In the Shadow of Globalization: Changing Firm-Level Employment Practices and Shifting Employment Risks in the United States

Source: UCLA School of Law, Law-Econ Research Paper

Globalization generates increased competition between firms in the product market, which induces firms to seek flexibility in their labor relations – flexibility to hire and fire on short notice, to increase or shrink the overall size of their workforce, to adjust pay to short-term performance results, to redeploy workers within the firm and to outside production partners, and to retain workers with particular skills on an as-needed basis. These practices are in tension with the labor law regimes throughout the Western world. In the United States, employers’ drive for flexibility has fueled aggressive de-unionization efforts, and has induced employers to increase their use of temporary workers and independent contractors and to restructure pension and benefit plans. A crucial question for employment regulation thus becomes how to protect workers – how to mitigate their vulnerabilities and ameliorate the shifting risks that today’s workplace practices impose. The author argues that other countries are experiencing the same tension between flexibility and worker protection, and suggests that we learn from other countries’ efforts to devise mechanisms to preserve worker security at the same time relaxing traditional labor protective regimes.

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