"While globalization has reshaped employment relations across the world, it has also highlighted the need for active employee participation and representation in the workplace."
It has been demonstrated that globalization has caused employee relations to change. But how exactly have they changed is the question that is to be answered. One school of thought talks about how the employee relations of different countries are converging to become more alike and because employees are also coming from different parts of the world, they are bringing their own culture and workplace values and therefore the employee relations are also converging.
Another view talks about how national organizations hold on to their differences and unique employee relations which leads to divergence from globalized employee relations. A third view says that a complex interrelated culture is now emerging in the workplace due to globalization and employee relations are not simply converging or diverging but are a complex amalgamation of both (Lansbury et, 2003).
Comparative Analysis - Japan and Korea
Japanese employment relationships in the past have been characterized by life-time employment, seniority based systems and enterprise based unions. These three core concepts that they have known forever are now being shaken up due to globalization.
The government had in the past been very protective about employee relations and is now deregulating its role. In the past educational systems were providing skilled labour that was then employed for a life time, this trend is now changing as the competition is tougher in a globalized economy and individuals who are more creative and innovative are being employed, and are readily terminated of they do not perform up to the mark. Individuals no longer find the need to join unions that were very important in Japan in the past. This is due to better regulations and changes in labour markets. During the 1970's Japan's employment relations practices were considered the reason for Japan's economic success (Lansbury, Kitay & Wailes, 2003).
Where Japan has traditionally had lifetime employment Korea has been plagued with unrest and no job stability. Since a long time back Koreans had been fighting for job security and holding protests and demonstrations in hopes of being heard. Even before that Korean employees had been fighting for short term economic gains, but in the 1990's they realized that it shouldn't be their main focus and they started stressing on employment security and stability. Japan has traditionally had seniority based practices where to motivate employees to stay at one company for their whole career they make pay differences as such that seniors get considerably higher pays due to their accumulated experience which the younger employees do not have. The younger employees are still learning about the company and about the business and have not accumulated enough experience as yet, therefore they receive substantially lower pays.
The seniority based system guarantees employees a job, a permanent livelihood and gives companies motivated, loyal employees that are willing to stay for a lifetime (Fujimura, 2003). However, this trend has been changing due to globalization. Due to the need for competitive advantage, without which firms cannot survive in a globalized world, Japan is viewing its seniority based systems with concern. Many companies in Japan today have done away with the seniority based systems to give way to systems that evaluate performance on individual basis and pay scales are decided on the basis of productivity and performance rather than seniority (Lansbury, Kitay & Wailes, 2003). The employees are also going for the new system rather than the old system. They feel that getting higher wages for better performance is more just and equitable and would prefer to work in such an environment. They were of the opinion that junior employees be able to pass over senior ones if they performed well enough (Morishima, 1997).
With the changing of this scenario job hopping is also something that is coming about in Japan. For changing jobs they need to develop their personal and professional skills which require them to get out of their comfort zone and improve which was greatly hindered in seniority based systems. For both the above mentioned characteristics require active employee participation and representation in the workplace.
As an example we can look at Hitachi Ltd. which abolished its Seniority Wage System in 2004. This was done with the joint agreement of management and labour. The wage system is now based on performance evaluations of all employees be it managerial or non managerial. Sanyo Electric has also started this from the new graduates of 2005 where wage differences will be dependent on the employee's skill abilities (Lansbury et., 2003).
For Japan studies indicate that the seniority based system did not help develop employee's skills and abilities, the system was uncreative and not at all innovative, the system poses burden on the employers even when the employee is not performing or in times of economic difficulties. Therefore this was and is a definite need for things to change. Thanks to globalization, they have. Three trends are obvious in Japan; firstly performance based systems are now being put in place. There has been a change in the wage payments system as the globalized workplace was not accepting the old system. Recession and globalization have also made Japanese employers friendly towards profit sharing (Adhikari, 2005).
The strike of 1997 in Korea proved to be successful for Korea and mobilized a major number of workers but in the end the results were only considerable. But even this success was a lot for Korea. As compared to Japan who had always been working for employee benefit and job security, Korea had always been lagging behind in that department. And when after the 1997 success due to globalization the economic recession of the world hit Korea too. This again led to worsened employment relationships where people lost their jobs, there was rampant unemployment, and wage levels dropped considerably which in turn also led to breakdown of families. Just when South Korea was getting a better employment relationship for itself global economic crisis brought it down (Joon-Shik, 1996).
The effect of globalization on employment relations in South Korea has been more complex than that in Japan. Also it has taken place in stages. After 1987 there was an increase in the rate of unionized workers looking out for themselves, better wages and better working conditions. However after the 1990's this rate decreased considerably. The power has also shifter from the managers to the unions even in the manufacturing units. The legalization and institutionalization of unions was one of the biggest successes of 1987 South Korea as it got rid of labor militancy and the country moved towards democracy. The state was still controlling capital distribution and labour force. However as globalization increased firms had to be more competitive and in the 1990's as Korea moved towards globalization these problems in its structure started becoming evident. Korea faced tough competition from other countries that were offering lower wages and more skilled labour. Korea was suffering from a labour force that was unskilled and an industry that had no technological developments. In the past this was the only thing that is the labour that had helped Korea grow but in this new globalized world, this just was not enough.
At this stage globalization helped improve Korea's employment relations. They developed strategies and started making unions weaker and also made the labor markets more flexible (this was also seen in Japan's case). Organizations were made more effective. One important step they took was looking at the number of strikes that were being held which led to less competitiveness in the global workforce was the rule that said that if you do not work, you do not get paid.
This meant that the lower level employees on weekly wages had to work to get paid and if they went on strike they would lose out on their pay which was crucial to their survival. To make their firms more competitive in the global marketplace, new technologies were introduced which helped in automation of processes (Park, 1991). Human labour was being replaced by robots. Firms were also making their labour force more flexible which meant that more part time or temporary workers were being employed. What this meant for the workers was that they needed to be more skilled at what they did to succeed and to be employed. No longer could they strike and try to get what they want.
Companies started employing Japanese techniques of quality control and just in time inventory. Merit based wage systems were being implemented rather than the old fixed wages and seniority based structure (this move was very similar to Japan) (Koike, 1991).
The labor laws at that time were restrictive and required employers to keep employees that were low in productivity and even in times of economic recession when the firm needed to cut back, this was very similar to the Japanese labor laws. However, in the 1990's the business community started to protest against this and started asking for reforms, because labour could not be utilized productively and efficiently due to these labour laws. This led to high labour costs and lower competitiveness in the global workforce. In December 1996 labour law reforms were passed which allowed more flexibility to the employers. This led to great unrest and the biggest labour strike that Korea has ever seen (Sonn, 1997). The tradition that Korea had built similar to Japan of lifelong employment was in threat and job security was falling away.
In contrast to Japan, globalization helped bring total chaos in South Korea. Things were improved when President Kim came to power. He formed a joint labour management government body where the government, labour and the corporations came on one platform to solve the problems that had ensued. Thus the labour force achieved the empowerment because that was the only way to succeed in a globalized environment, but at the cost of long ensuing chaos and unrest in the whole of South Korea.
Conclusion
Working towards the same things, Japan was more successful in empowering its workforce and bringing it to the forefront and implementing performance evaluation systems based rather than seniority based pay systems that South Korea was. However in both the countries the employment relations have changed drastically, the need for active employee participation and representation in the workplace has also grown.
The results of globalization in both the countries have been different depending on the kind of environment and variables they had to deal with but both have led to higher employee participation, involvement and flexibility (Koo, 2000).
