International Human Resource Management Managing people in a multinational context Chapter Objectives In this chapter we: • Discuss the key issues in international 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 and the impact of opponents to globalization v IHRM Chapter 10 2 Terms industrial relations trade unions regional economic zones collective bargaining enterprise unions strike-proneness umbrella or chateau clause ‘golden handshake’ ‘investment strike’ ‘social policy’ Social ‘dumping’ ‘converging divergences’ European Union (EU) National Contact Points (NCP) Single European Market (SEM) International Trade Secretariats (ITSs) ETUC UNCTAD CIIME IFCTU OECD EWC ILO FIET AFL-CIO v IHRM Chapter 10 3 Possible factors underlying historical differences in structure of trade unions 1. The mode of technology and industrial organization at critical stages of union development 2. Methods of union regulation by government 3. Ideological divisions within the trade union movement 4. The influence of religious organizations on trade union development 5. Managerial strategies for labor relations in large corporations v IHRM Chapter 10 4 Table 10-1 v Trade union structure in leading Western industrial societies IHRM Chapter 10 5 Key issues in international industrial relations 1. Industrial relations policies and practices of multinational firms 2. The degree of inter-subsidiary production integration 3. Nationality of ownership of the subsidiary 4. International HRM approach 5. MNE prior experience in industrial relations 6. Subsidiary characteristics 7. Characteristics of the home product market 8. Management attitudes towards unions v IHRM Chapter 10 6 Table 10-2 v Union membership for selected countries IHRM Chapter 10 7 Trade union limits on MNE strategic choices 1. Influence wage levels 2. Constrain the ability of MNEs to vary employment levels at will 3. Hinder or prevent global integration of operations of multinationals v IHRM Chapter 10 8 Trade union concerns about MNEs 1. MNEs have formidable financial resources 2. MNEs have alternative sources of supply 3. MNEs can move production facilities to other countries 4. MNEs have a remote locus of authority 5. MNEs have production facilities in many industries 6. MNEs have superior knowledge and expertise in industrial relations 7. MNEs have the capacity to stage an ‘investment strike’ v IHRM Chapter 10 9 Trade union responses to MNEs 1. International trade secretariats (ITSs) 2. Lobbying for restrictive national legislation 3. Regulation of multinationals by international organizations v IHRM Chapter 10 10 Regional integration: the European Union (EU) 1. Disclosure of information and European Works Councils 2. The issue of social ‘dumping’: That firms would locate in those member states that have lower labor costs, (relatively low social security) to gain a competitive advantage. v IHRM Chapter 10 11 Discussion Questions 1. Why is it important to understand the historical origins of national industrial relations systems? 2. In what ways can trade unions constrain the strategic choices of multinationals? 3. Identify four characteristics of MNEs that give trade unions cause for concern. v IHRM Chapter 10 12