Differing Labour Standards
A business firm cannot be effective in its operations if it does not understand the labour dynamics that affect it. The supply of labour enables businesses to continue with their operations thereby maintaining their profitability. Labour supply is determined by several factors among them the population structure in the region of location. The quality of such labour needs to be evaluated as it increases the productivity of the workforce as well as that of the entire business.
Business operations nowadays are not limited by their locations, they are able to access larger markets. For any business to succeed in their operations in foreign countries they need to understand the impact that labour trends have on their operations. The presence of labour forces in a country is important. These labour unions fight for the rights of the citizenly to avoid exploitation by firms through payment of low wages. These labour unions can liaise with governments of the respective countries to force firms to pay better wages.
In fact, there are internationally agreed wage rates that every firm is obliged to comply with. Failure to meet these wages attracts the fury of the governments forcing companies to either close down or raise the wages. This may be against a company’s capabilities and may affect their productivity. Failure to comply with such set standards also affects the company’s ability to hire more people. People would avoid the company because of the low wages. (Walsh, 1998). The location of the business can also affect the population structure in regions.
People will move to the areas where businesses have been established. Firms dealing with mining are an example. People move from distant lands and occupy the regions around such firms. This has the effect of increasing the labour supply in some areas as other areas experience deficit. This raises wages in some regions where there is deficit. Firms therefore find it harder to penetrate some areas where people have immigrated from. It also raises the charges for the hire of labour further for other interested entrants.
The overall effect on the international business is to push up hiring costs. (Gregory) As people move to the areas where businesses are located they increase the mobility of labour. Such movement of people has both positive and negative effects. An advantage of having a mobile work force is that a business will be guaranteed of labour supply wherever it chooses to be located. This is because people can easily move to these places. The minority groups are also affected by firms operations.
Because of their lack of skills, they are prone to be hired cheaply. This works to the advantage of the business as they get cheaper labour. The presence of business firms in an area motivates the populace to undertake training to enable them to work in the industries that have been set up. These trainings lead to better quality labour. This has made it easier for businesses to continue their penetration to more areas. The skills make people more productive and businesses should take advantage of these resources to improve their operations.
The availability of skilled labour in a country will enable quick expansion of the business as they as saved the costs of training the workforce anew. There are lesser resources required for human capital investment and this enables businesses to pick up fast. The labour market experiences great turbulences. The markets experience shortage of labour while in other markets there is excess supply. It takes quite a while before the equilibrium level is attained. In conclusion it is important to realize that businesses have an impact on the society.
The business should be able to respond to the society in a way to promote growth. Businesses should equip the people with the right skills to work even in other industries.
Gregory, M. B et al. Labour Market Inequalities: Problems and Policies of Low-Wage Employment in International Walsh, K & Valerie, L (1998). The Effect on International Competitiveness of Differing Labour Standards in the Steel Industries of the NIS and the EU. University of Wolver Hampton Management Research Centre.