Discuss about the Human Resource Planning on the challenges to Labor demand and supply that poses a threat by Globalization.
Globalization is dominating the world and is somewhat inevitable in the current market scenario, global economy constitutes of both national and international economic institution. Globalization is channeled to labor market in various ways. Among them, one of the ways is affecting tremendously the labor demand and supply. Due to increased competition on the output market, there might be slight increase in the elasticity of labor demand via scale effect or substitution effect where a firm expands its productivity and want to set additional input. Scenario planning determines and distinguishes between long-term trend and uncertain elements. Once they are figured and put together to create different scenarios that showcase what is known and what isn’t and how it going to effect the environment. In this report, we will discuss the setbacks that are affecting labor demand and supply in Australian market and Human Resource Planning focus on the scenario planning which will take account of external changes in Australian market.
Cause of Globalization
Globalization result in promoting competition but also can be relate with non-competitive nature in the international market. Thus, a threat arises for the government facing difficulty with behavior over another country that can affect its economy.
- Economic growth of a country craves for more imports and expands the capacity to produce more for export. Thus generating enough saving to invest both domestically and internationally to meet demand of investment associated with economic growth.
- Innovation in technology such as Information technology and communication technology generates high financial and economical degree between different countries.
- Fall in transportation cost is the major factor in recent boom in globalization.
- Liberation of economic activity trade and investment both nationally and internationally.
Globalization and Labor Market
Condition of domestic labor market plays an important role such as job roles such as nurse, retail worker, and teacher pay roles are affected by domestic condition. Globalization has deep-rooted effect in market as it encourages substitution of labor for technology and capital in industrialized countries as it helps the highly skilled workers and not the unskilled. Outsourcing works to low wage countries. Relocating firms from high pay to low pay countries will help cut cost. Globalization effect on trade and labor market is mixed but has broader effects on business and not only just on trade price on labor market. Trade have grown in the recent decade more than economic growth giving rise to more number of multinational companies in recent times which is bringing foreign investment and international flow of capital.
Impact of Globalization on Australia
The impact of globalization in the Global market and in Australia can be pointed in three sources of tension.
First, it reduces trade barriers and increases opportunities for high skilled labors because of investment but it also reduces opportunities for low or semi skilled labor in the market. Second, globalization creates a conflict with domestic preference of service and goods for example safety and health standard imposed by certain country on certain good will no longer stay validate as good under World Trade Organization are treated as equal no matter its nation of origin. Third, countries with most social insurance and protection with an open economy finds it hard to manage social insurance and safety nets due to globalization. Globalization can be debate over many economic and social issues. Australia particularly has always maintained openness in its industrialized economy but tried not to be tied up in “fortress Australia” mentality. Australia cannot isolate itself from the rest of the world in the time of globalization if they want economic development in the country. Globalization often raises concern of racism in the global scenario due to some counties extreme monopoly of isolationism and nationalism (Butler et al., 2016).
Abolish of Protectionism
Australia always have the monopoly of buying less and selling more to other countries and also have severe restriction on foreign investment but due to rise of unemployment and inflation it lost it competitive advantage. Thus government forces business to compete in the global market since then Australia have open doors to foreign investments as a result significant increase in the quality of lifestyle have shown in Australian. Globalization have given chance to foreign firm to set business in Australia which dragged out the inefficiency in the economy and made the market competitive and innovative thus improving the lives and lifestyle of many (Sparrow, Brewster & Chung, 2016).
Change in Manufacturing Base
Manufacturing which need high labor intensity shifted to Low wage country due to globalization, company finds it irrelevant to hold manufacturing unit in Australia as the same work can be done easily and at cheaper rate in Low wage country due to advancement in the transportation sector thus it can be cheaply produced and supplied in the market. High wage labors in Australia have resulted into shrunk of GDP of Australia by high percentage. Australia’s high tech manufacturing has risen as well as have seen the rise in jobs. For example, Australia has the largest unit of Boeing manufacturing unit outside USA that is developing through R&D and sales (Eaton, 2017).
Growth in Service Sector
Service sector of Australia have seen tremendous growth in the recent year. In the recent decade, Australian wholesale trade, financial institution, retails trade, education, healthcare and tourism communication etc. Due to Globalization and consistent growth of the country’s GDP Australia has been the benefactor. In a recent study according to Forbes 6 out of the 10 largest company of Australia are finance service and bank. This also resulted in strengthen of Property of the country, strong infrastructure, confidence of the consumers etc. Australia’s geography plays a major role to build a thriving relationship with Asian Market (Boella & Goss-Turner 2013).
Scenario planning identifies organizations long-term goal and plans. It involves different aspects such as system thinking. As Australia enters the 21st century, global shift is challenging Australian business and determining Australia’s step in to the International market with partnership with global clients to maintain peace and prosperity so that it will enhance sustainability in the future. To discuss the current global changes facing Australia we have to look at some big problems (Kavanagh & Johnson, 2017).
Global Financial Instability
Size, Complexity and Interconnection of financial market of privet sector challenges the ability to monitor and properly regulate by National government. To solve the problem financial stability board and Basel Committee are leading by examples keeping Australia out of recession. International agenda addressed by National government is necessary to avoid future crisis.
Nuclear weapons avoidance agreement between US and other countries do not solve the entire problem. The destruction capabilities of nuclear weapon are incomparable. That is why Australia is trying to remain active in the arms race (Ruttan & Thirtle 2014).
New technology have enhanced the productivity and the prosperity of any organization with that it has also threaten the security of an infrastructure of both country and corporation thus requires constant vigilance both at home and office through cyber cell is required. Australia will remain vigilant by addressing economic and political factors, including global terrorism and poverty (Hanna & Oliva, 2015).
Growing population giving rise to need of food security in Australia loss of agricultural land will be a major drawback, being the largest exporter of agricultural product, Australia’s landscape and tropical environment helps it to produce more and more amount. In the current market of globalization, Australia will be a major and leading name in the global market and will help other countries by solving their food scarcity.
Food, Energy and Climate all the three are interrelated growing demand of energy resource in the country from major concern. Renewable energy resource is severely scare so use of natural resource is very important and prominent (Ehrenberg & Smith, 2016).
Climate change is the major concern of developed countries and thus required attention both national and global action. Climate change has resulted into major economic and social trouble thus addressing the issue of climate change is important for Australia.
Today in this world, more than a third of the population lives on less than Two dollar. Trade policy and aid are the core elements to reduce poverty globally it will result in good for global economy, regional stability and Australia (Cahuc, Carcillo & Zylberberg, 2014).
These are the reason that are big problem globally and requires deep attention of the country to tackle. HR should be planning scenario to solve the problem. Australia have a diverse economy and being shaped into a vibrate economy due to globalization, thus influencing all the business. Business cannot survive without implementing global perspective in the competitive market but how globalization is going to affect a business varies from sector to sector. Terrorism, Legal reason and culture could the other phenomenons that influence a business in the global world. Transportation and communication made consumers aware and selective. So far globalization have efficiently and competitively made economy for Australia which is driving the country to provide better service in both mining and service industry. Innovation and accumulation knowledge through learning is the key to success in business.
Boella, M., & Goss-Turner, S. (2013). Human resource management in the hospitality industry: A guide to best practice. Routledge.
Cahuc, P., Carcillo, S., & Zylberberg, A. (2014). Labor economics. MIT press.
Eaton, J. (2017). Globalization and human resource management in the airline industry. Routledge.
Ehrenberg, R. G., & Smith, R. S. (2016). Modern labor economics: Theory and public policy. Routledge.
Hanna, R., & Oliva, P. (2015). The effect of pollution on labor supply: Evidence from a natural experiment in Mexico City. Journal of Public Economics, 122, 68-79.
Kavanagh, M. J., & Johnson, R. D. (Eds.). (2017). Human resource information systems: Basics, applications, and future directions. Sage Publications.
Ruttan, V., & Thirtle, C. (2014). The role of demand and supply in the generation and diffusion of technical change (Vol. 21). Routledge.
Sparrow, P., Brewster, C., & Chung, C. (2016). Globalizing human resource management. Routledge.
The challenges to labour demand and supply posed by globalisation, and environmental and demographic changes, means that organisations can no longer assume that jobs will remain unchanged for long periods and that Human Resource Planning only needs to focus on internal replacement charts and succession planning. To remain relevant, HRP must focus on scenario planning which takes account of the major external changes facing Australian businesses.’ Discuss.