Future Focus

Emerging Economies’ Ripple Effects

By Jennifer Schramm Aug 1, 2010

August coverAs a new generation of young workers comes of age in the world’s manufacturing centers, they are likely to demand that their governments improve working conditions, and they’re likely to challenge multinational companies to create more-effective and socially responsible human resource management practices.

Because of the workers’ growing economic power, these trends could influence business and economic conditions around the world.

During the recent labor strikes in China over pay and working conditions, for example, press coverage focused on the Chinese government’s response to the workers’ demands, but the impact was more widespread. The unrest spread to several foreign-owned factories and is likely to affect how multinationals do business in China and other countries, which in turn could raise the cost of many of the world’s consumer goods.

The two most influential emerging economies are China and India, and they are experiencing the arrival of their newest entrants into their workforce in slightly different ways.

Large numbers of factory workers in China’s expansive industrial zone in the Pearl River Delta, where nearly one-third of the country’s exports are manufactured, are young migrants who left the poverty of their native rural areas in search of a better life. They are well aware of China’s growing economic wealth.

In many ways, the strikes, led by workers in their 20s, can be viewed as expressions of this new generation’s unwillingness to accept the working conditions of previous generations. They are pressing for a greater share of the wealth produced in the Pearl River Delta and throughout China. And because of demographic trends that have led to worker shortages, they may be much better positioned than previous generations to have their demands met.

India, by contrast, is experiencing what economists and demographers call the "demographic sweet spot," meaning the country has an optimal number of young people who have reached working age and have few dependents—whether children or older family members—needing support. This is considered the most favorable set of circumstances for a nation to build lasting economic success. The pace of economic growth in India indicates that the demographic sweet spot is definitely having this beneficial impact on its economy.

Demand for workers is already having a dramatic impact on compensation, benefits and other aspects of HR management in the industrial and high-technology centers of India. This is likely to continue and even intensify if the global economy continues to improve.

The growing impact of these new generations of workers in emerging economies will spread well beyond the borders of those countries. Labor groups around the world may be galvanized by these recent trends—along with improved information and communications technologies—to revive labor-organizing efforts that transcend national borders. The demographic changes in emerging economies could lead to many such potential developments that could affect the work of HR professionals.

The author is manager of the Workplace Trends and Forecasting program at SHRM.

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