Impacts of the Globalization on the Labour Market

Due to the globalization the labour market is not nationally or regionally limited anymore it is globally unlimited. This leads to an enormous increase of labour supply. Living expenses differ significantly from country to country which means that there is a high discrepancy of salary and wages. Consequently foreign branches are  established not only to develop a new business market, but rather to take advantage of the cost benefits in the worldwide production network. This usually occurs with companies taking advantage of low salary for low-level qualified employees. This has brought a labour shift to those countries that have a lower wage. This development in turn browbeat the employees of global competition. In general we can say that the risk of an employee to become redundant is higher the lower his educational level and his level of qualifications.  Another important aspect regarding unemployment in the area of low-level qualified employees is migration. Migration of foreign employees causes additional trouble in the labour market, because migration increases the labour supply in the host country. Due to this development the salaries and prosperity will in some parts of the population of emerging nations increase. This means that in general globalization decreases salary differentials between the countries but increase salary differences within a country. In summary globalization from a global point of view leads to a convergence salary and from a regional point of view to a divergence of salary. The big industrial nations now have to think about strategies to avoid that low-level qualified do not have any chances on the labour market and slide into long-term unemployment. In contrast the newly industrialized countries have to use the new opportunity of the bigger labour supply to increase the standard of life in their own country and to improve the level of qualifications as well.

 

http://akademische-blaetter.de/politik/europa-und-die-welt/arbeitsmarkt-und-globalisierung

http://www.ilo.org/wcmsp5/groups/public/—ed_emp/—emp_elm/documents/publication/wcms_114330.pdf

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2 thoughts on “Impacts of the Globalization on the Labour Market

  1. Personally, I like this summarizing post about all important facts with respect to the Globalization. Of course, we discover a lot of positive effects, caused by the globalization. Due to the technical progress people all over the world are more and more connected. Furthermore, the consumer has access to many international businesses and cheap prices and companies can participate in the world market which leads to an improving global economy. However, there are also many negative aspects due to the globalization. A lot of big business concerns cut out the small and local companies. In addition, in some parts of the world the globalization causes an uneven allocation of wealth.
    On the one hand, the above discussed increase of labor supply is very positive with regard to the companies, but on the other hand very depressing for workers. They have to deal with high number of unemployment, low wages and bad working conditions. Still, due to the high labor supply they have to accept the job no matter what they get offered. Furthermore, the globalization leads to a very high competition for the huge world concerns. This results in an aggressive pricing strategy. As a consequence, this is a positive effect for consumers, but a negative effect for employees which have to deal with low wages. It is a dilemma for the world population, due to globalization.
    To conclude, in the nowadays world we experience a lot of advantages and disadvantages of the globalization. We cannot change anything about this effect anymore, but we can try to eliminate the negative aspects and extend the positive aspects. I like the idea of the author in the end, that newly industrialized areas should take the chance of the increasing labor supply and should adjust their living standards and their level of qualifications.

    Reply

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