INTRODUCTION

A multinational corporation (MNC) or enterprise (MNE),is a corporation or an enterprise that

manages production or delivers services in more than one country. It can also be referred to as
aninternational corporation. The International Labour Organisation (ILO) has defined an MNC
as a corporation that has its management headquarters in one country, known as the home
country, and operates in several other countries, known as host countries.
The Dutch East India Company was the first multinational corporation in the world and the first
company to issue stock. It was also arguably the world's first megacorporation, possessing quasigovernmental powers, including the ability to wage war, negotiate treaties, coin money, and
establish colonies.
The first modern multinational corporation is generally thought to be the East India
Company. Many corporations have offices, branches or manufacturing plants in different
countries from where their original and main headquarters is located.
Some multinational corporations are very big, with budgets that exceed some nations'
GDPs Multinational corporations can have a powerful influence in local economies, and even the
worls economy, and play an important role in international relations and globalisation.

MARKET IMPERFECTIONS
It may seem strange that a corporation can decide to do business in a different country, where it
does not know the laws, local customs or business practices. Why is it not more efficient to
combine assets of value overseas with local factors of production at lower costs by renting or
selling them to local investors?
One reason is that the use of the market for coordinating the behaviour of agents located in
different countries is less efficient than coordinating them by a multinational enterprise as an
institution.The additional costs caused by the entrance in foreign markets are of less interest for
the local enterprise. According to Hymer, Kindleberger and Caves, the existence of MNCs is
reasoned by structural market imperfections for final products. In Hymer's example, there are
considered two firms as monopolists in their own market and isolated from competition by
transportation costs and other tariff and non-tariff barriers. If these costs decrease, both are
forced to competition; which will reduce their profits.The firms can maximize their joint income
by a merger or acquisition, which will lower the competition in the shared market. Due to the

transformation of two separated companies into one MNE the pecuniary externalities are going
to be internalized.However, this does not mean that there is an improvement for the society.
This could also be the case if there are few substitutes or limited licenses in a foreign
market. The consolidation is often established by acquisition, merger or the vertical integration
of the potential licensee into overseas manufacturing. This makes it easy for the MNE to enforce
price discrimination schemes in various countries. Therefore Hymer considered the emergence of
multinational firms as "an (negative) instrument for restraining competition between firms of
different nations".
Market imperfections had been considered by Hymer as structural and caused by the deviations
from perfect competition in the final product markets.Further reasons are originated from the
control of proprietary technology and distribution systems, scale economies, privileged access to
inputs and product differentiation.In the absence of these factors, market are fully efficient. The
transaction costs theories of MNEs had been developed simultaneously and independently by
McManus (1972), Buckley & Casson (1976) Brown (1976) and Hennart (1977, 1982).All these
authors claimed that market imperfections are inherent conditions in markets and MNEs are
institutions that try to bypass these imperfections. The imperfections in markets are natural as
neoclassical assumptions like full knowledge and enforcement do not exist in real markets.

TAX COMPETITION
Multinational corporations have played an important role in globalization. Countries and
sometimes subnational regions must compete against one another for the establishment of MNC
facilities, and the subsequent tax revenue, employment, and economic activity. To compete,
countries and regional political districts sometimes offer incentives to MNCs such as tax breaks,
pledges of governmental assistance or improved infrastructure, or lax enveronmental and labour
standards enforcement. This process of becoming more attractive to foreign investment can be
characterized as a re, a push towards greater autonomy for corporate bodies, or both.
However, some scholars for instance the Columbia economist Jagdish Bhagwati, have argued
that multinationals are encegaged in a 'race to the top.' While multinationals certainly regard a
low tax burden or low labor costs as an element of comparative advantage, there is no evidence
to suggest that MNCs deliberately avail themselves of lax environmental regulation or poor
labour standards. As Bhagwati has pointed out, MNC profits are tied to operational efficiency,
which includes a high degree of standardisation. Thus, MNCs are likely to tailor production
processes in all of their operations in conformity to those jurisdictions where they operate (which

will almost always include one or more of the US, Japan or EU) that has the most rigorous
standards. As for labor costs, while MNCs clearly pay workers in, e.g. Vietnam, much less than
they would in the US (though it is worth noting that higher American productivitylinked to
technologymeans that any comparison is tricky, since in America the same company would
probably hire far fewer people and automate whatever process they performed in Vietnam with
manual labour), it is also the case that they tend to pay a premium of between 10% and 100% on
local labor rates. Finally, depending on the nature of the MNC, investment in any country reflects
a desire for a long-term return. Costs associated with establishing plant, training workers, etc.,
can be very high; once established in a jurisdiction, therefore, many MNCs are quite vulnerable
to predatory practices such as, e.g., expropriation, sudden contract renegotiation, the arbitrary
withdrawal or compulsory purchase of unnecessary 'licenses,' etc. Thus, both the negotiating
power of MNCs and the supposed 'race to the bottom' may be overstated, while the substantial
benefits that MNCs bring (tax revenues aside) are often understated.

MARKET WITHDRAWAL
Because of their size, multinationals can have a significant impact on government policy,
primarily through the threat of market withdrawal. For example, in an effort to reduce health care
costs, some countries have tried to force pharmeceutical companies to license their
patented drugs to local competitors for a very low fee, thereby artificially lowering the price.
When faced with that threat, multinational pharmaceutical firms have simply withdrawn from the
market, which often leads to limited availability of advanced drugs. In these cases, governments
have been forced to back down from their efforts. Similar corporate and government
confrontations have occurred when governments tried to force MNCs to make their intelectual
property public in an effort to gain technology for local entrepreneurs. When companies are
faced with the option of losing a core competitive technological advantage or withdrawing from
a national market, they may choose the latter. This withdrawal often causes governments to
change policy. Countries that have been the most successful in this type of confrontation with
multinational corporations are large countries such as United states and Brazil, which have viable
indigenous market competitors.

LOBBYING
Multinational corporate lobbying is directed at a range of business concerns, from
tariff structures to environmental regulations. There is no unified multinational perspective on
any of these issues.
Companies that have invested heavily in pollution control mechanisms may lobby for very tough
environmental standards in an effort to force non-compliant competitors into a weaker position.
Corporations lobby tariffs to restrict competition of foreign industries. For every tariff category
that one multinational wants to have reduced, there is another multinational that wants the tariff
raised. Even within the U.S. auto industry, the fraction of a company's imported components will
vary, so some firms favor tighter import restrictions, while others favor looser ones. Says Ely
Oliveira, Manager Director of the MCT/IR: This is very serious and is very hard and takes a lot
of work for the owner.
Many industries such as General electric and Boeing lobby the government to receive subsidies
to preserve their monopoly.

Transnational Corporations
A Transnational Corporation (TNC) differs from a tranditional MNC in that it does not identify
itself with one national home. Whilst traditional MNCs are national companies with foreign
subsidiaries,TNCs spread out their operations in many countries sustaining high levels of local
responsiveness An example of a TNC is Nestl who employ senior executives from many
countries and try to make decisions from a global perspective rather than from one centralised
headquarters.However, the terms TNC and MNC are often used interchangeably.

MERITS OF MULTINATIONAL CORPORATIONS

1 .Economic Development: MNCs are required in developing and under-develop nations
for economic development. MNCs with their large capital and labour resources set their
operation in such countries, which leads to expansion of economy and lead to the economic
growth of such nations. In-fact there culture, work style, skill are there attitude changes the
pattern of host nations and increases the productivity.
2.
Industrial Growth: MNCs with their professional approach, offer growth potential to
domestic industry. They directly provide support to many other ancillary companies as well.
Many MNCs have grown many nations and its industries. There professional approach helps the
people of the host nation to gain from the experience of MNCs.
3.
Research and Development: Vast resources, allow such companies to invest heavily on
research and development. Research and development leads to innovation and invention which
are good for the overall advancement of the world. Many multinational corporation are shifting
their research base to countries like India which offers cheap labour.
4. Technology: Products produced and marketed by MNCs are technically far superior than
the other companies. Such companies reduce the technological gap between the nation of the
world. .Technology not only improves the quality, it also reduces the cost, reduces wastage, saves
time and resources to top it all.
5.
Employment and standard of living: MNCs provide employment to the people in the
country of operation. They also indirectly allow the ancillary companies to develop which also
provides the employment to thousands of people. Employment improves the standard of living of
the people in the host nation.
6.
Competitive spirit: Research has shown MNCs brings competitive spirit among the
domestic industries as well, which is good for the people as they can enjoy far better choice and
better quality. When India opened up in 1991, to foreign companies, even the productivity of the
home companies improved.

1. Interference in the Economic Sovereignty of the Host Country

MNCs affects the independence of any country. For example, one East India company
came in India for business but it made India slave for 200 years. So, it is the biggest
drawback of MNCs that these are the risky for freedom of any country.
2. Drainage of Resources
MNC's main aim is to earn the profit by any way. So, it exploits developing country's
natural resources. These MNCs increase pollution of air and water.
3. Strain on Foreign Exchange Reserves
MNCs are very risky for foreign exchange reserves. India, there are lots of MNCs which
transfer Indian currencies to their home country in the form of profit and dividends of
foreign shareholders. With this, our foreign exchange reserve level is decreasing.
4. Minimum Transfer of Technology
No MNC bring any new technology in India. They only produces zero technology
products in the form of cold drinks and other which can easily make in each village of
India.
5. Exploitation of Labour
These MNCs do not create any employment in the host country because these MNCs are
only interested to exploit laborers by paying them less. All top posts are filled by their
home countries employees.

6. Cultural Loss
This is the one of biggest drawback of MNCs that it is risky for our cultural loss. Our culture
makes us vegetarian but many MNCs employees eat meat and chicken. So, all these things
are against our culture. Bad Indians copies MNCs employees and start to wear leather shoes.
Due to this, animals of India are being killed . So, this activities are so bad.
7. Creation of Monopolies
MNCs create also monopolies. With high advertising and other ways, these MNCs do not
live domestic companies. After this, these MNCs increase prices and then get high profit by
exploiting consumers of India.
8. Evasion of Taxes
These MNCs do not disclose its all true account. So, with this, these MNCs save their tax
liabilities.
9. Economic Power
This is also one of the important drawback of MNCs that these MNCs misuse of their
economic power. With economic power, these MNCs tries to change the economic policies.
With this, they have to pay zero tax in host country.
10. Depletion of Natural Resources
After increasing of MNCs in India, you can see that our all natural resources are decreasing
very fastly. These MNCS are selling urea fertilizers. With this, our land is becoming useless.

Infosys Limited (formerly Infosys Technologies Limited) is an Indian multinational

corporation that provides business consulting, information technology, software engineering and
outsourcing services. It is headquartered in Bangalore, Karnataka.
Infosys is the second-largest India-based IT services company by 2014 revenues, and the fifth
largest employer of H-1B visa professionals in the United States in FY 2013. On 15 February
2015, its market capitalisation was 263,735 crores ($42.51 billion), making it India's sixth
largest publicly traded company.
history
Infosys was co-founded in 1981 by CEO Narayan Murthy, Nandan Nilekani, N. S. Raghavan, S.
Gopalakrishnan, S. D. Shibulal, K. Dinesh and Ashok Arora after they resigned from Patni
Computer Systems.[11] The company was incorporated as "Infosys Consultants Pvt Ltd." with a
capital of 10,000 or US$1,250 (about $3,254 in 2016) in Model Colony, Pune as the registered
office.[12] It signed its first client, Data Basics Corporation, in New York.[13] In 1983, the
company's corporate headquarters was relocated from Pune to Bangalore.[13]
Change in name: The company changed its name to "Infosys Technologies Private Limited" in
April 1992 and to "Infosys Technologies Limited" when it became a public limited company in
June 1992. It was later renamed to "Infosys Limited" in June 2011.
An initial public offer (IPO) in February 1993 with an offer price of 95 (equivalent to 350 or
US$5.10 in 2016) per share against book value of 20 (equivalent to 74 or US$1.10 in 2016)
per share. The Infosys IPO was under subscribed but it was "bailed out" by US investment bank
Morgan Stanley which picked up 13% of equity at the offer price.[15] Its shares were listed in
stock exchanges in June 1993 with trading opening at 145 (equivalent to 530 or US$7.80 in
2016) per share.[16]
In October 1994, it made a private placement of 5,50,000 shares at 450 (equivalent to 1,500
or US$22 in 2016) each against book value of 10 (equivalent to 34 or 50 US in 2016) per
share to Foreign Institutional Investors (FIIs), Financial Institutions (FIs) and Corporates.[17]
In March 1999, it issued 2,070,000 ADSs (equivalent to 1,035,000 equity shares of par value of
10 (equivalent to 24 or 35 US in 2016) each) at US$34 ($48.3 in 2016) per ADS under the
American Depositary Shares Program and the same were listed on the NASDAQ National
Market in US. The total issue amount was US$70.38 million.[18]
The share price surged to 8,100 (equivalent to 20,000 or US$290 in 2016) by 1999 making it
the costliest share on the market at the time. At that time, Infosys was among the 20 biggest
companies by market capitalization on the NASDAQ.

During July 2003, June 2005 and November 2006, it made secondary ADS issues of US$294
($378.19 in 2016) million, US$1.07 ($1.3 in 2016) billion and US$1.605 ($1.88 in 2016) billion
respectively.
In December 2002,Infosys transferred the listing of its American Depositary Shares (ADS) from
the NASDAQ to the NYSE.
In July 2014, Infosys spun off a subsidiary, Edgeverve Systems Ltd., focusing on enterprise
software products for business operations, customer service, procurement and commerce
network domains
In August 2015, Finacle joins Edgeverve product portfolio.[22]
The credit rating of the company is A- (given by Standard & Poor' on 13-Dec-2013).[23] In
February 2015, Infosys announced it would acquire the US automation s technology company
Panaya for around $200 million.[24]

On 15 January 2016, Infosys had 1,045 clients across 50 countries.[3][25]

Infosys has a global footprint with offices and development centers across the world.[26]
In 2012, Infosys announced a new office in Milwaukee, Wisconsin to service Harley-Davidson,
being the 18th international office in the United States.[27][28] Infosys hired 1,200 United States
employees in 2011, and expanded the workforce by an additional 2,000 employees in 2012.[28]

Products and services

It provides software development, maintenance and independent validation services to
companies in banking, finance, insurance, manufacturing and other domains.[29]
One of its known products is Finacle[30] which is a universal banking solution with various
modules for retail and corporate banking

Acquisition
In December 2003, Infosys had acquired Australia-based IT service provider Expert Information Services
for $23 millios

In December 2009, Infosys BPO acquired Atlanta-based McCamish Systems for about
$38 million.[33]

In January 2012, Infosys BPO acquired Australia-based Portland Group, provider of

strategic sourcing and category management services, for about AUD 37 million.[34][35]

In September 2012, Infosys acquired Switzerland-based Lodestone Management

Consultants for about $345 million.[36]

In March 2015, Infosys acquired Panaya, Inc., a leading provider of automation

technology for large scale enterprise software management.[37]

In June 2015, Infosys acquired Skava, a leading provider of digital experience solutions,
including mobile commerce and in-store shopping experiences to large retail clients. The
acquisition of Skava is part of Infosys strategy to help clients bring new digital
experiences to their customers through IP-led technology offerings, new automation tools
and unparalleled skill and expertise in these new emerging are[38]
Shareholders (as on 31-Mar-2014)

Promoters group

Shareholding[]
15.94%

Foreign Institutional Investors (FII)

ADR

16.10%

Individual shareholders

09.95%

Banks, Financial Institutions and Insurance Companies

09.08%

Mutual Funds

04.58%

Others

02.25%

Total

100.00%

Infosys Foundation
In 1996, Infosys established the Infosys Foundation, to support the underprivileged sections of
society.[39] At the outset, the Infosys Foundation implemented many programs in Karnataka. It
subsequently covered Tamil Nadu, Telangana, Andhra Pradesh, Maharashtra, Odisha, and Punjab
in a phased manner. A team at the Foundation identifies all the programs in the areas of
Healthcare, Education, Culture, Destitute Care and Rural Development.

INFOSYS CONTRIBUTION TO INDIA GROWTH

Infosys, more commonly referred as IT giant in India, is a prime Economic backbone

of India and has a veto power to move the government Infosys contribute about
8.36% to the GDP of the country and 8.89% to the total tax kitty of the Indian
government however this contribution is considering the cyclic effect of Infosys
spending on real estate needs and respective impact on entire GDP and tax collection
as explained below. Infosys along with their families and friends form a huge and
intelligent voting block controlling around 0.55% of the countrys votes. Goes without
saying, Indias biggest political elections are won or lost by a shift of 1% of the total
votes. Contribution to Indias GDP
Infosys, an enterprise of approx. 122,468 employees, contribute 8.36% to the total GDP of India.
This has been scientifically calculated as follows in terms of the real estate sector.
How does the real estate sector contribute to the entire GDP? The holistic view to understand the
impact of the money flow on the GDP is to break the economic chain and see the direct and
indirect contribution of the employees to the entire GDP. The best practice is to cut the
economic cycle of the Indian economy and segregate the money contributed by the real estate
industry. This can be done in two ways.
Direct contribution to GDP: This is about 5%, if we go by the economics stats. This indicates
that out of the total countrys turnover, 5% is the real estate turnover.
Indirect contribution to the GDP: This is where the main catch is. The real estate money goes
to multiple outlets and circulates multiple times- for e.g.
1. Money being paid to the financial institutions for loan, goes out to add to the
financial institutions contribution to GDP
2. Money invested in construction, steel, cement, etc. gets further added to the
respective industrys contribution to GDP.
3. Money being paid out as wages is further spent on consumer goods, which
becomes a part of the consumer industrys contribution to GDP.
4. Then there is a cyclic multiplier impact of every chain further spending the
same thereby giving a multiple 20 times assuming 5% is the contribution of
real estate to GDP.

Thereby, if an Infosys requires 100 sq ft as his commercial space, valued at Rs.4000 per square
feet, on an average, in todays pan Indian market; and another 500 sq ft for his residential
requirements valued at Rs.3500 per sq ft on an average on shared basis, then the total
contribution of an individual employee to the real estate is Rs.21.5 lacs and together all Infosys
employees contribute 26.3K crore directly to real estate.
To estimate the above cyclic effect, if Infosys direct contribution to real estate is 26.3K crores,
which is 5% of the GDP, then its indirect contribution to the entire GDP considering the above
multiplier effect of twenty times can be calculated as 5.26 lacs crores.
The amount is huge and the calculation cannot be challenged. Its just that they are seeing for the
first time a dissected view of the economic cycle, which makes us realize that we are really
playing a major role in the growth of our country. This also describes why a slowdown in the IT
market had shaken the Indian economy to a great extent.
Though the contribution of IT or real estate individually is not much to the GDP, but their
indirect contribution is way higher and that makes Infoscions proud as they are one of the biggest
contributors to the Indian GDP.

Direct and Indirect contribution to Indias treasury

The direct and indirect taxes are calculated in the form of income tax, excise, service tax,
professional tax, etc. An employees aggregate contribution to the Indias tax collection can be
worked out by taking a top down approach; considering his contribution to the GDP and
reversely work out the tax to GDP ratio which is 13%, in India.
The total employees thereby contribute 68.4K crore to Indias tax money, which is 9% of the
total tax money (Rs.7.7 lacs crores) collected from direct and indirect taxes. Do Infoscions
realize that the money, that is being misused at times due to the corruption in the political
system, we are the ones sourcing it big time?

REVENUE GROWTH
Infosys' annual revenue growth tumbled to about 5 percent in U.S. dollar terms in the second
quarter, down from the 23 percent revenue growth the company had posted in the same quarter
last year, the company said on Thursday.
The company also lowered its revenue forecast for its fiscal year ending March 31, 2013 to a
little over US$7 billion, for annual growth of 5 percent. Infosys said in April that it expected its

revenue growth in the current fiscal year would be between 8 and 10 percent. Its revenue grew
by 16 percent in the previous fiscal year.
India's second-largest outsourcer has been hit by the slow recovery in the U.S. and the debt crisis
in Europe. The Indian economy has also slowed down with growth in gross domestic product
down to 5.3 percent in the first quarter.
The market continues to be uncertain, said B.G. Srinivas, Infosys' head of Europe and global
head of its financial services and insurance business. Infosys also saw slower revenue growth in
the quarter because a large project in Europe got cancelled. Its dollar revenue grew slowly partly
because of the appreciation of the dollar against the Euro and the U.K. pound in which the
company earns a significant part of its revenue, Srinivas said. A few clients are also renegotiating
contracts to cut costs.
The U.S. and Europe account for about 85 percent of the company's revenue.
The company reported revenue for the quarter was about $1.7 billion. Its net profit for the quarter
was $416 million, up by about 8 percent from the same quarter last year.
Revenue growth in rupee terms in the quarter was far higher at 28.5 percent because of the sharp
depreciation of the rupee against the dollar.
The uncertainty will continue as there is nothing really positive in the macro-economic
indicators, Srinivas said. In some markets like the Nordic countries and Australia there is
however new interest in offshoring, he added.
The market for outsourcing is sluggish and most Indian outsourcers are likely to report singledigit growth rates in the quarter, Sudin Apte , principal analyst and CEO of Offshore Insights, a
research and advisory firm, said earlier this week.
Infosys has also been affected by customer uncertainty about a lawsuit relating to visas against
the company in the U.S., said Jimit Arora , practice director at Everest Group.
Jay Palmer , an Infosys employee filed a lawsuit last year against Infosys, in which he alleged
that he was harassed after refusing to help the company use B-1 visas, a business visitor visa, for
work he claims needed an H-1B work visa. Infosys also said it was the target of a federal
investigation in this connection.
The company has communicated its stand on the lawsuit to customers, and did not find an impact
from the case on its U.S. business which has grown, Srinivas said.

Infosys added 1,157 staff in the quarter, and expects to slow down hiring this year in view of the
business environment and because it already has sufficient delivery capacity, Srinivas said. The
company had 151,151 staff at the end of the quarter. It will however continue to add experienced
staff in markets like the U.S. and Europe.

SWOT ANALYSIS
Strengths :

Since the company is based in India its competitive advantage is enhanced.The Indian
economy, despite weak economic indicators such as relatively high rates of inflation, has
low labor cost

The workforce has relatively high skills levels in Information Technology. Couple these
two elements together and you have an operational basis that offers low-cost based,
highly skilled competitive advantage.

Trained Indian personnel often speak very good English and are sensitive to Western
culture, underpinned by India's colonial past.

 Infosys is in a strong financial position. The business turned over more than $4 billion in
2008. This means that it has the capital to expand, and also the basis to leverage potential
invest.

The company has bases in 44 global development centres, most of which are located in
India, although the company has offices in many developed and developing nations. This
means not only that Infosys is becoming a global brand but also that it has the capability
to support the global operations of multinational clients.

Weaknesses :

Infosys on occasion struggles in the US markets, and has particular problems in securing
United States Federal Government contracts in North America. Since these contracts are
highly profitable and tend to run for long periods of time, Infosys is missing out on
lucrative business.

And its competitors do well in terms of securing the same Federal business (and one
should also take into account that many of its competitors are domiciled in the US and
there could be political pressure on the US Government to award contracts to domestic
organizations).

 Despite being a huge IT company in relation to its Indian competitors, Infosys is much
smaller than its global competitors. As discussed above, Infosys generated $4 billion in
2008, which is relatively low in comparison with large global competitors such as
Hewlett-Packard ($91 billion), IBM ($91 billion), EDS ($21 billion) and Accenture ($18
billion).

It is sometimes argued that Infosys is weaker when it comes to high-end management

consultancy, since it tends to work at the level of operational value creation. Competitors
such as IBM and Accenture tend to dominate this space.

Opportunities :

At a time of recession in the global economy, it may appear that some companies will
reduce take up of services that Infosys offers. However, in tough times clients tend to
focus upon cost reduction and outsourcing - with are strategies that Infosys offers. So
hard times could be profitable for Infosys.

There is a new and emerging market in China as the country undergoes a huge industrial
revolution.

The strategic alliance between Infosys and Schlumberger gives the IT company access to
lucrative business in the gas and oil industries.

 There has been a trend over recent years for European and North American companies to
base some or all of their operation in India. This is called an offshore service
.
There is a seamless link between domestic operations and services hosted in India.
Examples include telecommunications companies such as British Telecom and banks
such as HSBC that have customer service and support centres based in India. Think about
the times that you have made calls to a support line to find that the adviser is in Mumbai
or Bangalore and not in your home market.

. Threats :

India is not the only country that is undergoing rapid industrial expansion. Competitors
may come from countries such as China or Korea where there are large pools of low-cost
labor, and developing educational infrastructures such as universities and technology
colleges.

Customers may switch to other offshore service companies in other countries such as
China or Korea

Other global players have realised that India has the benefit of low-cost, highly-skilled
labor that often speaks English and is culturally sensitive to Western practices. As with all
global IT players, Infosys has to compete for skilled labor and this may have the effect of
driving up wage levels, and making it more difficult to recruit and retain staff.