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Unions push multinational corporations to comply with national regulations

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Posted August 31, 2018

Multinational corporations are great. They provide a good place to work, they can increase the living standard in a rural region and they can become a quick and easy boos for the local economy. However, they are so big and so well organized that sometimes they direct certain resources to find ways around the local laws. Scientists from the University of Waterloo found that MNC‘s comply better with Canadian labour laws when unions are involved.

Multinational corporations are great for the economy, but sometimes they avoid complying with national labour laws. Image credit: Ken Lund via Wikimedia (CC BY-SA 2.0)

So here’s a thing – where there is a law, there is a way around it. And it is a job of some people – finding loopholes in laws and regulations that may allow a company to maximise its profit the “easy way”. And then there is a simple case of the lack of experience. An MNC may not be familiar with all the regulations in the host country and so some labour laws may be looked at more liberally. At the end of the day, it is employees who suffer from such behaviour. However, a new research by the University of Waterloo looked at government records in Ontario from 2005 to 2015 and found that unions help keeping MNCs in check.

This research, although it was still difficult to complete, was made possible by Ontario law, stating that companies with more than 50 employees must provide data about layoffs and how they were handled in terms of helping the employees to transition. The period of 2005-2015 saw significant layoffs in the province due to the global financial crisis and other factors. Scientists found that when unions were not present, foreign MNCs generally had a much lower rate of compliance with employment law in Canada when compared to local companies. Interestingly, most European companies had a higher rate of compliance than the ones based in the U.S., Mexico and Asia (with the exception of Japan).

Chris Riddell, co-author of the study, said: “Unions entirely mitigate the country of origin effect. The study shows an example of how unions can play a broader role in ensuring companies comply with the law”. And while there were differences concerning countries of origin of these corporations, they can be explained by reputation of lower employment standards in these states. Some cultures simply have different attitudes towards labour rights.

Unions may not be the universal answer, but it seems like they certainly help. How and why are two separate questions – policy makers should encourage unions, because everyone wins when they are active.

 

Source: University of Waterloo

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