GLOBALISATION - can be defined as a process of increasing global connectivity, integration and interdependence in the economic, social, technological, cultural, political and institutional spheres. - It can be found to represent, for example, the process that reduces barriers between countries and involve greater integration in world markets, thus, increasing the pressure for assimilation towards international standards (Macdonald, 1997, Frenkel and Peetz, 1998, Ali, 2005). - Economic aspects of globalisation are the most visible and important ones. These include, but are not limited to: - economic competition amongst nations, rapidly expanding international trade and financial flows and foreign direct investments (FDIs) by multinational corporations (MNCs), disseminating advanced management practices and newer forms of work organisation and in some cases sharing of internationally recognised labour standards. - globalisation enhances competitiveness, both at a company level and at a national level, which leads to company managements and governments to adopt strategies designed to increase labour effectiveness in terms of productivity, quality and or innovation. - In summary, globalisation involves economies that are opening up to international competition and that do not discriminate against international capital. It therefore is accompanies by liberalisation of markets and the privatisation of productive assets. - At the same time, this phenomenon has obviously resulted in high unemployment, increasing casual employment and weakening labour movements according to Ali (2005) DIMENSIONS OF GLOBALISATION AND THEIR IMPACTS TO THE WORLD 1. Economic Globalisation - is the convergence of prices, products, wages, interest rates and profits towards the standard of developed countries. The extent to which an economy will globalise depends on the importance of certain processes at play, such as labour migration, international trade, movement of capital and integration of financial markets. 2. Political Globalisation - this relates to the increasing number and power of international organisations which influence or govern the relationships among nations and which safeguards the rights of countries arising from social and economic globalisation. 3. Information Globalisation - refers to the rapid development of ICT worldwide, such as global telecommunications infrastructure allowing for greater cross-boarder data flow. 4. Cultural Globalisation - this refers to the greater international culture exchange and growth of cross cultural contacts between nations and people. It also involves the expansion of multiculturalism and improved individual access to cultural diversity, as well as the growth of international travel and tourism, while at the same time developing and establishing a set of universal values. ECONOMIC IMPACTS OF GLOBALISATION - The most economic effects of economic globalisation include the following: Increasing integration of global economic activities (this leads to intensifying competition among producers and a greater and more varied offer of diverse sources and destinations of FDI. Capital movements are very high in an open international environment that labour force, MNCs have played a key role in this regard, through relocating their business activities while also subcontracting and substituting technology for human labour. Many companies have been seen to be rationalising their operations in order to strengthen their competitiveness, by reducing both wage and non-wage labour costs. Evidence has proved that MNCs generally pay higher wages and employment benefits than local companies, which significantly affects the industrial relations systems of the host country. In addition, their relationships with trade unions are influenced by both the management and workforce relations in the Company’s country of origin and the situation in host country, which makes it effectively difficult to remove the rigidities of their policies. In most instances, they do not recognise trade unions in bargaining on terms and conditions of employment, except for when they are complying with the labour relations regulations of that particular host country. (Macdonald, 1997, Ali, 2005) Rising Competitiveness – increased competition in global markets creates demand for more specialised and better quality products, leading to a higher volatility in product markets and shorter product life cycles, which ultimately requires companies to respond quicker to changes in market demands (HR implications- the need to manage people in a quality way, to build on audible readiness, to develop globats, the need for HR to transcend the stewardship of taking care of conditions of employment to look at factors that bring shareholder value and organisational competitiveness. Production implications-the need to introduce new technologies and increase the scope of flexibility in the production processes and resolve any information and coordination difficulties which previously limited the production capacities of enterprises in different locations around the world. The main focus in on individualising and decollectivising work through new work organisation in the form of niches, SBUs, while on the other end, a great deal of effort is placed on reducing the input cost to the production process by replacing people with technologies and then emphasising on building higher value capacities and skills on workers to perform a variety of jobs (multiskilling). This has blurred the functional and hierarchical distinctions between different types of jobs and between labour and management in general, Organisation of work – efforts to improve products through innovation, quality, availability and pricing have led companies to set up cross-functional development TEAMS, thus transcending the traditional boundaries between engineering, manufacturing, and marketing. All these developments have been accompanied by standardised, segmented, stable production process which had facilitated collective industrial relations (Macdonalds, 1997) and a continual shift of employment from manufacturing to service oriented industries, i.e., jobs shift from traditional manual occupations to various forms of white collar occupations, though these have been different amongst countries, largely because of differences in stages of development. The developments in technologies, for example, are affected by the willingness of countries with technologies to provide other countries with them (situations of sanctions), and also the extent to which economically developed countries are seeking access to the emerging markets to sell their products. On the other hand, developing countries face many barriers to entry into the developed world’s markets, hense affecting their rate of growth; hence the impact and pace of growth vary from one country to another. Relocation of economic activities Structural changes in the economy Rapid advancements and innovation. LABOUR MARKETS EFFECTS - The most influential effects here include: Labour market flexibility Increasing labour migration Rising atypical non-standard forms of employment Changes in the content and working conditions Skills mismatch, multi-skilling and the need for lifelong learning Such factors vary from one country to another, but however are very fundamental in determining a country’s competitive advantage labour market developments. Due to growing competitiveness, many countries have become obliged to relax their employment protection mechanisms in order to increase their labour market flexibility (see s12-duration, particulars and termination of employment contracts), which has also raised a need to the need to create a balance between labour market flexibility and social protection (see Parts 11-Fundamental Rights of employees, 111-unfair labour practices as examples). As a result, the need for cost efficiency and value addition has necessitated reforms in the labour market thus bringing flexibility in order for companies to be able to deliver goods at the right time and be strategically positioned closer to their customers. Flexibility defined: - the capacity to which an organisation can adapt to global pressures. We can distinguish between two types of flexibility, that is, numerical flexibility, which is when employers use non-standard contracts of employment to match labour supply to product service demand and to parcel out work in a way that avoids exposure to the risk of overstaffing. Employers achieve numerical flexibility when employees work part time, fixed term and or short term contracts, zero hours, annual hours or work from home, also including the use of short term casualised labour, agency workers including contracting in and contracting out. We can also talk about functional flexibility, which is the requirement or expectation that workers will perform tasks beyond those strictly specified in their main role or function. This might entail cross working (performing other people’s jobs at the workplace), expanding the number of tasks performed or working in Teams. We can also talk of geographical flexibility which results in managing across cultures as another type of flexibility. Organisational flexibility is yet another strategic form of flexibility, now this is a bigger form and beyond the deployment of flexible labour. It relates to workplace change more generally (e.g Business process reengineering, continuous process improvement, restructuring, mergers and acquisitions, takeovers etc) as well as introduction of new forms of work organisation, job design and redesign etc. Complexities in flexibility in organisations have come in the form of new forms of contracts, e.g., part time work, fixed term contracts, zero hour contracts, the increased participation of women in the labour market, outsourcing of labour, actualisation and subcontracting, all of which have reshaped the issue of security of employment, from job security to employability security. However, in most African societies, or the developing world in general, these have had a tendency of creating permanent unemployment hence underemployment. Pillay (2006) argues that outsourcing and subcontracting have been seen by COSATU as backdoor attempts to introduce labour market flexibility in the country- in other words, lowering employment standards. This is in contrast with the developed world, which sees a shortage in labour and skills threatening their competitiveness, productivity performance and sustainability of their economic growth, hence resulting in them steering labour migration to cover the void from the developing world in the form of temporary employment. This introduces flexibility into the labour market while increasing competition between foreign and domestic labour with varying implications for the countries sending and receiving workers. (They put restrictions of migrant labour into their markets in order to limit competition for work between domestic and foreign workers. The other issue we can talk about is the issue of reorganisation of work, which result in: - Greater emphasis on team working flattening of management hierarchies and the transfer of greater operational responsibility and authority to lower level managers, supervisors and work teams. All these are channelled at increasing workers’ commitment to the organisation and its goals, as well as in establishing closer relationships between managers and workers based on consultation and cooperation (Macdonald, 1997). In addition to that, there is an argument that, while globalisation and rapid changes in economies demand that workers become proactive, adaptable, multiskilled, responsible and competent, these demands put additional pressure on workers, thus exacerbating their difficulties at a time when working conditions are deteriorating and wages are compressed. The results of this change will be on an unbearable price, with ill health associated with a decrease in quality of life and unfair costs for individuals and society. However, to become aware of the benefits arising from global integration, countries will need effective education and training systems in order to supply the higher skills levels, which underpin strong and flexible labour markets, economic growth and high unemployment, address inequalities and ensure social cohesion (HM Treasury, 2005). In countries where competition is based on quality and innovation, governments emphasize the need for adequate skills training to improve workers’ competencies, esp. for those countries where shortages of qualified labour exist, hence we have LIFELONG LEARNING-which is based on continuous learning, as well as updating and upgrading of skills as a viable alternative to lifelong employment (Senge-learning organisations, Blanchardtoday’s organisations share a commitment to constant improvement.......) EFFECTS OF GLOBALISATION ON INDUSTRIAL RELATIONS In any event direct labour costs are not a big part of the price of many products and low wages alone are rarely decisive for most producers (although they are important in particular industries, for examples for garment producers and electronics assembly.) The major factor in the loss of manufacturing jobs is technological change. Domestic U.S. manufacturing output today is five times what it was in 1950 even as fewer workers are needed by the manufacturing sector. This is overwhelmingly the result of labour displacing technology, not of runaway shops. The lack of unionization in the fast growing high tech industries weakens all workers. The importance of such growth has Robert Blackburn in his new book, The Making of New World Slavery, informs us that by 1770 profits derived from slavery furnished a third of British capital formation. In what might be called a new international division of labour, slaves produced rice, coffee, sugar and other products central to the living standard and personal fortunes of many Europeans. What is interesting is not how much globalization changes things but the continuities in capitalist mentality and practices. As Eric Foner has written: "Today's Chinatown sweatshops and Third World child labour factories are the functional equivalent of colonial slavery in that the demands of the consumer and the profit drive of the entrepreneur overwhelm the rights of those whose labour actually produces the saleable commodity."9 Working people have always resisted such demands. At the end of the 20th century resistance will be stronger to the extent to which we do not allow the scarecrow of "globalization" to disempower us. The system is the same, its logic is the same, and the need for workers of the world to unite has never been greater. It is time for greater clarity in our critique of the basic workings of what are called "free markets" but are in reality class power. We need to counterpoise the need to control capital and to have the economy serve human needs rather than accept the continuous sacrifice of working people to such ideological constructions as competitiveness, free markets, and the alleged requirements of globalization. - THE HUMAN RESOURCES MANAGEMENT AGENDA DEFINITION OF GLOBALISATION - is a driving force in global economic development today concerns all actors in the economy, ranging from individuals and households to governments globalisation has greatly affected social partners, as traditional labour relations would have to deal with entirely new and very dynamic situations, which include, but are not limited to; Migration, relocation, changes in human capital and technology. Also included are changes in labour force composition, where there is an increase in white collar jobs from blue collar jobs, particularly in the developed world, coupled by an increase in self employment and the growth of the informal sector of the economy in developing countries. All these have put a significant pressure on trade unions to maintain and expand their membership levels and coverage rates. if industrial relations systems do not adjust to globalisation, the danger arises that companies will relocate their production to countries with fewer restrictions on business activities, such as countries with less regulated labour markets and lower labour costs. Characteristics of globalisation internationalisation of markets, increasing competition, free movement of capital and labour, information globalisation through rapid development of information and communication technologies (ict), the rising importance of markets- all influence working lives of employees and represent serious challenges to the national industrial relations systems. GLOBALISATION Internationalisation of markets Increase in competition Free movement of capital and labour across borders due to less stringent regulations. As a result, markets are internationalising, competition is increasing, global markets are integrating and ICT promote networking. Informational globalisation through rapid development of ICT IMPACTS OF GOBALISATION Increasing integration of global economic activities Rising competitiven ess Relocation of economic activities Structural changes in the economy Rapid technological advancement s and innovation Knowledge society, networking, social capital Labour market flexibilisation Increasing labour migration Rise of atypical and non standard employment forms INDUSTRIAL RELATIONS SYSTEM ACTORS -Trade Unions, Employers Organisations, Government ACTIONS/PROCESSES Collective Bargaining, Workers Participation, Industrial Actions, Conflict Resolution CONTEXT -Political, Economic, Legal, Socio-Cultural, Technological Environments OUTCOMES -Scope of regulation of employment, i.e., wages, working time, working conditions etc IMPACTS -Productivity, job and employment security, industrial peace and democracy Changes in working conditions and work content Job-skills mismatches, multi-skilling, need for lifelong learning