International Human Resources Management

International Human Resources Management
Dowling et al (p. 252) briefly discuss the issue of social ‘dumping’ in terms of the EU. How can this be considered comparable to the issue of outsourcing in the US? What suggestions do you have for these types of challenges?

The Issue of Social ‘Dumping’
One of the early concerns related to the formation of the European Union was its impact on jobs. There was alarm that those member states that have relatively low social security costs would have a competitive edge and that firms would locate in those member states that have lower labor costs. The counter-alarm was that states with low-cost labor would have to increase their labor costs, to the detriment of their competitiveness. There are two industrial relations issues here: the movement of work from one region to another and its effect on employment levels; and the need for trade union solidarity to prevent workers in one region from accepting pay cuts to attract investment, at the expense of workers in another region.
With the expansion of the EU in 2004 to include ten new members (most relatively low-income states, some of whom are still working to overcome the heritage of state socialist economic systems and limited recent experience with parliamentary democracy) there has been an increased sensitivity to the problem of social dumping. This is particularly so since the global financial crisis in 2009. An internet search using the term ‘social dumping’ will turn up webpages reflecting concerns from multiple perspectives – trade union, societal and business. We examine these multiple perspectives in the next section of this chapter where we look at the issue of monitoring global HR practices.