 In this topic, we are going to talk about trade unions and their effect on international industrial relations. So we will be discussing how trade unions in what ways they affect the dynamics of international industrial relations. The trade unions may limit the strategic choices of multinational enterprises in three ways. Number one by influencing wage levels to the extent that cost structures may become uncompetitive. Number two by constraining ability of the multinational to vary employment levels at will. And number three by hindering or preventing global integration of operations of multinational enterprises. So let's discuss number one trade unions that influence the wage levels. That is the first effect of trade unions. The things that they try to do is that they want to affect the wage levels and they influence the organizations to increase the wage levels more than the practical limit. And since wages and salaries, they are one of the major costs. If there is certain type of pressure on the wage level, then the multinational's ability to remain cost effective may be affected. So if the trade unions, they affect your wage levels and salaries to that extent that you have to pay so much to your employees and labors, then your ability to remain cost effective may be compromised. It is more important in the international scenario because when you move from one country to the other, it is possible that the amount of payments that you are able to pay in one country is more flexible than the amount of payments you are able to make in another country because of various different dynamics. So for example, you can pay more to people in Pakistan because the cost of living and the proportion and the GDP, all of these things, they are quite low. And the per capita income is also something which is quite low. So it is something which you can bargain very easily, whereas if you want to pay in a developed country, for example, if you want to pay somebody in the United States or let's say in the UK, the per capita incomes, the general market standards, the cost of living, all these things, they are so high already. And if then you are also affected by the trade union pressures, it is not possible for a multinational coming from a developing country to establish its subsidiaries in a developed countries because there are so many pressures of cost that they will not remain cost effective. So the trade unions, they affect the multinationals by influencing the wage levels. The second thing which these trade unions can do is constraining the ability of multinational enterprises to vary employment levels at will. This is more of a concern than the concern of influencing wage levels. You can pay a productive employee more because if the person is bringing you profits, you are in a possibility in a position to pay that person more. But the ability to fire or lay off a productive worker because you want to reduce your production levels, you want to change the strategy of your organization, you are restructuring, you are selling off, that the kind of situation is something which is more difficult to manage because trade unions, they do not allow you to vary your employment levels in case that you want to go for plant closures, layoffs and redundancy programs. This is something that the organizations, multinationals have to do extensively. Why? Because not all the time, all operations are successful. Not all the time, all businesses, they are flourishing. At times there are times of losses, at times there are times of profits. But these trade unions, they make sure that you are not able to close a plant where people are employed. You are not able to lay off at a substantial level because people are employed and it is their right that you should keep them employed unless they are not less productive or unless there is not any fault at their end. So this fact that you cannot change the employment levels, you cannot close a plant, you cannot close a branch, you cannot close a particular subsidiary because you are affected, because you are influenced by the trade unions not to do so unless you can show it in a hard and fast way that yes, this is something which is more, most required. But the process of showing this, showing the need is very long and drawn out. So you need to make a very clear and structured form of statement. You need to show in transparent records that this is something which is not profitable and your company is going bankrupt or your company is facing such kind of situation in which it is impossible to pay these people and to keep the plant running and to keep the people employed in this particular branch or area. So if the organization that wants to go for changing the employment level in the shape of redundancy or layoffs or plant closures, they are restricted by the trade unions unless they can actually make a point and this is more of a pressure than just influencing wage levels. Then trade unions, they can influence this process in two ways. They can influence the employment levels to be kept at a certain level in two ways. Number one is by lobbying their own national governments to introduce redundancy legislation. So one is that they can lobby their own country's legislation and their politicians so that such legislation can be brought in where redundancy cannot be done so easily. And secondly, by encouraging regulation of multinationals by international organizations, for example, the ILO or the OECD, so they also lobby with these international organizations which are regulating the functions of multinationals and they keep on issuing guidelines to which the multinationals should adhere in order to be accepted as acceptable organizations. So these trade unions, they lobby with these international organizations as well. Firstly, they lobby with their national institutions, secondly, they lobby with international organizations to put pressure on multinationals that they should make decisions which are transparent and which actually show that the redundancy programs or the layoffs or plant closures, they are done under severe need of the multinationals. Then they can hinder or prevent global integration of operations of multinationals. In this, we will quote an example of General Motors. General Motors, they pressurize them to carry out heavy investment in Germany to match the investment they had done in Spain and Austria. So rather than General Motors doing its investment in Spain and Austria, they should manage production from there. The German trade unions influenced General Motors and pressurized them to make the same investment in Germany and keep the plants running in Germany. So this was done on the demand of German metalworkers union. It is one of the most influential union of Germany. So in General Motors had to give in because they wanted to foster good industrial relations in Germany. So they made these investments and these investments were made not because the investment was required, but it was made because it was a pressure from the trade unions and it led to a phenomena which is called suboptimization. And suboptimization is when you are producing at not at the optimum levels and not with the maximum efficiency. You have invested at various different places, but that is not. If you integrate your global operations, you put them in one place and you manage your production at those integrated places, you will be more cost effective. But when you are doing this, you are sub-optimizing your operations. And what was the effect of that? The effect was that the unit manufacturing cost of those automobiles that was 15% more than the average, more than the rational manufacturing price. So this kind of strategy is used by trade unions to put pressure on multinationals to raise their investment levels, to raise their employment levels, to raise their wage levels more than what is planned or what is rationally chocked out by the multinational company. So these are the ways in which trade unions can influence multinational companies.