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Financial Crises, Multinational Corporations and Industrial Relations

Ph.D. Course, 27. November 2009

FAOS

Employment Relations Research Centre

University of Copenhagen

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Programme

9.00 – 9.10 Welcome to the day. Associate professor Steen E. Navrbjerg, FAOS, University of Copehagen

9.10-9.40: Four SME’s and MNC take-over. Steen E. Navrbjerg

9.40 – 12.00 Joint presentation by professor Michael Morley and professor Patrick Gunnigle, Limerick University:

9.40-10.20 Convergence, Divergence and Institutional Influence in International HRM (M. Morley)

10.20-10.35 Break

10.35-11.15 International Employment Relations/HRM and the Study of Multinational Companies (P. Gunnigle)

11.15-12.00 Methodology in international HRM research: experience from two large scale projects (M. Morley & P. Gunnigle)

12.00 – 12.15 Break

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Programme

12.15 – 13.05 2 presentations from PhD-students and feedback– Eugene Hickland: The Efficacy of Employee Voice: Does European Regulation Help or

Hinder? A Case Study in Three Cross-Border Companies on the Island of Ireland– Marie Bailey: Can you Hear Us? The Effectiveness of European Works Councils as a

Mechanism of Employee Voice for Hungarian Workers in the Printing, Chemical and Food Industries

13.05 – 14.05 Lunch

14.05 – 14.55 2 presentations from PhD-students and feedback– Hilary Drew: Organizational Restructuring and its Implications for the Management of

Demographic Shift in German Organizations– Nana Wesley Hansen: Local Bargaining in the enlarged Danish Municipalities

• 14.55 – 15.00 Summing up (Steen E. Navrbjerg)

• 15.00 End of conference

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Introduction

• Why are MNC’s of interest to IR?

• The Danish Case: Four case-studie of SME’s and MNC take-over

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Why are MNC’s of interest to IR-research?

Size = impact

• 1960’s: 7000 multinationals

• 2003: 65,000 multinationals– Employing some 55 million people– 850,000 subsidiaries

• In SME-countries: a big actor

• In developing countries: could be a decisive actor

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Why are MNC’s of interest to IR-research?

Influence on company level:

Transferring HR-policies

- work design- documentation (headcount, accounting etc.)

- new, competing perceptions of commitment etc.- individual contracts- challenging collectively based bargaining systems?

Thereby affecting Employment Practices and ultimately IR?

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Why are MNC’s of interest to IR-research?

The bigger picture:

Benchmarking countries against each other

- Labour costs - Tax revenues- Economic stability - Political stability- IR-regulations/legislation- Labour skills- Market proximity- Openness to FDI

thereby affecting the political-economic system as a whole?

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The Economist’s Ranking of Countries

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The Economist’s Ranking of Countries

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The Danish Case

• Strong CME

• DK: 3066 foreign owned companies = 1 percent

• Employing 18 per cent of the work force

• 20 per cent of turn-over in private sector

• On avarage 74 employees (the avarage in Danish enterprises: 4 employees)

• Big enterprises are in general main movers in collective negotiations

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Case study of four Danish SME’s

• Interviews in 1995, 2001, 2005

• All Danish owned in 1995

• Case I, II and III owned by MNC’s in 2005

• Research question:

Are the IR-relations affected by MNC ownership - at company level? - at national level?

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Four Danish SME’s

Enterprise I Enterprise II Enterprise III Enterprise IV

1995 2005 1995 2005 1995 2005 1995 2005

Industry PlasticsElectro mechanics

Automats Plastics

Ownership DK US DK US DK IT DK DK

Number of employees

360 185 80 53 550 380 250 456

Number of blue collar employees

260 138 50 26 350 295 175 243

Number of white-collar employees

100 49 30 27 200 85 75 213

Ratio white- collar/blue- collar

1:2.6 1:2.8 1:1.7 1:1 1:1.8 1:3.5 1:2.3 1:1.15

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Four Danish SME’s

Enterprise I Enterprise II Enterprise III Enterprise IV

1995 2005 1995 2005 1995 2005 1995 2005

Absenteeism < 2 % 4-5 % < 2 % < 2 % 4 % 4,5 % 4 % 4,6 %

Management style

Stake-holder

Share-holder

Stake-holder

Stake-holder

Between stake & share

Share-holder

Stake-holder

Stake-holder

% of employees compared to 1995

51 66 69 182

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General unemployment

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Four Danish SMEs Level of influence from HQ to subsidiary

Grey indicating HQ control, white indicating subsidiary autonomy

Enterprise I Enterprise IIEnterprise

IIIEnterprise

IV

Level 1: Strategy and overall finance

Level 2: Tactics and local economy

Level 3: HR policy

Level 4: Work organization

Level 5: Industrial Relations

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Conclusions

• Every taken-over enterprise lost jobs – Danish owned gained 82 per cent

• In one case, the enterprise lost more than half of the white-collar labour force

• None of the MNC’s tried directly to interfere with company-level IR…

• …but local management is kept in a short leach might affect employment relations and co-operation

• … and the Italians tried harder than the Americans!!!

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New hypothesis

• In systems with strong IR-partners (CMEs), MNCs influence on ER/IR is limited

• Those who do try to change IR/ER might not get what they’ve paid for!

• But: Big companies rule the collective bargaining system…

• …and 20 per cent of the private sector employees work in bigger, foreign owned enterprises

even strong and balanced national IR-systems are liable to be affected by MNCs

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The academic discussion on MNC’s

MNC’s might affect:

• Economy – huge FDI, for better or for worse

• Employment – new jobs, what kind of jobs, greenfield sites, threat of outsourcing

• Employment practices – convergence versus divergence– country-of-origin versus host-country– ethno-, poly-, regio- or geo-centric HRM

• Power balances – politically, IR, locally and nationally

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Everything - or everyone - can be outsourced…