JAMIA MILLIA ISLAMIA

FACULTY OF LAW

LABOUR LAW-I ASSIGNMENT

“Impact of Globalisation on Collective Bargaining”

Submitted by:
Deesha Kakkar
22
Regular (5th Semester)
202107080

1
 ACKNOWLEDGEMENT

I am deeply grateful to our teacher- Dr. Md. Arif Wadood for his constant guidance and support.
It is because of his teachings that I consider myself able enough to have completed this
assignment.

I would also like to thank the library staff for helping me in finding out the resources which is
a tedious task. I am also grateful to the University for providing me with all the facilities
required for conducting a research.

Lastly, I would like to thank the Almighty for his grace.

Deesha Kakkar

2
 TABLE OF CONTENTS

I. Introduction…………………………………………………………………04

II. Meaning of Collective Bargaining………………………………………..04

III. Globalisation and Labour……………………………………………..…05

IV. Theories on the Impact of Globalisation on Collective Bargaining…….05

V. Examples on how Globalisation has affected Collective Bargaining and

Negotiation in different Countries…………………………………………..08

VI. Recommendations for changes in the Legal Framework to ensure fair

labour practices in a Globalised Economy…………………………………10

VII. Conclusion……………………………………………………………..11

VIII. Bibliography………………………………………………………….12

3
 I. INTRODUCTION

In the age of capitalism, where maximizing profits is the primary objective of the employers,
these employers may even go so far as to exploit the workers unless certain terms and
conditions prevent it. Every person is free to negotiate for himself and protect his interests, but
the employer, who has the resources and the power, is better positioned to set the terms, and
the individual worker, who is in a much weaker position, would have to agree to those terms
in order to provide for his family.

If a union representing employees bargains terms and conditions with the employer, this
position changes. The employer will not want the association to become furious and
compromise on their work because that would defeat his goal of maximizing profits. “An
arrangement whereby the wages and conditions of employment of workmen are settled through
a bargain between the employer and the workmen collectively whether represented through
their union or by some of them on behalf of all of them is known as ‘Collective Bargaining’”.

The recent historic G20 meeting in Delhi had as its theme a Sanskrit phrase called "Vasudhaiva
Kutumbakam," which roughly translates to "the entire world is my family." What is commonly
referred to as "globalisation" can be expressed as this principle.

The National Geographic defines globalisation as- “Globalisation is a term used to describe
how trade and technology have made the world into a more connected and interdependent
place. Globalisation also captures in its scope the economic and social changes that have come
about as a result. It may be pictured as the threads of an immense spider web formed over
millennia, with the number and reach of these threads increasing over time. People, money,
material goods, ideas, and even disease and devastation have traveled these silken strands, and
have done so in greater numbers and with greater speed than ever in the present age.” 1 This
paper seeks to assess the impact of globalisation on the principle of collective bargaining.

II. MEANING OF COLLECTIVE BARGAINING

The term ‘Collective Bargaining’ was coined by famous authors Sydney and Beatrice Webb in
their celebrated treatise on ‘History of Trade Unions.’

1
National Geographic Society, “Globalization”, National Geographic , Oct. 19, 2023, available at:
https://education.nationalgeographic.org/resource/globalization/ (last visited on Oct. 25, 2023).

4
According to Article 2 of the International Labour Organization (ILO) Convention No. 154
defines collective bargaining as-

“For the purpose of this Convention the term collective bargaining extends to all negotiations
which take place between an employer, a group of employers or one or more employers'
organisations, on the one hand, and one or more workers' organisations, on the other, for--

(a) determining working conditions and terms of employment; and/or

(b) regulating relations between employers and workers; and/or

(c) regulating relations between employers or their organisations and a workers'

organisation or workers' organisations.”2

There is no single best definition of collective bargaining, however, we can conclude that
collective bargaining is a process by which the terms of employment and conditions of services
are determined by agreement between management and the union. In effect, “it is a business
deal (which) determines the price of labour services and the terms and conditions of labour’s
employment.”3

III. GLOBALISATION AND LABOUR

The Industrial Revolution of the 18th and 19th centuries is when globalisation and labour
legislation first emerged. Significant changes in the nature of labour and employment occurred
during this period as a result of the expansion of factory-based manufacturing and the
emergence of capitalist economies. Workers had limited legal rights or safeguards and were
frequently subjected to hard working conditions, long hours, and low pay.

Global labour movements got organised at the start of the 20th century and started pushing for
improved working conditions and rights. As a result, several nations created labour laws and
regulations in an effort to safeguard employees and guarantee just treatment.

These regulations set requirements for pay, hours worked, safety, and other crucial areas of
employment. However, labour law and workers' rights have faced serious difficulties as a result
of the globalisation process that occurred in the later half of the 20th century and the early 21st
century. Globalisation has made it easier for money and jobs to travel across borders and raised

2
International Labour Organization Collective Bargaining Convention, 1981, art.2.
3
James J. Heily (ed.), Creative Collective Bargaining 9 (Prentice Hall, New Jersey, 1965).

5
competitiveness between nations and businesses. Due to the complexity of cross-border
employment connections and multinational firms, labour law now faces additional issues.

Globalisation led to the rise of global consumer markets. Liberalization, deregulation and
privatization are now accepted norms. In order to avoid economic and political marginalization,
every country is opening up their economy. According to an ILO report from 1999, the
government no longer feels the need to take into account the opinions of labour unions or
workers in this new environment, which is characterised by fierce competition, monetary
restraint, the privatisation of utilities and public enterprises, and the deregulation of the labour
markets.4 Free trade zones are being formed, offering exemptions from taxes, customs, and the
strict labour rules.

Global competitiveness has prompted outsourcing, factory closures, industrial relocations

abroad, and the elimination of subsidies and tariffs. As a result, labour is losing its influence.5
The organised workforce is decreasing, trade unions are becoming weaker, and their political
clout is likewise dwindling.6

Trade unions are on a decline. This is a world-wide phenomenon. The World Labour Report
1997-98 has observed, "It is generally agreed that the trade unions movement has fallen on
hard times. The extent of its difficulties may sometimes, of-course, be exaggerated by
overemphasising adverse national situation--- Nonetheless, workers' organizations are losing
members. Some even have doubts about their future. The 1980s it seems was particularly bad"7.
On the membership and density of trade unions the report points out after examining the data
that, "Generally speaking, out of the sample of 92 countries for which figures on union
membership were available only 14 had a rate of more than 50% in 1995; in 48 countries, in
other words, more than half the sample, the rate was less than 20%.”8

The increase in international competition and rapid changes in the technology has led to a fall
in real wages of unskilled workers and increased inequalities in the developed countries. Worst
employment crisis faced by the world after 1930s. About one-third of the workers of the world
are either jobless or underemployed and many of those employed receive low wages and the

4
International Labour Organization, “The Dilemma of the Informal Sector- Report of the Director General”
(1991).
5
Alejandro Portes, “Neoliberalism and the Sociology of Development: Emerging trends and unanticipated Facts”,
23 Population and Development Review 229 (1997).
6
Supriya RoyChowdhury, “Globalisation and Labour”, 39 Economic and Political Weekly 105-108 (2004).
7
International Labour Organization, “World Labour Report, Industrial Relations, Democracy & Social Stability”
(1997).
8
Ibid.

6
working condition is poor. New labour-saving technologies have increased the woes of the
worker. The process has gained momentum due to global competition and financial squeeze on
governments. Growing income inequality, job unemployment has resulted due to
globalisation.9

IV. THEORIES ON THE IMPACT OF GLOBALISATION ON

COLLECTIVE BARGAINING

Regarding how globalisation affects labour rights and collective bargaining, there are
numerous theories. While some thinkers contend that globalisation has harmed collective
bargaining and labour rights, others contend that it has had more beneficial effects. The race-
to-the-bottom theory is one that contends that globalisation has a detrimental effect on labour
rights and collective bargaining. According to this view, globalisation has boosted rivalry
between nations and businesses and made it easier for money and jobs to go to nations with
less expensive workforce. As a result, there is currently a "race to the bottom" where businesses
and nations must cut salaries and labour standards to stay competitive. As a result, workers
have had fewer opportunity to exercise their right to collective bargaining or to negotiate better
pay and working conditions in many different countries. The "global commodity chain"
argument is another one that contends that globalisation has a detrimental effect on labour
rights and collective bargaining. According to this idea, manufacturing processes have become
more fragmented across national borders as a result of globalisation, with various stages of the
process taking place in several nations. Since their employers are frequently located in other
countries or are involved in intricate global supply networks, it has become more difficult for
workers to organise and engage in collective bargaining. As a result, obtaining improved
working conditions and exercising their labour rights may present serious obstacles for
employees.10

On the other hand, some views contend that globalisation has had a more advantageous effect
on collective bargaining and labour rights. The "global governance" idea is one such theory
that contends that international norms and laws that support labour rights and collective
bargaining have been established as a result of globalisation. To safeguard workers' rights and
guarantee fair treatment in the global economy, for instance, organisations such as the
worldwide Labour Organisation (ILO) have been instrumental in the development and

9
Kapstein, "Workers & the World Economy" 75 Foreign Affairs (1996).
10
Lee, S., “Impact of Globalization on Labor Standards: A Literature Review”. Journal of Business Ethics, 75-
88.

7
promotion of worldwide labour standards and regulations. Better working conditions and
employment standards have been promoted in many nations as a result, and labour rights and
collective bargaining have gained more recognition as crucial elements of global governance.11

Globalisation has a complex and wide-ranging effect on collective bargaining and workplace
rights. While some theorists contend that globalisation has had a detrimental effect, others
contend that it has had a more favourable effect due to the establishment of international
standards and laws that support collective bargaining and labour rights.

V. EXAMPLES OF HOW GLOBALISATION HAS AFFECTED

COLLECTIVE BARGAINING AND NEGOTIATION IN
DIFFERENT COUNTRIES

The examples of different countries and the effect of globalisation on collective bargaining in
these countries are as follows:

China's electronics sector: The expansion of international supply chains and the growing power
of multinational firms are two ways that globalisation has affected China's electronics industry.
Due to the adoption of anti-union practises by numerous electronics businesses and their
resistance to collective bargaining attempts, it has become more challenging for workers to
demand improved salaries and working conditions. But there have also been successful
unionisation and collective bargaining cases in China's electronics sector, especially in
international corporations that have robust unions in their home nations.12

Bangladesh's textile industry: Due to globalisation and international trade, Bangladesh's textile
industry has grown significantly. But low pay and unfavourable working conditions have come
with this expansion for employees. Because of the industry's extreme fragmentation and weak
union presence, it has been challenging for employees to bargain for improved pay and working
conditions.13

11
Kucera, D., “Industrial Relations, Collective Bargaining and the gig economy” International Labour Review,
335-357, (2017).
12
Shukla, R. J., “Impact of Globalization on Human Resource Practices” Indian Journal of Industrial Relations,
496-507, (2017).
13
Shukla, R. J., “Impact of Globalization on Human Resource Practices” Indian Journal of Industrial Relations,
496-507, (2017).

8
Construction sector in Qatar: As a result of globalisation and the nation's preparations for the
2022 FIFA World Cup, Qatar's construction sector has grown significantly. Serious worries
regarding workers' rights and working circumstances, such as poor pay, long hours, and
hazardous working conditions, have been raised in tandem with this rise, nevertheless. In
Qatar's construction sector, there is little room for collective bargaining or unionisation, which
makes it challenging for employees to demand for improved pay and working conditions.

US automotive sector: Globalisation has affected the US automotive industry by bringing in

more competition from overseas firms and fostering the expansion of international supply
chains. Consequently, a large number of US automakers have moved their manufacturing to
nations with cheaper wages, which has hurt unionisation and collective bargaining rates. Due
to these difficulties, the United Auto Workers (UAW) union, for instance, has suffered a
decline in membership and bargaining power in recent years. 14

The European fast food business has been influenced by globalisation, as seen by the expansion
of global supply chains and the growing power of multinational corporations. Due to the
widespread adoption of anti-union tactics by fast food chains and their resistance to collective
bargaining attempts, it has become more challenging for employees to demand improved pay
and working conditions. Nonetheless, there have also been prosperous instances of collective
bargaining and unionisation in the European fast food sector, as the UK's "Fast Food Forward"
movement.

These instances highlight a few of the numerous and intricate ways that globalisation has
affected collective bargaining and negotiating across nations and sectors. While there are many
obstacles to overcome in the fight for workers' rights and collective bargaining as a result of
globalisation, there are also many chances to advance improved working conditions and labour
standards through the creation and implementation of international labour standards and laws,
the reinforcement of domestic labour laws and regulations, and the promotion of workers' rights
through unions and bargaining.

14
Cynthia L. Estlund, “Collective Bargaining Beyond Employment in the United States” 42 Comparative Labor
Law & Policy Journal (2021).

9
 VI. RECOMMENDATIONS FOR CHANGES IN THE LEGAL
FRAMEWORK TO ENSURE FAIR LABOUR PRACTICES IN A
GLOBALISED ECONOMY

Through active reforming, many changes can be brought to defeat the unfair labour practices
and ensure that the workmen are treated fairly. The following are a few recommendations:

a) Ensure implementation of the International Standards: Certain international standards for

labour have been laid down by the International Labour Organization. However, these
standards are not implemented especially in the developing and underdeveloped countries.
Certain mechanisms should be put into place to ensure that these standards are enforced in
every country and stringent punishments or sanctions should be awarded in cases of non-
obedience.

b) Empowerment of Workers and the Unions: Workers’ rights are at stake, which needs to be
protected. The workers and the unions are at the core of the collective bargaining process. If
they are empowered, they will not allow processes like collective bargaining, strikes etc. to
weaken as they are the only mechanisms present to protect their rights. Workers should be
aware of their rights.

c) Equitable Distribution of Power: When the employers are given excessive powers using
which they are able to exploit the workmen is where the problem arises. The powers of the
employers should be limited. A hire and fire situation can be managed if there exists a contract
which prohibits firing employees for no valid reason. Therefore, the powers of the employers
should be limited using the key tool of contractual agreements. Similarly, the interests of the
workmen should be safeguarded by specifically mentioning his/her rights in the contract.

d) Transparency: Transparency is an essential tool for maintaining fair practices in any

organization. Lack of transparency results in problems like corruption, power abuses,
undeserving promotions, bribery and so on. The industries should also be obligated to disclose
their profits to the labour so that they can rightfully ask for their share in the profits. The labour
practices should also be made known to the workmen.

10
e) Governmental Support: The Government should support the rights and causes of the
workmen instead of siding with the powerful employers for their personal gains. The support
of government can be a game-changer for the workers because if an effective government
desires to safeguard the rights of the workers, it will be very difficult for the employers to go
against the Government and exploit their rights. Government can support the unions by
providing funding also.

“Overall, ensuring fair labour practices in the global economy will require a multifaceted
approach that involves a range of stakeholders, from workers and unions to governments and
international organizations. By taking these and other steps, it may be possible to create a more
just and equitable global labour system.”15

VII. CONCLUSION

After analysing several aspects, one cannot deny that globalisation has an effect on collective
bargaining. However, whether the effect has a positive impact or a negative impact is a complex
question. It is safe to say that it has both positive and negative impacts. The positive impact
mainly being the international standards which have been set or workers of one country can
get to know about their rights from the situation of workers in another country, however, there
is a huge problem with this positive impact as well and that is of implementation. Laying down
standards is one thing and ensuring that they are enforced is another.

The negative impacts cannot be ruled out and serious steps need to be taken to curb these
problems. A race to the bottom will not prove to be good for anyone. Countries should work
together for welfare of the workmen however they are exploiting them due to the competition
which has arisen because of globalisation.

15
David G. Collings and Geoffrey T. Wood, Human Resource Management: A Critical Approach (Routledge,
London, 2009).

11
 VIII. BIBLIOGRAPHY

Estlund, C. L. (2021). Collective Bargaining Beyond Employment in the United States.

Comparative Labor Law & Policy Journal.

Heily, J. J. (1955). Creative Collective Bargaining. New Jersey: Prentice Hall.

International Labour Organization. (1981). Collective Bargaining Convention.

International Labour Organization. (1991). The Dilemma of the Informal Sector-Report of

the Director General. Geneva: ILO.

Kapstein. (1996). Workers & the World Economy. Foreign Affairs.

Kucera, D. (2017). Industrial Relations, Collective Bargaining and the gig economy.
International Labour Review, 335-357.

Lee, S. (n.d.). Impact of Globalization on Labor Standards: A Literature Review. Journal

of Business Ethics, 75-88.

National Geographic Society. (2023, October 19). Globalization.

Organization, I. L. (1997). World Labour Report, Industrial Relations, Democracy &

Social Stability. Geneva: International Labour Organization.

Portes, A. (1997). Neo-liberalism & the Sociology Emerging Trend & Unanticipated
Facts. Population and Development Review, 229.

RoyChowdhury, S. (2004). Globalisation and Labour. Economic and Political Weekly,

105-108.

Shukla, R. J. (2017). Impact of Globalization on Human Resource Practices. Indian

Journal of Industrial Relations, 496-507.

12