Imagine yourself on your first assignment abroad as a manager at a manufacturing

Question

Imagine yourself on your first assignment abroad as a manager at a manufacturing facility in Asia. Your are aware of increasing concern among your employees (mostly young women) about wages that barely permit them to live at subsistence level. The plant is not unionized, and you know that your superiors in your home country are not particularly supportive to efforts to organize workers. You also know that if workers vote to form a union and then demand higher wages, headquarters is likely to shift production to a lower-wage country. The plant could possibly be shut down, your employees could lose their jobs, and you yourself could be transferred. Should you encourage or discourage your workers in their efforts to unionize? Why? Is there a way that you can help the workers yet not hurt your firm? Please elaborate.  

Explanation / Answer

This is an actual scenario that happens in many manufacturing setups which set up shop in low wage countries. Due to the lack of proper minimum wage levels, many corporates exploit the workers and barely pay them for their sustenance.

This is very wrong. What is given in the case study is something similar. In my view, the approach should be two pronged:

First, it is important to acknowledge the fact that the workers demands are just and right. They should be fulfilled. However, it is also important to note that if a union is formed, chances of co-ordinated strikes are much higher, and it generally causes more harm than benefit even to the workers. For example, if a workforce is unionized, you will see them pulling off strikes for even the smallest of issues, and this will eventually lead to frustration for the corporate which will shift its base to another location, affecting everyone involved.

Hence, firstly, the manager should budget the increase in wages demanded within the budget allocated to him. It would very much be possible. He should discuss with his higher management about this proposal - the increase should be such that even with the higher wage levels, the overall cost of the setup should be much lower than any other country that they are considering.

Secondly, he must explain that if the company does not heed to this demand, it is only going to affect them eventually as this would mean their workers do not have a good lifestyle. This would mean their productivity would be hampered.

Thirdly, if unionization happens, the chances are high that the company might shift base, and this would entail a lot of cost in terms of transferring assets to another country altogether.

Hence, the manager should take steps to increase the wage levels at this point so that unionization doesn't happen. However, he should try and conduct a bi-monthly townhall with all the workers to hear out their grievances and act on ones deserving attention.

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