Globalization of Labor – II
September 13, 2007 by Raj Sheelvant
Why is Globalization of Labor all of sudden important now? The barrier for job migration has dramatically lowered lately making it easy to move the jobs where the labor is.When we talked about globalization, a decade back, it meant 2 things-
- Movement of goods: A typical export/import business. Goods from one country shipped to another country.
- Movement of capital: Investment in companies and infrastructure around the globe.
Movement of Labor was not on the globalization agenda, because of the obvious reasons – high barrier for immigration. Although forced labor movement like slave labor and indentured labor has been going on for centuries – voluntary labor movement was a rarity. Most of the developed countries were self sufficient as far as labor pool was concerned and did not want to deal with social change brought by mass immigration. With the visa regime, many countries have set up high bar for easy immigration. Over the past decade 3 things have happened that has enabled globalization of labor.
- Demographic Shift: Majority of developed countries lately have lower birth rates causing labor shortage. This has forced the companies in these countries to look for labor in other countries.
- New Market: Chinese and Indian economy has been growing at more than 9%, lifting large number of people out of poverty. The companies in developed countries are now exposed to this new largely underserved market. They have stepped up effort to seek local knowledge to sell their products in these countries. Hence, there is a strong need to hire labor close to this new market.
- Technological advances: Due to dot com bubble in late 1990s, several companies over invested in communication technology bringing down the cost of communication. Internet, Email, Web 2.0 etc. opened up new avenues for collaboration where the need to co-locate employees became less important.
These three main trends have lowered the barrier for labor movement. The result is not that the labor can now move easily to where the jobs are but jobs can move where the labor is! Today, Globalization not just means movement of goods and movement of capital. Globalization also means movement of labor or movement of work towards the country that can supply cheap labor. This is a titanic shift for everyone – politicians, employees, business owners, management and HR. No one clearly understands how to deal with these dynamic changes. I will soon blog on what the trends are in the Globalization of Labor, so that we can adapt to these changes and thrive in this new environment.
Also, read my other blog Globalization of Labor.
Popularity: 69% [?]
Related posts:
Comments (4)
Financial Times was saying earlier this week that EU is being told to lower barriers for job migration.
EU told to accept 20m migrant workers
By Andrew Bounds in Brussels
Financial Times, September 12 2007 23:00 |
http://www.ft.com/cms/s/0/a23dbdaa-6164-11dc-bf25-0000779fd2ac.html
Europe must relax its immigration controls and open the door to an extra 20m workers during the next two decades, the European Union’s justice chief will say on Friday.
Franco Frattini, justice commissioner, is to tell the bloc’s immigration ministers in Lisbon that the EU should stop erecting barriers and instead build safe pathways for Africans and Asians who risk their lives heading to the continent to find a job.
Is it being recognised that free trade is impossible with free migration?
As I said
on my blog http://blogs.siliconindia.com/goldrupee in an entry “GCC, APEC, WTO and Competition Law” on 09th Sep 2007
Asia-Pacific Economic Cooperation (APEC) wanted last week-end the World Trade Organisation (WTO) to re-start the Doha-round of trade talks.
You are saying:
“Three main trends have lowered the barrier for labor movement. The result is not that the labor can now move easily to where the jobs are but jobs can move where the labor is.”
Here’s Nobel-Prize laureate Joseph E. Stiglitz in his book “Making Globalization Work”, (New York and London, W.W. Norton & Company, 2007), pp. 78-79:
“ The United States and Europe have perfected the art of arguing for free trade while simultaneously working for free trade agreements that protect themselves against imports from developing countries. Much of the success of the advanced industrial countries has to do with shaping the agenda – they set the agenda so that markets were opened up for the goods and services that represented their competitive advantage.
Western negotiators almost take it for granted that they can control what gets discussed, and determine the outcomes. As the United States and the EU push for opening up markets for services, they do not think (as they logically should): by and large, services are labor intensive; by and large, it is developing countries that have an abundance of labor; and therefore, by and large, a fair service sector liberalization will be of especial benefit to developing countries. They think: we can liberalize the high-skilled services which represent our comparative advantage now, and we can make sure, one way or the other, not to liberalize services that are intensive in unskilled labor. From the very beginning of the discussion, they had in mind an unbalanced agreement.”
If the EU is being told to accept 20m migrant workers, is this not the first step towards recognising that free trade is impossible with free migration, towards recognising that those unbalanced agreements need to be re-balanced?
Even the EU’s Common Agricultural Policy (CAP) is being discarded.
EU urged to halt set-aside to boost grain production
David Gow in Brussels
Friday September 14, 2007
The Guardian
http://www.guardian.co.uk/eu/story/0,,2169082,00.html
The European commission proposed yesterday to scrap the 20-year rule requiring EU farmers to leave 10% of their land fallow, which would enable them to grow more grain and offset recent poor harvests and soaring food prices.
In a move coinciding with a “pasta strike” in Italy in protest at a 20% leap in prices, Mariann Fischer Boel, EU farm commissioner, said up to 17m tonnes more wheat, oats and barley could be grown next year under her plans to reduce the set-aside rate for plantings this autumn, winter and spring to zero.
EU to suspend grain limits to boost cereals
By Andrew Bounds in Brussels and Javier Blas in Vienna
Financial Times September 14 2007 03:00
http://www.ft.com/cms/s/0/6a1aea72-625b-11dc-bdf6-0000779fd2ac.html
Europe reacted to soaring cereal prices yesterday by seeking to boost output through scrapping limits on grain production imposed 15 years ago.
The European Commission said it would suspend for at least a year a rule requiring farmers to set aside 10 per cent of their land. Agriculture ministers from the 27-member bloc and the European parliament should approve the move by the end of the month.
As Richard Cottrell said in 1987, that’s twenty years ago, on the backcover of his book
“The Sacred Cow – The Folly of Europe’s Food Mountains”
(London, Grafton Books, 1987):
“… the sacred cow of Europe’s common agricultural policy is leading us towards a world food crisis. In creating the greatest agricultural machine in history, the European countries have crushed the fragile economies of Third World nations, while in Europe the balance of nature has destroyed by agricultural over-production.”
The EU Court of First Instance is to rule on Monday on the EU Commission’s nearly decade-long struggle against Microsoft.
A Lex-column “Centre Court”, published on Thursday in Financial Times said that if the Commission wins, it will pursue cases with renewed vigour.
However, if the Commission loses, it will be a body blow. Microsoft is the biggest case the regulator has taken on in terms of time and resources. Failure would surely dent its appetite to be so aggressive in the future.
http://www.ft.com/cms/s/1/46a911e0-625b-11dc-bdf6-0000779fd2ac.html
Here’s why the Commission’s Competition Law policy should be abandoned.
ANTITRUST, BY ALAN GREENSPAN
(Based on a paper given at the Antitrust Seminar of the National Association of Business Economists, Cleveland, September 25, 1961. Published by Nathaniel Branden Institute, New York, 1962.)
http://www.polyconomic.com/searchbase/06-12-98.html
The world of antitrust is reminiscent of Alice’s Wonderland: everything seemingly is, yet apparently isn’t, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet ‘too much’ competition is condemned as ‘cutthroat.’ It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, YET PRAISED AS ‘ENLIGHTENED’ WHEN INITIATED BY THE GOVERNMENT. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict — after the fact.
If even the EU’s Common Agricultural Policy (CAP) can be abandoned, why couldn’t the EU’s Competition Law policy be abandoned?
But the Indian Parliament passed a Competition Bill earlier this week.
The bill is giving teeth to the regulator Competition Commission of India to deal with a host of contemporary economic issues including monopolies and takeovers of corporate firms, said The Economic Times.
http://economictimes.indiatimes.com/Parliament_passes_Competition_Bill/rssarticleshow/2355245.cms
Ivo Cerckel
ivocerckel AT siquijor DOT ws
Ivo
You are correct, there will be a lowering of barrier for labor migration in developed world (mainly because of demographic shifts). I think we will see more guest worker program both in US and Europe. I will write more about this in my future blogs. Thanks for your in depth comment as well as links to your references.
Move the Jobs, not the Labor
Travis Northcutt is a college student and a thinker (mutually exclusive for some of his classmates). You can find his thoughts at flatworldblog.com. In the Flat World, labor no longer has to move where the jobs are. Now, the jobs
[...]itstrategyblog.com is another wonderful authority of information. Online Car insurance claims [...]