International labour markets

Global Employment Trends (ILO 2011)
Developed Economies and the EU

—  Major deterioration in economic and labour market conditions

¡  USA: contraction of GDP of -3.4% in 2009

¡  Latvia: - 18%

¡  Lithuania: -14.8%

¡  Estonia: -13.9%

—  Led to rises in unemployment, increased underemployment and increase in part-time work

Developed Economies and the EU

—  Despite beginnings of recovery in 2010 unemployment rose from

¡  5.8% in 2007

¡  8.4% in 2009

¡  8.8% in 2010

—  Larger increase for men than women

—  High levels of youth unemployment

¡  12.4% in 2007

¡  17.4% in 2009

¡  18.2% in 2010

—  Ethnic differences  i.e. African Americans 2 x rate than that of  white Americans

Central and South East (non-EU)

—  Fall in economic growth of 10.3% in 2009 to -6%

¡  Ukraine: 17.2%

¡  Armenia: 14.2%

¡  Russian Federation: 13.1%

—  Rose in 2010 to regional average of 4.9%

—  But, unemployment remains high

¡  7.9% adult unemployment (7.5% in developed economies)

¡  18.9% youth unemployment

—  High levels of migration

¡  ILO estimates that 40% of Albanian workforce is working abroad – often in precarious employment

—  Decrease in vulnerable work in the informal economy slowing down

Latin America and the Caribbean

—  Increase in economic growth of 5.7% in 2010

—  However:

¡  Growth in employment alongside limited creation of ‘decent’ jobs

—  High levels of service sector employment

—  Decline in agricultural employment

East Asia

—  Economic growth of 9.8% in 2010

—  Decline in unemployment from 4.4% in 2009 to 4.1% in 2010

—  Higher youth unemployment (8.3% in 2010)

—  Increasing living standards, although:

¡  50.8% of workers in vulnerable employment

¡  25.1% in families on < US$2 a day

¡  9%  in families on < US%1.25 a day

South-East Asia and Pacific

—  Economic growth of 7.2% in 2010

¡  5% unemployment for men

¡  5.2% unemployment for women

¡  Young people 4.7 x more likely to be unemployed than adults

—  Shift from higher paid manufacturing employment to lower paid, more vulnerable  service sector employment

—  62% of regions employed workforce in vulnerable work

—  50% regions workers in families with <US$2 a day many on <US$1.25 a day

South Asia

—  Unemployment rate of 4.3% - 4.5% between 2007 and 2010

—  Youth unemployment 20.7%

—  Gender inequality

¡  40% participation rate for women (83% men)

—  Higher levels of vulnerable employment in the world i.e. 78.5% in 2009

—   High levels of working  poverty

—  45% on < US$1.25 a day

—  High levels of child labour

Middle East

—  Impact of economic crisis less than elsewhere – insulated by high oil prices.

—  However:

¡  10.3% unemployment 2009/10

¡  Youth unemployment 4 x adult rate

¡  Low employment to population levels i.e. 45.4% in 2010

¡  1/5 of women in the region work outside the home

¡  Many companies avoided paying bonuses

¡  18.7% of workers on <US$2 a day

North Africa

—  3.5% growth in GDP in 2009

—  High unemployment rates, especially for the young

—  Low levels of female participation (1/4)

—  High levels of working poverty

—  Many jobs are low quality, insecure, low paid and to not conform to basic labour standards

—  Vulnerable employment – 40.4% in 2009

Sub-Saharan Africa

—  Estimated economic growth of 5% in 2010

—  75.8% of workers in vulnerable employment in 2009

—  Low levels of trade with rest of world

Migration

“Widening disparities in income, wealth, human rights and security across countries serve as push factors towards migration. Migration in search of work has become a livelihood strategy for both women and men because of the lack of opportunities for full employment and decent work in many developing countries. At the same time , the proliferation of skill-intensive economic sectors, increased demand for skilled workers, reluctance of local workers to accept certain low-skilled jobs, and demographic trends such as population decline and population ageing in many major destination countries act as strong pull factors” (ILO 2010)

Implications in Terms of HRM

—  High incidence of ‘vulnerable’ work

¡  Poor conditions, protection, pay, security etc.

¡  Little in the way of HRM

—  High youth unemployment

¡  Discrimination and diversity; training

—  Participation and Discrimination

¡  i.e. In relation to gender and ethnicity

—  Western HRM models may well be meaningless in these circumstances

Global Resourcing

—  External Factors: the political economy approach

¡  Integration of system of production, role of government, broader social and economic environment under globalisation, labour market regulations and employment relations institutions

—  Three trends:

¡  Intensification of international competition

¡  Deregulation

¡  Collapse of communism and intensification of neo-liberalism

—  How are these trends linked to global employment trends?

Zhu 2011

—  Internal Factors: the strategic choice approach

¡  Identifies key elements of internal factors for business success and focuses on choice in terms of organisations’ business strategies, and their links with HR practice

—  Emphasises

¡  Integration of HR and business strategies

¡  Favours increased managerial autonomy and rejection of collective bargaining and union role

Global Resourcing: Capitalist Market Economies

—  Japan

¡  Change in labour market policy and impact on HRM

¡  Change in resourcing  and HRM

—  1990s   -  2000s: periods of recession and low economic growth led to relatively high rates of unemployment

—  Incentives for firms to employ more people – especially the young

—  Discourage dismissal of employees

—  Encourage flexibility

—  Government funding for training, development, pension and unemployment benefits

—  Core and periphery employment strategy

Socialist Market Economies:
China

—  Reforms – establishment of new labour market

¡  Reform of wages, employment and welfare

¡  Distribution according to work i.e. Links between individual performance, skill and position with income

¡  New wage systems such a piece work, bonuses, post plus skills, floating wage system

¡  Encourage labour to move from unproductive to more productive firms to overcome labour market immobility

—  However, high levels of unemployment and hidden unemployment remain (i.e. Category of ‘waiting to be employed’)

—  Gradual withdrawal of government from direct intervention in recruitment

—  Labour market segmentation

¡  i.e. Shortage of skilled labour and oversupply of unskilled labour led to competition for talent from expatiates and Chinese overseas graduates

¡  Informal recruitment for unskilled labour

UK

—  Labour Government policies included

¡  Encouragement to work through benefits system i.e. Family tax credits

¡  Future jobs fund to deal with youth unemployment

¡  High public spending

—  Coalition policies

¡  Deficit reduction  (and cross fingers and hope for the best)

¡  Job cuts in the public services and assumption that the private sector will expand and create jobs

¡  Deregulation of employee/trade union rights

Expatriation: Staffing the multinational enterprise

—  Expatriate defined as a parent country national working in a foreign subsidiary of a MNC for a predefined period, usually 2 – 5 years (Harzing 2004)

—  Global Relocation Trends Survey (2007) showed that:

¡  34% of companies deploy 50 or fewer expatriates, 56% deploy 100 or more

¡  69% say expatiation is increasing

¡  20% of expatriates are female

¡  48% are 20 – 39 years old

¡  60% are married and 54% have children

¡  82% accompanied by partner or spouse

¡  58% located to or from the headquarters country

¡  The USA, UK, China and Germany are the most frequent destinations

Rationale

—  To fill positions where indigenous managers do not have the necessary skills

—  Management development

—  Organisational development

—  To influence the performance of subsidiaries

¡  i.e. Cultural control

¡  Dissemination of corporate values and norms

¡  Functional imperatives

Expatriate Failure

—  Estimates range from 16 – 50%

—  For example, early return

—  Main reasons:

¡  Failure of partner to adapt

¡  Family concerns

¡  Poor candidate selection

—  Highest failure rates in Japan, USA, UK and China

—  Problems in terms of reduced career prospects, demotivation, poor morale etc.

Alternatives

—  Cross cultural training

—  International commuters

—  Short-term or intermediate postings

—  Contract expatriates

—  Virtual international employees

—  Cross-border project teams

—  Devolvement to the subsidiary

—  GMAC survey 2007 found 55% of companies looking for alternatives