The Impact of Globalization on the Australian Labour Force - Case Study Example

Student Name: Tutor: Title: Global Issues Course: The Impact of Globalization on the Australian labour force Executive summary Globalization has been on increase owing to advances in technology that has enhanced communication and capital mobility. This report discusses the impact of globalization on the labour force in Australia. The introduction provides an overview of the purpose of the report and introduces the topic. The impact of globalization has been extensively been discussed under the discussion section. Recommendations provide guidelines that can help Australia deal with the impact of globalization on its labour force. The main points are echoed in the conclusion emphasizing on the need of the government to take up its role. Introduction Globalization refers to the increasing economic interdependence among nations as demonstrated in growing actual movement across countries of investment, trade, technology, labour and finance. Globalization has been enhanced new technology such as email, the internet, social media, communication networks and mobile phones. Knowledge transfer and communication has been enhanced (Anheier, 2012). Products can be bought and delivered across nations as long as one can access the internet. The World Trade Organization (WTO) has increasing power of national governments while the International Monetary Fund (IMF) imposes restrictions as well as controls on countries requiring assistance. Globalization has had unprecedented impact on the Australian labour force causing changes that led to drop in union protection and increase in part-time or contractual employment. Increase of immigrant of workers who accept lower pay threatens the livelihood of native Australians. Mobility of labour force has been on the increase (Rosewarne, 2010). This report examines the impact of globalization of globalization on Australian labour force and provides recommendation to the federal government on how to reduce uncertainty within the Australian labour market. Discussion Movement of labour internationally has been growing since 1960’s. Close to 2.3% of the population of the world live outside their country of origin and 1.5% of the workforce in the world works in nations other than those that they possess their citizenship (Tazreiter & Tham, 2013). This emerging trend has increasing tremendously as skilled workers have an opportunity to apply for positions regardless of where they are in the world because of the power of the World Wide Web. Forces of globalization have drastically reduced barriers that hindered mobility of labour across nations and economies. At the same time there has been a growing interest in the ‘knowledge economy’ hence the demand of skilled manpower (Harrod & O'Brien, 2012). The integration of these factors has led to increased level of competition for skilled workers across national boundaries where domestic demand for highly skilled labour outweighs the available domestic labour supply. The influence of globalization on labour markets has come up as a significant policy issue, demonstrating the wider public discussion regarding the connected concerns on the downward pressure on wages, escalating job insecurity, and job opportunities relocating from OECD nations to developing countries that offer lower wages. The nature of globalization is changing (Hijzen & Swaim, 2008). Technological innovations, and especially drastic reductions in coordination and communication costs, have permitted the emergence of global supply chains that are fragmented geographically to a higher level. Labour markets are dynamic in Organization for Economic Cooperation and Development (OECD) countries such as Australia, but in the past years they have demonstrated enormous change as the economy gravitates towards globalization. Investors are able to move capital without any problem across the world looking for more profitable deals and locations having lower wages (Tazreiter & Tham, 2013). Common market agreements, freer trade, and advanced information technologies have dislodged some workers and industries out of the competitive market while allowing others to immensely prosper. Manufacturing jobs that were under the protection of registered unions lost have lost their protection under the union and moved outside the boundaries of western economies to national that are less developed. On the other hand, service sectors have realized expansion, offering more part-time as opposed to full-time jobs, even in countries considered to be prosperous like Australia (Ghose, Majid & Ernst, 2008). Within Australia opportunities for employment have changed significantly for workers. Majority of workers have been compelled to retrain, to take early retirement or to venture into self-employment. Jobs opportunities available to new entrants into the labour market and those looking for re-entry in particular have been changed. A few new entrants are lucky to find long-term and stable employment, while others go for part-time jobs that do not have any union protection, employment benefits, and regular working hours. Whereas both women and men have been affected by the changes in the labour market, the employment pattern affecting men growingly resemble those that hitherto been applied to women within the workforce of Australia (Snower & Coe, 2008). The One common effect is that a life-time career at the same employer is increasingly becoming elusive, and the time between jobs is becoming longer for those who are unemployed. The labour market is growingly becoming polarized into ‘bad jobs’ and ‘good jobs’, which has the end result of augmenting wealth and income disparities. To many people this occasions a relative decline in real income as compared to taxes and inflation (Grossman & Rossi-Hansberg, 2008). Increasingly many Australian families require two incomes for them to meet what is regarded as basic needs. Poverty and social welfare costs have gone up due to high levels of unemployment, as well as job insecurity. The Federal Government has reacted by limiting access to social benefits and creating employability programs that compel beneficiaries to retrain and look for paid work or have to forfeit part of their social security benefit (Ghose, Majid & Ernst, 2008). Some years back in Australia, workers started out in low-paying positions and found their way up as experience is gained on-job. Increasing casualization of low-paying jobs means that whereas high competition exists for such jobs, there is little hope of career advancement in any organization. Following the flooding of new entrants in the job market lower end, wages have gone down and employers can with ease keep some employees on part-time basis or short-term contracts, while opting to render others redundant (Suter, 2010). Low paying jobs are being made flexible to the benefit of employers while disadvantaging employees. Consequently, the ‘working poor’ are a common sight within the Australia lower end job market. Prior to the late 1980’s, rates of unemployment in New Zealand and Australia were much lower as compared to majority of OECD countries. Current rates are comparable. Australia observed stringent government controls on production, exports and imports, and was in a position to sustain this policy for many years following its isolation from the markets and the strong rapport between the trade unions and the labour governments (Rosewarne, 2012). Australia also controlled non-white immigration in order to prevent the low-wage workers, as well as competition for workers in the local market. Unemployment rates in Australia Year Rate of Unemployment 1964 1.6% 1970 1.6% 1984 8.9% 1987 8.1% 1992 10.1% 1996 8.5% 1998 8.4% 2001 7.4% Unemployment rates are high in Australia for specific groups of people like indigenous people, the young people, and immigrants who have little formal education. In the mid-1990s close to thirty percent of 15-19 year olds were jobless (Rosewarne, 2013). Regardless of the high rates of unemployment in recent times, the federal government of Australia has tightened qualification requirements for unemployment benefits as well as other types of social assistance. This strictness also extends to also apply to Sole Parent Pensions. Programs of welfare to work have been integrated and those engaging in the programs are struck out from the list of unemployment statistics. Moreover, labour market poverty is caused by low wages. ‘Fair wages’ were established in Australia in the last century by means of trade union negotiations and were extended to similar workers across the country. Wages go up when government resort to increase them, employers always lobby to keep the wages low in order to reduce production costs and realize high profit margins. There is a direct relationship between higher wages and union membership. Australian workers used to possess higher rates of union protection prior to globalization. Membership to trade unions has dropped from 58% in 1975 to less that 31% in year 1996 (Debrah & Smith, 2014). Loss of government subsidies and freer trade also encouraged low wages. Poverty in the labour market is also encouraged by time spent outside the labour force. Traditional perception concerning labour division in the family guides the choice of women not to care or care (Anheier, 2012). Therefore, engagement of women in paid work has been flexible as compared to men in Australia, whereas women have come in and moved out of the job market for childbearing, marriage, and accommodating career changes of husbands. By 1995, the number of employed persons who were male was 11.1% while female workers represent 42.7% at the same time (Hijzen & Swaim, 2008). Technological change, globalization and freer trade agreements have changed the labour market dynamics leading to polarization of the labour force. Recommendations Globalization cannot be stopped but how a country responds to it will influence poverty levels within its boundaries. Unemployment occasioned by increase labour force mobility is a threat to national development. Australia can use the advantages of globalization to develop itself while shielding its citizens from exploitation by employers who use increase mobility to lower wages and render other workers redundant. Australia has protect is local labour source exploitation while equipping available workers to compete favorably across the globe. The influence of globalization on the local labour market cannot be wished away but the federal government has to be prepared to counter the negatives that come with it. The Federal Government of Australia can reduce unemployment through reducing work-week, enacting legislation to counter over time work, and compelling employers to offer holidays and more unpaid and paid leave (Snower & Coe, 2008). The cause of high poverty level in Australia is systematic weakness in institutions bestowed with the responsibility of absorbing the risks that come with economic openness as result of globalization. The institutions have to be strengthened to play their roles effectively in order to protect Australian citizens. The government has to secure the employment of natives Australians and keep off immigrants workers from taking up their jobs by means of low wages. This can be done though restrictions on minimum wages according to skills required for a particular job. As compared to other southern European countries, Australia does not employ tough employment protection legislation to protect its citizens from job loss owing to new entrants. The government has to invest more in active labour market to assist job losers as well as sole parents to get jobs in growth sectors. Australia spends very little on labour market assistance and this trend has to be changed. The government has to invest more in post compulsory education as well as training to upgrade workforce skills so that so that Australian workforce can compete successfully across the global without feeling threatened (McGrath-Champ, Rosewarne & Rittau, 2010). More labour flexibility and economy restructuring are needed to raise national income. Conclusion Globalization has affected Australian labour force through altering its composition and other dynamics. Entry of migrant workers has posed an imminent threat to locals who struggle to provide for their families. Low wages and job insecurity have been some of the immediate effects of globalization on Australian labour force. Workers have been rendered redundant, others forced to retrain, and other forced to quit. The shocks of globalization have not been effectively dealt with by the government leaving its citizens to their own fate. Proper and strict legislation is needed to protect exploitation and locals from losing their jobs. While the influence of globalization cannot be wished away, Australia has not done enough to protect its citizens and create stability. References Anheier, HK 2012, Cultures and Globalization: Cities, Cultural Policy and Governance, SAGE, London. Debrah, Y.A. & Smith, I.G. 2014, Work and Employment in a Globalized Era: An Asia Pacific Focus, Routledge, New York. Grossman, G & Rossi-Hansberg, E 2008, Trading tasks: a simple theory of offshoring, Princeton University, mimeo, February. Hijzen, A & Swaim, P 2008, Offshoring, labour market institutions and the elasticity of labour demand, University of Nottingham GEP Working Paper 2008/05. McGrath-Champ, S., Rosewarne, S., & Rittau, Y 2010, Education, Skill and Unions in the Australian Construction Industry, Labour and Industry, 21(1), 438-462. Rosewarne, S 2010, Globalization and the Commodification of Labour: Temporary Labour Migration. Economic and Labour Relations Review, 20(2), 99-110. Rosewarne, S 2013, The ILO's Domestic Worker Convention (C189): Challenging the Gendered Disadvantage of Asia's Foreign Domestic Workers, Global Labour Journal, 4(1), 1-25. Rosewarne, S 2012, Temporary International Labor Migration and Development in South and Southeast Asia, Feminist Economics, 18(2), 63-90 Snower, D & Coe, D 2008, Globalization and redistribution, Kiel Institute for the World Economy Working Paper. Suter, S 2010, Inequality Beyond Globalization: Economic Changes, Social Transformations, and the Dynamics of Inequality, LIT Verlag Münster, New Delhi. Tazreiter, C. & Tham, SY 2013, Globalization and Social Transformation in the Asia-Pacific: The Australian and Malaysian Experience, Palgrave Macmillan, Melbourne. Harrod, J. & O'Brien, R 2012, Global Unions? Theory and Strategies of Organized Labour in the Global Political Economy, Routledge, London. Ghose, A.J., Majid, N. & Ernst, C 2008, The Global Employment Challenge, Academic Foundation, Sydney. Read More