The Effect of Globalization, Labour Flexibilization and National Industrial Relations Systems on HRM

This paper analyzes how changes to the global organization of capitalism have accompanied and intensified globalization as well as have affected the regulation of labor and employment relationship. One of the most significant of these changes has been the dramatic increase in the rate of cross-border merger and acquisition activity. Of equal significance, especially for the regulation of labor and the employment relationship, has been the pronounced tendency of global enterprises to transform themselves into coordinators and organizers of activities performed for them by contractors, sub-contractors and suppliers. Outsourcing and subcontracting have allowed global enterprises to reduce and externalize the costs incurred from the direct employment of labor. This reorganization of the operations of global corporations has been greatly facilitated by the removal of barriers to trade and the global movement of capital, and labor market deregulation. Labor market deregulation has largely been brought about by the emasculation of national Industrial Relations Systems (IRSs) in developed and developing nations alike. As national IRSs have been emasculated, so has the regulation of labor and the employment relationship increasingly been internalized in the firm by the use of Human Resource Management (HRM)