21 August 2012

The impact of the GFC on multinational companies  has been felt in AustraliaResearchers have warned that while Australia as a whole has scraped through the Global Financial Crisis relatively unscathed, the crisis has made an impact on multinational companies (MNCs) across all sectors which may have longer term effects.

Research from the University of South Australia’s Dr Anthony McDonnell and his colleague from the University of Newcastle, Dr Brendan Boyle, has found that multinational companies operating in Australia experienced a range of negative impacts due to the GFC.

The researchers conducted 211 interviews across all industry sectors to get a deeper understanding of the impact of the GFC for multinationals in the Australian context.

“There have been some obvious, what we would call, ‘hard’ impacts,” Dr McDonnell said.

“We did see site closures, off-shoring and retrenchments in Australian subsidiaries as primarily big US and European companies restructured their global operations. Those kinds of major effects have been felt by about 16 per cent of MNCs.

“Operation costs in Australia were viewed as relatively high and more than half of the MNCs reduced their local workforce and a third said they had increased their use of part-time and casual workers which provides further evidence of increasing workforce casualisation,” Dr McDonnell said.

He said the data showed that while cost reductions in the management of labour were common among MNCs, significant downsizing had not been the norm.

“Data did provide some support for the anecdotal evidence that many firms tried to achieve cost reductions in human resources by means other than closures or lay-offs – so it was not uncommon for companies to reduce shifts and working hours to avoid lay-offs,” he said.

The researchers also found that MNCs’ responses to the crisis varied according to the place of origin of the parent company.  Companies from liberal market economies such as the US and the UK were significantly more likely to close sites and off-shore or outsource labour than those from the coordinated market economies such as Germany and the Nordic regions.

“One area that really has suffered is investment in staff development and training and in the recruitment of new staff bringing fresh expertise,” he said.

“Longer term, these reductions may mean companies are less likely to be able to spring back to maximum productivity as skills deficits start to reveal the lack of investment in training.

“It is also important to note the potential human impact of downturn. In any situation where some people lose their jobs and others don’t we can see evidence of guilt and negativity in the residual workforce.

“Unless that is handled very well by organisations it can foster negativity and undermine longer term productivity.”

The research is part of a larger international, Australian Research Council funded project exploring the human resource management practices of MNCs in different countries.

The Australian study conducted during 2010 and early 2011, involving researchers from the University of South Australia, University of Newcastle, Curtin University, La Trobe University and Victoria University, is the most representative study to date on the human resource management practices of MNCs operating in Australia.

The study clearly showed that US-owned firms represent the largest cohort of MNCs operating in Australia.     

Michèle Nardelli office: 08 8302 0966 mobile: 0418 823 673 email: michele.nardelli@unisa.edu.au


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