The
Role of International Labor Standards in Enhancing Employment Relations in
Multinational Companies
Introduction
One of the greatest challenges that
multinational companies face is maintaining healthy employee relations in all
its operations abroad. Employee relations are concerned with efforts of a
company managing relationships between employees and employer in an effective
manner. According to Brewster et al. (2016), a company that maintains good
employee relations provides consistent and fair treatment to its all workers
leading to their commitment to work as well as being loyal to an organization. For
purposes of succeeding in international business operations multinational
companies, such as Nike, Coca-Cola is supposed to maintain high levels of
employee relations for them to succeed. Employee relations issues include
working conditions, respect for employee rights, minimum wages, fair
remuneration, and others (Fossum
2014). However, the biggest challenge that multinational companies face
to build strong employee relations is the fact that different countries around
the world have employment laws and standards that are different (Locke 2013). For example, in developing countries, there
are weak labor standards, whereby, some companies exploit for purposes of
lowering their cost of doing business, such as using child labor, which is
cheap in their operations. Multinational companies have been caught up in
confusion, some engaging in unethical labor practices, such as child labor as
it was the case of Nestle in Ivory Coast, where it was accused of using child labor. The major question that requires being
answered is how multinational companies can maintain good employee relations in
their global operations in a different jurisdiction with differing labor
standards and challenges?
International labor standards, which provides
global guidelines on certain labor practices and standards that are supposed to
be used by companies in dealing with employee related issues, can be a good way
to which multinational companies can enhance their capabilities of maintaining good
employment relations (Fichter,
Sydow and Volynets 2007). The principal objective of the research, in this
case, is to analyze the concept of international labor standards, especially
how its concepts and practices can be used by multinational companies in
improving employment relations in the global operations.
International Labor Standards (ILS)
According
to Basu et al. (2008), international labor standards can be defined as the
conventions which have been agreed by global actors, leading to a number of
value judgments, aimed at protecting the basic employee rights, enhancing
employees' job security, as well as improving their employment terms within the
international context. The ILS has been
developed through efforts of different unions from various countries under the
leadership of International Labor Organization and civil societies concerned
with the rights of employees. The main focus of ILS is to ensure that the
rights and welfare of employees are fully protected by companies around the
world. It aims at ensuring that companies implement programs that help in
improving the working conditions of the employees (Basu et al. 2008).
There are about 204 recommendations and 190
conventions that are outlined in the ILS. Around eight conventions found within
the ILS are considered as the fundamental international labor standards. The
fundamental standards usually address issue related to employees' freedom of
association, forced labor elimination, collective bargaining right,
discrimination related to employment as well as occupation, and child labor
abolition. Therefore, these standards require companies to engage in practices
that protect the welfare of the employees, particularly engagement in practices
that amounts to the violation of the rights of the employees, such as
discrimination by region and others (Harzing and Pinnington 2010). The
standards ensure that around the world companies maintain the same standards
while treating employees working for them in different geographical regions.
Therefore, the ILSs are critical in enhancing the employee relations management
within multinational companies, by ensuring that appropriate labor practices
are embraced.
System
Theory
To
understand the how international labor standards can be applied by
multinational companies in improving their employees' relations, it is critical
to look at system theory. The system theory usually argues that employee
relations are best described as sub-systems of the greater social system. Harzing and Pinnington (2010) indicates
that the system theory of employees relations hold that work in an organization
is guided by a range of informal and formal regulations and rules, which cover
all aspects of employee relations, such as recruitment, wages, hours,
performance and holidays. The system theory indicates that industry actor’s
basis their policies and practices on matters to do with work on existing
regulations and laws within their jurisdiction of operation.
The system theory indicates that the
industrial relations system is made up of four key elements. The first element
is the industrial actors, who are the employers as well as their respective
representatives, employee and their union representatives, as well as external
agencies dealing with employee relations issues in a nation. The environmental
context is the second element, which constitutes of the existing technological,
economic and wider society distribution power which limits the actions of the
industry actors when dealing with matters related to employees’ relations
(Harzing and Pinnington 2010). The
fourth element is the web of rules, which as the regulations used to govern
employees relation in industry. The last concept is the binding ideology, which
constitutes of the common understandings and beliefs that facilitate the actors
to compromise certain issues for purposes of encouraging the industrial
relation system to work effectively (Brewster et al. 2016).
International
labor standards fit well within the context of the system theory of employees'
relations. The ILSs are ruled that should be followed by companies and
employers globally as they deal with issues related to employees. The standards
outline rights of the employees and how they are supposed to be protected by
the employers. There are different actors who are supposed to implement the
standards, and these are the managers and owners of multinational companies.
The owners in efforts of implementing these global labor standards are
influenced by economic as well as technological changes, which for instance
impact on their ability to assure the workers of their job security or better
payments (Basu et al. 2008). The rules,
in this case, the international labor standards are what govern the way
managers and employees of multinational companies are supposed to treat
employees. The last aspect is common beliefs, where in this case, the need for
ensuring that the welfare of the employees is taken care of forms the basis of encouraging
the employers and managers in multinational firms to implement the ILSs in all
their operations as part of improving the working conditions of the individual
employees.
Ways in which Multinational Companies Can Improve Employment
Relations through ILS
There
are different ways in which international labor standards can be used by
multinational companies in enhancing employment relations. First, the ILSs can
be used by multinational companies in ensuring that the employees are not
discriminated in any given way. According to Locke and Romis (2007), one of the greatest challenges that
employees working within a global chain of a multinational company face is
discrimination by gender, religion or race. Given that multinational companies,
such as Nike usually outsource certain aspects of their operations to third
parties, these third parties sometimes engage in discriminatory employment
practices. Discrimination in the workplace has a negative impact on the
individual worker's levels of morale and loyalty towards an organization.
Consequently, employees who are discriminated against by multinational
companies end up being less motivated in their work, leading to low
productivity, which impacts on the overall organization's productivity.
Therefore, use of international labor standards can help multinational
companies deal with issues of discrimination, by requiring all their partners
to ensure that they do not engage in discriminative labor practices if they are
interested in doing business with a company in the future (Locke and Romis 2010).
This means that ILSs can be used by multinational companies as basis of
improving their employee relationship management, especially within their
supply chain practices globally, by requiring all their suppliers to observe
global labor standards on matters to do with eliminating discrimination on
matters to do with occupation and employment, such discrimination of employees
during promotions and others.
Additionally, ILSs are instrumental in helping
multinational companies to avoid engaging in labor practices of employee minors
to work in their plants. According to Locke et al. (2007), Nike over the years
has managed to use global labor standards to improve its employment practices
where it has raised the minimum age of employing different categories of
individuals in all its factories around the world. The practice in Nike has
resulted in it avoiding hiring of minors in its factories, a practice that is
discouraged by international labor laws. Hence, multinational companies can
apply the same concept that has been used by Nike by ensuring that they avoid
engaging in the practice of hiring minors by observing global labor standards,
whereby, one of the core standards discourages employers from engaging in the
practice of hiring minors (Toffel, Short and Ouellet 2015). The main reason why
minors are discouraged from being used as a source of labor is that they are
easily exploited by employers. Therefore, multinational companies embracing the
concept of global labor standards in managing their labor relation issues will
play an instrumental role in helping them eliminate practices of exploiting
some group of individuals in the society who are vulnerable to their economic
advantage (Thomas 2011).
Armstrong and Taylor (2014) point
out that fair remuneration of employees in all operational bases for companies
operating in more than one country is a major challenge in the field of human
resource management. Remuneration is one of the critical employment relation
issues that can affect a company’s operations either positively or negatively. Yu
(2008) argues that some multinational companies engage in remuneration
practices that are not fair in their global operations, whereby, they pay
better wages in some jurisdiction which are well regulated on matters to do
with labor, but poorly in developing countries. For example, companies like
Rebook, usually pay employees lower wages in China for the same work compared
to what they pay employees in the U.K. The differences in remunerations have a
negative effect on the overall productivity of individual employees within
multinational companies. The application of global labor standards, which
require companies to ensure that they fairly remunerate all their employees in
different jurisdictions, can be applied by multination companies to enhance
their remuneration policies. Implementing remuneration policies that encourage
are standard across the globe without any form of discrimination can play an
instrumental role in enhancing employees morale in different markets for a
multinational company (Armstrong and Taylor 2014).
Conclusion
In
summary, the system theory indicates that labor relations work effectively
within a sub-system of societal systems. The system that makes it possible for
organizations to maintain good labor relations with employees is through
regulations and rules. The international labor standards play a critical role
in enhancing the management of employment relations within multinational.
According to this paper, these standards require companies to engage in practices
that protect the welfare of the employees, particularly engagement in practices
that amounts to the violation of the rights of the employees, such as
discrimination by region and others (Harzing and Pinnington 2010).
The ILSs can be used by multinational companies in ensuring that the employees
are not discriminated in any given way and also deals with issues associated
with child labor and remuneration. In conclusion, it is evident that use of
global labor standards enhances the practice of good employment relations
within multinational companies around the globe.
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