Comparing and Contrast the Influence on Employment Policy of the European Union and Nafta - Case Study Example

Compare and contrast the influence on employment policy of the European Union and NAFTA on their respective member s. Evaluate their likely impact on the practice of International HRM Contents 1. Abstract…………………………………………………………………………………………………2 2. Introduction…………………………………………………………………………………………..3 3. Key Concepts & Concerns.……………………………………………………………………….5 4. Conclusion…………………………………………………………………………………………….7 References…………………………………………………………………………………………….8 1. Abstract The common consensus of the three member states namely, United States, Canada and Mexico that led to the establishment of the North American Free Trade Agreement several decades ago in the year 1993 has laid a foundation for a fair comparison with the European Union which comprises of over fifteen member states and is deemed to be a one – of – its – kind arrangement that encourages free and fair trade policies. Although in spite of several commonalities between the two associations which facilitate such a comparison such as organizational design, and being two of the world’s largest economies for instance, there are widespread differences in terms of complexity in decision making process and distinctiveness in terms of policies and organizational framework. However, the existence of such apparent similarities as well as differences to certain extent do not prevent or hamper the objective of this paper that seeks to offer a comparison between the two unions. This paper examines, discusses and analyses the influence on employment policy of the European Union (EU) and North American Free Trade Agreement (NAFTA) on their respective member states and also the subsequent and likely impact on the practice of international HRM. It also offers an overview of the impact of EU and NAFTA’s employment policies on the labor market of their respective member states. 2. Introduction The North American Free Trade Agreement or NAFTA, is a trilateral free trade deal which came into force in January 1994, which was established with an aim of eradicating the huge amount of tariffs that were levied on products or goods which formed a part of trade between the three North American countries namely Mexico, Canada and the United States1 while the European Union or the EU is a conglomeration of several sovereign states merged together for various economic benefits. The main goal of the EU is the progressive integration of Member States economic and political systems and the establishment of a single market based on the free movement of goods, people, money and services2. This paper discusses the impact of such associations on the labor market, economy, and employment and discusses key concerns faced by them. It further discusses the extent of benefits, if any, or challenges and opportunities faced by them and trace the factors that highlight the similarities as well as differences between them. 3. Key Concepts & Concerns The various concerns and challenges faced by the European Union as well as the North American Free Trade Agreement are discussed below: The European Union is constantly facing challenges from the enlargement of the Central and Eastern European states3 on account of transition as well as the problem of widespread difference in composition of income in those regions. The uncertainties arising on account of such enlargement is a cause of major concern to the other EU member states since it is likely to cause an imbalance in terms of income distribution as well as in the labor market. Moreover it also faces the threat of a decline in standard of living, accession of unskilled labor and the subsequent repercussions such as job displacement and wage loss from lower income countries. According to Bamber, Lansbury and Wailes (2004) “Topical research focus needs to expand to cover related areas of employment relations outside the areas of formal collective bargaining relationship. These include alternative forms of employee representation and the role of protective labor legislation4”. Thus, in order to mitigate the potential problems likely to be caused by structural changes in the EU member states, it is essential to draft economic policies that take into consideration factors such as uneven income distribution, and fluctuation in the labor market among others. Such economic framework may include flexible labor market polices and income support schemes that strives to stabilize the situation post accession. Such structural changes were witnessed in certain EU member states such as Greece, Portugal and Spain which largely affected the employment dynamics creating turbulence in the labor market. The key significance of establishment of NAFTA, on the other hand, was largely centered on the probable benefits that were likely to accrue from the relative flexible labor markets. A significant trend that led to reallocation of workers was observed on account of free trade agreements at GDP per capital levels with such countries as Mexico, which was at par with that generally found in the Central and Eastern European countries. However, the turbulence caused on account of accession and change in labor market structure that was witnessed in EU member states was absent in NAFTA since their institutions were well equipped to cope with such structural changes. The impact of NAFTA on U.S. employment was found to be evenly spread across all manufacturing sectors but the job opportunities generated in these sectors were relatively fewer (approx.3000) and over 1.1 million jobs were lost in the manufacturing sector during the period 1998 – 2001 alone5. 5. Conclusion The ensemble of the respective member states in the European Union as well as in the North American Free Trade Agreement was aimed at achieving a qualitative diverse combination which can be associated with exceptional state of affairs, rationale, purpose as well as limitations. Each one of them symbolizes a distinct historical path, geographical boundaries, tactical visualization, and cost effective techniques for assimilation. Hence any subsequent evaluation or assessments are required to be executed with utmost prudence and diligence. The comparison presented in the above sections presents an overwhelming challenge on account of both, an immense deviation of circumstances from one system to the other as well as owing to the interdisciplinary power, knowhow, and cultural sensitivity. References Bamber, G.J., Lansbury, R.D., & Wailes, N. Introduction. In G.J. Bamber and R.D.Lansbury(Eds) International and Comparitive Employment Relations: Globalization and the Developed Market Economies (4th Ed., Pp. 1 - 35), London: Sage Publications Scott R.E., (2001). Distorting the Record: NAFTA’s promoters play fast and loose with facts, EPI Issue Brief, No.158, viewed: January 9, 2009, from: < http://www.epi.org/Issuebriefs/ib158/ib158.pdf> Vaughn D., (2003). EU Enlargement Versus Social Europe?: The Uncertain Future of the European Social Model, Pp.458, Edward Elgar Publishing Wolinetz S. B., (2003). Comparing Canada, the European Union and NAFTA: Comparative Capers and Constitutional Conundrums, Vol. 3, No.4) Application of Community Law: European Commission, What is EU? Viewed: January 9, 2009, from: < http://ec.europa.eu/community_law/introduction/treaty_en.htm> Council on Foreign Relations: NAFTA’s Economic Impact, viewed January 9, 2009, from: Appendices: EU and NAFTA: Comparison in a Nutshell (Source: Wolinetz S. B., (2003). Comparing Canada, the European Union and NAFTA: Comparative Capers and Constitutional Conundrums, Vol. 3, No.4) Read More