mncs & their impact on indian labour scenario
Table of Contents
Executive Summary
Multinational corporations (MNCs) are a powerful economic force. In an increasingly globalized world, MNCs integrate with developing countries in a multifaceted manner. The concentration of competition among firms leads capitalist processes and labour division creation, which are critical to attain economies of scale. At present, access to cheap labour is an essential integration that MNCs exploit by outsourcing to small and medium contract firms in producer countries.
Outsourcing shifts core activities that used to be within MNCs to arms-length transactions. Low-skilled industries depend on outsourcing and contracting suppliers in developing countries from small and medium enterprises (SMEs).
Employers in certain industries face significant incentives to violate labour standards laws. Insufficient regulatory framework on labour standards in both developed and developing countries creates the opportunity to act on the impulse. While the distinction between issues of labour standards versus labour practices are unclear, this essay treats labour standards as policies and regulations, from local to international mandates, whereas labour practices are the actual labour conditions on the factory floors. With the incentive and ability, MNCs have the power to affect labour conditions. The question becomes, are big businesses really the most powerful force to improve labour standards in developing countries?
Introduction
Multinational Companies are placed all over the world with subsidiaries or joint ventures to gain a competitive advantage over other companies. A multinational company is a company with a global strategy with production bases all over the world to achieve cost advantages through economies of scale and low labour costs. Normally MNCs have a home country which supported the company in the beginning and sometimes these big companies were even built by governments to create a national champion through
Executive Summary
Multinational corporations (MNCs) are a powerful economic force. In an increasingly globalized world, MNCs integrate with developing countries in a multifaceted manner. The concentration of competition among firms leads capitalist processes and labour division creation, which are critical to attain economies of scale. At present, access to cheap labour is an essential integration that MNCs exploit by outsourcing to small and medium contract firms in producer countries.
Outsourcing shifts core activities that used to be within MNCs to arms-length transactions. Low-skilled industries depend on outsourcing and contracting suppliers in developing countries from small and medium enterprises (SMEs).
Employers in certain industries face significant incentives to violate labour standards laws. Insufficient regulatory framework on labour standards in both developed and developing countries creates the opportunity to act on the impulse. While the distinction between issues of labour standards versus labour practices are unclear, this essay treats labour standards as policies and regulations, from local to international mandates, whereas labour practices are the actual labour conditions on the factory floors. With the incentive and ability, MNCs have the power to affect labour conditions. The question becomes, are big businesses really the most powerful force to improve labour standards in developing countries?
Introduction
Multinational Companies are placed all over the world with subsidiaries or joint ventures to gain a competitive advantage over other companies. A multinational company is a company with a global strategy with production bases all over the world to achieve cost advantages through economies of scale and low labour costs. Normally MNCs have a home country which supported the company in the beginning and sometimes these big companies were even built by governments to create a national champion through
References: 1. http://labor.nic.in/ 2. http://en.wikipedia.org/wiki/Indian_labor_law 3. http://www.fas.org/sgp/crs/row/RL34161.pdf 4. http://www.investinginindia.in/fdi.htm 5. Goldman Sachs Global Economics Paper 6. www.doingbusiness.org/data/exploreeconomies/india/employing-workers 7. http://www.doingbusiness.org/data/exploreeconomies/united-states/employing-workers 8. http://www.legalindia.in/labour-law-in-india