THE MYTH:
THE OPINION:
In
respects to labour Globalisation has led to many multi-national companies
moving some operations overseas. Many companies are locating their call-centres
to low wage areas. A lot of manufacturing for multi-national corporations is now
being conducted in low wage areas, more specifically, Asia. The question is: Is
globalisation hurting economies in general or is it simply redistributing
wealth amongst more people?
There has been a lot of scrutiny on the factories, which have been set up in
some low wage countries such as China and Vietnam. They claim that there is a
huge amount of mistreatment of the workers, and the conditions that workers
work in are extremely poor.
For example, Nike is one organisation that has received a huge amount of criticism
for the factories in which they produce their products. Such as accusations of child labour, 60 hour
working weeks with forced overtime, physical abuse of workers and pay levels
below national minimum wage rates.
In 2005, Nike conducted an audit of all their factories and published a
document of over 100 pages on what they had found; “The company said it audited
hundreds of factories in 2003 and 2004 and found cases of "abusive
treatment", physical and verbal, in more than a quarter of its south Asian
plants.”
Obviously it is
unacceptable for any worker to receive this treatment in their place of work,
especially by such a huge multi national company like Nike. However, Nike was
the first company in that sector to publish details of their factories. Since
then, they claim they have strived to improve the standards of the working
conditions.
On the other hand, it should not be confused that only multi-national companies
mistreat the workers and the local factories do not. Local factories, more
often than not, will operate under the same or even
worse conditions. In fact, Nike workers are treated well in comparison to the
local factories.
Even though there is a level of mistreatment in the
factories relative to other factories in the area, the workers receive a much
better deal than they would have in a local factory. It has been found that
workers can earn up to 3 times as much in multi-national factories as they
would in the local factories. This was examined more in detail for a Nike
factory set up in Vietnam.
This shows that even though initially looking at these
factories set up in low wage countries it is a bad thing due to the poor
treatment of workers. This is compared to the conditions in western countries
when we compare this to what the workers are used to they are actually being
benefited greatly. Through the provision of the jobs for these people, they are
able to make a living for themselves. This conclusion does not include child
labour which regardless of conditions is unacceptable.
We are here however neglecting the
effects of these factories on the local workers based in the organisations home
countries who lose their jobs due to the fact the company move their operations
overseas. This could be seen in 2009 when HSBC cut 1,200 UK jobs and relocated
them to offshore great unemployment problems in countries such as the UK
currently. This could be partly due to the movement of many jobs to areas
within Asia. It could be argued that through globalisation, the increased
competition from overseas competitors companies have to cut costs hugely to
stay competitive. One way in which to do this is by moving the operations to low
wage countries.
These movements are not all one-way though. Recently due to the rise of the
Chinese economy, some Chinese companies have set up operations in the UK. This
has created jobs after years of taking so many away. For example 170 jobs have been
recently created in Birmingham by a Chinese lighting company. Their establishment
of a £5million factory has been built in the area. (The Birmingham Mail, 2011)
In conclusion, the working conditions in an
emerging economy seem to be much worse than in a western economy. Especially
local factories seem to exploit workers and treat them without human dignity. On
the other hand, even in the western world, overall employment rates are
dropping since large corporations move their operations abroad. So who is worse
off – an emerging and upcoming underdeveloped economy, or a developed but decreasing
economy?
EXAM RELEVANT EXTENSION:
EXAM RELEVANT EXTENSION:
IGSC
would like to thank our fellow students for the in-depth and thought provoking
comments and we would like to give some feedback on some of the points which
really stuck out to us when reading back over the comments.
Firstly,
we would like to come back to the comment by 40040587 who talked about the
specialization theory proposed by David Ricardo. You agree to the theory that
if every country would specialise in what they are good at, it will benefit
from globalisation and exchange their product or service on the market,
creating efficiency and productivity.
But have you thought about the associated
costs and loss of jobs in all the other industries that will decrease in size
due to the specialisation in one industry? We don't think that every country has
one industry or sector that is large and profitable enough to produce and
generate enough profits to keep a whole country alive and feed all inhabitants.
Further, since some industries produce products that are generally more
expensive than others, for example mechanical or industrial engineering
products are more expensive on the market than products for our daily needs.
Another
interesting comment was made by 51438060Doglover: “I think that the bad working
conditions are largely due to those countries' less developed economy and
society, poor state of human right and people's obsolete values, rather than
the presence of MNCs.”
In our opinion, it is not solely the less developed
economy or society in these countries that make those working conditions acceptable
there. Especially for MNCs setting up facilities in developing countries it
should be clear that they try to offer better conditions than local factories.
In Western countries, those working conditions and environment are not
acceptable and just because they are the norm in developing countries is in our
opinion not a good enough excuse for MNCs not to try to improve them. Further,
it is not only due to the less developed economy or society, nor due to the
state of human rights that MNCs can in fact employ such bad conditions. It is
also about incentives and how bears responsibility in the end. For companies
that have subcontractors in developing countries, once bad working conditions
are uncovered, saying it is not their fault nor responsibility since they do
own the company is easy. However, this should not be possible and there should
be either economic and human incentives be given to improve those bad working
conditions.
Furthermore
we would like to refer to 51822505smilyface’s comment:
“Despite the fact that
globalization may not brings prosperity directly
to every of us, I think
globalization does still help to improve our life”
In this respect we would
like to further clarify and substantiate the reasoning, which is indeed
correctly reflecting our global economic achievements of the last 60 years.
One of the achievements of globalization can certainly be accounted to the
World Trade Organization (WTO). The general aim of the WTO was to liberate
trading across national borders. Most certainly, the member states agree that
the liberalization of trade will improve direct foreign investments and
distribute wealth to emerging economies. In other words, without globalization
it would be much more difficult to bring capital to an emerging economy. Not
having capital does not bring the opportunity to invest into promising business
opportunities. This also includes factories.
Hence, globalization per se has
definitely improved economies around the world. The “big picture” is that in an
overall perspective, globalization has brought wealth to more people. Of
course, when looking deeper into the microeconomic subsections, misery and
exploitation are problematic side factors.
As
a closing argument, and as a strong opinion, it is our belief that an economy
itself needs to learn from its mistakes. These mistakes also include human
mistreatment and exploitation at the workplace. There are multiple factors to
be considered when doing business abroad. Political instability, social norms
and values, networks and connections - all of these factors need to be aligned
in order to improve working conditions. This is not an easy process.
Just as
Europe and the United States of America needed a long time to fight injustice
at the workplace, so will the emerging economies today need time to improve. It
is a long process for which western nations must fight, local nations must
fight and global organizations such as the WTO must fight for. Integrity is a
very difficult definition and a constantly ongoing process. Even today, western
societies struggle with ethical behavior and integrity. We shall fight for the
best so that our future generations do not do the same mistakes that we did
today.
Works Cited
Griffin, J. (2011, August 03). New Chinese factory
creates 170 jobs in Birmingham. Retrieved January 29, 2012, from
Birmingham Mail:
http://www.birminghammail.net/news/top-stories/2011/08/03/new-chinese-factory-creates-170-jobs-in-birmingham-97319-29168673/
Malispina, A. (2006). Critical
Perspectives on Globalisation. New York: Rosen Pub Group.
O'Sullivan, A. (2009, March 26). HSBC
moves jobs to overseas call centres. Retrieved January 28, 2012, from This
is Money:
http://www.thisismoney.co.uk/money/saving/article-1670745/HSBC-moves-jobs-to-overseas-call-centres.html
Teather, D. (2005). Nike lists abuses
at Asian factories. Retrieved January 28, 2012, from guardian.co.uk:
http://www.guardian.co.uk/business/2005/apr/14/ethicalbusiness.money
