Multinational corporation - Essay Example

There is great debate about the role of Mac’s in developing countries. Some are optimistic arguing Mans’ operations, fuelled by superior technical know-how and modern management practices, allow them to pay higher wages and raise labor standards, while others argue they exploit cheap labor and ignore poor working conditions. Evidence of Mans disregarding labor abuse in developing economies has fostered the rise of activism for corporate social responsibility (CARS); there is now a strong push for greater international regulation and enforcement of minimum labor standards.

We Will Write A Custom Essay Sample On

For Only $13.90/page

order now

The Mans’ power to control international investment and create Jobs has had enormous bearing on the economies of developing countries. Critics have argued that, faced with pressures to attract such Investments and lower unemployment rates, governments have had little or no alternative but to accept the terms of Mans. Following this argument, it can be said that globalization and the activities of Mans have simultaneously raised economic growth and inequity in developing countries.

While their economies are booming because of massive FDA, the workers, especially unskilled ones, are suffering from degrading living conditions and very low wages. The level of inequality between developing and developed countries is growing, which raises the issue of balancing economic growth and social injustice. Critics argue that Mans’ activity in the developing world has enhanced the unfairness of capitalist market and further widened the gap between the rich and the poor (Manhood, Welch and Kennedy, 2003, p. 966).

MEXICO A specific study of the involvement of Mans in the developing economy of Mexico particular, the lack of unionization in the inquisitorial sector of Mexican international business. Masqueraders are ‘foreign owned assembly plants in Mexico… [where] companies import machinery and materials duty-free and export finished products around the world’ (Corporate 1999, p 1). These are situated on the Mexican/US border and have had both positive effects, such as the promotion of foreign investment, and negative effects, such as cheap wages and child labor (Black 2010, pig 217).

Emerging in the mid sass’s, the inquisitorial factories of Mexico reflect the Mac’s impact in a host country; by particularly focusing on the industry, the labor standards in Mexico can be thoroughly investigated. In the masquerader’s of Mexico, Mac’s have little knowledge or persuasion in relation o the restricted unionization of workers; which is currently diminishing labor standards in these factories. Unionizing is mandatory to large scale factory workers as it provides them with defended against dominant managers and executives, allowing them to advocate for social and economic changes.

In Mexico there is an official union, the Confederation of Mexican Worker (ACT) and the Conciliation and Arbitration Boards (CAB) to enforce labor laws in Mexico. The issue for Mac’s and of course the inquisitorial workers, is these two organizations have strong ties to the government (Solidarity Centre 2003, p 14). Unionization in Mexico, a significant aspect of labor standards, is not currently adequate according to the Nun’s International Labor Organization (OIL). The OIL states that, although the OIL Convention No. 7 (1948) has been ratified, and trade union rights are recognized by law, there are many limitations imposed by inquisitorial heads and Mexican government officials on unionization (GIFTS 1997). CAB’s constantly withhold legalization of unions, strikes can be declared ‘legally nonexistent’, workers maybe blacklisted or ‘forcefully told to resign’ for union activities, and the rate of unionization is as low as 10-20% (GIFTS 997). Mac’s are known to have the ability to ‘generate positive pressures for the adoption… F collective labor rights’ (Moslem 2011, p 51) and through direct investment can attempt to impose fewer violations of union rights (Moslem 2011, p 51). This can be observed in the example of Volkswagen in 2004; in collaboration with the OIL the company implemented actions to strengthen labor inspections and encourage acts of unionization in Mexico. Unfortunately in the case of Mexico, due to strict control from the inquisitorial heads and the government, this is not a familiar story.

Mac’s have little control over labor rights and sparse knowledge of restricted unionization, due to locality and governmental suppression (ICTUS 1997). It is widely believed that the Mexican government flaunts core labor standards to attract Mac’s; as reduced labor rights, such as unionization and wages, strengthen relationships with international companies and increase global competitiveness as Mexico appears more financially attractive. Mac’s are thus said to attract labor abuses, rather than having much active involvement in eradicating any issues. N individualistic approach to workers, with unionization not significantly high to Mac’s concerns (Levees & Murray 2010, p 3). This leads to Western Mac’s, specifically, having a negative impact in the plight for union rights by ignoring Mexico anti-unionization rhetoric. The US mega company, Wall-Mart, is a current example of an NC in Mexico found to ignore workers union struggles, due to content with cheap labor and fast manufacturing (Moslem 2011, p 53).

A final negative impact of Mac’s on labor standards in Mexico is the continual signing, through lack of investigation, of ‘pretend contracts’ created by masqueraders (Solidarity Centre 2003, p 18). These hinder real unions from establishing, as the Mac’s place the control of unions and workers rights in the hands of the governments CAB’s. Although there are some positive effects of Mac’s presence in Mexico, labor standards, such as annunciations, have suffered many negative effects since the rise of FDA.

INDIA Another country which has suffered impacts on labor standards is India, which in the early sass began several economic reforms that led to economic liberalizing; and thus a great increase of FDA and Mans operating in the country during the last few decades (Bloater, 2002). Mans find Indian labor laws to be very restrictive on employers, thus a demand for rater relaxation in the laws has emerged. Laws relating to working conditions and wages were implemented in the sass and sass and are seen as dated, compared to how companies operate today (Sure and Dubbed, 2008).

The Indian government and organizations like the WTFO have been unable to ignore demand for change from Mans as they rely on the FDA of such firms. Mans power to push for changes in Indian labor laws has had both positive and negative outcomes for the Indian workforce. For example, a shift towards temporary contracts instead of permanent employment has now emerged, weakening the effect on the collective bargaining rower of employees. The presence of Mans has fostered an increase in female employees, an example of a positive push forward for India, which has developed into a more modern economy.

Before Mans entered India the workforce mainly consisted of men because of traditional beliefs, however, the corporations have consciously avoided laws which prevent women from working. This has thus increased wealth amongst females; allowing them to become more independent financially and personally, as dated inequalities and family structures in Indian households change. Not only are women revived with work, in some cases companies also provide them with transportation to work, day care and meals.

Additionally, demand for women within the workforce work environment, demands highly educated workers. Victoria Secret, a well- recognized and very successful US company, has a factory with over 2600 employees in India, most of which are women. Furthermore, the computer service sector in India has also experienced a significant increase in women employment (Richards, 2007). Mans have been greatly criticized for exploiting child labor in, with around 55 million children work in factories in India (Med, 1999).

These children are exposed to shocking working conditions which constitute long hours, extremely low wages and various kinds of abuse. Monsanto, an U. S agriculture giant, and Gap, an American apparel company, are examples of Mans that have exploited child labor in India. Monsanto employs Indian farmers who in turn employ children as they need cheap labor so as to gain even the smallest of profits (Med, 1999) and children have been found working in sweatshop conditions to produce clothes for Gap (McDougall, 2007). There has been increasing pressure on Mans to stop child exploitation.

The CELL Child Labor Elimination Group), which compromises of companies and Nags, was established so as to monitor cottonseed farms, amongst other things. Although child labor is definitely condemned, many children in India work because it is the only way for their families to survive as education services are limited and families are dependent on the income. While the development and investment of Mans in India has resulted in an overall increase in employment and wage growth, it has been partnered with greater income inequalities (CEO, 2007).

PUSH FOR CARS Human rights groups and organizations have insisted that forces of free market are insufficient to promote fair standard of labor conditions, calling for greater corporate social responsibility and international regulation. They also note that Mans are not equipped to deal with the questions of international ethics themselves, as they have other concerns, such as profits and obligations to shareholders that must be taken into account. Consequently, businesses need the help of human rights Nags and international organizations to deal with various human rights concerns.

It is important to make corporations realize the benefits and potential profits that social responsibility will bring to them. Manhood, Welch and Kennedy, 2003, p. 970) The debate over the establishment of regulation for corporation social responsibility has grown internationally, especially since the sass, when increasing international activism against corporate human rights abuses led the United Nations to address the issue in the form of the Global Compact.

Outlined at the World Economic Forum on 31 January 1999, the Compact ‘provides a basis for structured dialogue between the I-IN, business, labor, and civil society on improving corporate practices in the social arena’ (Manhood, Welch and Kennedy, 2003, pig. 979). Based on the principals Human Rights, the Compact sets out its guidelines for corporate practices, advocating fair labor conditions, safe workplace, freedom of association and right to unionize, an end to child labor and discrimination.

Additionally, foreign-owned firms make use of aspects of labor organizations and democratic institutions that improve the efficiency characteristics of their factory operations. Surveys and statistic fugues given a report published in 2008 by the Organization for Economic Cooperation and Development (COED) with the title ‘Do Multinationals Promote Better Pay and Working Conditions’ confirm such arguments. The report compares and examines differences between foreign firms and local firms by looking at wages and conditions like working hours and training.

It shows that Mans do tend o pay more than local firms, though the difference lessens with local firms that compete in the same markets. In general, foreign multinationals pay 40% higher in average wages than local firms, and even more in low-income countries of Asia and Latin America. Mans may offer higher pay than their local counterparts as it helps to minimize worker turnover and reduce monitoring costs, they also invest in capital- intensive sectors and rely on highly skilled employees. Knowledge and technology transfer; they bring modern management and production methods to domestic competitors, which is likely to raise productivity and labor conditions. This occurs especially through supply chains, partnerships and skilled labor mobility. Additionally, due to increased competition, domestic firms can be forced to improve working conditions in order to avoid loosing labor.

According to Wizen and Swami (2008) from COED directorate for employment, labor and social affairs, by building clusters in developing countries Mans can demand, from their suppliers and partners, higher standards for products and better labor conditions. For example Nikkei, due to increasing accusations of sweatshops and exploitation, formulated its first code of conduct in 1992 and in 2004, it employed 80 corporate social responsibility (CARS) and compliance managers. Factories were inspected daily/ weekly.

It is argued the gap between developed and developing countries for the most part is not the result of suppression of labor standards or rights within Mans but rather a reflection of low levels of human and physical capital, under-employment and pressure of population on physical resources (Manning, 1998). Therefore, activism for more corporate regulations from regulatory international bodies may adversely affect the very workers they are intended to benefit as punitive measures may push firms to alter production locations.