The Context of Globalization
Globalization in the 20th century has been characterized by a neoliberalist approach involving the deregulation and internationalization of markets, generally facilitated by technological advances. This process has been accompanied by the evolution of an international regulatory regime (the United Nations, the International Labour Organization, World Trade Organization, etc.) doted with historically unprecedented authority to suggest and sometimes enforce international trade rules and policy.
Global cities and multinational corporations with considerable international economic power have emerged while state sovereignty is on the decline. Foreign direct investment has increased dramatically, capital flows are less restricted, and free market policies are on the rise. The result has been the creation of a global economy.
Increase in the Global Workforce
"Over the past two decades, labor has become increasingly globalized. The integration of China, India, and the former Eastern bloc into the world economy, together with population growth, has led to an estimated fourfold increase in the effective global labor force, which could more than double again by 2050. […] The bigger labor pool is being accessed by advanced countries through imports of final products, offshoring of the production of intermediates, and immigration."
(Jaumotte, F. et I. Tytell,
Globalization of Labor,
Finance and Development, Vol. 44, No. 2, June 2007, International Monetary Fund, visited 2011-05-08)
Labour Market Trends in Developed Countries
In developed countries, several recent trends can be identified concerning the labour force:
- An increased rate of unemployment;
- An increase in labour mobility and real wages for skilled workers;
- A decrease in real wages and mobility for unskilled workers;
- An increase in service-based employment and a decrease in jobs in the manufacturing and agricultural sectors;
- An increase in non-traditional working arrangements (flexible and atypical work) and in the number of multiple job holders; and,
- A decrease in fringe benefits such as a pension plan and health care and in the bargaining strength of workers.
The Effects of Technological Change
Rapid technological change has negatively impacted labour's income share: "Technological change has especially depressed the share of income going to unskilled labor, and growth in total real labor compensation in unskilled sectors has hence been sluggish. In the United States, the United Kingdom, and Canada, this was reflected in very small increases in real labor compensation per worker and a growing earnings gap between skilled and unskilled sectors while unskilled employment held steady. In Europe (excluding the United Kingdom), in contrast, real compensation per worker in unskilled and skilled sectors has grown broadly in line with each other, but employment in unskilled sectors has contracted."
(Jaumotte, F. et I. Tytell,
Globalization of Labor,
Finance and Development, Vol. 44, No. 2, June 2007, International Monetary Fund, visited 2011-05-08)
Opposing Views: Has Globalization Benefited the Workforce?
The topic of globalization and its effects on the workforce is highly controversial. Opinions tend to reflect ideological positions regarding liberalism.
Trade unions and some human rights associations maintain that unemployment and the loss of jobs in developed countries are connected with globalization.
"The main arguments that the impact of globalization is negative are as follows:
- Multinationals have exported jobs from developed countries to developing countries through foreign investments and outward production in special economic zones.
- Through trade liberalization, governments have encouraged the replacement of domestically produced goods with goods produced abroad.
- The increased application of technology, especially in globally operating companies, can reduce the use of and dependence on labour."
"An opposing view, set forth for example by the IMF and the OECD, is that globalization (e.g. through foreign investment, trade, new technology and liberalization) contributes to growth, which is the key to employment. Unemployment, on the other hand, is mainly due to governments' failure to adopt sound macroeconomic and labour market policies."
(Bureau for Workers' Activities (ACTRAV),
Labour Market Trends and Globalization's Impact on Them, visited 2011-05-12)
According to the International Monetary Fund, "integrating workers from emerging markets and developing countries into the global labor force has produced big benefits for advanced economies—where, contrary to fears that globalization is driving down wages, total labor compensation has grown by a cumulative 60 percent on average since 1980. This is in part due to globalization as export opportunities have risen, while productivity and output have benefited from lower input costs and better production efficiencies. The decline in traded goods prices over the past 25 years has generated an estimated 6 percent increase in both output and real labor compensation on average in advanced economies."
(Jaumotte, F. et I. Tytell,
"Globalization of Labor",
Finance and Development, Vol. 44, No. 2, June 2007, visited 2008-05-08)
The ILO has a more critical stance and paints a bleaker picture: "in many countries increased global competition has led to job losses which have often been concentrated in particular industries and communities […]. At the same time, the compensating mechanisms promised through market forces, namely the creation of new jobs and the smooth redeployment of displaced workers to these, have often been weaker and slower than anticipated. In these circumstances the overall employment situation has deteriorated. In many developing countries without systems of unemployment insurance or adjustment assistance to workers, the social pain of these labour market developments has been particularly acute. In addition, hundreds of millions of the working poor and their families on the margins of developing country labour markets, are largely bystanders rather than participants in the growth of the world economy. […]
Many workers, in both North and South, feel caught in a race to the bottom, and believe that intensified global competition is exerting downward pressure on working conditions and labour standards."
(Samovia, J.,
Decent Work for all in a Global Economy: An ILO Perspective, ILO Statement to the WTO Meeting, December 1999, visited 2011-05-12)
Global Action to Protect the Workforce
The global labour force has responded to changes in the global economy through its own organizations and tools.
The main actor in global labour regulation is the International Labour Organization, founded in 1919. This UN agency is the global body responsible for drawing up and overseeing international labour standards and works jointly with governments, employers and workers to shape social policies and programs.
The international labour movement, embodied by the International Confederation of Free Trade Unions (ICFTU) has also reacted by encouraging the formation of global trade unions and work councils in order to keep workers informed and ensure minimum labour standards. However, these types of organizations exist mainly in developed countries and generally do not benefit the working poor.
Many people now contest the market-driven approach that has characterized globalization, claiming that it does not benefit everyone equally. In response to this, some multinational companies are now also including social charters or codes of conduct in their company documentation and contracts or negotiating international framework agreements with unions.
"Fair" Globalization of Labour
To ensure a more "fair" or "ethical" approach to the
globalization of labour, the ILO has identified four strategies for the promotion of decent work, that is, work that respects the principles of freedom, equity, security, and dignity. It aims to:
- achieve universal respect for fundamental principles and rights at work;
- create greater employment and income opportunities for women and men;
- extend social protection; and,
- promote social dialogue.
(adapted from Samovia,
Decent Work for all in a Global Economy: An ILO Perspective, ILO Statement to the WTO Meeting, December 1999, visited 2011-05-12)