International and Comparative Employment Relations - Assignment Example

International and Comparative Employment Relations By [Presented to] of Introduction Employment relations have emerged as one of the highly debatable topics in the business environment. Employment relations often signify the organisational practices pertaining to the management of human resources (Lewin, 2007). In this regard, human resource management has emerged as one of the most important management fields related to the effective and efficient utilisation of human resources. Employment relations are defined by key features that need to be understood in a clear manner. Furthermore, different countries have different set of rules and regulations while managing employment relations. The major purpose of the discussion is to compare different employment relation systems in different countries taking into the account similarities and differences along with implication for the management of employees within organisations. There is no doubt that different countries have different set of policies, rules, and protocols while managing varied kind of relationships. In the global business environment, American Model pertaining to the industrial relations is majorly followed However, this discussion will develop a European Model for industrial relations. The discussion will majorly focus on employment relation as function and system and applying it in the context of Foxconn with particular reference to the labour standards. The discussion will focus on the importance of maintaining labour standards along with analysing the benefits and challenges in a critical manner. Additionally, the discussion also revolves around examining the extent to which national patterns of employment relations exist and whether there is a shift towards a European Model of managing employee relations (Katz and Kochan, 2002). For this purpose, a critical analysis will be conducted on analysing employment relations systems in different countries along with discussing labour standards in general and in the context of Foxconn. The reason for conducting comparative analysis and discussing labour standards is based on deriving key conclusion by comparing and contrasting the existing results. International Labour Standards In the preamble of General Agreement on Tariffs and Trade, it is clearly mentioned that, relations among countries in the context of trade and commerce should be conducted with a view of raising living standards along with ensuring full term employment (Harvey, et al, 2000). In the context of business organisation operating in developed and developing countries, it was found that liberalisation offered both challenges and opportunities to MNCs operating in developed and developing nations. At the first WTO conference, both the US and European Union supported labour standards on a human right basis. However, minimum wage and labour rights were missing from the agenda. At the same time, Asian countries questioned Western countries motivation on the ground of enforceable labour standards used as non-tariff barriers to trade. Many academicians supported the fact that labour standards should not be used for perfectionist purpose and comparative advantage of countries especially low wage developing countries should not be put into question (Fields, 2003). Chan and Rose (2003) stated that the task of ensuring labour standards was offered to ILO, the UN based organisation for overseeing labour standards across the world. The four fundamental areas of labour standards were introduced in the form of freedom of association and bargaining, abolition of child labour, ban on forced labour, and abolition of discrimination in regard to employment. However, Singh and Zammit (2000) stated that there is a serious disparity in terms of following the labour standards when it comes to developed and developing economies. As per the report of WRC (2000), MNCs are willing to take advantage of developing countries by offering low wage to labours and making huge profit. Furthermore, few Asian countries like Bangladesh and India are more likely to attract MNCs based on the grounds of offering cheap labour. Thus, in this case exploitation of labour standards become much easier compared to investing in technologies. A number of researchers have been arguing over the effect of MNCs on labour standards in different industries across the world. Chan and Rose (2003) argued that the demand for low skilled and wages labour has gone high in developing countries. However, Singh and Zammit (2000) contradicted with this statement by saying that MNCs tend to affect the labour standards in terms of offering low wages and exploiting the needs of labours especially in developing countries. Perman, et al (2004) stated that in few developing countries, the governments have banned unionisation and restricted bargaining power by further lowering wages. Furthermore, job security has also reduced in last few years making things difficult for labours. Chan and Rose (2003) further added that the wages in South America have also declined in last few years mainly because of ineffective government policies and competition from international trade. At the same time, there is serious inequality of wages distribution in Asian countries offering an opportunity to MNCs to exploit labour standards. Elliote and Freeman (2003) stated that labour standards are very much conflicting, contradicting, and divergent in nature and there is a difference between theory and reality. Furthermore, it cannot be fully said that MNCs are a powerful tool to improve labour standards. However, few researchers have also argued the fact that MNCs can improve labour standards but given less power to them especially in the context of having operations in different countries, it is very hard for them to improve labour standards until, the government changes the regulatory framework of labour standards. From the above discussion, it can be believed that MNCs are one of the actors in the growing business environment whose approach to labour standard is based on personal and beneficiary interest. Thus, until there is a pressure from the regulating bodies, uniformity in labour standards, NGOs, and international organisations; MNCs have little power and rights to transform labour standards. However, they are one of the prime forces in exploiting labour standards. Different Employment Relations Systems in Different Countries It is important to discuss different employment relation systems in different countries in a critical manner for a better understanding. In this regard, the focus will be on European, Asian and American employment relations systems. In the context of the UK, it was found that unions have been the most important face representing employees. However, there has been a decrease in the number of unions in last few years. Marinas (2010) stated that by the end of 2010, there has been a decrease of 32% in the number of unions representing employees in different organisations. However, unions still play an important role in signifying employment relations within the country. Unions are created to take decisions on behalf of employees along with safeguarding their interest and benefits. Unions are defined by a structured body taking decisions and communicating on behalf of labours. Diben, et al (2011) stated that unions often indulge in collective negotiations with employers on wages, working hours, and rest times. Williams (2014) stated that with a rise in private companies, the collective negotiation has been replaced by individual negotiation. Almond (2011) stated that irrespective of the rise in private companies, the significance of unions in MNCs and large industries cannot be denied and the UK industries are very much driven by the unions when it comes to understanding and facilitating relations. The dual system of labour relations in Germany has series of difficulties while managing relations with employers. The labour market in Germany is defined by high degree of flexibility and deregulation. Unions once again are an important part of employment relations. However, there has been a decrease in the number of union members in last few years. Marinas (2010) stated that there were only 8.3 million union members in Germany and the trend was all set to decline mainly because of the rise of private companies and preference of employees for individual negotiation rather than collective negotiations. Benson (2008) stated that in China and Vietnam there is a monopoly of workers represented by national centre of trade unions. In the context of China it is, All China Federation of Trade Unions while in the context of Vietnam, it is Vietnam General Confederation of Labour. Both centres are closely aligned with the ruling communist parties. All trade unions are required affiliate with the national centre. De Silva (1995) added that trade unions in China and Vietnam are mainly driven by the policies and influence of the management. This does not offer great deal of freedom to the unions while taking decisions. Both countries realised that without proper functioning of the unions and collective bargaining in the long run, it would be hard to maintain the stability and economic sustainability. Though collective bargaining prevails in terms of maintaining relationship with employers; overly influence of the management often mitigates the prowess of unions in a significant manner. In the context of Singapore, it was found that the National Trade Union Congress aligns with unions to take decisions. This also helps workers in Singapore to indulge in decision making process that is uncommon compared to other East Asian Market Economies. However, the power of trade unions in maintaining employment relations is quite restricted mainly because of the administrative control and restrictions imposed on taking administration and legal actions. Decisions pertaining to wages and working hours are taken by the unions while promotions, layoffs, and assignments are not covered. Benson and Zhu (2008) stated that in Cambodia, Indonesia, Thailand, and Philippines there is democratic governance encouraging trade union growth in last few years. There were virtually no trade unions in Cambodia until 90s. However, trade unions are more than 50% in the cloth industry along with hotel and construction industry driven by collective bargaining approach. Bach, et al (2009) stated that industrial relations in Indonesia have went through radical changes with the government sponsored Federation of All Indonesian Workers Union receiving the monopoly status. However, only 4% of the total workforce includes in the union signifying the lesser density of the union. This also states that the overall influence and control of unions is not much in Indonesia while facilitating industrial and employment relations. On the other hand, Philippines have accepted the US model of labour relations. Most of the labour federations are engaged in general unionism. There is also lack of collective bargaining approach making unions weak and thus affecting the overall status. The fragmentation of trade unions for maintaining relationship with labours and employees offered ample opportunity to employers control the decision making process along with mitigating the scope of negotiation in the short as well as in the long run. In the context of Japan, it was found that enterprise unionism defined the industrial and labour relations and cooperative enterprise unions were termed as the key pillar for the Japanese industrial system along with seniority based wage systems. Benson (2008) stated that, in last few years, HRM has replaced the traditional unionism in the Japanese industrial relation framework. Majority of the communication and relationship management are handled by the HRM in an effective and efficient manner. The traditional industrial relation system has been replaced by the modern HRM practices that include flexibility, recruitment, payment, and handling of grievances. On the other hand, the industrial relation system is Korea is based on trade unions and collective bargaining. Though, there is no doubt that unions have included the components of HRM in terms of better bargaining for wages and working hours. Ebisui (2004) stated that employers in Korea and Japan often try to mitigate the dominance of unions through strong resistance and are successful in the context of small organisations. However, in the context of large organisations, democratic and collective bargaining often raises the power status of unions making them an important part of relationship management. Though, there are elements of modern HRM practices but on a larger scale; industrial relations are driven by the prowess of unions. Regulation of Labour Standards in the Context of Foxconn It is important to discuss the relevance and implication of labour standards in the context of a multinational. In this regard, Foxconn has been chosen as a preferred organisation. Charles (2012) stated that Foxconn is one of the largest electronic contract manufacturing companies headquartered in Taiwan. The company has notable clients namely Apple, Blackberry, and Amazon. David (2012) stated that, Foxconn has been severely criticised by a number of labours especially in China mainly because of its poor labour management. There has been a history of suicides at its factories mainly because of the poor working environment and conditions. As per the report published in The Economist (2012), it was found that in many factories in China, there are terrible working conditions. The working condition and environment in Chinese factories are poor mainly because labours do not have high bargaining powers. Furthermore, their wages are not attractive and high enough to offer them work satisfaction. David (2012) further added that companies often try to exploit benefits like low wages and high productivity offering them cost benefits. In this regard, sufferings of labours are often very high while the productivity is also high mainly because of large number of workers joining the workforce. As per the report published in The Economist (2012), it was further found that Foxconn has raised labour wages and a number of Foxconn labours are happy working with the company. Additionally, the working environment is not that dangerous compared to the boredom prevailing in the factories. Two arguments were found in this regard. First is about the primacy of rising productivity rather than labour safety, regulations, and improving working conditions and environment. Second argument states that a number of countries believe that sourcing products and services in countries with better labour enforced laws seem to be more favourable compared to sourcing products and services in China with a bad history of poor management of labours. As per the conventions of International Labour Organisations workers in poor countries have few labour rights and many endure terrible working conditions. Furthermore, financial crisis in Asian and Latin American countries have made the matter worse for a number of labours in these countries. In the context of the labour standards, it has been clearly states that labours should be offered better working condition and appropriate wages justifying their contribution in the firms’ productivity. However, in the context of Foxconn, it was clearly found that there are two theories existing in the regard of labour management. Few researchers argued that Foxconn has been offering better working conditions but a boring working environment and appropriate wages while a number of researchers argued that Foxconn has a history of labour issues and has been accused of not offering a favourable working environment to its employees. A number of labours have committed suicide in the past and the trend has not been fully positive in last few years especially in China. It was also found that companies like Apple and Blackberry hired Favourable Labour Association to investigate Foxconn’s factories and found that there have been no wages issues. Furthermore, labours from village were fully satisfied with their wages and did not have any issues. However, the issues do not have great deal of relevance especially because the satisfaction is represented by a small labour group and not by the masses. It can be said that the labour standards followed by Foxconn are not fully justified and appropriate considering its bad history of poor labour management in the past as well as in the present. Big MNCs can control labour standards to an extent but considering the low cost benefits they are getting by saving labour costs, they cannot regulate labour standards. Additionally, it is on organisations to ensure that fair labour policies and standards are maintained and implemented safeguarding the rights of labours in a significant manner. Based on the discussion, it can be said that Foxconn has not been following the labour standards resulting in poor labour management and labour issues. European Model for Industrial Relation in the Context of Foxconn European Framework Agreement (EFA) in the context of industrial relation deals with a number of issues in the form of social dialogue, occupational health and safety, restructuring, and efficient communication (Platzer, 2009). A number of French Companies and majority of automobile companies including the likes of General Motors and Ford have signed EFA. There is no doubt that European Work Councils (EWC) has played an important and crucial role in this process. A large number of EFA has been signed by EWCs. At the same time, some were co-signed by national or European trade unions. A growing number of EFAs are also signed by European trade union federations. The major purpose of EFA is to engage in negotiations with large number of multinationals. There is no doubt Foxconn having huge workforce and a designated union negotiating on employees’ behalf in few countries. The negotiation mandate not only defines the issue but also requires mentioning the process and procedures to be followed (Stollt and Kluge, 2011). A number of multinational companies from France and Germany have been signing EFAs with their EWCs. However, the negotiation model is affected by two models; the British Single Chanel Model and Germany Dual Model. Moreover, the functioning and operation of EWCs of German multinationals is mainly influenced by the German model offering work councils the power to negotiate on wide arrays of subjects (Waddington, 2011). Furthermore, trade unions have bargaining rights only related to wages and working time that have been excluded from multinational companies’ agreements. Overall, it can be said that in terms of Foxconn the European Trade Union Federation should find a way to integrate EWC and EWC members in the negotiation process of EFAs (Platzer, 2009). This will help in enhancing the bargaining rights along with enhancing the overall employment relations in a significant manner in many factories of Foxconn. European Labour Standards in regards to Foxconn There is no doubt that European labour standard is very much different from the labour standards being practiced in different countries. In Europe, contracts with employees cannot be terminated as employers have to undergo due process (Fetzer, 2010). On the other hand, as per American labour standards, employers can terminate employees at will prior to any notice. As per the European Labour Standards, workers are supposed to work for stipulated hours calculated on weekly basis. Workers have the rights to work for fix hours and unions have the power to protect their rights in a significant manner (Gold and Schwimbersky, 2008). Furthermore, the European Labour Standards state that child labour is a strict crime and does not favour minor working. This as per the standards is economic exploitation along with thwarting the progress of children. However, in the context of Foxconn, it was found that low wages, child labour, and inappropriate working environment have been the biggest challenges posed by the company (David, 2012). Furthermore, protection of employees in case of insolvency of employers is also an important standard safeguarding the rights of employees along with taking care of their economic issues. Other standards also include safeguarding employees’ rights in the event of undertaking, obligation to inform employees on working conditions, strengthening the labour standards, equal pay, equal and fair treatment to all employees, protecting the health of employees, modernising the labour laws, and improving and enhancing the working condition of employees in a significant manner (Fetzer, 2010). There is no doubt that with all these standards in place, protection of employees’ and employers’ rights have become easy. However, in the context of Foxconn, it was further found that all these regulations have been missing making things uneasy and complicated for labours. With the inclusion of European Labour Standards; things may get better for Foxconn’s labours in coming years (David, 2012). Benefits and Challenges of Maintaining the Labour Standards in Foxconn In last few years, a number of researchers have vouched for the implementation of European Labour Standards on a cross national basis. However, with different countries having their own framework and standard; it is hard to implement one uniform standard. Major challenges of labour standards are in the form of lack of one universal approach (Marginson, et al, 2004). Even in European Nations, labour standard differs from country to country. This can be considered as a major challenge in terms of practicing preferred protocols on labour standards. Furthermore, labour standards may not always help in covering all rights of labours like EWCs do not cover wages and work timings as a part of negotiation with employers. Overall, it can be said that labour standards have significant benefits and challenges and in the context of Foxconn, it can be said that countries need to think over the universal labour standard in order to respect and ensure labour rights (Marginson, et al, 2004). Conclusion Based on the above discussion, it was found that employment relations play an important role in ascertaining and understanding the relationship policies and framework between the employers and employees. Overall, in terms of the best Labour standards, it was found that European Standards are quite systematic in nature and also well governed but the possibility of its adoption at the international level may not go well with other countries. Overall, it was concluded that labour standards should be used to strengthen the relationship between employers and employees so that mutual value can be created. Finally, it was concluded that, Foxconn affects the labour standards by exploiting them for their own benefits rather than transforming them for offering value to labours as per global labour standards and thus, inclusion of European Labour Standards may offer great deal of benefits along with safeguarding labour rights. References Almond, P. (2011) Re-visiting country of origin effects on HRM in multinational corporations. Human Resource Management Journal 21: 3, 258–271. Benson, J.; Zhu, Y. (Eds.). (2008). Trade unions in Asia: An economic and sociological analysis. (Routledge). Bach, S, Givan, R and Forth, J (2009) The public sector in transition in W Brown et al (Eds) The Evolution of the Modern Workplace, Cambridge UP. Benson, J. (2010) Employee voice: does union membership matter? 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