Threat To Development by William Loehr John P Powelson

Author:William Loehr, John P Powelson [William Loehr, John P Powelson]
Language: eng
Format: epub
ISBN: 9780367274344
Google: FAFozgEACAAJ
Barnesnoble:
Publisher: Taylor & Francis
Published: 2021-05-31T00:00:00+00:00

12. They Employ Nationals from Their Home Countries

Three decades ago, it was customary to fault MNCs for failing to promote host-country nationals to responsible positions. Employment was thus two tiered: executives from the home country and blue-collar workers from the host country.

That criticism is not much heard any more, for the situation has greatly changed. In Mexico, no foreigner may be hired unless it can be proved that there is no Mexican capable of doing the job. Since the government resists such “proofs” strongly, virtually all MNC-affiliated companies in Mexico are staffed by Mexicans, from the chairman of the board on down. Other LDCs have not gone so far, and sometimes high positions are still filled from home, but the tendency is definitely toward host-country hiring. According to a United Nations report on MNCs (1973, p. 53), “an OECD study shows that for a sample of 50 foreign investment projects, local clerks and accountants accounted for 97 percent of the staff concerned, foremen and supervisors 90 percent, sales and marketing personnel 80 percent, management and engineering personnel 73 percent. There is, moreover, a tendency for the local share to increase over time, especially in the professional categories.” The same report indicates (p. 53) that “many managers and technicians move from foreign affiliates to domestic enterprises,” thus applying their experience to the development of home industries.

Comparative salaries are still hotly debated, however. It is often charged that MNCs pay higher salaries to home-country personnel than to host-country personnel for the same work. Since we have found no data to substantiate this charge, we do not know to what extent it is true. If it is true, however, the increased hiring of host-country personnel should solve the matter. Our informal understanding (unresearched) is that it is increasingly difficult to find a situation in which home-country and host-country personnel are in fact doing the same work. Why would a profit-seeking MNC hire from its home country if the same task could be performed cheaper by a host-country employee?

The problem that does remain, however, is that there is a wide gap between host-country and home-country salaries. If a home-country employee is to be attracted, the company must pay a salary comparable to what its competitors would pay at home. But salaries paid to host-country employees must be lower, or else they will not conform to alternative opportunities and distortions will be created.

Possibly the problem will be resolved when only host-country nationals are employed, as in Mexico. But we have a nagging doubt here just as we believe that the scarcity of high-level personnel in LDCs leads to similar disparities between blue-collar and executive employment in local industries (although once again we have seen no data). Thus, the problem is probably not confined to MNCs, and most likely it will not be resolved until a greater supply of executive talent can be trained.

We deduce from this assessment that the disparities are structural. A new economic order will not affect them.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.