Transnational Corporations (TNC)

Introduction

Transnational corporations (TNC) refers to either incorporated or unincorporated enterprises made up of parent companies and their affiliates. A parent company is one that controls assets of other entities in other countries mostly by owning equity. Controlling stake is considered to be achieved when a company attains 10% of more of the ordinary shares or voting power. The presence of TNC is an evidence of the globalization that has been noted by international trade in goods and services, foreign direct investment, portfolio investment, interorganizational, and movement of people across border in search of jobs. One issue that transnationals corporations deals is on employees. This paper will discuss where most of Transnational’s Corporations employees are based, establish whether they employees are unionized, establish the salaries paid to the top executives of the TNCs, discover the lowest paid ends, establish how the Transnational Corporations deals with managerial employee diversity, discover any campaigns that have been raised against TNC and their response to such campaigns.

Location of TNCs employees

The expansion of globalization and TNCs have had an effect on the labor patterns. This has mainly affected majority of people living in the developing countries. Transnational Corporations are known to take advantage of some factors in some countries that d not have strict labor laws and working conditions. It should be noted that most TNCs originate from developed countries. They tend to earn most of their profit from the manner in which they manufacture their goods. This is mainly due to how they outsource the largest part of their labor force to developing countries. This implies that most the employees for the transnational employees are based in the developing countries. The main reason associated with this is because most of these developing countries lack strict industrial relations law on minimum wage, minimum age of employment, maximum daily number of hours allowed. Thus, by operating in developing countries, Transnational Corporations pay their employees less than they would have done to the workers in the developed countries. In the developing countries, the safety standards are much lower and therefore offers a loophole for the TNC to exploit their employees.

Another country where most TNC’s employees are based is China. The TNCs in China are encouraged by the quantitative surplus of the labor force. It is estimated that by 2020, the investments in the transnational corporations will create about 0.13-0.15 billion employment opportunities in China. The huge surplus of employees in China implies a lower minimum age (Jia, 2010).

TNCs and Unions

The trend of transnationalized corporate workforce challenges the nationally constituted trade unions related to craft, industry or occupation-based organization. With the presence of these TNCs, the unions are unable to operate effectively and efficiently within their national borders. The corporate offshoring and outsourcing of labor affects the bargaining power of the nationally constituted unions. Such unions are weakened in relation to their declining union density, reduction of unions’ power at labor market, and their political salience (Wad, 2014).

It is therefore clear that employees in Transnational corporations are engaged in unions at national level. These trade unions face major challenges in developing effective responses to the growing international scope, integration and complexity of the transnational operations. The TNCs have experienced increased internationalization in the management structures which has strengthened their capacity to move activities and jobs across the borders as well as increase the pressure on directly employed and supplier workforces. This has posed a great challenge to the trade unions, as they need to match the spatial scope of employers (Marginson, 2016).

Salaries of Top Executives in TNC

An analysis of different range of industries and company sizes across ten countries in North America, Europe and Middle East and Asia identified that the transnational companies had revenues amounting to $44 billion and 85000 employees. Practices for competitive compensation for each level of the executive tea had the target pay positioning varies based on the country where the headquarters are located.  US-headquartered companies are most likely to set targets for long-term incentive positioning. It is noted that only half of top-level have their salaries based in the local salary positioning while three quarters are pegged on the local market positioning (Seitz & Edwards, 2011). The overall pay packages for CEOs is mainly comprised of variable pay with only 20% being the basic salary. Where fixed pay is considered to be comprised of salary, pension, and benefits, for every $10 dollar received only $ 3 is fixed pay. The remaining amount is comprised of short-term and long-term incentive plan. An analysis of the FTSE 100 companies shows that a salary package worth £48000 is received to an average employee. It is then noted that for every £1 an average employee is paid, their CEO receives £129. In some companies the ratio of CEOs pay to an average pay is at large as 1200 times while others stand at 15: 1 (CIPD, 2017).

Transnational corporations and Gender balance

It has been observed that the investments in transnational corporations have opened up opportunities for women but despite this exacerbating gender inequality at the work place has remained prevalent. The transnational corporations have been instrumental in the creation of job opportunities for women, especially in the labor-intensive, and export-oriented industries such as  flower industries and textile industries. However, despite this, there are risks involved such as poor working conditions and limited access to training for women. This is especially evident where the jobs opportunities are confined to low-paid activities in the informal sector.

Gender balance is felt at different levels and producing different effects, in terms of productivity effects, the TNCs offer competition to the local firms which impacts on women’s employment and potential for training and upgrading their skills. In terms of labor market effects, the TNCs are known to produce both positive and negative impact related to direct employment within TNCs which affects wages, training, labor standards and crowding in and out (UNCTAD, 2014).

TNCs and managerial and employees’ diversity

Most US multinational corporations have substantial workforce diversity management programs. The issue of internationalization especially in the European Union has led to increased competition, demographic, legal, and political developments that together form the workforce diversity issues mandate. Transnationals have been known to put in place measures of diversity management by introducing policies and practices targeting recruitment, retaining and managing employees from diverse backgrounds and identities. They also aim provide a culture where everybody is put in the capacity to perform and attain organizational and personal objectives (Syed & Tariq, 2017).

Wage campaigns against Transnational Corporations

The International Textile Garment and Leather Worker Federation initiated a campaign dubbed as “sweatshop labour” that named major TNCs such as Tesco, Marks & Spencer, and Next involved in exploitation of workers. This was after a report was released by the lobby group to examine the working conditions among 100,000 workers across 83 factors with an aim of establishing how the workers treated. Other brands that were found to be breaking the rights of the workers included Adidas, Converse, Abercrombie and Fitch and Victoria’s Secret (McLysaght, 2011). The main grievance raised was that none of their companies paid a living wage to all their workers while some paid the workers a pay that was below the average. There was a concern that most of the workers in these TNCs were not members of unions as they feared being victimized and termination from their positions. To savage their positions, most of these companies enacted policies that promoted the conditions of the workers. Some of their factories affected were shut down such as the Nike factory in Bangladesh. The companies resorted to using public relations agencies to help restore their image.

References

CIPD. (2017). Executiv Pay: Review of FTSE 100 executive pay packages.

Jia, X. J. (2010, 2010). Analysis of the Economic Influences of the Investments in China from Transactional Corporations. International Business Research .

Marginson, P. (2016). Trade Unions and MultiNational Companies: A Mult-level Challenge . Warwick Paper in Industrial Relations.

McLysaght, E. (2011). Sixty Big name Brands Continuing to Use Sweatshop Labour. The Journal Media.

Seitz, D., & Edwards, K. (2011). Competitive Pay Positioning for Multinational Corporations. Willis Towers Watson.

Syed, J., & Tariq, M. (2017). Global Divesirty Management. Human Resource Management.

UNCTAD. (2014). Investment by TNCs and Gender: Preliminary Assessment and Way Forward. Geneva: United Nations.

Wad, P. (2014). Solidarty Action in GLobal Labour Networks: Four Cases of Workplace Organizing at Foreign Affiliates on the Global South. Nrdic Journal of Work Life Studies .