CHAPTER 14
Labor Relations in Multinational Corporations and in Other
Countries
Outline
I. Multinational Corporations and Transnational Collective Bargaining
i. Growing interdependence among nations.
ii. Exchange rates have a great deal to do with the trade between countries (Exhibit
14.1).
iii. Hourly compensation costs influence decisions on production and plant location.
iv. International links between trade unions.
v. Effect of U.S. MNCs on employment and labor relations.
vi. Unions have difficulty dealing with MNCs.
II. Union Approaches to Multinational Bargaining and Employer Reactions
i. Standardize labor conditions among MNCs.
ii. Codes of conduct for MNCs.
iii. Global agreements.
iv. European Trade Union Confederation (ETUC).
v. European works council.
vi. European Company Statute.
a. Obstacles for Unions in Bargaining with Multinational Corporations
i. Differences in Labor Relations Laws.
ii. Absence of a Central Authority.
iii. Cultural Differences.
iv. Lack of Coordination of Activities.
v. Differing National Priorities.
vi. Employer Resistance.
b. Effects of Unions on Multinational Corporations
c. Conclusions and Predictions on Transnational Bargaining
III. Globalization and Concerns about Free Trade
i. General Agreement on Tariffs and Trade (GATT).
ii. North American Free Trade Agreement (NAFTA).
a. North American Agreement on Labor Cooperation (NAALC) (Exhibit 14.2)
i. John Hiatt recommendations.
IV. Unions in Other Countries (Exhibits 14.3, 14.4, and 14.5)
a. Canada
i. Closest and most extensive relationship.
ii. Unlike U.S., union membership stable since 1956.
iii. Factors that contribute to greater Canadian union density.
iv. Significant differences in arbitration.
b. Mexico, Central America, and South America
c. Cuba
d. Western Europe
i. Contrasting labor relations system.
e. European Union (Exhibit 14.6)
i. The Charter of Fundamental Social Rights (Exhibit 14.7).
ii. European Works Council (EWC).
f. Great Britain
i. Membership declining due to industrial change since 1980.
ii. Labor agreements are not enforceable by law.
iii. Grievances are not subject to private arbitration.
g. Germany
i. German model of labor–management relations.
ii. Works Constitution Act of 1952 (amended in 2001).
iii. Supervisory boards.
h. Central and Eastern Europe—Former Soviet Bloc Countries
i. Major role of trade unions is to exert political pressure.
ii. Russia adopts labor code.
i. Japan
i. Labor relations system has five characteristics.
ii. Teamwork and consensus building.
iii. Lifetime employment.
iv. Collective bargaining revolves around pay levels.
v. Wage system.
vi. Enterprise unionism.
vii. HR department has a higher status in corporations.
j. South Korea
i. Republic of Korea–United States Free Trade Agreement (KORUS FTA).
ii. Tripartite labor relations system.
iii. Majority of unions are enterprise-based.
iv. Korean Employers’ Federation (KEF).
v. Federation of Korean Trade Unions (FKTU).
vi. Trade Union and Labor Relations Adjustment Act (TULRAA).
k. Australia
i. Australia Industrial Relations Commission (AIRC).
ii. Workplace Relations Act of 1996 (WRA).
iii. Work Choice Act of 2005.
iv. Greenfield agreements.
v. Workplace Relations Amendment (Transition to Forward with Fairness) Act of
2008.
vi. Forward with Fairness Act (FWFA).
vii. Awards system.
l. China
i. All-China Federation of Trade Unions (ACFTU).
ii. Model contract provided by the Communist Party state through the ACFTU
(Exhibit 14.8).
Discussion Questions
1. Although the United States shares a common border with Canada, its labor relations system is
affected by a number of variables that do not greatly affect the United States. Enumerate and
explain these variables.
Variables include:
• Foreign influence: mostly from the United States; the United States experiences no
2. Explain why labor unions in many Central American countries have developed more slowly
than those in the United States.
• A low percentage of the work force is included as wage earners.
3. Western Europe seems to be uniquely involved with various forms of worker participation.
Explain why these worker participation systems have developed so fully there instead of
elsewhere.
4. What are five special features of the Japanese system? Why haven’t these features been
widely adopted in the United States?
Labor–management consultations, teamwork, a lifetime employment policy of the largest
Although many employees work for the same employer for their entire career, employers still
want to maintain the right to discharge or lay off nonproductive employees. Most firms
5. Although multinational corporations seem to be growing in size and influence, what must
occur before transnational collective bargaining can be effectively carried out?
It seems as though unions must overcome the obstacles listed in the chapter. These are:
6. Which features of Canada’s labor relations system would you transfer to the United States?
Why?
While the answers will be influenced by each student’s values, consideration should be given to:
7. Assess the continuing transformation of the Australian labor relations system.
The Australian labor relations system is transitioning from a highly centralized system to a
very decentralized one, more akin to the United States.
Under the old system, there was “the Accord” which was a form of centralized pay
8. Give your assessment of the requirements for Cuba to develop a free, independent trade
union. It is essential for a free society?
The answer appears to rest with the life of Fidel Castro and his successor. With the fall of the
9. Assess the strategy of Wal-Mart in China, where the company has recognized unions in all 62
stores, to its strategy in the United States, which is to combat any type of union
representation.
The ACFTU performs a dual function: an instrument of the state and a labor organization
Exploring the Web
Labor Relations in Multinational Corporations and in Other Countries
1. The International Labor Organization.
2. Foreign Labor Trends.
3. Guidelines for Multinational Corporations.
4. Multinational Labor Organizations.
rendered nonfunctional when link-associated web sites and pages are updated.
Suggested Readings and Term Paper Topics
1. What is the European Community’s “Social Charter”? Why is it important for U.S.
firms dealing with European unions to be aware of this?
Possible references:
Belke, A. and Hebler, M. (2002). Towards a European Social Union: Impacts on labor markets in acceding
countries. Constitutional Political Economy, 13, 4, 313-335.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Silvia, S. J. (1991). The Social Charter of the European Community: A defeat for European labor.
Industrial & Labor Relations Review, 44, 626-643.
2. In Japan, unions are specific to a given company. Advocates of this approach argue
that this makes workers more responsive to the needs of each individual business.
Critics charge that these Japanese unions come dangerously close to the company-
dominated “Yellow Unions” of the early 1900s in the U.S. (now outlawed in the U.S.).
Should the U.S. modify its labor laws to encourage Japanese-style “Company Unions”?
If so, why? How should the laws be changed? If not, why not?
Possible references:
Sakoh, K. (1990). Economic implications of enterprise unionism. Journal of Labor Research, 11, 257-267
3. The North American Free Trade Agreement (NAFTA) has been on the books for
several years now. How well is it working for workers in the U.S., Canada, and
Mexico? Is such a free trade policy a good or bad idea? What have been the
consequences for workers in all three countries? What legislative policy changes, if any,
do you recommend? Support your position.
Possible references:
Foote, C. F., Jr. (October, 1991). The cost of a Free-Trade Zone. Black Enterprise, 22, 27-28
4. During the past 30 years, Multi-National Corporations (MNCs) have grown and moved
production facilities to developing countries. Although workers in these countries are
often unionized, their wages remain low. Prepare a report arguing for strategies that
organized labor can take, both here and in the lesser-developed countries, to deal with
MNCs.
Possible references:
——-(2001). Africa: A continent for the third millennium. British Medical Journal, 322, (7277),
5. Write a paper for the AFL-CIO entitled, “Union organizing for American workers
working for nonunion Japanese-owned businesses in the U.S.: Problems, Prospects,
and Recommended Strategies.” Support your ideas.
Possible references:
Harman, R.A., Golhar D.Y., and Deshpande, S.P. (2002). Lessons learnt in work teams. Production
Planning and Control.13, 4, 362-369.
6. Most studies that compare the Industrial Relations systems of the U.S. with other
countries are descriptive; they do not discuss the role that historical factors have
played in shaping each country’s Industrial Relations system. Your mission: Pick a
country and explore how that nation’s Industrial Relations system has evolved, relating
it to historical factors.
Possible references:
Dubofsky, M. and Dulles, F.R. (2004). Labor in America: A history. 7th edition. Wheeling, Ill.: Harlan
for other articles.
7. Pick two European countries. Compare their public-sector labor relations systems to
each other and to the public-sector system for American workers. You may use either
“federal workers” or “state and local workers” for your comparisons.
Possible references:
Beaumont, P. B. (1991). Privatization, contracting out, and public sector industrial relations: The Thatcher
Years. Journal of Collective negotiations in the Public Sector, 20, 89-100.
8. Analyze one of the following “cross-cultural” labor novels in light of what you have
learned in this course:
Chidester, A. (1946). The Long Year. NY: Scribners. [Reprinted: NY: AMS (1976)].
Traven, B. (1969). The cotton pickers. [English translation of Die Baumwollpfluckers].
New York: Hill & Wang.
9. How should unions deal with American workers employed by U.S.-based firms, but
working in subsidiaries overseas? How should they deal with the local workers in those
same subsidiaries? What laws govern these workers? What laws should be passed?
Possible references:
Jacoby, S. M. (2004). Employing bureaucracy : Managers, unions, and the transformation of work in the
20th century. Mahwah, N.J.: Lawrence Erlbaum.
10. How is the Australian and/or New Zealandian industrial relations system different from
that of the U.S.? What features (if any) are better? What features (if any) should the
U.S. adopt?
744.
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
McGavin, P. (2000). Reshaping the Labour Market: Regulation Efficiency and Equality in Australia.
Economic Record, 76, (233), 204–207.
O’Donnell, M. (2000). Performance-based pay in the Australian Public Service. Review of Public Personnel
Administration, 20, (2), 20-36.
11. Agree or disagree: The rise of the labor union in the U.K. is responsible for the decline
of British industry.
Possible references:
Marsh, D. (1992). The new politics of British trade unionism. Ithaca, NY: ILR Press.
12. What role can unions play in helping the U.S. maintain or regain its competitive
position in the world?
Possible references:
Darlington, R. (2002). Shop stewards’ leadership, left-wing activism and collective workplace union
13. Compare and contrast the labor movement in France with that of the United States.
You may use either the public or the private sectors.
Possible references:
Bolle, P. (1999). Pratique des relations et negociations socials. International Labour Review, 138, (1), 85.
14. Compare the labor relations system in Germany with that of the United States. You
may use either the private business sector or the public sector for your comparisons.
How are the systems different? How are they similar? Why? What parts should the
U.S. system adopt from the German system (if any) to improve our system?
Possible references:
Altmann, N., & Dull, K. (1990). Rationalization and participation: Implementation of new technologies and
15. Analyze the labor relations system in Sweden. How does it differ from that in the
United States? Is Sweden a “model of labor relations” that the U.S. should copy? Why
or why not?
Possible references:
16. What does the future hold for unions under the unified European economic system?
You may discuss unions in general or focus on a specific type of union (e.g., white collar
unions, teachers).
Possible references:
Belke, A. and Hebler, M. (2002). Towards a European Social Union: Impacts on labor markets in acceding
17. Analyze labor relations in Mexico. What makes this country unique? How does its
labor relations system (history, laws, practices) differ from that of the United States?
What are some recent developments in this country’s labor relations system? What do
they suggest for the future of the industrial relations system?
Possible references:
Botz, D. L. (Nov., 2000). Into the frying pan: Mexican labor faces its greatest crisis. Dollars & Sense, (No.
232), 29–30.
18. Analyze labor relations in South Korea. What makes this country unique? How does its
labor relations system (history, laws, practices) differ from that of the United States?
What are some recent developments in this country’s labor relations system? What do
they suggest for the future of the industrial relations system?
Possible references:
——- (July 24, 2000). Bank strike fizzles. Country Monitor, 8, (28), 4-5.
19. In recent years there has been much discussion of doctors unionizing in the United
States. But in some countries, doctors have long been unionized. How does this work?
What are recent developments? What are the implications for their approach for
physician unions in the U.S.? Support your positions.
Possible references:
DeBousingen, Durand, D (Feb. 15, 1997). French, German, and Belgian doctors unite. Lancet, 349, (9050),
20. Analyze labor relations in Communist China since 1975. What makes this country
unique? How does its labor relations system (history, laws, practices) differ from that
of the United States? What are some recent developments in this country’s labor
relations system? What do they suggest for the future of the industrial relations
system?
Possible references:
Classroom Exercise 14.1: Mobile Factory
1. Evaluate the exchange rates and wages shown in Exhibit 14.1, and decide where you
should dock your ship for local production.
2. Review the index of wage rates of 1980, 1990, 2005, and 2012 and determine whether the
strategy and decision in 2012 would be the same as in the previous years.