HLTC05H3 Lecture Notes - Kathie Lee Gifford, Labour Market Flexibility, International Financial Institutions
ProfessorRhan- Ju Song
Millen and Holtz, 2000
Transnational Corporations. (TNC)
-In the late 19th century to early 20th century it appeared that govts were able to constrain corporate
-Power shifts from government to the market.
-Global situations confirm TNCs can relocate their operations and redefine their jurisdictions.
-health compromising effects of corporate labour, envi, advertising, and political activities were
intensified during 1980’s and 1990’s.
-Modern communication tech facilitated the rapid movement of money in and out of the country. -More
countries lessened restrictions on movement of capital, goods, and services. Along with all these
changes was the expansion of TNCs.
*Growth and Expansion of TNCs.
- the boom of TNC worldwide was enormous from 7,000 in the 1970’s to 40,000 TNCs by 1996.
-TNCs control over 70% of products in the international trade.
Eg: General Motors (GM) the 5th largest TNC in the world generate revenue greater than the combined
GDPs of Pakistan, Nepal, Bangladesh, and Sri Lanka.
-TNCs owners enjoyed wealth and power and are able to redefine the system of international trade,
development orgs such as WTO, World Bank, IMF.
Eg: corporate leaders have lobbied deregulation, privatization, and liberalization so they can maximize
profit and growth.
-end of 1970’s indebted nations declared they could no longer continue to make payments on debt. So,
IMF and World Bank proposed a program that would enable them to pay off their debt –indebted
nations would earn enough foreign exchange to services. The program was built using austerity
-to secure the cooperation of indebted nations the WB and IMF began imposing strenuous conditions
such as Structural Adjustment Policies (SAPs) that altered previous economic patterns and social
-As TNCs continue to grow and win by privileges through the General Agreement on Tariffs and Trade
(GATT) poor countries were forced to adopt new trade and investment measures.
Eg: A GATT agreement on Trade-related investment measures (TRIMS) made it more difficult for poor
countries to control TNC activities like guaranteeing benefits for the local pop. Some govts in poor
countries believed in the export-led development strategy. Some leaders believed this would help them
for personal enrichment.
*IFI (International Financial Institutions) neoliberal policies.
-export-led development meant less state-intervention and give more TNC the authority to set their
own rules and regulations.
-Govts of indebted nations were forced to remove restrictions on TNC and remove state responsibility to
regulate, coordinate, and control foreign corporations operations.
-Govt of indebted nations abolished quotas, lowered tariffs, and dismantled regulatory mechanisms that
protect local industry from foreign competitions.
- IFI lowered labour and envi standards
Eg: 1984, Union Carbide toxic gas leak that killed at least 3,000 people and injured well over 200,000
others in Bhopal, India.
Eg: 1990, outrage erupted over inhumane working conditions endured by young seamstress of in
Honduras and New York City, who were hired to make shirts, pants, and skirts for Wal-Mart and the
Kathie Lee Gifford fashion line.
*TNC Labour practices
-“labour market flexibility” – essential element of neoliberalism and a key component of SAPs. Around
1980’s – 1990’s IFI considered some forms of govt interventions in labour such as: minimum wage laws
and job security protection. But both are impediments for labour mobility and competitive investment
climate. So by “flexibilizing” labour markets govt can create more friendly business environments in
-In some parts of the world where govt dismantled worker protection and cut wages to attract foreign
investment and economic growth rates increased in 1980’s Hence, termed as “flexible”.
-In practice, a “flexible” market means cracking down unions, dismantle wages, and scrap benefit
protections, loosen rules for hiring/firing.
Eg: this trend grows as corporate are encouraged to hire subcontractors and replace full-time workers
-Most flexible labour markets are found in the export processing zones.
- even though deregulations was promoted to initially alleviate poverty in a long term, a significant shift
to informal sector employment and deteriorate working conditions.
-Worker’s protection further disintegrates as jobs become highly competitive.
as the number of qualified workers grow due to
urbanization, greater access to edu. And entrance
of women in the workforce.
*"race to bottom" strategy of indebted nations started to engage in a downward standard-lowering
bidding cycle whereby the needs of the citizens, esp. the poorwere typically subordinate to the needs of
the foreign companies.
*foreign investors are attracted most to countries experiencing rapid economic growth.
(eg. South, East, and South East Asia) Therefore, investment fowed in Asian countries whereas African
countries export-led development has not had the same effect. Hence, the promise of increased
employment and economic growth have not materialized much in African nations. these processes
further marginalized the poorest nations.
- Such companies (TNCs) avoid "troublesome legislations" by paying middlemen to do the manufacturing
for them. Subcontracting arrangement ensures the lowest possible costs for the productions of a
company's product. Enabling parent company to avoid responsibility for improving working conditions
and paying benefits to those who supply the company with goods and services.
EXPORT PROCESSING ON FREE TRADE ZONES
- another way TNCs avoid regulatory measures is by setting up their operations on Export Processing
Eg: Mexico, El Salvador, Haiti, Sri Lanka, Indonesia, and Vietnam etc.
-Zones are usually located on the outskirts of large cities
-labour unions ae forbidden to organizes in EPZ
-In TNC-owned factories worker activism is crushed.
-workers are harassed, detained, attacked by police.
eg. Ford Motor Company nullified union contract, fired 3400 workers, and cut wages by 45%
eg. July, 1998 Mexican workers at automotive parts production facility, they were intimidated and
threatened with dismissal
if they voted to join independent union.
TNC AND ENVIRONMENT
-Occupational health and environmental laws in developing countries are more lax than developed
eg: Pedro and son suffers as health is compromised by the TNCs spewing out 2,000 tons of sulfur dioxide
from the smelters. levels of emission by this american based company is well over 10x the legal limit for
similar plants n Toronto. The smoke causes the crops to die.
- TNCs tend to locate near low-income areas where people are are not well organized politically. when
relocating in populated areas, their arrival in populated areas only exacerbate the bad living conditions
of the poor.
-TNCs tend to invite the spread and growth of urban squatter settlements.
AT THE WORKSITE: IN PLANTS AND FACTORIES
-Occupational risk of employees include:\
-toxic exposure to lead, mercury, and other metals.
- increased chance of developing respiratory such as asthma and byssinosis,
- exposure to excessive now and physical injury.
- risk in occupational hazards heightened because it can affect a lot of ppl at once.
eg: most insidious environmental toxic is the one that stays stable in envi and are taken into the food
ADVERTISING AND PROMOTIONAL ACTIVITIES
-promotion of infant formula: Aggressive marketing was carried out in hospitals, maternity ward, gifts to
medical personnel, free samples.
-careful preparation of bottle-feeding was too much for the working poor. because it wasnt as
-new moms tend to dilute formula it make it last longer. (overdilution and lack of clean water for