The Dynamics of Employee Relations - Essay Example

? Employee Relations in Britain “The weakening of companies as social s goes in tandem with the further commodification of work. Labour has become something that is sold in bits to corporations. Businesses have shed many of the responsibilities that rendered the world of work humanly tolerable in the past.” (Gray 2002: 47) Introduction The opening quote from Gray is premised upon companies performing the role of vanguard of the rights and welfare of labour. The statement infers that the fact that companies have “succumbed” to the pressures of the global marketplace and consequently suffered “weakened” structures is the direct cause of the deterioration of the protections afforded to labour. This study seeks to analyze this statement, by: (1) tracing the development of British labour relations from a historical perspective; (2) examining the necessary implications upon corporations operating in a globalized context; and (3) analyzing whether any perceived weaknesses in labour relations may be attributed to business corporations’ failure as social institutions. Historical Perspective In Britain’s history, three industrial relations systems have dominated during three distinct time periods. The collective laissez-faire system gave rise to trade unionism and industry bargaining, which lasted from about 1890 to 1960; crisis, reconstruction, and technological advances that led to mass layoffs and wage restraints between 1960 and 1980; and the single European market, deregulation, and erosion of economic autonomy, that led to the individualisation of industrial relations after the 1980s and until the present (Howell, 2000). The period 1890 to 1945 saw the most important developments in the role played by collective bargaining and trade unionism. Even prior to the 20th century, there were significant pieces of legislation passed that impacted on the legal obligations between employers and employees, such as the Employers Liability Act of 1880. By the 1900s a “new unionism” emerged that was characterized by more active union activity (particularly the use of strikes and “picketing”) and an increase in the number of members, accompanied by an increase in the employers’ recourse to the courts to file cases against trade unions. Generally, however, court rulings tended towards relaxation of the law in favour of the labour unions (Brodie, 2003). The entry of Britain into World Wars I and II created exigencies that impacted on government’s labour relations policy. Because of the importance of continued productivity to ensure an unhampered supply of the basic necessities, as well as the implements of war, the government took the stance that restrictive practices that tended to cause friction between employers and employees should be reduced, and cooperation ensured between them. This necessitated heavy government intervention. This was seen by labour as a relinquishment of some of their hard-won concessions. Initially this was left to voluntary means, but when this strategy failed, the state resorted to legislation that controlled profits, froze wages, banned strikes and lock-outs, and suspended restrictive practices. (Brodie, 2003). The post-war period, until the 1960s and 1970s, saw a bid to return Britain to its pre-war socio-economic normalcy. The policy pursued was consistent with the control exerted by the government during World War II, which was seen as highly successful and instrumental in tiding the country through the war. The Keynesian economic theory of state planning and intervention put into effect was accompanied with enhanced power for labour, which was warily greeted by industry. Some capitalists saw some wisdom in the strategy of the Labour government for economic regeneration through increased intervention, but stressed that this intervention must be tempered by “insulation from working class demands” (Price, 1990, p. 214). For the most part, however, capitalists held little sway over government policy at this time, with trade unionism being accorded greater power and influence. During the 1980s, a shift in economic policy from Keynesianism to Hayek’s neoliberalization was underway in both sides of the Atlantic, with the advent of Reaganomics in the US and Thatcherism in the UK. Monetarism and strict budgetary control raised interest rates and, consequently, resulted in high unemployment. The condition was exacerbated with a more liberal import policy, where cheaper imports squeezed higher-priced local products out of the market. Foreign investors such as the Japanese hired non-union workers, thereby further weakening labour’s bargaining power. The result was a drastic reduction in strike activity, relatively low wages, a drop in unionism, and a largely compliant labour market (Harvey, 2007). Neoliberalism in the market place led to individualism in the workplace. The assurance of personal and individual freedoms is implemented in such a way that each individual is responsible for his own well-being and actuations. Rather than attribute one’s success or failure in the workplace as the working of systemic factors (e.g. class exclusion), the attribution is more commonly relegated to one’s investment in his own human capital (e.g. education and training) (Harvey, 2007). Furthermore, the rewards of labour are increasingly and voluntarily negotiated via an individualised rather than collective approach (Taylor, 2009). Globalization and membership in the European Union “Globalization” has been used in many varying contexts, so for this discussion the definition in the text will be resorted to. The definition by Held (1999) describes globalization as: “The widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritual.” This ascribes a truly broad scope and implication upon the effects of globalization, encompassing aspects of social life far beyond than the mere economic. Held and other theorists such as Giddens distinguish among four schools of thought: the sceptics (that the importance of globalization is overrated), the hyperglobalizers (that the importance of globalization is all-encompassing), and the transformationalists (that globalization is a central force that combines changes with old patterns). For the purpose of this discussion, we take the transformationalist view of globalization’s impact on how business is done. According to Cohen (2006), globalization presents both threats and opportunities to firms. Some of the more important among these are shown in the diagram below: Source: Cohen (2006) Payne and Askeland (2008) look at the effects of globalization on the local community. Among the adverse effects are the degradation of the natural environment through overuse, reduction of resources for social provisions, and the social consequence of migration. More than the general effects are the specific consequences: for the welfare state, globalization raises the question as to whether states can provide comprehensive welfare services for their citizens; and for developing nations, globalization pressures developing nations to concentrate on economic rather than social development (Payne & Askeland, 2008, p. 18). In the process of competing in the global economy, extreme pressures are placed the host country to respond to threats to: Protection of citizens’ and workers’ rights In the globalization context, and even in internationalization of regions such as the EU, workers may gain the opportunity to earn higher wages abroad; however, a country such as the UK may also experience the migration of workers from abroad into its own economy. In a regime of non-discrimination based on nationality, there is a real danger of crowding out employment opportunities for local workers, or at least minimize protections to them that would have been accorded by a collective bargaining agreement. Control of global capital movements Complete internationalization may also effect the transfer of investments from local sources to other destination abroad. It may also allow the influx of foreign direct investments, in which case the country may benefit from additional productive capacity. There are special implications if the FDI involves the setting up of transnational companies, though. Management of transnational companies Globalization gains particular implications when it comes in the form of the entry of transnational corporation in a developing host country. A transnational or multinational corporation operates in several countries and, therefore, may not be confined in its human resources practices and employee policies to the labour regime in any one particular country. The power of the multinational to intrude on the national sovereignty is real and is held to comprise a threat to the nation-state. Because of this, governments are compelled to reconcile themselves to a modified concept of sovereignty in economic undertakings (Wallace, 2002, p. 63), accepting the need for cooperation and accommodation in return for economic benefits that its citizens may avail of. Effects of globalization notwithstanding, the UK is a member of the European Union, and thus is committed to abide by the principle of non-discrimination and equal opportunities under COM[2008]480 (Eur-Lex, 2011). Analysis The discussion challenges the proposition that “the weakening of companies as social institutions” has reneged on its role as protector of the British worker. Seen another way, it is the responsibility of business organizations to protect the welfare of the worker against the effects of globalization (as globalization is the cause of their “weakening”). A look at the history of British labour relations does not show a strong link between companies and worker protection; if anything, employers (i.e. companies) had historically been relegated a weaker position in the economy until about the seventies, when Thatcher introduced neo-liberalism and opened up economic reforms in the UK. Throughout the first seven decades of the 20th century, labour occupied a powerful position in Britain’s political economy, as partner to the State in social development (Harvey, 2007). The history of labour relations in Britain may be perceived from the point of view of the state. The government performs the role of central actor in the establishment of institutions that create the framework of industrial relations. Without the state, employers and employees, and their organizations, could not have built the mechanisms that ensure stability in the regulation of labour relations. The state alone has the resources to create and regulate these institutions. It alone also possesses the organizational infrastructure and longevity necessary to interpret industrial crises that permit “the long-term legitimacy and stability of a given industrial relations ‘settlement’” (Howell, 2000, p. 206). While state action is central in structuring and stabilizing the employer-employee relationship, it is important to remember that the motivation for state intervention lies in the context of the restructuring it desires to effect in the broad economy, through its political machinery. Economics and politics therefore drive the nature of state-instituted industrial relations. The factors that contributed to the drop in unionism include the de-industrialisation of former trade unions’ centers of power, which include coal, iron and steel, textiles, shipbuilding and engineering. There has also been a slowdown in the expansion of the public services sector, formerly the main driver for the growth of trade unions. Wage negotiations in enterprises have assumed an individualistic approach, replacing collective bargaining as the vehicle for wage and benefits arrangements. Most especially, the closed shop had been outlawed and legal restrictions had been imposed upon calling and organising pickets and strikes, thereby weakening what used to be the trade union’s most powerful tools to recruit and mobilise their members into action (Taylor, 2009). There is, however, empirical evidence of a transformation of industrial relations, with the potential for both individual and collective approaches, that veers away from excessive litigation and assumes a traditional voluntary approach. Research reports that though trade unions successfully secure full legal recognition from companies, there is voluntarily less reliance on them to negotiate the benefits and wages of the employees they claim to represent – only a third of all British employees avail of collective bargaining agreements for the determination of their compensation and workplace conditions, as compared to 70 per cent in 1984. Performance-related pay and various modes of individualised reward (i.e. profit sharing, stock options) have been generally favoured by employees to union-negotiated terms (Taylor, 2009, p. 9). Given, then, that where side by side collective bargaining is made to exist with individual negotiation by the worker at the firm level, the fact that individualization is generally preferred by the worker indicates that workers enjoy certain advantages that may offset the protections they are afforded by collective negotiation. This is not accounted for by any weaknesses that business firms may have developed against the global competition. Furthermore, it is to be recalled that the UK is a member of the EU and is (or eventually will be) obligated to observe a policy of equal employment and non-discrimination. While it is true that such would tend to commodify labour within the context of the unified market, such commodification is not consequential to the weakening of business companies as a result of globalization. It is, on the contrary, a liberalization of the market for labour itself, by opening up a wider arena for workers to seek employment, an opportunity created by a multilateral agreement which the State has entered into. Conclusion The common thread that runs through the evolution of industrial relations in the UK is state action, a positive policy of the government undertaken with the aim of economic reconstruction. The strength or weakness of business companies have no causal effect on employee relations, rather tends to react to effects created by state policies. There was a period in Britain’s past wherein organized labour wielded a strong influence not only in the economy but also in politics and society; the presently eroding status of labour unionism is not attributable to weaknesses of business organizations, but to the economic policies adopted by the state. Taylor (2009) suggests an interesting shift in paradigm when conceptualizing future labour relations. Rather than the militant unionism seemingly espoused in the text, there may be greater relevance for trade unions to act in partnership with companies, some even going a long way to formalise such agreements. The goal is “to realize mutual gains deals, … to guarantee union recognition and workplace stability in return for job flexibility and a commitment to learning and training” (Taylor, 2009, p. 11). In effect, there is a need to redefine the nature and role of trade unions in the context of the more competitive economy, if trade unions are to remain relevant in the new global workplace. References: Blyton, P. & Tunrbull, P 2004 The Dynamics of Employee Relations: 3rd edition. Macmillan Palgrave, Basingstoke Brodie, D 2003 A History of British Labour Law, 1867-1945. Hart Publishing, Portland, Oregon. Cohen, 2006 “Effect of Globalization on Firms,” OECD. Accessed 15 January 2011 from http://www.oecd.org/dataoecd/31/7/37521132.pdf Eur-Lex 2011 “Non-discrimination and equal opportunities for all in the EU,” Europa. Accessed 15 January 2011 from http://eur-lex.europa.eu/en/dossier/dossier_23.htm Giddens, A 2006 Sociology, Fifth Edition. Polity Press, Cambridge, UK Harvey, D 2007 A Brief History of Neoliberalism. Oxford University Press, New York, NY Held, David (1999). “Rethinking Democracy,” Theoria, 94, pp. 30-47 Howell, C 2000 “Constructing British industrial relations,” British Journal of Politics and International Relations, vol. 2, no. 2, June 2000, pp. 205-236 Nagelkerke, A G & de Nijs, W F 1998 “Institutional Dynamics in European Industrial Relations.”. LABOUR: Review of Labour Economics & Industrial Relations, Dec98, Vol. 12 Issue 4, p745-771 Payne, M & Askeland, G A Globalization and International Social Work: Postmodern Change and Challenge. Ashgate Publishing. Price, R 1986 Labour in British society: an interpretative history. Routledge, New York, NY Taylor, R 2009 “The Future of Employment Relations,” Future of Work Programme Seminar Series, Economic and Social Research Council. Accessed 15 January 2011 from http://www.esrc.ac.uk/ESRCInfoCentre/Images/fow_publication_1_tcm6-6059.pdf Wallace, C D 2002 The Multinational Enterprise and Legal Control: Host State Sovereignty in an Era of Economic Globalization. Kluwer Law International, The Hague, The Netherlands Read More