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Blue Collars, Dark Suits, and Stocks (Part 2)

9 October 2007 - Features - Editor

Blue Collars, Dark Suits, and Stocks (Part 1)

International investors are accustomed to weighing macro-economic factors when taking their trading decisions with respect to trans-national stocks. The climate for collective bargaining is an important issue, though it has no statutory place in standards for financial reporting on stocks. Some countries actively discourage collective bargaining, especially if it becomes disruptive, while others remain committed to the rights of workers even in extreme situations. The differences between the functioning of trade unions in various countries remain a matter for constant monitoring, especially when federal governments change.

Local Labor Norms and Global Stocks

Few would deny the iconic status of Starbucks with respect to free enterprise and service excellence. One would think that an organizational started by a former employee, and one which is so dedicated to human satisfaction, should be a great place to work. However, the web site of the union of employees of this legendary brand tells a very different story. The company stands accused of preventing such mundane activities as union access to staff bulletin boards. Allegations of vilification of active unionists are equally shameful. What should people who trade in the stocks of Starbucks make of all this?

Global expansion will count most for making the future of this company even nearly as brilliant as its past. Labor conditions in third world plantations from where Starbucks sources its most vital raw material has always been a matter of contention, but that is only marginal in importance compared to a plethora of labor laws with which the company must contend as it expands in to countries such as India. This is a subject for local governance in most countries, implying further complications for foreign players trying to establish national operations. It is only a matter of time before employees or ‘associates’ of Starbucks, wherever they may reside, learn for US trade union developments.

Asking hard questions about compliance with labor legislation, and keeping abreast of trade union views about company operations, are new but important matters on which owners of stocks should dialog with executive teams. Showing concern for such issues will help to keep management teams alert, and can mitigate the disruptive effects of militant confrontations and expensive litigation.

 


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