Magoosh GRE

The ethics and labour market inequalities in perspective of globalization.

| March 3, 2015

Executive Summary
Globalization has caused a number of changes in the practice and policy making of business organizations as well as economies. More and more organizations are reaping benefits of new markets and are having an increasingly diverse workforce. However, there are associated challenges with the globalization. This research investigates the market inequalities, ethics and the profit motive in the context of UK SMEs. The author has used data from both primary and secondary sources to investigate the issue at hand. The findings of this study reveal that there is a significant relationship between the increased supplies of labour due to globalization. This phenomenon has resulted in the increased inequalities in the way labour is treated across the SMEs of UK. The employers of SMEs find it easy to hire the workers who are adaptive to changed conditions of work and do not demand the rights and benefits as those of regular employees. There are inequalities reported by the respondent workers who state that there is evidence of globalization having a negative effect on the labour working conditions. Although a few respondents reported that they have observed and experienced some unethical practices in their organization but there is absolutely no link of these practices with globalization. The results of this study with respect to the profit oriented behaviour of SME owners in UK are consistent with previous researches in the field and the researcher recommends that in order to stay competitive in the global marketplace, the SMEs of not only the UK, but all the developed countries, need to revisit their practices with labour at the lower levels of organizational hierarchy.

1.0 Project Aims and Objectives

If one looks into the history of business evolution and changing trends in the organizations doing business, there are a number of revolutions aimed at evolutionary practices in business. After the advent of scientific management, globalization, fast communication channels, management information systems, new organizational models and quality control tools and techniques, are some major changes in the field of business. The author of this project takes the case of ethics and labour market inequalities in perspective of globalization as the major theme of the research and aims to investigate the issue with the help of primary and secondary data.
The United Kingdom (UK) represents the case of the world’s developed economies which are reaping substantial benefits from their industrial and technological environment. According to Malamberg (2003), the increased efforts of governments to attract more and more foreign direct investment has lead to the loosening imposition of labour and equality law. The same fact was stated by Gibney (2003), Slaughter (2000) and Knop (2000). All the scholars highlighted the need to explore the issues associated with the labour market inequalities resulting from globalization and unethical behaviours of firm owners due to profit motives. This research aims to explore the same issue and has following major research aim:
“To investigate the labour market inequalities resulting from the unethical and profit oriented behaviour in the aftermath of globalisation.”
The research will be performed in UK and will focus on the small and medium enterprises (SMEs) and the labour market conditions in these organizations. Following research objectives are drawn from the research aim to make the research specific and easy to conduct:
– To investigate the labour market inequalities in UK as a result of globalisation
– To investigate the unethical behaviour in labour market of UK as a result of globalisation
– To investigate the profit oriented behaviour in labour market of UK as a result of globalisation

2.0 Project Plan and Approach

The study will begin with the basic analysis of the situation by gathering information from secondary sources mainly. The process of secondary data collection will start on February 6th. Once the appropriate secondary information is available, the researcher will go through the existing theory and will formulate a theoretical framework in his mind for the upcoming parts of the research by Feb 20th. Once this secondary data consultation is done, the phase of data collection will start on Feb 21st. Interview is to be used as a technique of data collection for this study and the population for the study includes the workers from two different SMEs. The selection of the sample will be done using snowball sampling technique and workers will be interviewed. There is no specific sample size selected at this stage and information will be collected until a saturation point is reached. The data collection will be in progress for two weeks and will end on March 6th. This will be followed by analysis of data and presentation of findings in written form to the supervisor. The first draft will be submitted on March 13th and will be followed by the final draft after the feedback is received from supervisor.
The researcher aims to perform a basic qualitative study by gathering data from both primary and secondary sources. The data from secondary sources will be collected through journal articles, books magazines and other sources of information. This data will be used to formulate a data collection tool and to design a theoretical framework used to analyse the data collected through primary sources. The data through primary sources will be collected using interviews from different SME workers. As the study is to focus on the ethical practices and labour market inequalities in perspective of globalization, the respondents will be asked to report their responses to the interview questions by taking into account that aspect of the operations as well.

3.0 Literature Review
As stated in the section on introduction, the globalization of labour markets has resulted from the differential patterns in economic growth and industrialization of the societies. The UK, like other European Union (EU) member states, has experienced significant economic growth and is attracting a huge and diverse workforce from all around the world (Gibney, 2003). Świątkowski (2009) stated that as a result of globalization of economies, the labour inequalities are observed in countries which have a diverse labour and workforce. The scholar gave reference to the International Labour Organization (ILO) and stated that the courts and governments of developed countries are finding it hard to implement the rules and regulations devised to protect rights of the workforce. Borjas (2006) and Dustmann, Fabbi, Preston (2005) gave the notion that globalization has resulted in immigration where majority of the immigrants go to the lower levels of jobs in organizations in developed countries. A violation of rights of this labour was reported by a number of scholars. Zimmermann (2009) reported that immigration is one of the major causes of labour inequalities where the labour immobility leads to differential patterns in labour law practices. Gatson and Neslson (2002) stated that immigration of workers, mostly low skilled workers, has significant impacts on the labour market conditions including wages, working time, off time and other benefits.
Riisgaard and Hammer (2011) showed in their research that labour unions have a limited influence over the labour practices and conditions in the market when there is diversity in workforce and when the workers have lower job securities. Combining this assumption with the restricted mobility of labour, the labour inequalities are the result. Locke et al. (2009) stated that in order to achieve the long term welfare of labour in multi-stakeholder firms, there is need of close supervision of practices and policies. However, one should keep it in mind that where there is low job security and most of the labour force is not finding enough job opportunities to switch and they compromise on lower wages and poorer work conditions. Implications of these factors are shown in the form of acceptance of labour inequalities and unethical practices including discrimination, harassment, glass ceilings and lower wages (O’Rourke, 2006).
It is interesting to note that in times where corporate social responsibility and business ethics are widely advocated in the business word, there is very little or no emphasis on the labour market inequalities resulting from immigration (Friedberg, 2001). Although the study by Friedberg (2001) may sound out dated, there are other studies by scholars which endorse the same idea and state that there are ongoing unethical practices in the labour market of developed countries (Zimmermann, 2009). Borjas (2006) pointed out that as the immigrant workers are low skilled and are ready to work at lower wages, this distorts the overall condition of the labour market. Moreover, these workers are willing to work without any kind of benefits and increase in wages and promotions so that they get the job security and earn a living. This decreases the standards of working conditions on one hand and makes doing business more profitable on the other hand. Rendall and Ball (2004) reported that the trends in immigration have shown statistical associations with the decrease in labour market conditions for the developed economies.
Now, keeping all these findings in context of times of economic turbulence, the results aggravate. With firms being more profit oriented, there is a general lack of attention on labour laws and their implementation. In the whole process of labour market inequalities, there are two major stakeholders of the process, i.e., the governing bodies and the labour itself. Świątkowski (2011) stated that it is the shared responsibility of state and the organizations’ management to safeguard interests of labour.
“In the contemporary world, it is not only the states that are under the obligation to harmonise their national law with the mentioned international standards, but also case law should play a special role under the present-day conditions affected by global economic phenomena, and it is courts that must rely on international standards and promptly incorporate them into the national legal framework through the law of precedent” (Świątkowski, 2011, p.190).
Therefore, organizations should be careful in their labour practices and are equally responsible as that of the formal law enforcing agencies. An important aspect in this regard is the economic environment in which organizations are operating as it casts significant impact on their policies and operations. In times of financial adversity, the organizations, particularly the ones operating at medium or small level, find it hard to meet their expenses and other costs. In order to meet the target to achieve a breakeven point, the SMEs, in face of financial constraints try to minimize their expenses in a variety of ways and reducing labour costs is one of them. Keeping aside the ethical and unemployment issues, the profit motives lead organizational policies including the labour and human resource policies.
One may question at this stage that there is available huge literature on the issue of corporate social responsibility, equal employment opportunities, and therefore ignoring major corporations is not possible. The statement is true that corporate social responsibility motives are important and cannot be ignored but this happens only at a macro level of operations and all such theories are being fully applied by the multinational and national level organizations (Hoivik and Mele, 2009). However, in case of SMEs there is a shortage of literature which elaborates how the owners of SMEs are to devise socially responsible moves. Sas and Liedekerke (2009) reported that in face of increasing threats to the survival of organizations, more or less all the world class corporations are going for massive layoffs, so one can expect such profit motives behind labour market inequalities from local SMEs.

3.0 Critical Evaluation and Analysis of Data
3.1 Review of Business Case and Environment
Having gone through the literature available on the issues of labour market condition and labour inequalities, it has helped the researcher to draw the inference that there is a general lack of corporate social responsibility practices in SMEs. It is also evident that the labour inequalities have resulted from the increased supply of labour as a result of a number of factors including immigration and entry of workers at a lower level of jobs in SMEs. There is literary evidence which asserts the notion that where SMEs are not active in applying the ethical business practices, the survival and profit motives stand at the top of the list in the face of adverse economic conditions therefore the SME owners prefer those workers who are willing to work with lower wages and compromised benefits. It also includes the inequalities in promotion and bonuses.
In order to investigate the research issue in depth, the researcher selected two SMEs from the local industry. Primary data was collected from the workers to check the validity of the assumptions derived as a result of literature review using structured interview as the data collection tool. Snowball sampling technique was used to select a sample of respondents until saturation point was reached. A brief description of the two SMEs is provided in order to describe the business case for the selected organizations.
SME 1 is working in the sector of food processing and sale. The organization has an employee base of 200 and has shown significant growth in its business over past few years. The products of the organization include processed fruits and vegetables. The processed fruits are added to the list after expansion of business and the firm originally started to produce only processed vegetables. Any explicit data about the financial performance of the SME is unavailable but the addition of products in the product line and data from local stores about the sales frequency of these products gives a good idea that the organization is performing well on economic front. As there is high demand of processed fruits and vegetables, the business owners are hopeful about the future prospects of their business. A traditional hierarchical structure is present in the organization with the owner and his daughter being the top managers of the business. There are supervisors and administration staff in the organization but there is no separate human resource department to monitor the selection, recruitment, training and compensation management of the workers. The organization reports to be an equal opportunity employer and is a majority of minority workers in the organization. A huge proportion of these employees are working in the processing units where supply chain is managed by their colleagues who are natives.
SME 2 deals in the photography and event management business and has an employee base of 175 employees. The SME operates in two major cities and has no specific HRM department. However, it should be noted that the organizational structure of this establishment is slightly different from SME 1. There is a more bureaucratic structure in the organization and the top managers and middle managers take major decisions to be implemented by the line managers. The skill level of workers is higher than those in the SME 1. It is noteworthy that the organization has laid off its employees in the previous operating year and there is medium level of activity reported by the middle managers. One of the middle managers has reported that the business is loosing its scope mainly because the organization lacks the latest equipment and investments are to be made in order to reap profits. He also stated that the lay off is a desperate attempt to cut expenses and stay profitable. The minority employees, working at the lowest level of operations are usually in the technical departments and there is no such employee working on any job which involves direct dealing with customers.
Data collected from the workers in the two SMEs is presented and analysed below to meet the research objectives set at the start of the research. The respondents of this study included one middle level manager from each organization and five workers at the operational level.

3.2 Analysis of Data and Finding

The first dimension for investigation was about the effect of globalization on general labour market inequalities in SMEs of UK. The researcher interviewed the workers about the major inequalities they think they face in the organization and got mixed responses from SME 1 workers. When asked how they perceive that globalization has affected he labour market condition, middle manager of SME 1 responded in the following manner:
“Being in the processed food industry, and having an experience of more than 15 years, I am of the view that globalization has shown positive signs for SMEs both in terms of increased demand and labour market conditions. We are a technology operated organization where most of out workers are to use a combination of manual and mechanical work on their job. Globalization has lead to increased supply of labour for organization and we get a chance to increase the diversity in the workforce. For me, this is the only way in which globalization has affected the labour market condition, i.e., it has increased the supply of labour and has resulted in increased diversity of workforce.”
When asked about the differences in treatment of labour as a function of globalization, the manager reported that he finds no significant difference in the treatment of labour before and after globalization. Similarly, he denied the statement that there are differences in wages and other benefits among the existing labour in organizations.
In contrast, when the same questions were asked from the workers, the native workers and the immigrants responded in different ways.
Mr. A, a native worker working in the SME 1 for the previous ten years, reported that there are significant differences in the labour practices in his organization between the time he joined the organization and now. He stated that:
“Since the time when I joined the organization, the managers used to treat us in a different manner. There was job security and higher wages. I am not saying that wages have not increased since then but I must say that they are no longer increasing proportionately. Discussing this change in face of globalization, I think the increased demand from international market has not affected an SME like my organization. We sell the products in local market only so we have no concerns with the global rise in demand. However, with increased labour supply there is lesser job security for both the experienced workers and new workers.”
He further added that:
“Yes, I feel there are inequalities in different classes of labour but I cannot explicitly state what they are. The difference in demographic characteristics is something which really counts towards how you are being treated as a worker, which I think are quite unfair.”
Similar responses were reported by other three native respondents and all of them endorsed the viewpoint that globalization has lead to labour inequalities. All the workers from SME 1 reported the same while the minority workers could not be contacted to get any desired information.
There was only one immigrant among the selected sample and he was from SME 2. The native respondents of SME 2 reported that they find the negative impacts of globalization on labour market more significant than the positive impacts. These respondents also added that globalization may have an indirect impact on their business but it is not significant. Respondent C from SME 2 stated that:
“What globalization can do to a local event management organization? May be some more events to cover? Or some clients from other nations? No more than that and it has very less to do with the labour market conditions where there is lesser job security. The owner finds a foreign national low skilled employee more profitable as he/she demands lesser salary with no benefits and insurance so why should he keep a large yet high paid workforce.”
There was one immigrant worker in the SME 2 who was working as an apprentice in the organization. When asked about the effects of globalization on labour inequalities, he reported that:
“For me, labour inequality means a little. I don’t mind receiving lesser wage if I am working in a foreign owned subsidiary. It is recession and being paid low is still good for me. I must add that this is not the only sector or only organization where it is happening, my friends tell me the same stories everyday but we all are satisfied being in a job.”
The second dimension of investigation was the degree to which unethical behaviour is exhibited in SMEs in the aftermath of globalization. Managers of both SMEs reported the same responses to the questions asked in this aspect and stated that there is absolutely no relationship between the globalization and the way they treat the labour working in their organization. Both the managers denied that there is ay increase in the unethical practices with an overall decline in the quality of working conditions in their organizations.
Manager from SME 1 stated that”
“We work under close regulations of government where we cannot afford any unethical behaviour at workplace. All the supervisors and managers are fully aware of what business ethics mean and how they can affect the way an organization stays competitive. If we are found involved in any unethical practice, it will affect our customer base and corporate image. This is totally out of question that with globalization we have started compromising on our work ethic.”
Similar responses were reported by the manager of SME 2. He also denied that there is any relationship between the globalization of business and the prevalence of unethical work practices in their business.
It was interesting to note that the employees of both the organizations reported more or less similar responses and endorsed the views of their managers. There was not significant difference in the viewpoints of native and immigrant workers.
Workers from SME 1 reported that there is general respect and equal behaviour exhibited by the managers as well as employees of the organization. Four out of five respondents reported that they have never seen any discriminatory or any other type of unethical practices in their career. However, one of the respondents stated that there have been minor incidents where women from minorities in the country were observed in her career. She also stated that with increased regulations against racial discrimination and harassment, there has been a decreased frequency of such incidents and there are not any reported significant cases of unethical behaviour by her co-workers. This respondent also stated that she does not think that there is any relationship between globalization and unethical behaviour in SMEs as the cases were there even when the globalization was not at its peak as it presents itself today.
The respondents from SME workers reported similar responses and the only minority worker in the sample stated that there are certain events of unethical behaviour in his personal experience where he received racial remarks but the frequency of such events is very low due to increased awareness about the anti-discriminatory laws. He also stated that there is no relationship of globalization with such incidents and this type of unethical behaviour is not significant enough to be linked with any other process.
The last dimension of this research was to investigate the effect of profit oriented behaviour in labour market of UK as a result of globalisation. Unfortunately, none of the managers from the two SMEs responded to any of the questions asked in this regard. However, all the respondent workers from both the organizations reported that recession is the main factor which has made the owners of SMEs adapt to the profit oriented policies. All the respondents unanimously reported that their employers prefer those workers who demand fewer benefits and are ready to work at lower wage rates. The increased supply of labour from higher proportion of immigrants in the country was rendered as the second major factor behind the profit oriented attitude of the owners of SMEs by the natives while the immigrant worker did not provide any information about this aspect of research.

4.0 Discussion

The first objective of this research was to investigate the labour market inequalities in the UK as a result of globalisation. The findings of this study reveal that there is a significant relationship between the increased supplies of labour due to globalization. This phenomenon has resulted in the increased inequalities in the way labour is treated across the SMEs of UK. The employers of SMEs find it easy to hire the workers who are adaptive to changed conditions of work and do not demand the rights and benefits as those of regular employees. Świątkowski (2011) stated that it is due to the globalization of the labour that there is general decline in the social and human rights condition of the workers.
“The response to social and economic globalization in the contemporary world is globalization of social and economic rights, especially the elements which should be classified as fundamental human rights (the right to work in just, safe and healthy conditions; the right to a fair remuneration; the right to organise; the right to strike; the right to social security and medical assistance) and be subject to similar legal protection enjoyed by civil rights and liberties guaranteed by the European Convention on Human Rights…” (Świątkowski, 2011, p. 190).
Responses from the minority respondent and the worker from SME 1 are in coherence with this statement by Świątkowski (2011). As more and more workers are willing to compromise on the job conditions, the overall standard of the labour market decreases implicitly (Politakis, 2007). Similar trends are reported by the workers from both the selected SMEs. Therefore, it is inferred from the data collected and analysed for this study that the globalization of business affects the labour market conditions. There are inequalities reported by the respondent workers who report that there is evidence of globalization having a negative effect on the labour working conditions. This view point is endorsed by O’Rourke (2006), Rendall and Ball (2004) and Clark and Salt (2003).
The second research objective was to investigate the unethical behaviour in labour market of the UK as a result of globalisation considering the case of SMEs. The current research reveals that there are no unethical practices involved in the SMEs of the UK as a result of globalization. The unethical practices investigated in this study included gender discrimination, racial discrimination and harassment on the basis of race gender or ethnicity. Although a few respondents reported that they have observed and experienced some unethical practices in their organization, there is absolutely no link of these practices with globalization. Card (2001) reported the same findings in his study and stated that there is no significant impact of globalization and immigration of workers on the unethical practices and that the most commonly reported practice is racial discrimination and harassment. From the findings of this study, this fact is further strengthened. This fact can be attributed to the changes in law and the strict laws and regulations devised by the UK government against unethical practices in any setting, be it an educational setting or a business organization. Moreover, organizations try to avoid such incidents as they spoil their corporate image and negatively affect their goodwill.
The last aspect of this research was to investigate the profit oriented behaviour in the labour market of UK as a result of globalisation. The data collected from SME managers and workers showed two different sides of the picture. The managers of SMEs were found denying any relationship between the organizational profit motives and globalization. On the other hand, the workers reported that they have found that financial crisis and the increase in labour supply has made the owners of SMEs conscious about profit and that this has affected their labour relations policies and practices. Dustman and Preston (2007) and Lillie and Greer (2007) had reported the same trends in their researches performed on the labour sector of European countries. Therefore, the results of this study with respect to the profit oriented behaviour of SME owners in UK are consistent with previous researches in the field.

5.0 Conclusion

The researcher recommends that in order to stay competitive in the global marketplace, the SMEs of not only UK but all the developed countries need to revisit their practices with labour at the lower levels of organizational hierarchy. Due to globalization, there is a general increase in the supply of the low skilled to unskilled labour. This fact, combined with the financial crises faced by all the major economies of the world, has lead to changed practices in industrial relations. Therefore, in order to keep the workforce motivated and satisfied with their jobs, organizations need to take care of the interests of employees.
Future researches should look into the other aspects of the effects of globalization on practices in the labour market of UK. Including a larger sample size in the research and using more sophisticated techniques of analysis will be helpful in devising some theoretical framework which can help the organizational as well as national policy makers to improve the condition of non-managerial employees in SMEs of developed countries.

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