Declining Unionization in the Age of Economic Globalization

A protest in Utah against Wal-Mart (Photo credit: Wikipedia)

by Jeawon Moon

The liberal economist Friedrich Hayek claimed that ‘the effect of union activities to influence pricing is potentially very harmful, making the market system ineffective. For the economic freedom labor unions’ power should be restricted.” As he insisted, labor unions have often been believed to disturb effective corporate management in an increasingly competitive marketplace, especially with the fast-pace of globalization. Companies aim to improve their productivity and create a stable profit by keeping an anti-union strategy. However, strategies have been criticized as making income inequality severe all over the world. I will explain this by giving the example of Wal-Mart which is one of many famous companies that do not allow a labor union.

Wal-Mart, a giant company in the retail industry, has been successful with the policy ‘Everyday Low Price’ satisfying customers’ demanding for less price but high quality. Its way of cost reduction for low prices and improving productivity has received positive evaluations from neo-liberal economists and other business leaders. However, hidden behind the success of Wal-Mart is the exploitation of cheap labor, which means that Wal-Mart’s cost reduction depends on low pay for workers. Employees of Wal-Mart have to put up with terrible working conditions such as low salaries, less than the minimum cost of living, no health insurance, paid holidays or sick leaves. They are less-skilled workers who are viewed as just commodities and expendables whenever the company can throw them out. This explains why they reluctantly continue to accept low wages and poor working conditions to make their living. Nevertheless, they cannot fight against the ruthless company for fair wages and dignified conditions through the power of a union because it is very nearly impossible to organize a union due to the harsh anti-union strategy of the company. Wal-Mart has blocked labor unions completely to make employees unable to demand higher wages. However, many companies think the strategy of Wal-Mart is a desirable strategy to survive in the midst of the fierce competition of the current free world market.

Economic globalization is understood as free trade, creating a private sector and allowing foreign investment, and it has been supported to increase incomes and wealth through the effective use of resources and free competition. However, the hidden reality is brutal. The declining unionization trend is one of factors showing that the globalization is contributing to the worldwide inequality issue by increased inequitable distribution of income. In other words, the economic globalization causes the polarization between competitive countries, industry, companies, individuals and uncompetitive ones.

References

ルディー和子『ウォルマート「儲け」のしくみ : 低い粗利で、大きな純利益 — 世界NO.1企業の「儲け」の秘密を徹底分析!』あさ出版、2002年
スティーブン・グリーンハウス『大搾取!』文藝春秋、2009年
HUMAN RIGHTS WATCH. 2007. Wal-Mart’s Violation of US Workers’Right to Freedom of Association. Discounting Rights 19:2. National Labor Relations Board.
Wikipedia, Criticism of Wal-Mart [http://en.wikipedia.org/wiki/Criticism_of_Walmart]
BIG GOVERNMENT, Labor Unions: Employment at Wal-Mart Like Slavery [http://biggovernment.com/capitolconfidential/2010/04/13/labor-unions-employment-at-wal-mart-like-slavery/]