Transcript ib-economic-labor-forces

Welcome to class of
Economic and Labor Forces
by
Dr. Satyendra Singh
University of Winnipeg
Canada
Objectives:
Learning Objectives
 Purpose of economic analysis
 Levels of national economic development
 Dimensions of the economy and different
indicators used to assess them
 Importance of a nation’s consumption patterns
and the significance of purchasing power parity
 International labor trends
 Labor union
 Labor union membership
 Multinational labor activities
Levels of Economic Development
• Developed
– Nations that are the most technically developed
• Newly industrialized economies (NIEs)
– The fast-growing upper MIG and HIG economies
such as Taiwan, Hong Kong, and Singapore
• Newly industrializing countries (NICs)
– Brazil, Mexico, Malaysia, Chile and Thailand
• Developing
– Nations that are less technically developed
• Emerging Markets
– Transformation from controlled to market economy
Dimensions of the Economy…
 Important Economic Indicators
 Gross National Income (GNI)
 GNI/capita
 Purchasing Power Parity
 Income Distribution
 Private consumption
 Unit labor costs
 Exchange rates
 Inflation rates
 Interest rates
Dimensions of the Economy…
• Gross National Income (GNI)
– The measure of the income generated by a
nation’s residents from international and domestic
activity
– Preferred over GDP
• GNI/Capita
– Used to compare countries with respect to the
well-being of their citizens and to assess market or
investment potential
Dimensions of the Economy…
• Purchasing Power Parity
– The number of units of a currency required to buy
the same amount of goods and services in a
domestic market that $1.00 would buy in the U.S.
– Helps to make comparisons possible across
economies
CIA Fact Book
Dimensions of the Economy…
 Income Distribution
A
measure of how a nation’s income is
apportioned among its people
 Reported as the percentage of income
received by population quintiles
 Data gathered by World Bank
 Income more evenly distributed in richer nations
 Income redistribution proceeds slowly
 Income inequality increases in early stages
development but reverses in later stages
of
Dimensions of the Economy…
 Private Consumption
 Disposable income
 after-tax personal income
 Discretionary income
 income left after paying taxes and making
essential purchases
Dimensions of the Economy…
 Unit labor costs
 Total
direct labor costs divided by units
produced
 Countries with slower-rising unit labor
costs attract management’s attention
Dimensions of the Economy
• Reasons for relative changes in labor costs
– Compensation
– Productivity
– Exchange rates
• International firms must keep close watch on
labor rates around the world
Labor Forces
Labor Forces…
International Labor Trends
Aging of Populations 
Rural to Urban Shift 
Unemployment
Immigrant Labor
Child Labor
Forced Labor
Brain Drain
Guest Workers
Labor Forces…
• 192 million overall unemployed
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Middle East and North Africa (13.2%)
Sub-Saharan Africa (9.7%)
Central and Eastern Europe (9.7)
Latin America and Caribbean (7.7)
Developed economies (6.7%)
Southeast Asia and the Pacific (6.1%)
South Asia (4.7%)
East Asia (3.8%)
Labor Forces…
 Immigrant Labor
 Refers to the process of leaving one’s home country to
reside in another country
 Foreign-born
 Population
comprises those immigrants whose
move is permanent and may include taking
citizenship
 Foreign
 Population who are guest workers
Labor Forces…
• Child Labor
– The labor of children below 16 years of age who
are forced to work in production and usually
receive little or no formal education
• Primarily found in developing nations
• Existent in developed countries
• 70% is in agriculture
• Forced Labor
– Most common in South and East Asia
Labor Forces…
• Brain Drain
– The loss by a country of its most intelligent and
best-educated people
– When skilled workers migrate from developing
countries they do so for professional opportunities
and economic reasons
• Reverse Brain Drain
– The growth of outsourcing and the movement of
highly educated, technologically skilled employees
and research scientists to other countries
Labor Forces
• Guest Workers
– People who go to a foreign country legally to
perform certain types of jobs
• Guest workers
countries need
provide
the
labor
host
– Guest workers are desirable as long as the
economies are growing
– When economies slow, fewer workers are needed
and problems appear
Labor Unions…
• Organizations of workers
• European labor
– Identified
ideology
with
political
parties
and
socialist
• United States labor
– Laborers already have many civil rights
– Collective bargaining
• The process in which a union represents the interests of
a bargaining unit (which sometimes includes both union
members and nonmembers) in negotiations with
management
Labor Unions
• Japanese unions are enterprise-based rather
than industry wide
– As a result, unions tend to identify strongly with
company interests
– However, Japanese workers are reported least
satisfied with jobs in developed world
Labor Union Membership Trends
• Employers have made efforts to keep their
businesses union-free.
• More woman and teenagers have joined the
work force, low loyalty to unions.
• The unions have been successful in raising
wages, which leads to offshoring.
• In the knowledge economy, industrial jobs
that have formed the core of union
membership are declining.
Multinational Labor Activities…
• Internationalization of companies creates
opportunities for them to escape the reach of
unions
• In response, unions have begun to
– Collect and disseminate information about
companies
– Consult with unions in other countries
– Coordinate with those unions’ policies and tactics
– Encourage international companies’ codes of
conduct
• Multinational unionism is developing
Multinational Labor Activities
 International Labor Organization (ILO)
 Purpose
is to promote social justice and
internationally recognize human and labor rights
worldwide
 Trade Union Advisory Committee to the OECD
 Consults on trade union issues in global markets