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The relevance of international labor standards (ILS) can be attributed to several factors. The most apparent factor is the recognition that labor is an activity that requires a certain amount of freedom, dignity, and well-being to be provided to its participants. The rapid pace of globalization has resulted in a situation where large corporate entities are able to increase the profitability of their operations by tapping into the labor markets of developing countries and saving on labor costs.
However, this approach has resulted in the attempts of some corporations to gain an unfair advantage by exploiting a lack of enforceable regulations and gaps in the legal frameworks of the host countries. The following paper analyzes the outcomes of dealing with conflicting ILS and estimates their impact on the optimization of operational processes.
Purpose of International Labor Standards
International standards offer a framework for ensuring compliance with ethical values without compromising economic development. In addition, international labor standards offer a unified legal approach for minimizing the challenges of operating in an unfamiliar setting and promoting fair business practices. Third, they are expected to create similar conditions for all players in the field. This aspect is especially important for organizations that independently choose to uphold fair labor standards and, as a result, face growing pressure from competitors who either deliberately or unintentionally ignore them (Heizner, Render, & Munson, 2017).
Finally, compliance with international standards is expected to contribute to the economic performance of businesses in the long run by decreasing expenses associated with workplace accidents, providing a higher quality of employee training, encouraging creativity and innovation, and improving employee satisfaction rates by strengthening a sense of trust and security.
Possible Areas of Conflict
However, compliance with international labor standards is associated with a number of difficulties. For example, the standards are adopted by governments and states after their ratification, and, more importantly, cannot be enforced. This means that corporations are not obliged to comply with them. In other words, the standards cannot have a binding effect on companies’ actions. At the same time, at least some of the ILS is formulated with a considerable degree of vagueness, which further complicates the process.
As a result, the organizations that choose to uphold the standards have to rely on their own interpretation of the standards (Global Employment Institute, 2015). While, in most cases, this approach is sufficient, it is also possible for a situation to arise where the standards cannot be considered a contractual obligation due to a lack of specificity. While in most cases, this scenario opens up an opportunity for organizations to engage in unfair business practices, it also introduces a significant degree of complexity for companies that choose to use the standards for optimizing production.
For instance, the concept of adequate protection that is used throughout the international labor standards convention is not defined with a sufficient degree of precision to be used as an enforceable norm, and therefore cannot be brought to a court by either of the parties. In a scenario where international labor standards conflict with host country laws, this factor may discourage adherence to international standards in favor of the easier and, in most cases, better-defined requirements of local regulations. In other words, the legal aspects of ILS compliance may hinder the globalization of a company’s operational processes and, by extension, impact the optimization of production.
It should be pointed out, however, that adherence to international labor standards does not necessarily lead to the optimization of operational processes. In most cases, ILS implementation is expected to provide improvements in working conditions while at the same time improving the performance of the firm. However, the change in labor standards will likely complicate the hiring process, which will decrease the efficiency of the HR department and introduce additional expenses (Plasa, 2015).
In addition, the following ILS will limit the use of the labor market in the host country, creating a situation where fewer local citizens have access to improved conditions. In some cases, this may be considered an acceptable tradeoff, as the resulting improvement will cover any losses associated with these complications. However, the involvement of a large number of factors makes it difficult to estimate the benefits and compare them to expected losses. The issue is further complicated by the lack of conclusive data regarding the viability of implementing ILS, caused in part by the vague nature of the standards discussed above. Thus the firms that choose to implement the standards in order to facilitate the globalization of international processes may face unexpected problems in the optimization of their operational processes.
It is also important that in some cases, compliance with international standards can be achieved by using punitive measures such as trade sanctions. While it can be argued that these measures are necessary for achieving the desired outcome, they also have the potential to disrupt the optimization of operational processes. The main value of sanctions is their deterrent effect, which means that in an optimistic scenario, they are not expected to be used, since their use has adverse effects for all stakeholders. As a result, once the sanctions are imposed, they compromise the performance of the firm and, more importantly, have a negative effect on the employees.
For instance, in a scenario where a hypothetical company prevents its employees from organizing a labor union to challenge inadequate working conditions, the international community could respond by reducing the volume of goods exported by the company. As a result, the company would be forced to scale down its operations and possibly fire some of its employees. As can be seen, actions that are intended to ensure the integrity of international standards may have unforeseen and unintended consequences that disrupt the optimization of operational processes in a company.
Finally, it should be mentioned that the introduction of labor standards imposes certain restrictions whose total value depends on a variety of factors. While in general, these factors are expected to result in improved performance, better workplace conditions, and increased employee satisfaction, in practice, they sometimes introduce requirements incompatible with local labor conditions. Sometimes, the misalignment is technical – for instance, the working hours suggested by the standards may be unsuitable for organizations that are viewed as potential partners, limiting the options of an expanding company. In other cases, the standards are incompatible with cultural and social norms, which undermines employee satisfaction and, by extension, disrupts the firm’s operational processes.
The implementation of international standards is associated with numerous benefits for an organization, including an improved workplace environment in terms of safety and quality, increased employee satisfaction, and, by extension, reduced employee turnover. However, the absence of mechanisms to ensure compliance with the standards decreases their overall effectiveness. Thus it is necessary to acknowledge the possible conflicts created by the introduction of international labor standards in order to mitigate their adverse effects and maximize the optimization of a firm’s operational processes.
Global Employment Institute. (2015). Paper on international labour standards in the contemporary global economy. Web.
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Heizner, J., Render, B., & Munson, C. (2017). Operations management: Sustainability and supply chain management (12th ed.). New York, NY: Pearson.
Plasa, W. (2015). Reconciling international trade and labor protection: Why we need to bridge the gap between ILO standards and WTO rules. New York, NY: Lexington Books.