CONSEQUENCES OF GLOBALIZATION FOR LABOR

Consequences of globalization for labor

Consequences of globalization for labor

Introduction

In the 1980s, globalisation was praised from many quarters as offering firms and countries a wealth of opportunities that had previously been unexploited or inaccessible. The impact of this “rush to globalisation has been an explosive growth in international business” (Ball and McCulloch, 1996, p. 10). Burgeoning globalisation, which permeated small, medium and large-scale business (even educational institutions) appeared as a saviour from economic stagnation. Nothing was more fashionable than the concept of looking beyond national borders and grasping the international markets that seemed to be moving ever more within reach. Kirkland (1988) argued that wealth and markets were multiplying and the idea of “conquering the world” in Coca-Cola fashion had a strong appeal (Deresky, 1994, p. 131). Even at the time of writing, in a publication from the German government, Orth (1996) presents the case for globalisation purely from the point of view of business potential, without even hinting that there might be another side to the coin.

More recently, however, a sinister edge to the process of globalisation has emerged on the horizon, alarmingly conspicuous and prevalent. It is becoming increasingly clear that globalisation does indeed create opportunities for business, but at a cost. This cost is a process of international rationalisation which is currently ravaging the labour market with grave consequences. Globalisation is not what it once seemed to be. The promise of a better world in which free trade brings gains for all is clearly a theoretical myth, which conforms only to the synthetic elegance of textbook models, and not to the realities of economic pragmatism.

The globalisation process

In the medium to longer term, excessively open markets erode social structures and stability, destroying the old order before a viable new one can develop. It is quite conceivable that fairly early in the next century, only a small fraction of the workforce will be required to keep the global economy running. According to Rifkin (1995), 20 per cent will be quite sufficient. That is not to say that all needs will be fulfilled, but rather that the world community can only afford to purchase a volume of goods and services that can quite easily be provided by one fifth of the potential workforce.

The search for competitive advantage has changed fundamentally the development of the international economy. The more efficiently production and capital can cross borders, the more powerful become the transnational firms (TNCs) which do the country-hopping. Their ability to move from one location to another of lower cost gives them enormous bargaining power in relation to workers. These TNCs, that account for roughly two thirds of world trade (UNCTAD, 1995), stand at the forefront of globalisation and promote it relentlessly and consistently. Well-organised firms like the machinery and plant giant Asea Brown Boveri (ABB) can relocate production from one country to another within a matter of days. German firms do not even create that many jobs overseas, mainly purchasing existing outlets in order to secure ...