Understanding International Labour Law
Understanding International Labour Law
COHR 4201
LECTURE NOTES
1.1. Introduction
Labour law plays a significant role in ensuring that the parties into employment relationship
fairly treat each other. Labour law therefore ensures that justice prevails at all the times in an
effort to enhance balance between the parties to employment. Before we dwell much into
labour law, there is need to generalise on the concept of employment.
The word employment simply means work or doing work for a reward in form of
wage or salary.
It is an act or state of being employed or being engaged in activity or activities to earn
money i.e. the situation in which people have work.
Employment is a means for providing human basic needs. Its nature can be full-time,
part-time, permanent or temporary.
More focus here is put on Labour Law, its aims and objectives.
Law
Set of rules which govern the conduct of individuals and or organisation/
community and rules are enforced by identified organs of the state.
Labour law, otherwise known as employment law, is the body of laws, administrative
rulings, and precedents which address the legal rights of, and restrictions on working
people and their organisations.
Labour law mediates many aspects of the relationship between trade unions,
employers and employees.
It is evolved to regulate the activities and conducts of the various actors or the main
stakeholders in the world of work so that the game is played according to the dictate
of the rules and regulations.
Such main actors are the workers and their union, the employers and their
associations, the government and its agencies.
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The essence of labour law is to ensure orderliness and stability in the world of work
through harmonious relationship among and between the actors within the work
organisation.
This situation, if well established and sustained, there will be good job performance
that will engender continuous and improved productivity level whereby interests of
individual employee, the investors and the community will be favoured as to each
party and the overall well-being.
Labour law, just like other areas of law including the constitution and the entire
judicial system of the land (nation) is set out to show direction of conduct, control,
protect interests, prevent oppression, exploitation of a party by another party and
many more.
On a general note, thinking about employment and its contextual issues especially the
mode of interaction at the workplace is growing by the day.
The role of each of the parties in a particular organisation and the world of work in
general, the diversity and conflict of interests, the likely fallouts in various
dimensions, the need for harmonization of these diverse interests, prevention of
unwholesome happenings and engendering of required peaceful industrial or work
environment, healthy enough for required productivities in form of employment
relation remain paramount and tenable philosophy.
The importance of work as a primary human activity and a means of fulfilling man’s
potentialities cannot be overemphasized.
The employment of individual to work amount to the development of the human
potentialities of the worker as a social being, a wealth creator and a master of nature.
Employment (work) makes individual to be useful to himself and the society lack of
work or unemployment makes man incomplete and threatens man’s existence.
Thus, employment integrates people into the social structure and gives them an
identity.
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The essential nature of employment (work) and its social nature in terms of uneven
interests, interdependence, contribution to individual and community life, calls for
evolvement and enforcement of necessary codes of conduct or rules of the game as
being or may be played by the actors or parties making up the whole system to
forestall any breach that may result from the inbuilt differences.
Such codes, principles and regulatory instruments constitute the labour (employment)
law which components shall be discussed in this course.
Under this discussion, the general dimension of the scope of labour law is articulated in an
itemised manner thus:
Here, the areas of coverage include contract of employment, minimum wage, working time,
health and safety, anti-discrimination, unfair dismissal and child labour.
In this category, labour law includes trade unions; strikes; pickets; workplace involvement;
and co-determination.
The highest category here belongs to the International Labour Organisation. There are labour
codes binding on members of economic regional bodies such as those belonging to the
European Labour Law, African and its sub-regions as ECOWAS, NATO, EEC, etc.
The focus here is on the coverage of employment law within a nation. In our Zimbabwean
scenario, Labour Act which is complemented by a number of Statutory Instruments passed
time and again govern the constitute the National Labour Law.
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That aspect of law that concerns itself with issues arising out of the work place e.g
problems between employee and employer
Employment of young persons.
Duration, particulars and termination of employment contract.
Remuneration and deductions from remuneration.
Dismissal.
Retrenchment.
Special measures to avoid retrenchment.
Wages and benefits upon termination of employment.
Sick leave.
Vacation leave.
Special leave.
Weekly rest and remuneration for work during public holidays.
Death of employer.
Rights of employees on transfer of undertaking.
Regulatory powers of Minister.
Maternity leave.
trade unions, employers organizations and federations of trade unions and employers
organizations
employment councils
collective bargaining agreements negotiated by trade unions and employers
organizations
labour court
resolution of disputes and unfair labour practices
collective job action
Employment agencies
Zimbabwe’s undertaking
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“International Labour Law” refers to the body of rules spanning public and private
law which concern the rights and duties of employees, employers, trade unions and
International labour law covers both the substantive rules of law established at
international level and the procedural rules relating to their adoption and
implementation at national level.
That aspect of law that concerns itself with issues arising out of the work place e.g
problems between employee and employer in different nations across the world
There has always been a connection between international trade and labour standards.
This link, only tenuous in past decades, has attained prominence in today’s climate of
unprecedented growth of trade between countries with different labour standards and
labour costs.
Traditionally, “North” countries with high labour costs offered high value-added
production while “South” countries offered raw materials and low value-added
production with low labour costs, so that the North–South gap in labour costs did not
affect international trade competition.
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However, this gap has started to close over the last few decades as “South” countries
have begun to also compete internationally in the high bracket of the market – the
“assets” apparently giving these countries the edge being low wages and weak labour
regulations, including, in some cases, severe restraints on freedom of association.
There are several strategies that can help protect workers’ fundamental rights without
putting pressure on global trade. The approaches vary in their scope and efficiency
and include:
International labour standards: Conventions impose on ILO Members the
obligation to guarantee minimum rights and conditions of work to their
workers. However, member States are bound to the Convention only upon its
ratification, which is not mandatory.
Indeed many ILO Members, including some that have considerable weight in
international trade such as Brazil, China, India, the United States and Viet
Nam have not yet ratified all of the fundamental Conventions. Even upon
ratification, the application of the Convention varies at national level and the
breach of a Convention is internationally reprimanded only through moral
sanctions. Despite these shortcomings, this strategy is supported by a wide
international consensus.
Supranational law: Supranational law is the establishment by an international
authority of labour standards that would be directly binding on each State
without need for ratification.
In cases of conflict, supranational law would take precedence over national
law. So far only the European Union has set up and proceeded to work with
supranational laws and regulations, the interpretation of which is also
entrusted to a supranational judiciary body.
Social clauses: A social clause with a unilateral or multilateral source may be
part of a treaty or international trade agreement. It may include mechanisms to
investigate, and if appropriate, impose fines or trade restrictions on countries
in breach of respecting workers’ rights. A state can also provide for a social
clause in its national law on foreign trade. Some national and international
schemes like the Generalized System of Preferences in the United States or the
European Union provide interesting examples of how a country can tie
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3.1. Introduction
3.2. Origin
The ILO was founded in 1919, at the time of the Peace Conference convened at the
end of the First World War.
The ILO Constitution, incorporated into Part XIII of the Treaty of Versailles, for the
first time established a link between peace and social justice, stating that “universal
and lasting peace can be established only if it is based upon social justice”.
The driving forces for ILO's creation arose from security, humanitarian, political and
economic considerations. Summarizing them, the ILO Constitution's Preamble says
the High Contracting Parties were 'moved by sentiments of justice and humanity as
well as by the desire to secure the permanent peace of the world...'
There was keen appreciation of the importance of social justice in securing peace,
against a background of exploitation of workers in the industrializing nations of that
time.
There was also increasing understanding of the world's economic interdependence
and the need for cooperation to obtain similarity of working conditions in countries
competing for markets.
Reflecting these ideas, the Preamble states:
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1. Whereas universal and lasting peace can be established only if it is based upon social
justice;
2. And whereas conditions of labour exist involving such injustice hardship and
privation to large numbers of people as to produce unrest so great that the peace and
harmony of the world are imperilled; and an improvement of those conditions is
urgently required;
3. Whereas also the failure of any nation to adopt humane conditions of labour is an
obstacle in the way of other nations which desire to improve the conditions in their
own countries.
The areas of improvement listed in the Preamble remain relevant today, for example:
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GENERAL PRINCIPLES
Article 427
The High Contracting Parties, recognising that the wellbeing, physical, moral and
intellectual, of industrial wage-earners is of supreme international importance, have
framed, in order to further this great end, the permanent machinery provided for in
Section I, and associated with that of the League of Nations.
They recognise that differences of climate, habits and customs, of economic
opportunity and industrial tradition, make strict uniformity in the conditions of labour
difficult of immediate attainment. But, holding as they do that labour should not be
regarded merely as an article of commerce, they think that there are methods and
principles for regulating labour conditions which all industrial communities should
endeavour to apply, so far as their special circumstances will permit.
Among these methods and principles, the following seem to the High Contracting
Parties to be of special and urgent importance:
First.—The guiding principle above enunciated that labour should not be regarded
merely as a commodity or article of commerce.
Second.—The right of association for all lawful purposes by the employed as well as
by the employers.
Third.—The payment to the employed of a wage adequate to maintain a reasonable
standard of life as this is understood in their time and country.
Fourth.—The adoption of an eight hours day or a forty-eight hours week as the
standard to be aimed at where it has not already been attained.
Fifth.—The adoption of a weekly rest of at least twenty-four hours, which should
include Sunday wherever practicable.
Sixth.—The abolition of child labour and the imposition of such limitations on the
labour of young persons as shall permit the continuation of their education and assure
their proper physical development.
Seventh.—The principle that men and women should receive equal remuneration for
work of equal value.
Eighth.—The standard set by law in each country with respect to the conditions of
labour should have due regard to the equitable economic treatment of all workers
lawfully resident therein.
Ninth.—Each State should make provision for a system of inspection in which
women should take part, in order to ensure the enforcement of the laws and
regulations for the protection of the employed.
Without claiming that these methods and principles are either complete or final, the
High Contracting Parties are of opinion that they are well fitted to guide the policy of
the League of Nations; and that, if adopted by the industrial communities who are
Members of the League, and safeguarded in practice by an adequate system of such
inspection, they will confer lasting benefits upon the wage-earners of the world.
(Treaty of Versailles of 28 June 1919, Part XIII, Annex, Section II, Article 427)
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3.3. Structure
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The Governing Body meets three times a year, in March, June and November, in
Geneva, Switzerland.
It has 56 titular members: 28 represent governments, 14 represent employers and 14
represent workers. Ten of the government seats are permanently held by States of
major industrial importance.17 The other government members are elected by the
government delegates at the Conference (other than those of major industrial
importance) every three years, taking geographical distribution into account.
The employers’ and workers’ representatives are elected by the employers’ and
workers’ delegates at the Conference, and are chosen in their individual capacity to
represent the employers and workers of the organization as a whole.
The Governing Body takes decisions on ILO policy, sets the agenda of the
International Labour Conference, establishes the programme and budget of the
Organization (which are then submitted to the Conference for adoption), elects the
Director-General of the International Labour Office and directs the activities of the
Office.
The Governing Body also plays a role in supervising the application of international
labour standards.
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Through these offices, the IL maintains direct contact with governments, workers and
employers.
The International Training Centre of the ILO, based in Turin, Italy, is the training arm
of the Organization. It provides training in subjects that further the ILO’s pursuit of
decent work for all.
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Every Convention contains an article which sets out the conditions under which a State that
has ratified it may denounce it, i.e. end its obligations. It is worth looking at the precise
conditions laid down for each case, but in general:
a) Conventions Nos. 1 to 25
Denunciation is authorized at any time five years or ten years (depending on the provisions)
after the Convention comes into force.
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In practice, except for specific cases, the process for revision is substantially the same
as for the adoption of Conventions and Recommendations (see the section on
adoption).
The effects of the entry into force or the ratification of a revised Convention on
previous Conventions vary.
A Recommendation that revises or replaces (the two terms have been used
interchangeably) one or more Recommendations take their place.
The ILO has developed various means of supervising the application of Conventions and
Recommendations in law and practice following their adoption by the International Labour
Conference and their ratification by States.
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ILO CONVENTIONS
Freedom of Association, Collective Bargaining and Industrial Relations
4.1.0. Introduction
ILO has put in place a number of conventions that seek to address the plight of the employees
in the work setting. Of concern in this section are the conventions that address the freedom of
association, the right to fair collective bargaining and the promotion of harmonious industrial
relations between the parties into the employment relationship.
4.1.1. Freedom of Association
To promote freedom of association amongst the players into employment relationship, three
key ILO Conventions have been put in place and these are:
Convention No. 87 of 1948
Convention No. 98 of 1949
Convention No. 135 1971
4.1.1.1. Convention No. 87, Freedom of Association and Protection of the Right to
Organise, 1948
This convention is imperative in the sense that it establishes the right of all workers and
employers to form and join organizations of their own choosing without prior authorization.
It also lays down a series of guarantees for the free functioning of organizations without
interference by the public authorities. Key issues provided by the convention:
Employees should join organisations of their own choice for furthering and defending
their interests
Employers can also join organisations of choice to further and defend their interests
Federation and confederation of worker and employer organisations
Armed forces with regards to this convention will depend on the national laws
4.1.1.2. Convention No. 98, Right to organise and Collective Bargaining, 1949
The convention provides for protection against anti-union discrimination, for protection of
workers' and employers' organizations against acts of interference by each other, and for
measures to promote collective bargaining. In brief, the convention provides for:
The right for the employees to join trade unions
Employees not to be prejudiced for the reason of union membership or participation
in union activities outside working hours.
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The ILO has adopted more than 40 standards specifically dealing with occupational safety
and health, as well as over 40 Codes of Practice. Nearly half of ILO instruments deal directly
or indirectly with occupational safety and health issues.
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and health policy, as well as action to be taken by governments and within enterprises
to promote occupational safety and health and to improve working conditions. This
policy shall be developed by taking into consideration national conditions and
practice. The Protocol calls for the establishment and the periodic review of
requirements and procedures for the recording and notification of occupational
accidents and diseases, and for the publication of related annual statistics.
Occupational Health Services Convention, 1985 (No. 161) -
This convention provides for the establishment of enterprise-level occupational health
services which are entrusted with essentially preventive functions and which are
responsible for advising the employer, the workers and their representatives in the
enterprise on maintaining a safe and healthy working environment.
Promotional Framework for Occupational Safety and Health Convention, 2006
(No. 187) - [ratifications ]
This Convention aims at promoting a preventative safety and health culture and
progressively achieving a safe and healthy working environment. It requires ratifying
States to develop, in consultation with the most representative organizations of
employers and workers, a national policy, national system, and national programme
on occupational safety and health. The national policy shall be developed in
accordance with the principles of Article 4 of the Occupational Safety and Health
Convention, 1981 (No. 155) , and the national systems and programmes shall be
developed taking into account the principles set out in relevant ILO instruments. A list
of relevant instruments is contained in the Annex to the Promotional Framework for
Occupational Safety and Health Recommendation, 2006 (No. 197) . National systems
shall provide the infrastructure for implementing national policy and programmes on
occupational safety and health, such as laws and regulations, authorities or bodies,
compliance mechanisms including systems of inspection, and arrangements at the
level of the undertaking. National programmes shall include time-bound measures to
promote occupational safety and health, enabling a measuring of progress.
Further relevant instruments
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administrative services in which workers are mainly engaged in office work and other
related services through elementary hygiene measures responding to the requirements
of welfare at the workplace.
Safety and Health in Construction Convention, 1988 (No. 167) -
The convention provides for detailed technical preventive and protective measures
having due regard for the specific requirements of this sector. These measures relate
to safety of workplaces, machines and equipment used, work at heights and work
executed in compressed air.
Safety and Health in Mines Convention, 1995 (No. 176) -
This instrument regulates the various aspects of safety and health characteristic for
work in mines, including inspection, special working devices, and special protective
equipment of workers. It also prescribes requirements relating to mine rescue.
Safety and Health in Agriculture Convention, 2001 (No. 184) -
The convention has the objective of preventing accidents and injury to health arising
out of, linked with, or occurring in the course of agricultural and forestry work. To
this end, the Convention includes measures relating to machinery safety and
ergonomics, handling and transport of materials, sound management of chemicals,
animal handling, protection against biological risks, and welfare and accommodation
facilities.
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Matenity Leave
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Comment on getting pregnant at recruitment/ do you reveal at interview, what rights, and chances
of employment? Should the law consider pregnancy leave to cover pregnancy related illness of
fatigue, miscarriage or abortions?
N:B. Refer to pages 93-105 of PDF Maternity at work. You are expected to analyse at least
5 countries paying particular attention to the provisions of maternity in those countries.
Globalisation
Introduction
Revolutionary technological developments created foundation for more free trade and control
of information has been curtailed. The wide use of internet and cellular telephones has
increased the exchange of information and it has been difficult for government to control this
and therefore undermining sovereignty. This exchange of information has been stimulated by
developments such as formation of WTO, which encouraged free trade among nations.
Internationalization of markets has also been the backbone for globalization where companies
are entering into foreign alliances so as to withstand competition. Foreign Direct Investments
have been stimulated by global competition and free trade to ensure growth and survival and
labor has therefore become very fluid production factor, meaning there is a high mobility of
labor across boundaries.
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Toyota (Japan) currently leads the global market in terms of vehicle manufacturing,
overtaking GM (USA). This is a direct scenario of competition that characterizes the global
village whereby national borders and geographic distance no longer make significance.
Shell the second largest MNC owns 400 million acres of land, more than 146 countries put
together. This leads to the following questions in relation to Industrial Relations:
Do we still have three actors? (Business, Government and Labour)
What is the power balance?
Expanding the role of service sector to stimulate people to rethink priorities. This
liberalization of services fosters the application of new management techniques,
facilitates relations between various stages of design, production, and marketing of
products and services and generating greater economies of scale.
Due to globalization organizations may seize this opportunity to filter into new
markets where they can exploit cheaper labour or any other resources. BMW in South
Africa, whose parent country is Germany, is an example of such an organization that
targeted cheaper labour market.
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Competition has taken a centre stage when it comes to globalization and hence the
continuous improvement in manufacturing techniques. Total Quality Management
systems and other world class manufacturing systems have therefore come to the
forefront so as to boost performance to achieve highly competitive products and
services in a business.
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IPD (1996) research showed that globalization is becoming increasingly important and is
leading to an increase in the number of IHRM specialists required because
Many organizations are managing an international workforce
Many employees are employed by organizations that have branches in other countries
There is an increase in the number of organizations that employ a workforce based
overseas
Fast growing international economies are proving to be attractive as business markets
Most organizations are conscious of the need to be interdependent and global.
There should be co-relation between employment practices and a diverse culture through
managing diversity and legal requirements. In recruitment management of such a diverse
workforce an organization is encouraged to commit itself to being an ‘equal opportunity
employer’, who does not discriminate in terms of gender, nationality, among others. These
are some of the legal requirements in managing a diverse workforce.
The role of international bodies that have interfered because of globalization has taken
a centre stage in making regulations upon which government has to refer when
implementing its rules and laws. There are organizations such as Green Peace, which
is an anti-globalization NGO aimed at promoting sustainable development and
conserving natural resources. The Green Belt (conservation of resources around a
town) is therefore an initiative for such international bodies.
Integration-based legal changes have made it difficult to institute legal measures that
are not practiced in the group. The state has to abide with the measures implemented
by a group, for example, SADC, EU or COMESA.
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IR policy is shaped by the ILO conventions and the state has to make reference to
them when providing a legal framework for the parties in IR therefore the state is not
at liberty to formulate its own regulations outside of international regulations.
DANGERS
Brecher (1993) stresses that globalization is out of control and specifies 7 danger signals:
Race to the bottom- Wages and social environmental conditions tend to fall to the
level of the most desperate.
Global stagnation- Lower wages and reduced public spending mean less buying
power leading to stagnation, recession ad unemployment. This is aggravated by debt
accumulation as national economies in poor counties become geared to debt
repayment at the expense of consumption, investment and development.
Polarization of haves and have nots- as a result of globalization the gap between the
rich and poor is increasing both within and between countries around he globe.
Loss of democratic control- globalization has reduced the power of individuals and
communities to shape their destinies.
Unfettered TNCs have become the world’s most influential ad most feared that they
shape community destinies.
Unaccountable global institutions- for poor countries foreign control is formalized in
the World Bank’s structural adjustment plans and IMF decisions and GATT rules
affect the economic growth rates of all countries. The decisions of these institutions
also have an enormous impact on global economy.
Global conflict- Economic globalization is producing chaotic destructive rivalries. In
the past eras such rivalries have ultimately led to world wars.
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• Flexibility (Contracting, casual labour and outsourcing). There has been a global
increase in the casualization of labour, contract employment and lower working
standards meaning that employers now have the ability to fire and hire easily so as to
improve operational efficiency. These employees do not enjoy benefits of permanent
workers d representation y trade unions. Such measures cut down on labour costs so s
to boost investment, production efficiency and increase economic growth. Labour
market flexibility has therefore led to a lot of job and employment insecurities.
• BPR with a view to increasing organisational effectiveness. Globalisation results in
organisational changes which need to be supported by BPR which therefore affect HR
policies such as retrenchment, recruitment and selection, training and others.
• Reducing the scope of CB to issues that can be employer specific. Negotiation is
moving from being wage based to other issues that include educational assistance,
medical aid and other benefits.
• Shift to enterprise level bargaining whereby employees and employers at workplace
levels.
• Training and Development (Management of Diversity). Employers re encouraged to
support employees through provision of the necessary resources for workers to be
able to undertake continuous on-the-job, educational and skill training so as to move
long with labour and IT changes.
• Knowledge is driving employment, investment and productivity. This involves
knowledgeable workers who advocate for more investment which boosts productivity.
There is shift from job security to employability where employers opt for a multi-
skilled workforce which is compliant with current global trends.
• Poor remuneration for employment- the struggle for survival under globalization has
often resulted in competition by developing countries to lower labour standards,
(beggar-thy-neighbour policies) resulting in decline of remuneration and poor
working conditions.
• Retrenchments- Opening up economies in developing countries has made it difficult
for local firms to thrive on the domestic market. Many firms have failed to compete
and have been forced to either close down or to reduce their operational size. Such
measures have led to the laying off of employees (retrenchments) and have resulted in
increased unemployment, therefore weakening trade unions.
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• Increasing poverty levels- As government role has shifted from that of being provider
to regulator, it has reduced its expenditure in social sectors. The private sector is being
promoted to take up social service provision, on both the domestic and international
market.
• A shift from the traditional roles of T.Us -Expansion of managerial prerogative where
employers now have more power. Trade union significance has been curtailed further
through globalization due to the level of bargaining which is now done mainly at
enterprise level.
• Erosion of tripartite forums for consultation on economic and social issues Focus on
cost-cutting and personal agendas due to globalisation. It therefore becomes difficult
to hold social talks which aim at having a common goal.
• Increased importance of MNCs . Power imbalances between labour and capital in
certain countries will result in reliance on MNC’s. These hold better production
process, improved technology and employment opportunities to poorer countries.
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The pathway to the future for MNC/TNC is borderless for management and a global
mind set. These corporations globalize operations in areas of product development,
purchasing sales and manufacturing.
The operations of MNCs globally vary considerably thus having, Ethnocentric,
polycentric and geocentric in nature.
1. Ethnocentric MNCs
It exerts strict headquarter control over foreign operations, tries to operate abroad largely
the way it does at home and often creates local resentment by failing to respect local
needs and customs.
2. Polycentric MNCs
It gives its foreign operations more operating freedom; respects market differences among
countries, and pursues ‘multi domestic’ strategies that treat each country as a separate
competitive domain for such things as product designs and advertising campaigns.
3. Geocentric MNCs
They seek total integration of global operations, try to operate across borders without
home based prejudice, make major decisions from a global perspective, distribute work
among world-wide points of excellence and employ senior executives from many
different countries
4. Regiocentric
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This reflects the geocentric strategy and structure of the multinational. Like the geocentric
approach, it utilizes a wide pool of managers, but in a limited way. Personnel may move
outside their countries, but only within the particular geographic region. Regional
managers may not be promoted to headquarters positions but enjoy a degree of regional
anatomy in decision making. It may seem as a precursory step towards geocentrism.
However there are several other MNCs to include Toyota, Nissan, Barclays Bank, Nestlé
Africa, Old Mutual , Stanbic, Anglo American and Nokia.
RULES
International labour organization (ILO) exerts influence over multi-national. This has
been done through organizations such as the United Nations Conference on Trade and
Development (UNCTAD). The ILO has identified a number of workplace- related
principles that should be respected by all nations: freedom of association, the right to
organize and collectively bargain, abolishing of forced labour, and non discrimination
in employment.
In 1977 the ILO adopted a code of conduct for multinationals (Tripartite Declaration
of Principles Concerning MNEs and Social policy. The ILO code of conduct was
influential for drafting of the OECD guidelines for multinationals which were
approved in 1976. However there is controversy in the literature as to the
effectiveness of OECD guidelines in regulating multinational behavior. This lack of
agreement centers on assessments of the various challenges of the guidelines.
In the Zimbabwean context multinational companies are regulated by the Labour
Relations Act, the Company `s Act and all the other statutory instruments that regulate
other companies operating in Zimbabwe.
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While some TNCs/MNCs are withdrawing from Zimbabwe citing a harsh macro-economic
environment, Zimbabwe is becoming a fore runner in the global economy witnessed by the
emergence of the telecoms giant ECONET, former financial house TRUST Holdings and
PIONEER Africa.
Labour in Zimbabwe has been seen to favour MNCs because of their higher
remuneration levels compared to government and other private organizations. MNCs
also tend to have competitive developmental problems for employees which they
adopt from their mother countries and since they are normally involved in diverse
business lines employees tend to gain the advantage of multi-skilling and hence their
development.
Since capital is more mobile than the workers it employs in Zimbabwe, Multinational
Corporations have greatly facilitated this mobility and thus have strengthened the
bargaining power of management against the workers. By the same token the job
security of workers employed by multinationals is lessened. However in this sense we
can say that Zimbabwe is in a Mosaic model of MNCs whereby there is low degree of
worker mobility and emphasis on social policy. The balance between economic
efficiency and social justice determines the internal dynamics of IR and its ability to
respond to outside factors.
Trade unions do not favour TNCs/MNCs they believe that they export jobs, shift
operations into low wage countries to escape them, hand down industrial relations
systems from foreign headquarters, and try to keep unions out of their operations.
Labour unions view the growth of multinationals as a threat to the bargaining power
of labour because of the considerable power and influence of large multinationals
firms. While it is recognized that multinationals are ‘neither uniformly anti-union nor
omnipotent and monolithic bureaucracies, their potential for lobbing power and
flexibility across national borders creates difficulties for employees and Trade unions
endeavoring to develop countervailing power (Brewster et al 2000).
Alternative sources of supply- this may take the form of an explicit ‘dual sourcing’ policy to
reduce the vulnerability of the multinational to a strike by any national union. Also,
temporary switching of production in order to defeat industrial action is often utilized to some
extent by MNCs.
MNCs and transnational are increasingly influencing the global economy. Their role towards
global economic growth cannot be undermined. They control a greater part of the world’s
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productive assets and world trade. Both the MNCs and the host countries mutually benefits
from the relationship.
In Zimbabwe like any other country the economy derives benefits from MNCs and TNCs that
include:
A larger tax base- giving the government revenue to finance its expenditure.
Increased employment opportunities- as they intensify their operations they engage
local employees thus creating more opportunities.
By creating employment-they reduce the level of unemployment, hence enhancing the
control of one of the economy `s critical macro-economic fundamental
(unemployment)
Create new industries- thus increase the employment of idle resources and improving
Zimbabwe `s productive capacity and capacity utilization.
Increased Gross Domestic Product (GDP)- by increased employment of resources and
investment MNCs contributes much towards GDP which in turn boosts aggregate
supply.
Reduced inflation- the increase in GDP and aggregate supply improves the
availability of goods and services on the market and such an increase in supply will
reduce inflation, stimulate growth and stability thus contributing towards the success
of the Zimbabwean economy.
Increased export base- their operations increase productivity and giving the
Zimbabwean economy surplus produce to export.
Increase in foreign exchange inflows- through increased exports by MNCs foreign
inflows are stimulated thus improving Zimbabwe’s foreign exchange reserves and
Zimbabwe `s ability to procure imported raw material and services at national level.
Increased National Income and Per capita Income- MNCs improve the national
income which has a positive effect thus improving the welfare and living standards of
nationals within the countries they operate and such an achievement will be regarded
as economic growth in Zimbabwe.
Enhanced development of local resources and infrastructure- as MNCs intensify their
operations and their ability to secure off-shore finance they develop local resources
and infrastructure for example, the former BHP developed Zimbabwe `s Platinum
industry and infrastructure such as the Selous Meturlogical complex , the Mhondoro
Ngezi highway, schools and housing projects in Norton and Chegutu.
They also induce technological transfers in host countries though at times limited.
Excessive profits
Economic domination
Interference with government
Hire best Local Talent (Competition for labour)
Limited Technology transfer
Disrespect for local customs
Plundering of resources in host countries.
Cheap labour –MNCs gain from the advantage of cheap labour. The labour market in
Zimbabwe is characterized by low wages and this lures them because of the resultant
low production costs
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Profit limitations
Overpriced resources
Exploitative rules
Foreign exchange restrictions
Failure to uphold controls
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