INTERNATIONAL INDUSTRIAL

RELATIONS

Key Players
Approaches to IR,
Impact of Globalization to IR
Key Issues in IIRs
International Trade Union
Social Dumping

Key Players

Employees

Employee

Government

Labour Relations or IR is concerned

with:

Collective Bargaining
Role management, unions and Government
Machinery for resolution of industrial disputes,
Individual Grievances and disciplinary policy and
practices.
Labour legislations and
Industrial Relations training

Approaches to IR:
1.

Unitary: The unitary approach emphasis on the growth of the org.

and both management as well as employees are expected to work
towards its success. The approach also believes in the existence of
unions, government and tribunals.

2 Pluralistic: Departs from the unitary approach, it perceives:

Organizations as coalitions of competing interests, where the
managements role is to mediate amongst the different groups. Trade
union as legitimate representative of employees interests. Stability in
IR as the product of concessions and compromises between
management and unions.
3. Marxist: Focuses on the type of society in which an org. functions.
CONFLICT ARISES not because of competing interests within the org.
but because of the division within society the class.

Impact of Globalization to IR
1. Intra country system for consulting employees at an early stage in
any potential conflicts Austria & Germany.
2. Rapid development economics, high productivity gives ample scope
for dealing with wage claims and avoiding potential disputes Latvia
and Slovakia.
3. In the RUSSIAN Federation, the low level of disputes can be
attributed to complex legal procedures that make all but a minority of
strikes technically, illegal.
4. Greece and Italy have a strange practice of holding regular one day
national strikes that involve large sections of the working population.
5. High levels of inward investment also give increased opportunities
for individuals to change their mentality as well as their jobs.
6. Finally quality movement in the world wide.

Key Issues in IIRs: Key issues in IIRs can

broadly divided into categories:
1. Who should handle Labour Relations HQ or
Subsidiaries in the concerned countries.
2. What should be the Union Tactics?

Improvement in
Recruitment
drive
Develop
Workers
centres:

Union need to
pool resources
via Mergers

International
Trade Union
Lobby for
Restrictive
National legi
International
Trade
secretariats (ITS)
slation
Using the good
offices of
international
organizations

Chapter 7
Global issues in HR
By Anju Chawla
Adjunct Faculty, HR
SCMS NOIDA

Checkpoint 1 of 3
HRM in the host country context
Factors influencing standardization or adaptation
of work practices and the role of HR, including
HCN culture workplace environment, and
international experience and subsidiary mandate.
Retaining, developing and retrenching local staff.
HR implications of language standardization: HCN
selection, training and promotion on the basis of
language skills.
Monitoring HR practices used by foreign
subcontractors.

Extension to internationalization process

In order to build, maintain and develop their
corporate identity, multinational
organizations need to strive for consistency
in various ways of managing people on a
worldwide basis.
Yet, in order to be effective locally, they
also need to adapt those ways to the specific
cultural requirements of different societies.
While the global nature of business may call
for increased consistency, the variety of
cultural environments may be calling for
differentiation.

Laurent proposed that , in practice , this would require sates of

minds and mindsets that allow five conditions to be met:

Checkpoint 2 of 3- Industrial Relations

The focus of the preceding chapters has been on managing and
supporting international assignments, post-assignment and the
issues in subsidiary operations. In this chapter we:
Discuss key issues in industrial relations and the policies and
practices of multinationals.
Examine the potential constraints that trade unions may have
on multinationals.
Outline key concerns for trade unions.
Discuss recent trends and issues in the global workforce
context.
Discuss the formation of regional economic zones such as the
European Union.

Introduction
We need to consider some general points about the field of
international industrial relations. First, it is important to
realize that it is difficult to compare industrial relations
systems and behavior across national boundaries; an
industrial relations concept may change considerably when
translated from one industrial relations context to another.
Cross-national differences also emerge as to the objectives of
the collective bargaining process and the enforceability of
collective agreements.
(cont.)

Introduction (cont.)
Schregle has observed:
A comparative study of industrial relations shows that
industrial relations phenomena are a very faithful expression
of the society in which they operate, of its characteristic
features and of the power relationships between different
interest groups. Industrial relations cannot be understood
without an understanding of the way in which rules are
established and implemented and decisions are made in the
society concerned.
(cont.)

Introduction (cont.)
Poole has identified several factors that may underlie these
historical differences:
the mode of technology and industrial organization at critical stages of
union development
methods of union regulation by government
ideological divisions within the trade union movement
the influence of religious organizations on trade union development
managerial strategies for labor relations in large corporations.

(cont.)

Introduction (cont.)
Union structures differ considerably among Western
countries. These include industrial unions, which represent all
grades of employees in an industry; craft unions, which are
based on skilled occupational groupings across industries;
conglomerate unions, which represent members in more than
one industry; and general unions, which are open to almost
all employees in a given country.
(cont.)

Introduction (cont.)

Table 9-1: Trade union structure in leading western

industrial societies

Introduction (cont.)
These differences in union structures have had a major
influence on the collective bargaining process in Western
countries. Some changes in union structure are evident over
time.
The lack of familiarity of multinational managers with local
industrial and political conditions has sometimes needlessly
worsened a conflict that a local firm would have been likely to
resolve.
Increasingly, multinationals are recognizing this shortcoming
and admitting that industrial relations policies must be flexible
enough to adapt to local requirements.
This is evidently an enduring approach, even in firms that
follow a non-union labor relations strategy where possible.

Key issues in international

industrial relations
Industrial relations policies and practices of multinational firms
Because national differences in economic, political and legal systems
produce markedly different industrial relations systems across countries,
multinationals generally delegate the management of industrial
relations to their foreign subsidiaries. However, a policy of
decentralization does not keep corporate headquarters from exercising
some coordination over industrial relations strategy.
Generally, corporate headquarters will become involved in or oversee
labor agreements made by foreign subsidiaries because these
agreements may affect the international plans of the firm and/or create
precedents for negotiations in other countries.
Multinational headquarters involvement in industrial relations is
influenced by several factors, as detailed below.
(cont.)

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
The degree of inter-subsidiary production integration.
High degree of integration was found to be the most important factor
leading to the centralization of the industrial relations function within the
firms studied.
Industrial relations throughout a system become of direct importance to
corporate headquarters when transnational sourcing patterns have been
developed, that is, when a subsidiary in one country relies on another
foreign subsidiary as a source of components or as a user of its output.
In this context, a coordinated industrial relations policy is one of the key
factors in a successful global production strategy.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
Nationality of ownership of the subsidiary.
A number of studies have revealed that US firms tend to exercise greater
centralized control over labor relations than do British or other European firms.
US firms tend to place greater emphasis on formal management controls and a
close reporting system (particularly within the area of financial control) to ensure
that planning targets are met.
Foreign-owned multinationals in Britain prefer single-employer bargaining (rather
than involving an employer association), and are more likely than British firms to
assert managerial prerogative on matters of labor utilization.
Further, Hamill found US-owned subsidiaries to be much more centralized in labor
relations decision making than British-owned. Hamill attributed this difference in
management procedures to the more integrated nature of US firms, the greater
divergence between British and US labor relations systems than between British
and other European systems, and the more ethnocentric managerial style of US
firms.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
International human resource management approach.
The various international human resource management approaches utilized
by multinationals; these have implications for international industrial
relations.
An ethnocentric predisposition is more likely to be associated with various
forms of industrial relations conflict.
Conversely, it has been shown that more geocentric firms will bear more
influence on host-country industrial relations systems, owing to their
greater propensity to participate in local events.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
MNE prior experience in industrial relations.
European firms have tended to deal with industrial unions at industry level
(frequently via employer associations) rather than at firm level.
The opposite is more typical for US firms. In the USA, employer associations
have not played a key role in the industrial relations system, and firm-based
industrial relations policies are the norm.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
Subsidiary characteristics.
Research has identified a number of subsidiary characteristics to be relevant
to centralization of industrial relations.
First, subsidiaries that are formed through acquisition of well-established
indigenous firms tend to be given much more autonomy over industrial
relations than are greenfield sites set up by a multinational firm.
Second, according to Enderwick, greater intervention would be expected
when the subsidiary is of key strategic importance to the firm and the
subsidiary is young.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
Subsidiary characteristics (cont.).
Third, where the parent firm is a significant source of operating or
investment funds for the subsidiary, that is, where the subsidiary is more
dependent on headquarters for resources, there will tend to be increased
corporate involvement in industrial relations and human resource
management.
Finally, poor subsidiary performance tends to be accompanied by increased
corporate involvement in industrial relations. Where poor performance is
due to industrial relations problems, multinationals tend to attempt to
introduce parent-country industrial relations practices aimed at reducing
industrial unrest or increasing productivity.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
Characteristics of the home product market.
An important factor is the extent of the home product market.
If domestic sales are large relative to overseas operations (as is the case
with many US firms), it is more likely that overseas operations will be
regarded by the parent firm as an extension of domestic operations.
This is not the case for many European firms, whose international
operations represent the major part of their business.
Lack of a large home market is a strong incentive to adapt to host-country
institutions and norms.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
Characteristics of the home product market (cont.).
Since the implementation of the Single European Market in 1993, there has
been growth in large European-scale companies (formed via acquisition or
joint ventures) that centralize management organization and strategic
decision-making.
However, processes of operational decentralization with regard to industrial
relations are also evident.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
Management attitudes towards unions.
An additional important factor is that of management attitudes or ideology
concerning unions.
Knowledge of management attitudes concerning unions may provide a more
complete explanation of multinational industrial relations behavior than could
be obtained by relying solely on a rational economic model.
Thus, management attitudes should also be considered in any explanation of
managerial behavior along with such factors as market forces and strategic
choices.
Denmark has the highest level of union membership, the USA has the second
lowest and France has the lowest in the Western world.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
Although there are several problems inherent in data collection for a
crossnational comparison of union-density rates, several theories have
been suggested to explain the variations among countries. Such theories
consider economic factors such as wages, prices and unemployment
levels, social factors such as public support for unions and political
factors. In addition, studies indicate that the strategies utilized by labor,
management and governments are particularly important.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
Another key issue in international industrial relations is industrial
disputes. Hamill examined strike-proneness of multinational subsidiaries
and indigenous firms in Britain across three industries. Strike proneness
was measured via three variables strike frequency, strike size and
strike duration. There was no difference across the two groups of firms
with regard to strike frequency, but multinational subsidiaries did
experience larger and longer strikes than local firms. Hamill suggests
that this difference indicates that foreign-owned firms may be under
less financial pressure to settle a strike quickly than local firms possibly
because they can switch production out of the country.

Key issues in international

industrial relations (cont.)
Industrial relations policies and practices of multinational firms
(cont.)
Overall, it is evident that international industrial relations are influenced
by a broad range of factors. Commenting on the overall results of his
research, Hamill concluded that:
General statements cannot be applied to the organization of the labor
relations function within MNEs. Rather, different MNEs adopt different
labor relations strategies in relation to the environmental factors
peculiar to each firm. In other words, it is the type of multinational
under consideration which is important rather than multinationality
itself.

Trade unions and international

industrial relations
Trade unions may limit the strategic choices of multinationals in
three ways: (1) by influencing wage levels to the extent that
cost structures may become uncompetitive; (2) by constraining
the ability of multinationals to vary employment levels at will;
and (3) by hindering or preventing global integration of the
operations of multinationals.
Influencing wage levels.
Although the importance of labor costs relative to other costs is decreasing,
labor costs still play an important part in determining cost competitiveness
in most industries.
Multinationals that fail to manage their wage levels successfully will suffer
labor cost disadvantages that may narrow their strategic options.

Trade unions and international

industrial relations (cont.)
Constraining the ability of multinationals to vary employment levels at
will.

For many multinationals operating in Western Europe, Japan and Australia,

the inability to vary employment levels at will may be a more serious
problem than wage levels.
Many countries now have legislation that limits considerably the ability of
firms to carry out plant closure, redundancy or layoff programs unless it can
be shown that structural conditions make these employment losses
unavoidable.
Frequently, the process of showing the need for these programs is long and
drawnout.
Plant closure or redundancy legislation in many countries also frequently
specifies that firms must compensate redundant employees through
specified formulae such as 2 weeks pay for each year of service. In many
countries, payments for involuntary terminations are substantial, especially
in comparison with those in the USA.

Trade unions and international

industrial relations (cont.)
Constraining the ability of multinationals to vary employment levels at
will (cont.).
Trade unions may influence this process in two ways: by lobbying their own
national governments to introduce redundancy legislation, and by
encouraging regulation of multinationals by international organizations such
as the Organization for Economic Cooperation and Development (OECD).
Multinational managers who do not take these restrictions into account in
their strategic planning may well find their options severely limited. In fact,
recent evidence shows that multinationals are beginning to consider the
ability to dismiss employees to be one of the priorities when making
investment location decisions.

Trade unions and international

industrial relations (cont.)
Hindering or preventing global integration of the operations of
multinationals.
Many multinationals make a conscious decision not to integrate and
rationalize their operations to the most efficient degree, because to do so
could cause industrial and political problems.
General Motors as an example of this sub-optimization of integration. GM
was alleged in the early 1980s to have undertaken substantial investments
in Germany at the demand of the German metalworkers union (one of the
largest industrial unions in the Western world) in order to foster good
industrial relations in Germany. One observer of the world auto industry
suggested that car manufacturers were sub-optimizing their manufacturing
networks partly to placate trade unions and partly to provide redundancy in
sources to prevent localized social strife from paralysing their network.

Trade unions and international

industrial relations (cont.)
Hindering or preventing global integration of the operations of
multinationals (cont.).
This suboptimization led to unit manufacturing costs in Europe that were 15
per cent higher, on average, than an economically optimal network would
have achieved:
Union influence thus not only delays the rationalization and integration of
MNEs manufacturing networks and increases the cost of such adjustments
(not so much in the visible severance payments and golden handshake
provisions as through the economic losses incurred in the meantime), but
also, at least in such industries as automobiles, permanently reduces the
efficiency of the integrated MNC network. Therefore, treating labor
relations as incidental and relegating them to the specialists in the various
countries is inappropriate. In the same way as government policies need to
be integrated into strategic choices, so do labor relations.

The response of trade unions to

multinationals
Trade union leaders have long seen the growth of
multinationals as a threat to the bargaining power of labor
because of the considerable power and influence of large
multinational firms.
While it is recognized that multinationals are neither uniformly
anti-union nor omnipotent and monolithic bureaucracies, their
potential for lobbying power and flexibility across national
borders creates difficulties for employees and trade unions
endeavouring to develop countervailing power.
There are several ways in which multinationals have an impact
upon trade union and employee interests. Kennedy has
identified the following seven characteristics of MNEs as the
source of trade union concern about multinationals:

The response of trade unions to

multinationals (cont.)

Formidable financial resources.

Alternative sources of supply.
The ability to move production facilities to other countries.
A remote locus of authority (i.e. the corporate head office management
of a multinational firm).
Production facilities in many industries.
Superior knowledge and expertise in industrial relations.
The capacity to stage an investment strike, whereby the multinational
refuses to invest any additional funds in a plant, thus ensuring that the
plant will become obsolete and economically non-competitive.

The response of trade unions to

multinationals (cont.)
Another issue reported by trade unions is their claim that they
have difficulty accessing decision-makers located outside the
host country and obtaining financial information.
The response of labor unions to multinationals has been
threefold: to form international trade secretariats (ITSs), to
lobby for restrictive national legislation and to try to achieve
regulation of multinationals by international organizations.
Alternative trade secretariats (ITSs).

There are 15 ITSs, which function as loose confederations to provide

worldwide links for the national unions in a particular trade or industry (e.g.
metals, transport and chemicals).
The secretariats have mainly operated to facilitate the exchange of
information.

The response of trade unions to

multinationals (cont.)
International trade secretariats (ITSs) (cont.).
One of the fastest growing of the ITSs is the European Regional Organization of
the International Federation of Commercial, Clerical, Professional and Technical
Employees (generally known by its initials, Euro-FIET) which is focused on the
service sector.
The long-term goal of each ITS is to achieve transnational bargaining with each
of the multinationals in its industry.
Each ITS has followed a similar program to achieve the goal of transnational
bargaining. The elements of this program are (1) research and information, (2)
calling company conferences, (3) establishing company councils, (4) companywide unionmanagement discussions and (5) coordinated bargaining. Overall,
the ITSs have met with limited success, the reasons for which Northrup
attributes to (1) the generally good wages and working conditions offered by
multinationals, (2) strong resistance from multinational firm management, (3)
conflicts within the labor movement and (4) differing laws and customs in the
industrial relations field.

The response of trade unions to

multinationals (cont.)
Lobbying for restrictive national legislation.
On a political level, trade unions have for many years lobbied for restrictive
national legislation in the USA and Europe. The motivation for trade unions to
pursue restrictive national legislation is based on a desire to prevent the export
of jobs via multinational investment policies.

The response of trade unions to

multinationals (cont.)
Regulation of multinationals by international organizations.
Attempts by trade unions to exert influence over multinationals via international
organizations have met with some success. Through trade union federations
such as the European Trade Union Confederation (ETUC) and the International
Confederation of Free Trade Unions (ICFTU), the labor movement has been able
to lobby the International Labor Organization (ILO), the United Nations
Conference on Trade and Development (UNCTAD), the Organization for
Economic Cooperation and Development (OECD) and the European Union (EU).
The ILO has identified a number of workplace-related principles that should be
respected by all nations: freedom of association, the right to organize and
collectively bargain, abolition of forced labor and non-discrimination in
employment.

The response of trade unions to

multinationals (cont.)
Regulation of multinationals by international organizations (cont.).
In 1977 the ILO adopted a code of conduct for multinationals (Tripartite Declaration
of Principles Concerning MNEs and Social Policy). The ILO code of conduct, which was
originally proposed in 1975, was influential in the drafting of the OECD guidelines for
multinationals, which were approved in 1976. These voluntary guidelines cover
disclosure of information, competition, financing, taxation, employment and
industrial relations and science and technology.
There is also some controversy in the literature as to the effectiveness of the OECD
guidelines in regulating multinational behavior.
This lack of agreement centers on assessments of the various challenges to the
guidelines.
The best known of these challenges is the Badger case.

The response of trade unions to

multinationals (cont.)
Regulation of multinationals by international organizations (cont.).

A recent development with the OECD guidelines (which are addressed by 36

OECD and non-OECD governments) has been the follow-up procedures. The
system of National Contact Points promotes observance of the guidelines by
MNEs operating in or from the governments territories.
Recognizing the limitations of voluntary codes of conduct, European trade
unions have also lobbied the Commission of the European Union to regulate the
activities of multinationals.
Unlike the OECD, the Commission of the EU can translate guidelines into law,
and has developed a number of proposals concerning disclosure of information
to make multinationals more transparent.

Regional integration: the

European Union (EU)
Regional integration such as the development of the EU has
brought significant implications for industrial relations. In the
Treaty of Rome (1957), some consideration was given to social
policy issues related to the creation of the European
Community. In the EU, the terms social policy or social
dimension are used to cover a number of issues including in
particular labor law and working conditions, aspects of
employment and vocational training, social security and
pensions.
(cont.)

Regional integration: the

European Union (EU) (cont.)
There have been a number of significant developments in EU social
policy over the past four decades. The Social Charter of the Council of
Europe came into effect in 1965. In 1987, the major objective of the
implementation of the Single European Act was to establish the
Single European Market (SEM) on 31 December 1992, in order to
enhance the free movement of goods, money and people within the
SEM. The social dimension aims to achieve a large labor market by
eliminating the barriers that restrict the freedom of movement and
the right of domicile within the SEM. The European Community
Charter of the Fundamental Social Rights of Workers (often referred
to simply as the Social Charter) was introduced in 1989, and has
guided the development of social policy in the 1990s.
(cont.)

Regional integration: the

European Union (EU) (cont.)
Multinationals are often accused of doing research and development
in developed countries and operating out of low cost countries. A
recent press release by the EU listing the top 100 Best Workplaces in
the EU in 2003 provides some evidence that this pattern may be
changing to some extent in Europe (see Table 9-3). Of these 100, the
top ten companies were from all over Europe. The global software
giant Microsoft was listed as one of the top 10 best workplaces in
multiple countries (Belgium, France, Germany and Ireland).
(cont.)

Regional integration: the

European Union (EU) (cont.)
Disclosure of information and European Works
Councils
The EU has introduced a range of Directives related to the social
dimension. Of the Directives concerned with multinationals, the most
contentious has been the Vredeling Directive (associated with Henk
Vredeling, a former Dutch member of the EU Commission). The Seventh
(Vredeling) Directives requirement of disclosure of company
information to unions faced strong opposition led by the then
conservative British government and employer representatives. They
argued that employee involvement in consultation and decision-making
should be voluntary. The European Works Councils (EWC) Directive was
approved on 22 September 1994 and implemented 2 years later.

Regional integration: the

European Union (EU) (cont.)
Disclosure of information and European Works Councils
(cont.)
Obviously, all firms operating in the EU will need to become familiar with EU
Directives and keep abreast of changes. While harmonization of labor laws
can be seen as the ultimate objective, Michon argues that the notion of a
European social community does not mean a unification of all social
conditions and benefits or, for that matter, of all social systems. However,
the EU does aim to establish minimal standards for social conditions that will
safeguard the fundamental rights of workers.

Pan-European pensions
The EU Council of Ministers has approved the pension funds Directive
that sets standards for the prudential supervision of pension plans in
the EU. The Member States will need to implement the Directive by
the middle of 2005. The Directive covers employer-sponsored,
separately funded pension plans. The Directive provides pension
funds with a coherent framework to operate within the internal
market and allows European companies and citizens the opportunity
to benefit from more efficient pan-European pension funds. Once
implemented, the Directive will ensure a high level of protection for
both members and beneficiaries of pension funds.
(cont.)

Pan-European pensions (cont.)

The greatest barrier to implementation of the pan-European
pensions is the taxation differences among Member States. The
consulting firm Mercer HR states in a report analysing the viability of
pan-European pensions that The Directive does not attempt to cover
taxation issues which may need a separate and more prolonged
process though the EU legislative institutions. Many Member
countries tax laws do not recognize contributions to foreign pension
plans. This creates unfavourable tax circumstances for employees
working outside their home countries and contributing to pension
plans in their host countries.
(cont.)

Pan-European pensions (cont.)

The issue of social dumping

One of the concerns related to the formation of the SEM was its impact on
jobs. There was alarm that those Member States that have relatively low
social security costs would have a competitive edge and that firms would
locate in those Member States that have lower labor costs. The counteralarm was that states with low-cost labor would have to increase their labor
costs, to the detriment of their competitiveness.
There are two industrial relations issues here: the movement of work from
one region to another, and its effect on employment levels; and the need for
trade union solidarity to prevent workers in one region from accepting pay
cuts to attract investment, at the expense of workers in another region.
There is some, although not as much as was expected, evidence of social
dumping in the EU. It is likely that this issue will be a contentious one in
Europe for some time and multinationals need to be aware of this debate
when doing business in Europe.

(cont.)

Pan-European pensions (cont.)

The impact of the digital economy
Processes of knowledge acquisition used by MNEs are an emerging issue
in the USA where local technology workers are increasingly being paid
their normal salaries to train people from overseas eventually to do
their jobs. These newly trained professionals then replace their trainers.
This is in part an unintended consequence of the US non-immigrant visa
programme particularly the L-1 classification that allows companies to
transfer workers from overseas offices to the USA for as long as 7 years.
Importantly, this visa classification allows companies to pay these
workers their home-country wage.

(cont.)

Pan-European pensions (cont.)

The impact of the digital economy (cont.)
The effect of these developments on the structure of markets and
organizations and established patterns of economic behavior will be
profound. The creation and loss of jobs, the content and quality of work, the
location of work, the nature of the employment contract, the skills required
and how often they can be obtained, the organization of work and the
functioning and effectiveness of worker and employer organizations are all
affected by the emerging era of digital globalization. While the networking
economy has opened new opportunities for job creation, this does not
necessarily mean an increase in knowledge or skill requirements. Unskilled
jobs, de-skilling and skill polarization in the networking economy also exist.

(cont.)

Pan-European pensions (cont.)

The impact of the digital economy (cont.)
Only 15 per cent of the worlds population (living mostly in industrialized
countries) has access to ICT.80 This leaves a majority of the worlds
population technologically disconnected. As noted by the International
Labor Organization, The digital divide exists not only between societies
but within societies. Internet usage is stratified and is much more
common among younger rather than older people, men rather than
women, urban rather than rural dwellers, and people with higher levels
of education and income.

Checkpoint 3 0f 3 cultural diversity

Fish in a bowl: Just as fish swim in the water
and are not aware of the nature of that water,
we human beings, depending on the
opportunities that we have had or have taken,
may or may not be aware of the reality or the
air outside our own bowl.
Onion: Each one of us, through our upbringing, education, work and experiences in
life, are layered beings.

contd
Sunglasses: Culture enables us to frame issues.
We look at the world according to the tint or the
color of the lenses that we wear. But as
professionals, we have a responsibility towards
our organizations to ensure we have the right
lenses.
Iceberg: Just as a larger part of the iceberg is
under water, there are a lot of things happening
in any interaction that are below the surface. We
have to make an effort to see not only what is
above but also what is below the surface

All the analogies point to: Our attitudes, traditions, beliefs and values
together define who we are and when these
values are shared by a social group, it forms our
culture. This social group can be as small as a
family or as large as a nation. Culture influences
how we think, what we do and how we look at
the world, just as we would wear a particular
color of sunglasses. Culture is learned and is
influenced by the people around us and the
interactions that we have over time, until it
becomes like the water all around us.

Different cultures have different nuances

Hear one understand ten. - Japanese

Say what you mean and mean what you say. American
It is good to know the truth but better to speak of
palm trees. - Arab
Similarly, whether people are restrained or
emotional is illustrated with these proverbs.
The first one to raise their voice loses the
argument. - Chinese
What is nearest the heart is nearest the mouth. Irish
After the storm fair weather, after the storm joy Russia
In any pressure situation, we always revert to the
core disposition of who we are culturally. So, it is
important to explore more about culture and be

Connecting dots
In any pressure situation, we always revert to
the core disposition of who we are culturally.
So, it is important to explore more about
culture and be aware of the defaults.

It is important first to acknowledge

that differences exist and also that
they can be bridged. According to
Brian, there are usually six stages of
development in how people
conceptualize differences::

 Denial: In this stage, there is absolutely no interest in

acknowledging cultural differences. There is no
curiosity, no reaching out and no involvement with
another culture.
Defense: The best way to be is the way I am. There is
no recognition of the differences.
Minimization: Statistically speaking this is where
most of us are. We take strength in similarity but
because of that we miss out on some important
aspects or rather miss the contextualized, richer
picture.
Acceptance: At this stage, people are very flexible but
not ready to creatively bridge the differences.
Adaptation: Bridging differences, seeking creative
solutions to overcome differences.
Integration: Celebrate the differences and arrive at a
shared space where all differences can be

Chapter summary
The literature reviewed in this chapter and the discussion
surrounding the formation of regional economic zones such as
the European Union and the Asia Pacific Economic Cooperation
(APEC) support the conclusion that transnational collective
bargaining has yet to be attained by trade unions. As Enderwick
has stated:
The international operations of MNEs do create considerable
impediments in effectively segmenting labor groups by national
boundaries and stratifying groups within and between nations.
Combining recognition of the overt segmentation effects of international
business with an understanding of the dynamics of direct investment
yields the conclusion that general multinational collective bargaining is
likely to remain a remote possibility.

Chapter summary (cont.)

Enderwick argues that trade unions should opt for less
ambitious strategies in dealing with multinationals, such as (1)
strengthening national union involvement in plant-based and
company-based bargaining, (2) supporting research on the
vulnerability of selective multinationals and (3) consolidating
the activities of company-based ITSs. Despite setbacks,
especially with the regional economic integration issues
discussed in this chapter, it is likely that trade unions and the
ILO will pursue these strategies and continue to lobby where
possible for the regulation of multinationals via the European
Commission and the United Nations.

Chapter summary (cont.)

Recent research on multinationals and industrial relations has
provided useful information on the issues and challenges related
to this aspect of international HRM. Further research is needed
on how multinationals view developments in international
industrial relations and whether these developments will
influence the overall business strategy of the firm. Further
research is also needed on how global firms implement
industrial relations policy in various countries.