BUS 305

1. Chapter 09
Labor
Forces
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2. 9-2
Learning Objectives
• LO1 Identify the forces that affect the quantity and
quality of labor in a nation.
• LO2 Discuss major factors that may impact
employment policies in an international setting.
• LO3 Discuss the differences and trends in labor
unions from country to country and worldwide.
• LO1 Identify the forces that affect the quantity and
quality of labor in a nation.
• LO2 Discuss major factors that may impact
employment policies in an international setting.
• LO3 Discuss the differences and trends in labor
unions from country to country and worldwide.

3. 9-3
Overall Size of the Workforce
• 2010 World Population – 6.8 billion
– 48% < 25 years
– 31% < 15 years
• 2010 World Population – 6.8 billion
– 48% < 25 years
– 31% < 15 years
• Developing Nations:
– younger, growing populations due to high birth
rate and reduced infant mortality
• Developed Countries:
– Population decline due to low birthrate and low
immigration
• Developing Nations:
– younger, growing populations due to high birth
rate and reduced infant mortality
• Developed Countries:
– Population decline due to low birthrate and low
immigration

4. 9-4

5. 9-5
Worldwide Labor
Conditions and Trends
• Labor Quality:
– The skills, education, and attitudes of
available employees
• Labor Quantity:
– The number of available employees with the
skills to meet an employer’s business needs

6. 9-6
Unemployment
• Global Unemployment
– 6.6%
– 34 million increase over
2007 with 2/3 in
developed countries
• Global Unemployment
– 6.6%
– 34 million increase over
2007 with 2/3 in
developed countries
• Projections:
– Employment Growth:
SLOW!
– Recovery:
• Labor LAGGING
behind economic
recovery
• Unemployment Rates
– SLOW reduction
• Projections:
– Employment Growth:
SLOW!
– Recovery:
• Labor LAGGING
behind economic
recovery
• Unemployment Rates
– SLOW reduction

7. 9-7

8. 9-8

9. 9-9
Vulnerable Workforce:
• Self-employed or
contributing family
members
– No contracts or formal work
arrangements
– Characteristics:
• Inadequate earnings
• Low productivity
• Difficult work conditions
that undermine
fundamental work rights
• Found in all economies but
most in developing countries
• Growing worldwide
• Self-employed or
contributing family
members
– No contracts or formal work
arrangements
– Characteristics:
• Inadequate earnings
• Low productivity
• Difficult work conditions
that undermine
fundamental work rights
• Found in all economies but
most in developing countries
• Growing worldwide
Aging Populations:
• 2010: 7.6% was 65 +
years old, getting older
and found in developed
countries
• Projected to grow by
8.4% in 2015 and 16.4%
by 2050
• 2010: 7.6% was 65 +
years old, getting older
and found in developed
countries
• Projected to grow by
8.4% in 2015 and 16.4%
by 2050

10. 9-10
Urbanization of Workforce
• Global Shifts from
Rural to Urban:
– 1950: < 25% urban
– 2010: 50% urban
– 2030: 60% urban
– Developing countries: 4x
rate 4x faster than in
developed countries
• Global Shifts from
Rural to Urban:
– 1950: < 25% urban
– 2010: 50% urban
– 2030: 60% urban
– Developing countries: 4x
rate 4x faster than in
developed countries
• Impacts:
• Shift from agriculture to
industry or service sectors
• Growing low-cost, low-skill
labor pool
• Large % vulnerable
workforce
• Quick to learn industrial
skills
• Social and psychological
problems adjusting to
industry and service sectors
• Impacts:
• Shift from agriculture to
industry or service sectors
• Growing low-cost, low-skill
labor pool
• Large % vulnerable
workforce
• Quick to learn industrial
skills
• Social and psychological
problems adjusting to
industry and service sectors

11. 9-11
Immigrant Labor
• Facts:
– 1850-1970: 60 million
Europeans emigrated
– By end of WWII: 30
million S. Europeans & N.
Africans went to 8
European countries
– 2005: 191 million living
out of birth country
– 2008 - U.S.: 5% of world
population and 20% of
world’s immigrants
• Facts:
– 1850-1970: 60 million
Europeans emigrated
– By end of WWII: 30
million S. Europeans & N.
Africans went to 8
European countries
– 2005: 191 million living
out of birth country
– 2008 - U.S.: 5% of world
population and 20% of
world’s immigrants
• Reasons:
– Better economic
conditions
– Global labor supply,
demand
– Looser regulations
• Migrant Labor Skills:
– Highly skilled: medicine,
IT
– Low skilled: agricultural,
domestic service, 3-D jobs
– 9dirty, dangerous and
degrading)
• Reasons:
– Better economic
conditions
– Global labor supply,
demand
– Looser regulations
• Migrant Labor Skills:
– Highly skilled: medicine,
IT
– Low skilled: agricultural,
domestic service, 3-D jobs
– 9dirty, dangerous and
degrading)

12. 9-12
Child Labor
• Facts:
– 158 million 5-14 year olds
work in conditions that
fail to meet basic needs in
exploitative, hazardous or
illegal conditions
-UNICEF
– Child labor exists in all
countries but mostly in
developing countries
– 7% child labor in
agriculture
• Facts:
– 158 million 5-14 year olds
work in conditions that
fail to meet basic needs in
exploitative, hazardous or
illegal conditions
-UNICEF
– Child labor exists in all
countries but mostly in
developing countries
– 7% child labor in
agriculture
• UNICEF’s Convention
on Rights of the Child:
1. Nondiscrimination
2. Devotion to the best
interests of the child
3. Right to life, survival
& development
4. Respect for views of
the child
• UNICEF’s Convention
on Rights of the Child:
1. Nondiscrimination
2. Devotion to the best
interests of the child
3. Right to life, survival
& development
4. Respect for views of
the child

13. 9-13
Forced Labor
• 12.3 million women, children
& low-income men affected
• 59% women and girls forced
in servitude: domestics,
sweatshops, prostitutes
– South & East Asia
– North & West Africa
– U.S.
– Latin America
• 12.3 million women, children
& low-income men affected
• 59% women and girls forced
in servitude: domestics,
sweatshops, prostitutes
– South & East Asia
– North & West Africa
– U.S.
– Latin America
• U.S. State Department
Trafficking in Persons Report
includes:
– Bonded labor
– Involuntary servitude
– Debt bondage
– Involuntary domestic
servitude
– Forced child labor
– Child soldiers
– Sex trafficking, prostitution
– Children exploited for sex,
child sex tourism
– Prison labor
– Descent-based slavery
• U.S. State Department
Trafficking in Persons Report
includes:
– Bonded labor
– Involuntary servitude
– Debt bondage
– Involuntary domestic
servitude
– Forced child labor
– Child soldiers
– Sex trafficking, prostitution
– Children exploited for sex,
child sex tourism
– Prison labor
– Descent-based slavery

14. 9-14
Brain Drain
• Brain Drain:
– Country’s loss of most
intelligent and best-
educated people
– Record numbers of
scientists, IT personnel,
engineers, teachers and
health care professionals
move to OECD countries
– Reasons
• Salary
• Standard of living
• Research
• Social environment
• Brain Drain:
– Country’s loss of most
intelligent and best-
educated people
– Record numbers of
scientists, IT personnel,
engineers, teachers and
health care professionals
move to OECD countries
– Reasons
• Salary
• Standard of living
• Research
• Social environment
• Reverse Brain Drain:
– Highly skilled immigrants
return home after
contributions to host
country
– Aided by U.S. outsourcing
of knowledge work in
engineering, software,
product design and
development
• India
• China
• Russia
• Reverse Brain Drain:
– Highly skilled immigrants
return home after
contributions to host
country
– Aided by U.S. outsourcing
of knowledge work in
engineering, software,
product design and
development
• India
• China
• Russia

15. 9-15
Guest Workers
• People who legally
go to foreign
countries for jobs in:
– Service work
– Factory work
– Construction
• People who legally
go to foreign
countries for jobs in:
– Service work
– Factory work
– Construction
• Why?
– Countries with low birth
rates & labor shortages
need labor – France,
Germany, Switzerland
and Scandinavia
• Issues:
– Good in growing economy
– Bad in slow economic
growth with excess labor
• Why?
– Countries with low birth
rates & labor shortages
need labor – France,
Germany, Switzerland
and Scandinavia
• Issues:
– Good in growing economy
– Bad in slow economic
growth with excess labor

16. 9-16
Considerations in
Employment Policies
• World-wide
employment policy
issues include:
– Social status
– Sexism
– Racism
– Minorities within
traditional societies
– Labor situations in
developing countries
• World-wide
employment policy
issues include:
– Social status
– Sexism
– Racism
– Minorities within
traditional societies
– Labor situations in
developing countries
• Social status
– Culture dominates human
behavior & attitudes
– Social status is a part of
culture
– Extreme social status =
social division
– Employment & HR
practices need to factor
social status into work
relationships
• Social status
– Culture dominates human
behavior & attitudes
– Social status is a part of
culture
– Extreme social status =
social division
– Employment & HR
practices need to factor
social status into work
relationships

17. 9-17
Sexism
• Patriarchal values
inherent in many
cultures deny women
equal participation
– Saudi Arabia, Middle
Eastern laws and
traditions prevent gender
mixing in workplace
– Women’s roles are
changing in Saudi Arabia
• Patriarchal values
inherent in many
cultures deny women
equal participation
– Saudi Arabia, Middle
Eastern laws and
traditions prevent gender
mixing in workplace
– Women’s roles are
changing in Saudi Arabia
• Facts:
– Women hold < 25%
senior management
positions worldwide
– 1/3 private companies
have no women in senior
management
– Women’s education is
increasing, illiteracy
declining, economic
impact growing
• Facts:
– Women hold < 25%
senior management
positions worldwide
– 1/3 private companies
have no women in senior
management
– Women’s education is
increasing, illiteracy
declining, economic
impact growing

18. 9-18

19. 9-19

20. 9-20
Racism
• Racism:
– Racial conflict and discrimination is world-
wide
• Globalization:
– Increases contact between very different
people
– May eventually minimize racism by valuing
differences
• Racism:
– Racial conflict and discrimination is world-
wide
• Globalization:
– Increases contact between very different
people
– May eventually minimize racism by valuing
differences

21. 9-21
Minorities in Traditional Societies
• Traditional Societies
Problems and
Opportunities:
– Merchants, bankers &
business people scorned
in some societies
– Outsiders may dominate
local commerce
• Traditional Societies
Problems and
Opportunities:
– Merchants, bankers &
business people scorned
in some societies
– Outsiders may dominate
local commerce
• Advantages to
Foreign Employers:
– Skilled minorities
immediately available
– Speak local language and
others
– Less nationalistic than locals
• Disadvantages:
– Unpopular with locals
– High dependence on
minority employees
– Discrimination against
minorities may result
• Advantages to
Foreign Employers:
– Skilled minorities
immediately available
– Speak local language and
others
– Less nationalistic than locals
• Disadvantages:
– Unpopular with locals
– High dependence on
minority employees
– Discrimination against
minorities may result

22. 9-22
Labor in Developing Nations
• Challenges:
– Poverty:
• Low educational levels affect quality of labor force
– HIV/AIDS:
• Creates social unrest and labor shortages with up-skilling a
major challenge
– Outsourcing:
• Developed country: outbound job transfers seen as problem
• Developing country: economic growth seen as benefit of
globalization
• Challenges:
– Poverty:
• Low educational levels affect quality of labor force
– HIV/AIDS:
• Creates social unrest and labor shortages with up-skilling a
major challenge
– Outsourcing:
• Developed country: outbound job transfers seen as problem
• Developing country: economic growth seen as benefit of
globalization

23. 9-23

24. 9-24
Multinational Labor Activities
• Companies escape
unionization by
outsourcing and
production transfer
to other countries
• Companies escape
unionization by
outsourcing and
production transfer
to other countries
• Unions’ response:
– Collect and disseminate
company’s information
– Consult with unions in
other countries
– Coordinate policies and
tactics with those unions
– Encourage international
company codes of conduct
• Unions’ response:
– Collect and disseminate
company’s information
– Consult with unions in
other countries
– Coordinate policies and
tactics with those unions
– Encourage international
company codes of conduct

25. 9-25
GLOBAL gauntlet
• Are harmonized
labor standards a
good idea or is labor
best a national-level
concern?
• Are harmonized
labor standards a
good idea or is labor
best a national-level
concern?
• Labor unions, human rights
activists and some governments
argue that market access be
dependent on improved labor
standards and sanctions be
imposed for violations (the
Social Clause).
• IMF holds harmonized labor
standards are a weak economic
argument and high labor
standards are a result of
economic growth.
• What do you think? Is there a
threshold level of labor
standards all nations should
follow, or are labor conditions
purely a national-level issue?
• Labor unions, human rights
activists and some governments
argue that market access be
dependent on improved labor
standards and sanctions be
imposed for violations (the
Social Clause).
• IMF holds harmonized labor
standards are a weak economic
argument and high labor
standards are a result of
economic growth.
• What do you think? Is there a
threshold level of labor
standards all nations should
follow, or are labor conditions
purely a national-level issue?