1. International Labor Relations

2. Overview
Lower rates of unionization in U.S. than most other advanced economies
Unionization rate has fallen faster in U.S. in past 30 years than any other industrialized country
Believe it or not! U.S. unions are less tied to politics than in many other Western nations
Globalization and trade policies are having a major impact on bargaining power of U.S. unions
(Katz & Kochan, 2000, 2004)

3. Source:
Evanoff, T. (2002, June 24). Chrysler’s retooling pays off. The Indianapolis Star, pp. C1, C6.

4. Industrial Relations in Multinational Firms
A multinational firm engages in economic activity in more than one country
Multinational firms expanded greatly in the past 50 years
Legal issues are significant for multinationals.
European unions are often affiliated with political parties.
In France, the two most important unions are:
CGT (affiliated with the Communist Party)
CFDT (affiliated with the Socialist Party)
(Katz & Kochan, 2000, 2004)

5. Industrial Relations in Multinational Firms 2
The Pressure of Diversity
The management of a multinational enterprise confronts cultural, legal, and institutional diversity
Workers in different countries view work differently and place different demands on their unions
Legal issues are significant for multinationals.
European unions are often affiliated with political parties.
In France, the two most important unions are:
CGT (affiliated with the Communist Party)
CFDT (affiliated with the Socialist Party)
(Katz & Kochan, 2000, 2004)

6. Hofstede Cultural Dimensions
Individualism-Collectivism
Power Distance
Uncertainty Avoidance
Masculinity – Femininity
Long-Term – Short-Term Orientation
Basic idea is that these factors impact how managers relate to employees or “how leaders are expected to lead.” May also impact expectations for how training takes place and role of the trainer.
Hofstede Dimensions with Explanations by Country

7. Degree of Industrial Relations Centralization
Multinational management’s problem:
How pursue company wide objectives through industrial relations policies given diversity
decentralization of industrial relations, vs.
global integration of policies
Challenge:
Each country’s culture and law may support uniqueness, but globalization increases need for coordination
(Katz & Kochan, 2000, 2004)

8. Multinational Operations: Power Advantage for Management
Expansion of economic activity across national boundaries reduces bargaining power of country-bound unions
Management can shift production and capital across borders and raise competitive pressures
If faced with a strike, management can use alternative production facilities
Management can move production to countries with weak environmental and social rules; called “social dumping”
(Katz & Kochan, 2000, 2004)

9. Multinational Unionism
In the past, U.S. unions expanded their jurisdiction by shifting from local or regional to national unions
Globalization suggests unions should move to the next level, i.e., truly international unions
Problems in doing this include:
Diversity, law, and culture make it difficult for unions to expand
Diversity also reduces group cohesion
Workers in low wage countries may not support demands for higher wages for their global brethren
Communications are difficult, and mergers are VERY complex
(Katz & Kochan, 2000, 2004)

10. The International Labor Rights Movement
A variety of organizations seeking to protect international labor rights have been energized by the effects of globalization
Activists worry that globalization will create a downward spiral in labor and social conditions (the so-called “race to the bottom”)
Fair trade initiatives on coffee and other consumer goods are increasing in order to support decent working conditions, limiting child labor, and strengthening unionism in developing countries
(Katz & Kochan, 2000, 2004)

11. Expansion of Intentional Trade Through Trade Pacts
The European Union (EU) and the North American Free Trade Agreement (NAFTA) are examples of efforts to increase trade
(Katz & Kochan, 2000, 2004)

12. NAFTA
Took effect in 1994
Removed tariffs and trade barriers among U.S., Mexico, and Canada over a 15-year period
Criticized by unions, claiming Mexico’s low wages caused U.S. job loss
NAFTA includes “Transitional Adjustment Assistance” to train workers who lose jobs due to trade
As of December 2001, approximately 370,000 workers were eligible for NAFTA assistance (in 2005, this would include workers at Westan, in Westfield, PA)
(Katz & Kochan, 2000, 2004)

13. European Union Formerly referred to as European Economic Community
Goals of Integration:
Eliminate trade barriers in member states
Allow free movement of workers, products, and investments across national borders
Labor relations to be “harmonized”
A single currency in most states
Pre-Integration Structure of Industrial Relations:
Unionization rates varied from about 10% in France to 83% in Sweden
Hourly labor rates ranged from about $31.88 in Germany to $5.35 in Portugal
(Katz & Kochan, 2000, 2004)

14. EU Regulation of “Social Dimension”
The social dimension includes the regulations, directives, and laws that govern employment in EU
The Social Charter was issued in 1989
Gives workers the right to form and join unions and to strike
Provides for freedom of movement and equal treatment for men and women
Member countries make specific policies
Avoids full harmonization of labor regulations
Other directives also adopted that address layoffs, bankruptcies, and mergers
EU wide work council rule adopted in 1994, but does not provide for formal council power
(Katz & Kochan, 2000, 2004)

15. Current Issue: The Trans-Pacific Partnership Free Trade Agreement
The U.S. Government View
The AFL-CIO Version
How Others Reacted

16. Labor’s Concerns about Integration
Unions concerned that “harmonization” of labor standards in EU will be based on lowest member standards
Alternatively, raising standards of low wage countries could help unions
For example, U.K. unions supported integration if it was based on (higher) German standards of representation
Management prefers that labor regulation be left to member nations rather than the EU
(Katz & Kochan, 2000, 2004)

17. Industrial Relations in Developing Countries
Workers in countries that lack democratic governments also lack the rights enjoyed in Western industrialized nations
If unions do exist, they are dominated by government and/or employers
(Katz & Kochan, 2000, 2004)