Business and Management
Submitted By Breana
The international division of labour refers to the breaking up of the production process in different locations around the world. It can involve a firm setting up offshore branches or divisions in different countries, outsourcing tasks to businesses in other countries, or outsourcing employment to individuals in other countries using technology.
Firms have a range of options available to them globally: choosing to produce in a rich country versus a poor country, an urban area versus a non-urban area, outsourcing different functions to different locations, using technology to outsource functions without relocation.
Advantages of Global division of labour - Access to a much larger labour force for firms - More competitive labour market drives down labour costs, eg. Wages and working conditions such as sick leave – this leads to falling average costs, increased profits, rising income, employment and economic growth - Increased employment opportunities for employees in developing countries - Increased wages for employees in developing countries - Potential for employees to organise globally to share information and to improve wages and working conditions |
Disadvantages of global division of labour - Loss of jobs for employees in the home country - ‘race to the bottom’ of wages due to international competition for employees in import-competing industries -Exploitation of employees in developing countries, leading to poor working conditions, job insecurity, low wages, not just in unskilled or semi-skilled occupations - Employers areable to work outside the industrial relations framework including minimum wages and standards of employment, which can undermine wages and working conditions at home In Banerjee article it states how the specific nature of IT in productity is considered to have strengthened by bargaining strength of the knowledge...