Free The Impact Of Globalization On Work And Employment Essay Example

Type of paper: Essay

Topic: Workplace, Economics, Economy, Employment, Globalization, Countries, Growth, Value

Pages: 7

Words: 1925

Published: 2021/01/03


One of the most important phenomena of our time is globalization. This is a process of global economic, political and cultural integration and unification. The labor market is a major subsystem of the economy and is one of the most reliable indicators of its changes. Relevance of the study of the global labor market in the context of globalization is defined as the significance of the subsystems of the labor market for a modern market economy. It is important to understand how globalization affects the changes that have occurred over the past twenty years in the global economy, as well as the influence of the processes taking place in the employment relationship. Due to the globalization of the world economy, there is raises a question of globalization of the world labor market. Profound changes in the course of employment, labor organization, employment patterns and labor relations pose the problem of the evolution of world labor market. In these circumstances, the study of international migration issues and concerns of the international regulation of labor relations is primarily.


The US economy is experiencing hard times. Low growth, high unemployment, falling competitiveness, job losses in manufacturing, growing social inequalities - all of these issues in recent years have become very acute. President Barack Obama had a focus in the "Address to the State of the Union" submitted to Congress a few years ago. What is the role of globalization in the exacerbation of the current economic and social problems in the United States? Is the loss of jobs in the US industry resulting transfer of production to developing countries in order to reduce costs and save on wages or it is due to the introduction of new technologies? Does globalization affects income distribution in the United States and whether it leads to greater inequality? Can the market on their own, without the intervention of the state to solve the problem of employment and income in various sectors of the American economy? All these issues have been the subject of heated debate in the American scientific community for a long time, but after the economic crisis of 2008-2009 they have acquired a special urgency. In this regard, a lot of interest, in my opinion, represent the views of one of the most active participants in this debate - the famous American economist, Nobel laureate Michael Spence. He set out his views in the article "Globalization and Unemployment" (Magazine «Foreign affairs»). There are also interesting position can be considered in two his opponents - Richard Katz and Robert Lawrence. They take a different, distinct from M. Spence, position on the impact of globalization on the US economy (Lawrence, R., 2011).
"Globalization is the process by which markets are rallying the world - writes M. Spence.- Over the past 60 years, as a result of the introduction of new technologies and improved management practices to reduce transport, transaction costs and tariffs, as well as eliminate many artificial barriers to international trade, globalization is constantly accelerating. This gave a stunning effect. An increasing number of developing countries managed to achieve sustainable economic growth of the order of 7-10%, and in thirteen of these countries (including China) growth rates in excess of 7%, persisted for 25 years or more. As a result, developing countries have become more and more close to the rich countries". Ten years ago, the impact of globalization on employment and distribution of wealth in the developed countries was very low. The economic growth rate of 2.5% was considered as appropriate, and in most of these countries, the employment opportunities for workers with different levels of education were continuously expanding. But to the extent of that developing countries has become more powerful and the rich, they changed the structure of the economy. In an effort to make the most of their competitive advantages, they have started to switch to the production of parts and components products, characterized by high added value, which 30 years ago was the exclusive prerogative of the developed countries. Along this route there are confidently go two largest countries in the world - China and India, which together now account for almost 40% of the world population. Developing countries every year strengthens their position in the world economy. This is felt by all developed countries, including the United States. The largest of them are very active in the global market. They are becoming more competitive in those areas in which the United States has dominated for a long time, and primarily in the development and production of semiconductors, pharmaceuticals and information technology services (Spence, M., 2010).
For most of the post-war period, American politicians were convinced that economic growth and employment growth are "arranged a heart to heart," and this belief to some extent was confirmed by the favorable economic condition of the country. But the ongoing structural changes in the global economy have a very strong impact on the US economy. For the first time for all the past decades the correlation between these two important economic indicators practically does not occur. Statistics clearly shows that in industries with low rates of growth the employment is increases, and in sectors with higher growth – it is falls.
Reducing of the large number of jobs in the US economy was also caused by the widespread introduction of new information technologies. But a much greater impact on employment in the US, according to M. Spence, had a transfer of many types of production (primarily components with low value added) into developing countries. This process led to a decrease in employment in almost all manufacturing sectors, with the exception of the most profitable parts of the value chain. Employment growth was also observed in some segments of the export-oriented sector, but their range is rather limited: it is primarily engineering and computer-aided design, management and finance. In these areas, where usually busy educated, highly skilled personnel, the US still retain their advantages and can compete successfully in the global economy.
Thus, the structure of employment in the US economy is changing jobs increasingly move from sector engaged in the production of goods for foreign markets, economy, producing goods and services consumed exclusively in the domestic market. M. Spence believes that all this poses to the US is a serious problem, since the non-tradable sector is likely to be created fewer jobs than expected. In addition, the currently existing range of activities for those employed in the export-oriented sector is shrinking, and it affects primarily on workers with middle-income countries. If the economy sector, which is oriented on the domestic demand, will lose the ability to absorb free labor, and export-oriented sector of the economy will not be able to become a "motor" for employment growth, the United States will inevitably take a long period of mass unemployment.
In contrast from employment, the value added in export and non-export sectors of the US economy since the early 1990s has grown about the same pace. But since in the sector, operating in the domestic market, employment grew faster in value added per employee is between 1990 and 2008 increased by only 0.7% per year (for the 1990-2008 - 12%, with 72 thousand to just over 80 thousand dollars). In the export-oriented sector, where the increase in the number of employees was negligible, value-added growth in general and per employee for the same period (from 79 thousand to 120 thousand dollars, or 52%) was relatively high and consistent growth rate of the global economy. Rapid growth was observed not only in the field of finance, where the number of jobs in this period increased, but also in manufacturing industries, where it was recorded the largest decline in employment. In high-tech industries value added grew so rapidly that it is possible to compensate for losses caused by the movement of certain types of economic activity from the US to other countries.
M. Spence notes that the added value is a very important indicator of socio-economic development of the country, because it reflects not only the state and rate of development of an industry, but also the sectoral distribution of income in the economy. Income of each citizen of the country depends on the value of the product added value. For employees, this figure determines the level of their personal income to shareholders and other owners of capital - return on investment for the state - the level of tax revenues. As a rule, the income of workers in the industry is in the correlation of the value of value-added per worker. Since value added in the sector, the domestic demand, practically did not grow, the average income in this sector also increased. In the sector of export-oriented, in contrast, value added per employee and revenue showed strong growth - by increasing productivity in a variety of industries and the displacement of low-paid jobs in other countries. Since most of the new jobs created in the sector producing for domestic consumption, where wages grew slowly, this has led to greater inequality in income distribution.


Over the past 50 years thanks to new technologies, labor productivity in manufacturing has grown faster than in other sectors of the US economy, said R. Lawrence. On the one hand, productivity growth may lead to a decrease in the number of employees, because it allows the same amount of goods with fewer workers. On the other hand, it leads to cheaper products and thereby stimulates consumer demand, which in turn increases the time. However, as practice shows, the increase in consumer demand is not sufficient to compensate for lost jobs. In manufacturing, the same process as in agriculture, namely the growth of labor productivity jobs is continuously declining (Davidson, C., 2010).
Thus, the growth of labor productivity to a much greater extent than the transfer of the manufacturing operations abroad, has helped reduce the number of jobs in the export sector of the US economy, emphasizes R. Lawrence. Statistical data show that the proportion of workers employed in the US manufacturing in total employment in the US economy over the past 50 years decreased by almost 0.5 percentage points per year. The rate of decline of this share after 1990 (i.e. from the time when outsourcing has become is becoming more common) is not increased compared with the rates of the 1960s, when the US economy was still relatively closed. Income inequality and high unemployment are very serious problems, says R. Lawrence. But statements of M. Spence, that these problems are the result of US trade with developing countries, may mislead the American politicians and prevent not only the identification of the true causes of these problems, but the authorities and the adoption of correct measures to address them.


Coates, N. (n.d.). The globalization of the motor vehicle manufacturing industry. Strategy & Leadership, 34-39.
Davidson, C., & Matusz, S. (2010). International trade with equilibrium unemployment. Princeton, N.J.: Princeton University Press.
Haugen, D. (2011). Unemployment. Detroit: Greenhaven Press.
Katz, R. (2011). Manufacturing Globalization: The Real Sources of U.S Retrieved March 28, 2015, from
Lawrence Robert, Z. (2011). Manufacturing Globalization. Retrieved March 28, 2015, from
Spence, M. (2010). Globalization and Unemployment. Retrieved March 28, 2015, from

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