If you have to close a plant in Italy, in France, in Spain, or in Germany,
you have to discuss the possibility with the state, the local communities, the trade unions; everybody feels entitled to intervene. . even the
Church.
An important variable in organizing work, in control, and in strategic planning is that of the labor relations environment and system within which the managers of an MNE will operate in a foreign country. Differences in economic, political, and legal systems result in considerable variation in labor relations systems across countries. Pan-European firms, for example, are still dealing with disparate national labor and social systems as the EC directors wrestle with the goal of the harmonization of labor laws. In addition, European businesses continue to be undermined by their poor labor relations and by inflexible regulations. As a result businesses are having to move jobs overseas to cut labor costs, resulting from a refusal of unions to grant any reduction in employment protection or benefits in order to keep the jobs at home.47 As well, non-European firms wishing to operate in Europe have to carefully weigh the labor relations systems and their potential effect on strategic and operational decisions.
The term labor relations refers to the process through which managers and workers determine their workplace relationsMps. This process may be through verbal agreement and job descriptions, or through a union-written labor contract which has been reached through negotiation in collective bargaining between workers and managers. The labor contract determines rights regarding workers' pay, benefits, job duties, firing procedures, retirement, layoffs, and so on.
The importance to the international manager of the prevailing labor relations system in a country is that it can constrain the strategic choices and operational activities of a firm operating there. The three main dimensions of the labor - management relationship which the manager will consider are: (1. the participation of labor in the affairs of the firm, especially as this affects performance and well-being; (2. the role and impact of unions in the relationship; and (3. specific human resource policies in terms of recruitment, training, and cornpensation. Constraints take the form of (1. wage levels which are set by union contracts and leave the foreign firm little flexibility to be globally competitive; (2. limits on the ability of the foreign firm to vary employment levels when necessary; (3. limitations on the global integration of operations of the foreign firm because of incompatibility and the potential for industrial conflict.
WORKING WITHIN LOCAL LABOR RELATIONS SYSTEMS : Organizing Structure article from Formulating Implement Catagory WORKING WITHIN LOCAL LABOR RELATIONS SYSTEMS
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