Labor Relations Recommendations: How to Improve Employee Relations

Introduction 

Organizations should position themselves to attract and retain the employees they will need to navigate the choppy waters of a complex global economy. Global firms should take into consideration the demographic, technological and cultural differences around the world that may affect labor supply (Brandolini et al., 2006). Organizations operating on an international scale face significant challenge relating to unknown laws, work ethics, attitudes, culture, management approach and culture. Organizations should consider the economic, social and economic factors that affect labor supply in a given country before setting up business there. Factors such as monthly earnings, labor force, employment rates and working time are some of the significant factors that affect human resource decisions for multinational corporations (Mutsuddi, 2012). Magna International, a Canadian global automotive supplier that may seek to expand to international markets in order to increase its market share and sales. The company has 327 manufacturing operations, as well as 100 product development, engineering and sales centers in 29 countries. Based on the global dynamics experienced currently, the company has the potential to grow its business by expanding to emerging markets such as Asia, Eastern Europe and Africa. In order to come up with the appropriate business decisions the company’s HR function should carry out an analysis of various countries in terms of their economic, social and political factors that may influence international human resource decisions (Blanchard & Philippon, 2004). The human resource functions should be examined and modified to accommodate a global workforce. The report will present and analysis of three countries based on the International Labor Organization (ILO) data. The analysis will assist in arriving at a decision on which country to expand business to. The ILO maintains an online database of international labor statistics across the countries of the world. The countries that will be analyzed include Greece, Ireland and Portugal. The data from the three countries will be further compared to United States data. 

Role of HR 

One of the most significant challenges facing HR is to help an organization to move from a domestic corporate orientation to working in global business environment successfully. The HR function will adopt a cross cultural HR development plan as a strategy to facilitate the transformation. Additionally, the HR managers need to respond quickly in the dynamic environments that characterize the global market. The HR function is typically involved in the recruitment, hiring, training and developing employees from various cultures and regions. The HR professionals, therefore, have the responsibility of inspiring employees to work collaboratively even if they do not reside in the same location. In so doing, the HR function helps to support international business by availing qualified and skilled employees from around the globe. It also develops appropriate policies for managing employees drawn from the various cultures around the world. 

Greece 

The economy of Greece is the 47 th largest in the world. It has a nominal GDP of $194.559 billion per year. As a developed country, Greece economy is mainly based on the service sector. Any organization intending to set business in a given country should take into consideration various factors concerning the country which may influence international human resource policies and procedures (Scullion et al., 2007). The average monthly salary in Greece is 780 euros (ILO). The recession financial recession hit the country seriously affecting the average monthly wage of employees in the country. The length of a typical working week in the country is 8 hours a day, 5 days a week. Greek workers work longer than their European counterparts, for instance, employees in Greece work on average 42 hours in a week compared to a European average of 40.3 hours in a week. There is an adequate supply of skilled, semi-skilled and unskilled labor in the country. Therefore, the HR function has to recognize that, labor supply in Greece is capable of supporting any investment activity. However, some highly technical skills may be lacking. The rate of unemployment in Greece is more than double the average of the Eurozone. The unemployment rate in Greece stands at 23.4 percent. Therefore, there is no competition for labor in the country. 

Ireland 

Ireland has retained its status of being the EU’s fastest growing economy. Ireland’s economy is a modern knowledge economy that focuses on services, as well as high-tech industries. The country’s economy is dependent on trade, industry and investment (Turbek et al., 2000). The labor force in Ireland stands at an estimate of 2.181 million. Therefore, the labor supply in the country is lower compared to other countries in Europe. Additionally, two thirds of the labor force, in Ireland, works in government. There are various minimum wages in effect in Ireland. For instance, the national minimum wage is set at 1461.85 Euros. The legal working time in the country is set at a maximum of 39 hours a week. Moreover, the employees are entitled to 4 weeks paid holiday. The unemployment rate in Ireland stands at around 6.4 percent. Therefore, the HR function should notice that competition for labor in the country is very high. It is important to realize that Ireland has several corporate tax incentives. The incentives include 12.5 percent corporate tax rate on active business income, a 25 percent tax credit on qualifying R&D expenditures and accelerated tax depreciation allowances for approved energy efficient equipment. Such incentives attract overseas investments in the country. 

Portugal 

The economy of Portugal has rebounded dramatically since it was bailed out by the European Union in 2011. The country has become a diversified and significantly service-based economy since joining the European Community back in 1986. Portugal’s national minimum wage stands at 649.8 Euros per month. Portugal’s labor force stands at about 5.2 million with an unemployment rate standing at 9.8 percent (ILO). Portugal is ranked among top five nations working the most hours. The statutory maximum working week in Portugal is 40 hours while the statutory maximum working day is 8 hours. The holiday entitlement in Portugal is 22 days. Basically, there is no siesta tradition in Portugal. The country has some tax and benefits for businesses. Businesses with investment projects that qualify for the strategic economic interest are eligible for tax incentives in Portugal. Portugal has a foreign trade zone in the Autonomous Region of Madeira. The HR function of Magna International should note that companies established in such a foreign trade zone are entitled to import and export benefits, financial incentives and tax incentives for both investors and companies. 

U.S. at a Glance 

The United States of America’s economy is the world’s largest national economy. The unemployment rate in the country stands at 4.7 percent. The private sector is the largest employer in the United States. The economy experiences relatively low levels of regulation and government involvement. The labor force is approximately 163 million. Therefore, the country has a large labor force. The average monthly earnings in the United States stand at $3769. American employees work 8.4 hours per work day (ILO). This may total to 47 hours per week. The country has one of the highest tax rates in the world. In comparison to Greece, Ireland and Portugal, United States has the highest corporate tax rates in the world. The United States also has the largest labor force as compared to the three countries. The average monthly wage in the United States is also the highest when compared to Greece, Ireland and Portugal. 

Recommendation 

The primary role of the HR function in any organization is to make appropriate decisions regarding personnel. Based on the analysis done by the HR, it is recommended that Magna International should consider expanding its manufacturing business in Portugal. Portugal is the most suitable destination because the working culture is favorable. Compared to Ireland and Greece, Portugal has longer working hours. This means that employees can contribute more to the manufacturing process. The working culture of employees significantly influences job performance (Lundby & Jolton, 2010). Among the three countries, Greece, Ireland and Portugal, Portugal has the lowest average monthly earnings. This indicates that the cost of labor in Portugal is lower. Low labor costs result in low production costs. There is also a relatively lower competition for labor in Portugal. Most importantly, Portugal has corporate tax incentives, export and import benefits, as well as financial incentives. Based on the analysis, Portugal stands out as the most preferable investment destination. Government regulations affect the business environment in a significant way (Noe et al., 2016). Therefore, countries with business friendly government policies are good business destinations. 

Conclusion 

In conclusion, the global economy presents significant challenges to international human resources functions of organization. Decisions regarding international workforce should factor in the social, economic and political factors existing in the various countries of interest. The HR professionals of organizations operating on an international scale face significant challenge relating to unknown laws, work ethics, attitudes, culture, management approach and culture. Organizations should consider the economic, social and economic factors that affect labor supply in a given country before setting up business there. Factors such as monthly earnings, labor force, employment rates and working time are some of the significant factors that affect human resource decisions for multinational corporations. Portugal stands out among the three countries as the most preferred investment destination for Magna International. 

References 

Blanchard, O., & Philippon, T. (2004). The quality of labor relations and unemployment (No. w10590). National Bureau of Economic Research. 

Brandolini, A., Cipollone, P., & Viviano, E. (2006). Does the ILO definition capture all unemployment?. Journal of the European Economic Association , 4 (1), 153-179. http://www.ilo.org/global/lang--en/index.htm 

International Labour Organization. (n.d.). Retrieved from http://www.ilo.org   

Lundby, K. M., & Jolton, J. (2010). Going global: Practical applications and recommendations for HR and OD professionals in the global workplace. San Francisco, CA: Jossey-Bass. 

Mutsuddi, I. (2012). Managing human resources in the global context. Daryaganj, India: New Age International. 

Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2016). Fundamentals of human resource management (6th ed.). New York, NY: McGraw Hill.

Scullion, H., Collings, D. G., & Gunnigle, P. (2007). International human resource management in the 21st century: emerging themes and contemporary debates. Human Resource management journal , 17 (4), 309-319. 

Trubek, D. M., Mosher, J., & Rothstein, J. S. (2000). Transnationalism in the regulation of labor relations: International regimes and transnational advocacy networks. Law & Social Inquiry , 25 (4), 1187-1211.