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International Business : The Challenge of Global Competition, 8/e
Donald Ball
Wendell H. McCulloch, California State University Long Beach
Paul L. Frantz, California State University Long Beach
Michael Geringer, California Polytechnic State University
Michael S. Minor, University of Texas Pan American
Labor Forces

E Learning Session

  1. Labor factor PowerPoint (32.0K)Concept Check
    1. Labor quality refers to the attitudes, education, and skills of available employees
    2. Labor quantity refers to the number of available employees with the skills to meet the employer's business needs
  2. Labor mobility
    1. Classical economists assumed the immobility of labor
    2. Immigration
      • Refers to the process of leaving one's home country to reside in another country
      • Sometimes rules make such movement difficult, such as into the US
      • The North American Free Trade Agreement provides no cross border movement in the same way that the EU established free movement
      • Immigration and Naturalization Services is the federal agency overseeing immigration
      • Naturalization is the process of becoming a citizen
      • INS has two missions
        1. To allow legal immigrants to enter US
        2. To keep illegal immigrants out of US
      • Background
        1. US is a land of immigrants
        2. Several major periods of immigration have occurred
      • Federal Law
        1. Immigration is a federal matter in the US
        2. First limitation of immigration occurred in 1921
        3. The Immigration Reform and Control Act of 1986 attempted to stop illegal immigration
      • Nonimmigrant visas PowerPoint (31.0K)
        1. Issued to those entering the US for temporary visits
        2. B visa issued for short-term stay
          1. B-1 for business
          2. B-2 for pleasure
        3. E visas for noncitizens coming to the US for trade purposes
        4. F visa for students
        5. H visa for workers
          1. H-1B for specialty occupations
        6. I visa for members of the media
        7. J visa for exchange scholars
        8. L visa for intracompany transferees
      • Immigrant visas
        1. Visas for those wanting to remain in the US permanently
        2. Often called a "green card"
        3. Two main categories Concept Check
          1. Family reunification
          2. Employment-based
    3. Refugees and asylum seekers
      • Refugees leave a country to seek safety
      • When in country they can seek asylum, or permission to remain
      • Several periods of refugee and asylum flow to the US ocurred as political unrest or war displaced populations
      • Standard for admission of refugees/asylum seekers into the US
        1. Establish a well-founded fear of persecution of one's race, religion, nationality, membership in a particular group or political opinion
        2. Economic reasons are not sufficient
      • Population pressures
        1. Motivation for much of movement among world's population
        2. Women and children are among the most often hurt by rampantly growing populations
      • United Nations High Commission for Refugees
        1. Assists refugees
        2. Mandate to lead and coordinate worldwide protection of refugees and resolution of the refugee problem
      • Refugees welcome
        1. Refugees are not welcome in many countries
        2. A few countries accept refugees in limited numbers
        3. Finding work for all refugees is difficult, even in US
      • But immigration can help
        1. Immigration can support economic growth as it has in the US on several occasions
        2. High tech industries expanded faster than they could have otherwise by using immigrant workers
  3. Guest Workers and labor shortages
    1. Guest workers
      • Some countries allow guest workers to immigrate because of labor shortages
      • Desirable policy when economies are growing
    2. Labor shortages
      • Low unemployment rates in industrialized countries creates need for workers as jobs are created
  4. Composition of the labor force
    1. Labor force composition and comparative productivity
      • The mix of people available to work, in terms of age, skill, gender, race, and religion
      • Immigration and refugee flow change the composition
      • Labor productivity measures how many acceptable units of a product are produced by a worker during a given time and the cost per unit Concept Check
      • Unit labor costs are the costs to produce one unit of output
      • Human capital has been a major contributor to US economic growth
      • Research and development
        1. Reduces dependence on human capital
        2. Outcome of research and development contributes to increase in productivity
  5. Social status, sexism, racism, traditional society, or minority: considerations in employment policies
    1. Social status PowerPoint (31.0K)
      • India
        1. Extreme example of caste society
        2. Conflict between castes causes social unrest
        3. Employers must be sensitive to the caste system
        4. Caste structure consists of the Brahmin (priests), the Kshatriya (various landlholder, warrior, or ruler), the bania (businessman), shudra (laborer), harijans (untouchables)
        5. Change is occurring, but slowly
        6. Untouchables now call themselves dalits
      • Great Britain Concept Check
        1. The class system in Britain may be eroding
        2. People are still classified by accents
        3. This caste system doesn't result in violence as in India, but it is still a force in English society
      • Japan
        1. Caste system remains from the 17th century
        2. Warrior administrator samurai at the top, then farmers, artisans, merchants, and "dirty occupations" such as slaughterers, butchers, or tanners
        3. Caste system members congregate in same living areas, that call themselves burakumin, or ghetto people
    2. Sexism
      • Acceptance of women in the workforce varies widely around the world
      • Although sexism hasn't been eliminated in the US, women's position in society has changed dramatically in the past few decades
      • In some parts of the world women are banned from any type of public activity from participating in sports to business activity
      • Even when improvement is made, gains are not always secure as in Iran with the change from the Shah's regime to the Islamic fundamentalists of the Ayatollah
      • Women's education
        1. Research shows correlations among women's schooling, and birthrates, child survival, family health, and a nation's overall prosperity
        2. Increasing number of counties recognize the need to educate young girls
    3. Opportunities for women in international business
      • In many ways the opportunities for women are increasing
      • Progress is slow
    4. Racism
      • Racism is found worldwide
      • Conflicts among ethnic and racism groups range from animosity to outright warfare
    5. Minorities Concept Check
      • Traditional societies, nomadic states of people before they turn to organized agriculture of industry, present problems and opportunities for employers
      • Advantage is the minorities, a relative small number of people, identified by race or national origin, who live among a larger population of different people, because they tend to be underplayed and immediately available for new work
      • A disadvantage is that these people may be unpopular in the local society and could result in the firm's isolation from the local environment
  6. Employer-Employee relations
    1. When an employer arrives in country it is met with a labor market, a pool of available employees with the necessary skills within commuting distance from the employer PowerPoint (36.0K)
    2. Statistics are kept on most countries to make information about local labor forces, from number of people to union activity
    3. The statistics should be evaluated in context of the local culture and society
    4. Labor unions: European, American, and Japanese
      • European labor unions are usually identified with political parties
      • A sense of worker identity is common in these unions
      • In the US laborers already possessed many civil rights before unions arrived on the scene resulting in less need for unions to be political entities
      • Labor legislation in the US mostly focuses on collective bargaining, the process of the union representing workers in compensation and condition negotiations with an employer Concept Check
      • Many Latin American governments are very active in labor relations because of the weaknesses of unions
      • Japanese unions are enterprise oriented rather than industry wide
      • Japanese unions tend to be more company-centric in issue consideration
        1. Labor union membership trends
          1. Between 1980 and 1996, union membership in OECD countries decreased by two-thirds
          2. Scandinavia has high percentage of union membership
          3. US union membership has been in very steep decline
    5. Multinational labor activities
      • Effects of union structure can be avoided in international business by moving production to places less effected by union influence
      • To combat this tactic unions: PowerPoint (32.0K)
        1. Collect and disseminate information about countries
        2. Consult with unions in other countries
        3. Coordinate with those unions' policy and tactics in dealing with some companies
        4. Encourage international companies; codes of conduct
      • European Union may be the first place where international unionism takes hold
      • The US union federation, the AFL-CIO, cooperates with unions worldwide
      • International Labor Organization
        1. A specialized agency of the UN
        2. Promotes human and labor rights worldwide
        3. ILO formulates international labor standards
      • Trade Union Advisory Committee to the OECD
        1. TUAC is interface organization between unions and OECD
        2. Ensures labor laws are consistent in global markets
      • Would harmonized labor standards boost trade and income?
        1. Labor unions, human rights activists, and some governments contend that access to their markets should be dependent on improved labor standards
        2. Some countries view this "social clause" as protectionism
        3. IMF suggests that the arguments for harmonized labor standards are weak
        4. IMF suggests that tempts to force higher standards is a detriment to development in some developing countries
    6. Worker participation in management PowerPoint (33.0K)
      • It began in Germany
        1. Frequently called codetermination
        2. Began in German steel and coal industries in 1951
        3. Management boards are divided 50-50 between unions and shareholders with independent elected to break stalemates
      • It has spread
        1. Other European countries and Japan are discussing codetermination
        2. In US neither business nor unions have shown much interest
          1. Similar concepts called industrial democracy and worker participation are discussed occasionally
      • Works councils in the EU
        1. EU requires most international companies to establish works councils
        2. Improves right to information and consultation
        3. Two models are emerging
          1. Made up of workers representatives only
          2. Made up of workers and management representatives
      • Developments in the United States
        1. In the 1980s the idea of industrial democracy arrived in the US
        2. Quality circles, part of the Japanese management system, provide opportunity for workers to participate in decision making
    7. Workers of the world
      • Labor costs vary thought world (see chart in text)
      • Young people do not do well in most labor markets as percentage of working people
      • Some countries are more restrictive in regulations regarding layoffs making it an issue for IC consideration




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