As the world globalizes, multinational corporations are also coming under more scrutiny, as questions about their accountability are also being raised.
In some cases, some corporations have lobbied their governments to aggressively support regimes that are favorable to them. For example, especially in the 1970s and 80s, some tacitly supported dictatorships as they could control their own people, be more easily influenced and corrupted, allow conditions like cheap labor and sweatshops, and so on. This is less practical today as a company’s image with such associations can more readily be tarnished today. Increasingly then, influence is being spread through lobbying for global economic and trade arrangements that are more beneficial to themselves.
This can be accomplished through various means including:
-Tacitly supporting military interventions (often dressed in propaganda about saving the people from themselves, or undoing a wrong in the other country and so on)
-Pushing for economic policies that are heavily weighted in their favor
-Foreign investment treaties and other negotiations designed in part to give more abilities for corporations to expand into other poorer countries possibly at the expense of local businesses.
-Following an ideology which is believed to be beneficial to everyone, but hides the realities and complexities that may worsen situations. These ideologies can be influential as some larger corporations may indeed benefit from these policies, but that does not automatically mean everyone else will, and power and such interests may see these agendas being pushed forth more so.
However, with this expansion and drive for further profits, there has often come a disregard for human rights. In some cases, corporations have been accused for hiring local militaries to subdue and even kill people who are protesting the effects and practices of these corporations, such as the various controversies over oil corporations and resource and mineral companies in parts of Africa have highlighted.
As globalization has increased in the past decade or two, so has the criticisms. Whether it is concerns at profits over people as the driving factor, or violations of human rights, or large scale tax avoidance by some companies, some large multinationals operating in developing countries in particular have certainly had many questions to answer.
The pressure to compete has often meant fighting against social clauses and policies that may lead to more costs for the company where other companies may not be subject to the same restrictions. The fear of losing out in competition then drives many companies to a lower common denominator rather than a higher one.
And so there is a downward pressure on worker’s wages and their working conditions because they are such major costs for many operations.
Many multinationals encourage the formation of export processing zones in developing countries which end up being areas where worker’s rights are reduced. This way they are able to play off countries against each other; if one tries to improve worker or living standards in some way, the company can threaten to move operations to another zone in another country. Some developing countries such as China also benefit from this arrangement as it makes them more competitive in international markets.
Side Note»
For many, the implication for this situation is that the right to form unions need to be supported. The topic of unions can cause debate and resentment from companies and free trade advocates.
On the one hand unions are supposed to represent worker’s and their rights. Without unions in some sectors workers have little ability to demand fairer conditions and pay from a more influential and powerful employee.
On the other hand, in an increasingly globalized world, companies struggle to compete with each other, especially where standards vary.
The enormous labor costs means that companies from countries with higher standards are at a competitive disadvantage. Rather than a global effort to improve working conditions for everyone, it seems easier—and more profitable—for companies and countries to argue for lower conditions.
The political effect of this is also increased control and influence; with less organized labor force, the political power is more firmly in the hands of a few powerful elite.
It is quite easy to demonize unions as well because the disruption they can cause (e.g. if the union is for some public service) can easily be shown to be a hindrance for the general population. Media coverage often looks at the inconvenience of the general population and hints at the unreasonable demands unions make.
(As a Human Rights Watch report details, it is not just developing countries where this problem exists; even the United States suffers from the denial of such rights.)
Lobbying at international institutions such as the World Trade Organization also helps them see more favorable conditions and the companies with more money can wield more influence, creating an imbalanced playing field, as opposed to a level one which they publicly argue for.
Despite the rhetoric of many corporations signing up to human rights related pacts and agreements, their lack of real commitment is still apparent, and, as mentioned by the previous link, “[w]hat is more, reveals the Washington D.C.-based IPS in a recently released report, ‘Top 200: The Rise of Corporate Global Power’, leading corporations have fiercely opposed attempts that require them to ‘achieve a higher level of transparency.’” [You can see the actual report from this link as well.]
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