Human Resources Management Essay Example | Topics and Well Written Essays - 2000 words

Human Resources Management - Essay Example Due to the shift in demand of employees, the countries with fairly flexible wage had transformed into those with low relative wages. Almost 70% of U.S. employees’ demand had shifted in manufacturing industry from less skilled employees to high skilled employees. Globalization had affected the prices of employee wages. Trade flow among countries gave rise to change in demand for employees because the requirement for more employees in profitable sector had increased and these changes in demand led to increase in employees’ wages (Swagel & Slaughter, 1997). The globalization had affected the demand elasticity of employees. The higher receptiveness of employees’ demand had changed the relative cost of employees (Bruno & Et. Al., 2004). Outsourcing and its effect on wages Globalization influences outsourcing and it affects the wages of labor. For example, the following figure shows the relative wages of the employees in US manufacturing industry. Source: (Feenstra, 20 07). From the above graph, it can be viewed that the relative wages was in declining stage from the year 1960 to 1980. The reason for this decline in relative wages of employees is that the globalization had increased the supply of experienced graduate students from different countries and thus the skilled employees were forced to shift into non – production professions (Feenstra, 2007). Outsourcing model The value chain of a company involves works like that of manufacturing of products. The manufacturing activity needs lesser skilled labors and more unskilled labors compared to marketing and research and development activities. For this reason, companies always want to outsource manufacturing activities to other countries where they can find unskilled labor with lower wages. The following figure shows the outsourcing pattern of value chain of a company (Feenstra, 2007). Source: (Feenstra, 2007). Globalization had helped to outsource the production and manufacturing activitie s to be accomplished by unskilled labor force. For this reason, the activities in the left side of A in the above figure are those which are accumulated from overseas countries and activities of right side of B are those which are undertaken in home country. Globalization had liberalized the trade agreement among countries that led to improve the infrastructure of foreign company. The outsourcing leads to accomplish the works of left side of A at abroad. The activities which are performed at home country need more skilled employees. This is the reason for raise in relative wages for skilled employees in home country. On the other hand, the relative wages of foreign country also increased because certain activities between A and B requires more skilled labor than the activities at the left side of A. For this reason the relative demand of skilled employees had increased in foreign country, which led to increase in relative wages of skilled employees in foreign country (Feenstra, 2007 ). Globalization & Competition between Workers Globalization is associated with the process of integrating international market into a single market. It encompasses goods, services, capital, and technology and labor market. The governments of many