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Introduction to International Labor Memo

Labor is important to business since the input of labor in a business will produce goods that can bring profit to the company. In fact, labor productivity (working hours, unemployment, and labor participation rate) of a certain country is an indicator o f the economic performance of a country (Art and Gulin: 1999). Thus, if a country’s workforce has high productivity, then it has a sound economy that would be good for a business like ours to trade with. A specific example of how labor affects international business would be from the IT industry.

It is a common knowledge that the IT industry grown tremendously for the past few decades brought about by global trade. Due to the dynamic changes of software being produced, skills needed for recruiting IT employees are fast-changing. A study conducted by Mann (2005 ) reported that “IT complements and enhances some tasks (those that involve problem-solving, judgment, and communications skills) and thus raises the demand for workers in those jobs”. (See Table 1).

Thus, the labor demands affect the international business since this puts pressure on governments to train or produce citizens that can cope up with the said demands. The IT companies being a formidable group can lobby to the legislators their needs so as to supply the industry. However, not all countries have the same labor practices, which is the very reason why as new associates for an international trading business it is important to know the effect of labor law over international business.

Another important issue when discussing labor is concerning labor law. The international labor law is but part of international law that is a normative set of guidelines that will influence international business in practicing equal trade practices. For one, every country has different compensation rate, thus, there is a need to assure workers that they are paid fairly. If a country is known for compensating workers with low wages, then the tendency of another country is to outsource manpower from such countries.

The most unfortunate part would be relocating the whole business to a new country since labor costs are at a minimum which indirectly deprives the people chance for employment. Thus, labor laws are important in protecting countries from either exploiting other countries workforce or being exploited by a more develop country, let us say United Kingdom. In the case of the United States, a Labor and Employment Committee was established in order to “pursue a proactive and coordinated strategy to positively influence international labor standards, increase labor market flexibility and promote best practices” (USCIB ).

Recently many disputes regarding labor have been going on between China and its partner countries due to unfair labor practices. This puts a strain on the business relationships which has far reaching consequences to the economic condition and trade agreements of both countries. Although China is known for its vast labor supply that can meet the demands the international market, western companies do not want to breach ethics in conducting international transactions. Also, corporations have social responsibility towards the communities that they engage with.

Although profit is a requirement in business, it is not the only thing that must drive the organization towards reaching its objectives. As new business associates, it will take time to adjust to familiarize oneself with the trading business, much more in understanding the effects of labor, labor relations, and international labor law to the various countries that the business forms partnership with. the important thing however, is to be sensitive in judgment before acting on a decision since decisions made has far reaching implications that could mean profit or loss to the company’s transactions.


Ark, Bart Van and McGuckin. 1999 July. Robert. International comparisons of labor productivity and per capita income . Monthly Labor Review. Mann , Catherine L . 2005. Globalization, Information Technology and US Economic Performance. Globalization: Prospects and Problems Conference in Honor of Jagdish Bhagwati’s 70th Birthday University of Florida, Gainesville January 28-30, 2005. Policy Advocacy. Labor and Employment Policy USCIB. [http://www. uscib. org /index. asp? document ID=825 ]. Accessed May 12,2008.

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