MNCs IMPACT ON LABOUR STANDARDS IN DEVELOPING COUNTRIES
MNCS IMPACT ON LABOUR STANDARDS IN DEVELOPING COUNTRIES
INTRODUCTION
Globalization has increased the economic power of the multinational corporations (MNCs), especially in developing countries where MNCs have shaped the economy through foreign direct investment (FDI), knowledge transfer, influence on employment rates and strong competition within the domestic market. Additionally, MNCs have a direct impact on the economic, political, and social landscape of developing countries; their business activities continue to have considerable effect upon human rights and labour standards, both positively and negatively.
THE DEBATE
There is great debate about the role of MNC's in developing countries. Some are optimistic arguing MNCs' operations, fuelled by superior technical know-how and modern management practices, allow them to pay higher wages and raise labour standards, while others argue they exploit cheap labour and ignore poor working conditions. Evidence of MNCs disregarding labour abuse in developing economies has fostered the rise of activism for corporate social responsibility (CSR); there is now a strong push for greater international regulation and enforcement of minimum labour standards.
The MNCs' power to control international investment and create jobs has had enormous bearing on the economies of developing countries. Critics have argued that, faced with pressures to attract such investments and lower unemployment rates, governments have had little or no alternative but to accept the terms of MNCs. Following this argument, it can be said that globalization and the activities of MNCs have simultaneously raised economic growth and inequity in developing countries. While their economies are booming because of massive FDI, the workers, especially unskilled ones, are suffering from degrading living conditions and very low wages. The level of inequality between developing and developed countries is growing, which raises the issue of balancing economic growth
INTRODUCTION
Globalization has increased the economic power of the multinational corporations (MNCs), especially in developing countries where MNCs have shaped the economy through foreign direct investment (FDI), knowledge transfer, influence on employment rates and strong competition within the domestic market. Additionally, MNCs have a direct impact on the economic, political, and social landscape of developing countries; their business activities continue to have considerable effect upon human rights and labour standards, both positively and negatively.
THE DEBATE
There is great debate about the role of MNC's in developing countries. Some are optimistic arguing MNCs' operations, fuelled by superior technical know-how and modern management practices, allow them to pay higher wages and raise labour standards, while others argue they exploit cheap labour and ignore poor working conditions. Evidence of MNCs disregarding labour abuse in developing economies has fostered the rise of activism for corporate social responsibility (CSR); there is now a strong push for greater international regulation and enforcement of minimum labour standards.
The MNCs' power to control international investment and create jobs has had enormous bearing on the economies of developing countries. Critics have argued that, faced with pressures to attract such investments and lower unemployment rates, governments have had little or no alternative but to accept the terms of MNCs. Following this argument, it can be said that globalization and the activities of MNCs have simultaneously raised economic growth and inequity in developing countries. While their economies are booming because of massive FDI, the workers, especially unskilled ones, are suffering from degrading living conditions and very low wages. The level of inequality between developing and developed countries is growing, which raises the issue of balancing economic growth