, such as a Korean firm producing in Korea, may not worry nearly so much about what happens to a Canadian-owned plant in Canada when it exports to the Canadian market.
Structural Problems Observers often contend that it is difficult for labor unions to deal with MNEs because of the complexities in the location of decision making and the difficulties involved in interpreting financial data. If the real decision makers are far removed from the bargaining location, such as home-country headquarters, it is often assumed that this will lead to arbitrarily stringent management decisions. Conceivably, the opposite might happen, particularly if the demands abroad seem low in comparison with those being made at home. In reality, labor relations tend to be very much delegated to subsidiary management.
The question of interpreting financial data of MNEs is complex because of disparities among managerial, tax, and public disclosure requirements in home and host countries. Labor has been particularly leery of the possibility of artificial transfer pricing to give the appearance that a given subsidiary is unable to meet labor demands. These concerns seem to place an overreliance on a company's ability to pay, rather than the seemingly more important going wage rates in the industry and geographic area. Although MNEs may have more complex data, at least some set of financial statements must satisfy local authorities. This set should be no more difficult to interpret than that involving a purely local firm. In terms of transfer pricing, it is very doubtful that MNEs set artificial levels to aid in collective-bargaining situations. To understate profits in one place would imply overstating elsewhere, which would negate the advantage, unless changes are made to reflect different contract periods. Tax authorities would not likely approve sudden price changes before contract negotiation. Furthermore, any artificial prices also would have to consider income taxes, tariffs, and opinions of minority shareholders.
Labor Responses and Initiatives
Information Sharing The most common form of cooperation among unions in different countries is through an exchange of information. This helps them refute company claims as well as cite precedents from other countries when bargaining issues seem transferable. The exchange of information is carried out by international confederations of unions representing different types of workers and ideologies, by trade secretariats composed of unions in a single industry or in a complex of related industries, and by company councils that include representatives from an MNE's plants around the world.68
Assistance to Foreign Bargaining Units Labor groups in one country may support their counterparts in other countries in a number of ways. These include refusing to work overtime when that output would supply the market normally served by striking workers' production, sending financial aid to workers in other countries, and presenting demands to management through other countries. Although there are examples involving these types of assistance, for now they must be classified as potential rather than actual initiatives. There are more examples of refusals to cooperate in these matters than of successful collaboration.
Simultaneous Actions There have been a few examples of simultaneous negotiations and strikes.69 Among the more notable have been meetings among the unions that negotiate with GE worldwide, a common strategy for unions from nine countries that represent St. Gobain, and simultaneous work stoppages in England and Italy against Dunlop-Pirelli. The concept of multinational collective bargaining seems less appealing to labor leaders now than it did in the 1970s. This is due to the relatively few successes and the national differences in terms of union structures and demands. Furthermore, there has undoubtedly been a growing nationalism of workers as their fear of foreign competition has grown.
National Approaches Unions' conflict with MNEs has been primarily on a national basis. There is little enthusiasm on the part of workers in one country to incur costs in order to support workers in another country, since they tend to view each other as competitors. Even between the United States and Canada, where there has long been a common union membership, there has been a move among Canadian workers to form unions independent of those in the United States. One Canadian organizer summed up much of the attitude by saying, "An American union is not going to fight to prote:t Canadian jobs at the expense of American jobs." The logic was that international unions will adopt policies favoring the bulk of their membership, which is bound to be American in any joint Canadian-U.S. relationship.70
Through national legislation, workers have managed in places to acquire representation on boards of directors, to regulate the entry of foreign workers, to limit imports, and to limit foreign investment outflows. Therefore, it is probable that most regulations will be at the national rather than the international level.
COLLECTIVE BARGAINING MNE Advantages
Job Security It is often argued that, when the number of jobs is not growing, workers are concerned about employment stability rather than other work conditions. If MNEs have exported jobs from industrialized countries, then it should follow that labor demands in those countries have been tempered in the process. Yet it is difficult to conclude whether MNEs have increased or decreased home-country employment by making direct investments abroad.
The composition of work forces in industrial countries has moved more toward white-collar than blue-collar jobs. Although some of this internal realignment in work-force composition may be inevitable with or without MNE activities, the result is nevertheless a shrinking of traditional bargaining units made up of blue-collar workers.65 The white-collar workers have been less prone to join unions in the United States than they have in other industrial countries. But even when they are organized by unions, they may not be as adverse to management as blue-collar workers are, since they may look forward to moving into management positions themselves. MNEs may rationalize international activities by setting up production facilities in countries with low wages and high unemployment while simultaneously concentrating such functions as accounting, R&D, and staff support in industrialized countries. To the extent that they do this, they are contributing to work-force composition changes that weaken the size of traditional production bargaining units in industrialized countries.
Product and Resource Flows If, during a strike in one country, an MNE can divert output from facilities in other countries to the consumers in the country where the strike occurs, there is less client pressure on the MNE to reach an agreement. Furthermore, since the operations in a given country usually comprise a small percentage of the MNE's total worldwide sales, prof-
the cost-saving advantages of moving its production location against the losses in terms of cutting back at existing facilities, creating bad will, and becoming vulnerable through decreased diversification. A national company, such as a Korean firm producing in Korea, may not worry nearly so much about what happens to a Canadian-owned plant in Canada when it exports to the Canadian market.
Structural Problems Observers often contend that it is difficult for labor unions to deal with MNEs because of the complexities in the location of decision making and the difficulties involved in interpreting financial data. If the real decision makers are far removed from the bargaining location, such as home-country headquarters, it is often assumed that this will lead to arbitrarily stringent management decisions. Conceivably, the opposite might happen, particularly if the demands abroad seem low in comparison with those being made at home. In reality, labor relations tend to be very much delegated to subsidiary management.
The question of interpreting financial data of MNEs is complex because of disparities among managerial, tax, and public disclosure requirements in home and host countries. Labor has been particularly leery of the possibility of artificial transfer pricing to give the appearance that a given subsidiary is unable to meet labor demands. These concerns seem to place an overreliance on a company's ability to pay, rather than the seemingly more important going wage rates in the industry and geographic area. Although MNEs may have more complex data, at least some set of financial statements must satisfy local authorities. This set should be no more difficult to interpret than that involving a purely local firm. In terms of transfer pricing, it is very doubtful that MNEs set artificial levels to aid in collective-bargaining situations. To understate profits in one place would imply overstating elsewhere, which would negate the advantage, unless changes are made to reflect different contract periods. Tax authorities would not likely approve sudden price changes before contract negotiation. Furthermore, any artificial prices also would have to consider income taxes, tariffs, and opinions of minority shareholders.
Labor Responses and Initiatives
Information Sharing The most common form of cooperation among unions in different countries is through an exchange of information. This helps them refute company claims as well as cite precedents from other countries when bargaining issues seem transferable. The exchange of information is carried out by international confederations of unions representing different types of workers and ideologies, by trade secretariats composed of unions in a single industry or in a complex of related industries, and by company councils that include representatives from an MNE's plants around the world.68
Assistance to Foreign Bargaining Units Labor groups in one country may support their counterparts in other countries in a number of ways. These include refusing to work overtime when that output would supply the market normally served by striking workers' production, sending financial aid to workers in other countries, and presenting demands to management through other countries. Although there are examples involving these types of assistance, for now they must be classified as potential rather than actual initiatives. There are more examples of refusals to cooperate in these matters than of successful collaboration.
Simultaneous Actions There have been a few examples of simultaneous negotiations and strikes.69 Among the more notable have been meetings among the unions that negotiate with GE worldwide, a common strategy for unions from nine countries that represent St. Gobain, and simultaneous work stoppages in England and Italy against Dunlop-Pirelli. The concept of multinational collective bargaining seems less appealing to labor leaders now than it did in the 1970s. This is due to the relatively few successes and the national differences in terms of union structures and demands. Furthermore, there has undoubtedly been a growing nationalism of workers as their fear of foreign competition has grown.
National Approaches Unions' conflict with MNEs has been primarily on a national basis. There is little enthusiasm on the part of workers in one country to incur costs in order to support workers in another country, since they tend to view each other as competitors. Even between the United States and Canada, where there has long been a common union membership, there has been a move among Canadian workers to form unions independent of those in the United States. One Canadian organizer summed up much of the attitude by saying, "An American union is not going to fight to prote:t Canadian jobs at the expense of American jobs." The logic was that international unions will adopt policies favoring the bulk of their membership, which is bound to be American in any joint Canadian-U.S. relationship.70
Through national legislation, workers have managed in places to acquire representation on boards of directors, to regulate the entry of foreign workers, to limit imports, and to limit foreign investment outflows. Therefore, it is probable that most regulations will be at the national rather than the international level.
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