Effects of Globalization on Work and Employment
The Growing Influence of Globalization
The process of globalization has been an integral part of society in recent years, and its pace is only accelerating. This phenomenon primarily affects the lives of society in essential aspects such as work and employment. Heyman and Sjöholm (2019) note that globalization results in several significant structural changes in the labor market, including an increased level of specialization in countries’ production, growing competition, benefiting from the economics of scale, as well as an increase in the number of workers employed in “foreign-owned firms, in firms that own foreign affiliates, and in exporting and offshoring firms” (p. 67). These changes will also lead to higher living standards, higher incomes, and higher economic growth, which is especially relevant for developing countries.
Transformation of International Business
The primary effects of globalization on work and employment are linked to the transformation of international business. Bose and Medgal (2018) emphasize that modern conditions are characterized by a growing import-export orientation, highly volatile exchange rates, foreign direct investment, and the global movement of capital. The researchers note that these factors are unevenly distributed within different industries and affect various areas of labor in distinct ways (Bose & Medgal, 2018; Heyman & Sjöholm, 2019).
Heyman and Sjöholm (2019) argue that the transformations brought about by globalization have led to greater labor polarization within firms and have altered the demand for high- and low-skilled labor. Bose and Medgal (2018) also emphasize that “employment has become highly insecure in some situations and relatively more secure in other locations” (p. 223). Thus, globalization has had an uneven impact on both the labor market and employment conditions.
Impact on Working Conditions
Globalization also has an impact on working conditions, especially for unskilled workers. Fang et al. (2021) and Lansbury (2018) argue that, for the most part, this process leads to a deterioration in working conditions for less-skilled workers through the weakening of labor unions and the negative impact on collective bargaining. Researchers also express concern that, at the moment, low-skilled labor is disappearing (Fang et al., 2021). This occurs for several primary reasons, including the internationalization of production and the race to the bottom (Bose & Medgal, 2018; Fang et al., 2021). The internationalization of production leads to specialization in a particular country, increasing the demand for one type of labor and decreasing the demand for others. The race to the bottom forces companies to increase revenues and reduce costs, leading to significant wage reductions and a deterioration in working conditions.
Structural Changes in Labor Markets
These factors of globalization also affect the structure of labor. In particular, the desire to reduce costs and the need for highly specialized labor result in an increase in the number of temporary workers who require fewer benefits and lower costs (Bose & Medgal, 2018). The researchers also note that a shrinking job market in the public sector was once an alternative to working in private companies (Bose & Medgal, 2018; Fang et al., 2021). This factor further reduces the stability of the labor market and increases competition.
At the same time, within some export-oriented industries, globalization has given rise to an extensive job creation process, which is especially relevant for developing countries (Bose & Medgal, 2018). However, the internationalization of production can reduce the demand for low-skilled labor in developed countries, potentially slowing economic growth and increasing competition.
The Future of Globalization and Labor
Globalization has accelerated significantly in recent years, suggesting a possible continuation and intensification of current trends in the coming decades. Vlados et al. (2018) propose to perceive this process as “an evolutionary road under a never-ending cycle of construction and reconstruction” (p. 135). Heyman and Sjöholm (2019) emphasize that “multinational firms have a more skilled distribution than firms that only sell their products on the local market” (p. 227).
This may indicate that, over the next twenty years, the world can expect a significant reduction in low-skilled laborers, which puts many population groups at risk. This process can also be accelerated by the spread of technologies that can replace low-skilled labor by reducing production costs. This process is also supported by the weakening of labor unions and a decrease in collective bargaining, which negatively affects working conditions (Fang et al., 2021; Lansbury, 2018). These trends can hardly be eliminated in the coming decades, as the race to the bottom remains a relevant concern.
Considering the noted factors, it is possible to make an approximate forecast of the impact of globalization on work and employment over the next twenty years. It is most likely that the process of internationalization of the global market is an inevitable stage in the development of society and the economy, so one should not expect it to end. On the contrary, the influence of this process will only increase from year to year, transforming the usual way of working.
Firstly, the specialization of production and the increasing demand for skills, combined with the growing use of new technologies, will enhance the mobility of the population. This trend has been observed over the last decade and is expected to continue growing (Segal, 2019). These aspects are likely to lead to even greater specialization of countries in producing certain goods and the development of more complex supply chains.
In terms of work and employment, this will lead to an increase in the specialization of low-skilled labor and heightened competition within it. However, in relation to a highly skilled trade, these aspects can also lead to an expansion of existing management functions, as well as an expansion of the number of jobs. As noted, globalization has an uneven impact on labor, depending on the industry and segment, which is expected to become even more pronounced.
It is most likely that accelerating globalization will lead to the widespread disappearance of local businesses in favor of international companies. It is less likely that this will happen in the next twenty years, but the perspective seems realistic in the more distant future. Thus, an increasing number of people will work in multinational companies that contribute to improving work conditions through cost optimization. The labor market of the future is likely to be highly competitive and require predominantly highly skilled workers.
References
Bose, I., & Mudgal, R. K. (2018). Impact of globalization on job-abolition and job-creation in recent times: A brief research overview. Journal of Applied Management and Investments, 5(4), 223-228. Web.
Fang, J., Gozgor, G., & Nolt, J. H. (2021). Globalisation, economic uncertainty and labour market regulations: Implications for the COVID-19 crisis. The World Economy. Web.
Heyman, F., & Sjöholm, F. (2019). Globalization, job tasks and the demand for different occupations. Travel et Emploi, 157, 67-92. Web.
Lansbury, R. D. (2018). The changing world of work and employment relations: A multi-level institutional perspective of the future. Labor and Industry, 28(1), 5-20. Web.
Segal, U. A. (2019). Globalization, migration, and ethnicity. Public Health, 172, 135-142. Web.
Vlados, C. M., Deniozos, N., Chatzinikolaou, D., & Demertzis, M. (2018). Perceiving competitiveness under the restructuring process of globalization. International Journal of Business and Management, 13(8), 135-153. Web.