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What is the effect of Globalization
on the Employment level ? |
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The importance in studying the
effects of globalization on the
labor market |
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The importance in
studying the effects of globalization on the labor
market lies in the fact that earnings from labor
represent the main source of income for the great
majority of the inhabitants of developing nations
and especially of the poorer groups of workers, who
lack ownership of any other material assets. |
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How
does Globalization affect the labor market? |
Positive Effects |
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►Positive
effects can occur as a result of the increased
capacity of developing countries to create new
opportunities for work and production following the
alleviation of price distortions with respect to
both labor and capital. (ESCWA 1999:24).
►FDI
has both direct and indirect effects on employment
creation in the recipient countries. This depends on
the size and type of investment, the type of
technology adopted and the ability of the host
country to master the imported technology and adapt
it to its needs.
►FDI
also has indirect effects on employment through the
vertical links to the TNCs, and there may also be
spillover effects of TNCs on local science,
technology, education and training |
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Negative Effects |
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Negative effects occur as a result
of large-scale technological
developments that accompany this
phenomenon, which will reduce the
demand on unskilled labor
Even direct foreign investment does
not care for cheap workers but only
for highly skilled workers. |
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The
traditional nature of “work” might
disappear due the rapid advances in
technology, while at the same time
creating new and innovative
occupations in favor of the highly
specialized professions. |
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An
increase in hidden unemployment, a
lack of new job openings, and a
deterioration of real wage rates are
the consequences of globalization in
most developing economies, which
were unable to adapt the new
technologies. |
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Moreover if the labor clause, will
be enforced through the WTO, this
will have a negative impact on
economic growth and employment in
many developing countries, where
child labor exists and where
working conditions are miserable
(Nassar,2003). |
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Most
trade liberalization benefits will
be received by the
manufacturing-producing countries,
while the smallest share will be
going to the agricultural-producing
countries (developing countries). |
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In
addition policies of structural
adjustment such as privatization
imply an increase in unemployment
since privatization is accompanied
usually by a reduction in the demand
for labor. |
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Finally the theoretical predictions
about the employment consequences of
trade liberalization are based on
assumptions of full employment of
resources and flexible labor
markets. These assumptions, might
not hold true in developing
countries where labor markets are
inflexible due to structural
factors. |
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Labor supply trends by region,1980-2015 |
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Working age
(15-64) population
( millions) |
Average Annual Labor Force
Growth (%)
(1980 – 1999) |
Projected Annual Population
Growth Rate (%),
1999-2015 |
Formal % of Labor Force |
| |
1980 |
1999 |
|
0-14 |
15-64 |
65+ |
1980 |
1999 |
|
East Asia &Pacific |
820 |
1220 |
1.9 |
-0.6 |
1.2 |
2.5 |
42.5 |
44.4 |
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Eastern Europe &Central Asia |
274 |
318 |
0.5 |
-1.2 |
0.4 |
0.7 |
46.7 |
46.2 |
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Latin America & Caribbean |
201 |
319 |
2.7 |
-0.1 |
1.7 |
2.8 |
27.8 |
34.6 |
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Middle East &North Africa |
92 |
172 |
3 |
0.5 |
2.5 |
2.8 |
23.8 |
27.3 |
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South Asia |
508 |
797 |
2.2 |
0.1 |
2 |
2.5 |
33.8 |
33.3 |
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Sub-Saharan Africa |
195 |
340 |
2.6 |
1.6 |
2.7 |
1.8 |
42.3 |
42.2 |
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High-income |
505 |
595 |
1 |
-0.6 |
0.2 |
1.8 |
38.4 |
43.1 |
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World |
2595 |
3761 |
1.9 |
0.1 |
1.4 |
2.1 |
39.1 |
40.6 |
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Source
:
Betcherman, G. (2002) |
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Educational
Levels of Female Workers in The
Manufacturing Sector in Selected in
Selected Arab Countries in 1980's and
1990's |
|
Country |
Year |
Illiterate |
Read & Write |
Primary |
Intermediate |
Secondary |
University & Upper |
Unidentified |
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Bahrain |
1991 |
1 |
4 |
8 |
11 |
64 |
12 |
- |
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Kuwait |
1970 |
11 |
22 |
22 |
33 |
- |
11 |
- |
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Oman |
1993 |
42 |
22 |
17 |
8 |
10 |
1 |
0 |
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Qatar |
1986 |
2 |
6 |
7 |
15 |
28 |
42 |
- |
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Saudi Arabia |
1986 |
34 |
13 |
26 |
7 |
15 |
5 |
- |
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United Arab Emirates |
1980 |
45 |
- |
- |
18 |
9 |
27 |
- |
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Egypt |
1976
1990 |
34
58 |
23
12 |
17
8 |
18
16 |
1
1 |
6
5 |
1
0 |
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Iraq |
1987 |
25 |
16 |
23 |
7 |
12 |
12 |
6 |
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Jordan |
1979
1993 |
13
7 |
19
6 |
37
21 |
18
26 |
8
21 |
5
19 |
- |
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Lebanon |
1997 |
9 |
6 |
36 |
27 |
13 |
9 |
19 |
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Syria |
1970
1994 |
67
21 |
21
24 |
10
31 |
1
13 |
1
9 |
0
2 |
0
0 |
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Source :
CAWTAR,2001 |
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Educational
Levels of Female Workers in The
Services Sector in
Selected Arab Countries in 1980's and
1990's |
|
Country |
Year |
Illiterate |
Primary |
Intermediate |
Secondary |
University & Upper |
Unidentified |
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Bahrain |
1991 |
46 |
15 |
10 |
8 |
0 |
0 |
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Kuwait |
1985 |
30 |
24 |
23 |
3 |
2 |
0 |
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Qatar |
1986 |
36 |
6 |
5 |
8 |
3 |
0 |
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Saudi Arabia |
1987 |
79 |
11 |
1 |
2 |
1 |
0 |
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United Arab Emirates |
1980 |
83 |
3 |
2 |
3 |
0 |
0 |
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Egypt |
1986 |
65 |
5 |
4 |
0 |
4 |
0 |
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Iraq |
1987 |
52 |
17 |
4 |
2 |
2 |
0 |
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Jordan |
1979 |
48 |
18 |
13 |
4 |
3 |
7 |
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Syria |
1994 |
27 |
33 |
12 |
4 |
1 |
0 |
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Yemen |
1991 |
79 |
4 |
0 |
0 |
0 |
0 |
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Source:
CAWTAR,2001 |
Effect on real wage levels of the work force |
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Trade
flows lead to shifts in the demand
for labor, as more workers are
needed in newly profitable sectors
and fewer in unprofitable sectors. |
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If the
supply of labor is fixed these
demand changes lead to a rise in
wages to more profitable industries. |
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Competition by imports might lower
the price of products by low skilled
labor relative to the price of
products made by skilled labor, so
that domestic firms shift toward
producing skill intensive goods,
which will lead to a lower real wage
level for the majority of work
force, the unskilled in developing
countries (Rama,M.2003 , Fontana,
M.1998) |
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Financial liberalization is likely
to result in a fall in the net
income received by workers. This is
because countries are lowering taxes
to attract FDI, relatively to high
tax rates on labor, as labor is
less mobile to resist high taxes |
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By
applying this discriminatory tax
policy against labor, income will
be redistributed in favor of the
high-income earners in the society.
This negative impact of
globalization on wages is likely to
be greater in developing countries,
which lack strong labor unions and
democratic political systems such as
developing countries (ABDEL-KHALEK, G. and
Karima Korayem.1999) |
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More Resources |
|
► |
Anderson ,Edward
(1998)
"Globalization
and Wage Inequalities 1870-1970"
(Brighton: Institute of Development
Studies (IDS) |
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► |
Black, E. Sandra
and Elizabeth Brainerd (2002)
"Importing Equality? The
Impact of globalization on gender
discrimination"
(Massachusetts: National Bureau of
Economic Research) |
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Cline, William R.
(1999)
"Trade and Income
Distribution: The Debate and New
Evidence"
(Washington D.C.: Institute for
International Economics) |
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► |
Joekes,
Susan (1995)
Trade-Related Employment for Women
in Industry and Services in
Developing Countries
(Geneva: UNRISD) |
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► |
Matthew J. Slaughter
and Phillip Swagel (1997) "Does
Globalization Lower Wages and Export
Jobs?"
(Washington D.C.:
International Monetary Fund) |
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► |
Milanovic, Branko
(2002)
"Can We Discern the Effect
of Globalization on Income
Distribution? Evidence from
Household Budget Surveys"
Working Paper
(World Bank: New York)
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Stevens, Christopher. Stephen Devereux
and Jane Kennan (2003)
"International Trade,
Livelihoods and Food Security in
Developing Countries"
(Brighton:
Institute of Development Studies,
University of Sussex)
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