Impacts of Social, Political and Economic Changes on Industrial Relations Practices - Essay Example

Impacts of Social, Political and Economic Changes on Industrial Relations Practices and the Employment of Labor of the USA and South Korea Table of Contents Abstract 1. Introduction 2. Impact of social changes on industrial relations 3. Impact of political changes on industrial relations. 4. Impact of economic changes on industrial relations. 5. Conclusion 6. Recommendations Bibliography Abstract The role of industrial relations in the economic growth of countries internationally has been proved to be significant; however, the relevant framework can be effective only under specific political, social and economic conditions. Changes in the specific conditions can lead to differentiations in a country’s industrial relations; this issue is set under examination in this study. The following parameters had to be taken into consideration: political, social and economic conditions are different in countries internationally; moreover, not all countries have the same level of industrialization. A series of theories and studies have been used in order to reflect the actual interaction between industrial relations and the political, economic and social environment; on the other hand, the industrial relations of two countries which are not equally industrialized are explored and critically analyzed – aiming to highlight the effects of political, social and economic changes on industrial relations within countries with different political, social and economic characteristics. The above target has been achieved while the following phenomenon observed: in both newly industrialized and highly industrialized countries the patterns of interaction between industrial relations and political/ social and economic conditions can be similar. It is assumed that this is a phenomenon supported by the globalization and the trend for continuous increase of countries’ power within the international community. It is suggested that industrial relations become independent – as possible – from political and economic conditions – aiming to improve their relationship with the social trends and needs. 1. Introduction The change in political, social and economic priorities in countries worldwide has been unavoidable – in the context of the efforts made by governments in order to introduce common patterns of growth in all industrial sectors; these initiatives also affected the industrial relations in all industries worldwide; however, the level of this influence has been different – being depended on the economic trends and conditions – as in the case of USA – or the traditional social structures and the economic needs – as in South Korea. Industrial relations can take specific forms in accordance with the social environment in which they developed; Tzeng and Henderson (1999) examined the level of modernization that a nation with specific characteristics – social, educational, industrial and technological – can achieve; it was proved that all these characteristics are likely to affect the modernization of a state – if such initiative is undertaken. In order to understand the potential differentiation of industrial relations under the influence of social, political and economic changes it would be necessary to refer primarily to the characteristics of the specific concept – as developed by theorists worldwide. The term ‘industrial relations’ is explained in the study of Frank et al. (2009); in the above study it is noted that the specific term ‘refers to the important relationship between employers and employees as social partners’ (Frank et al 2009, 143). The above relationship could be possibly expanded – including also the relationship of employers and employees with the state/ authorities. Different theories have been used in order to describe the development of industrial relations in countries worldwide; in accordance with Gray (2008) labour can be considered as ‘labour as expression of dissent or social resistance to neoliberal economic globalization’ (Gray 2008, 483); in this context, industrial relations can be equalized with the framework used for guaranteeing the rights of employers and employees within specific political, social and economic conditions. On the other hand, Cho et al. (2008) note that the role of industrial relations within a particular society can be identified by observing the social security framework established in the particular society. The ‘total social organisation of labour approach’ (Collins 2010, 402) has been proposed by Collins (2010) as a theoretical basis for the evaluation of industrial relations in a particular country; this approach is based on the use of labour and monetary practices as criteria for developing the above evaluation in the context of a specific political, social and economic environment. The Downsian theory referring to the role of political parties within a specific political system would be an alternative theory for examining the effects of political changes on a country’s industrial relations (Thomas 1982). Different approaches could be used in order to examine and evaluate the role of industrial relations in modern societies. In order to understand the interaction between industrial relations and the political, economic and social changes developed within countries worldwide it would be necessary to refer to specific examples of such relationship; because the level of development of a state has been considered as related with its performance in regard to the specific sector, the cases of two countries that present different performance in regard to their industrialization will be used: USA – an advanced industrialized country - and South Korea, a country which is newly industrialized – with many potentials for further industrial growth. 2. Impact of social changes on industrial relations In accordance with Crouch (2004) the value and the role of industrial relations in the context of a specific society can be identified by referring to the ability of industrial relations to influence this society’s social characteristics; the transition from ‘industrial to post-industrial society’ (Crouch 2004, 7347) has been a process reflecting the power of industrial relations to influence the social and political structure and decisions within modern states. Taking into consideration the above issue it could be noted that social changes in USA could affect the country’s industrial relations at the following points: a) the pressure for the increase of wages in certain industries would be increased, b) pressures also would exist for the introduction of stricter legislation regarding the health and safety in the workplace, c) the number of immigrants working in enterprises across USA could be differentiated – being depended on the social trends referring to the presence of foreigners in the workplace. In South Korea, the impact of social changes on the country’s industrial relations has been also proved to be significant. In accordance with Bong (2005) the social patterns of Korea has influenced its industrial relations – which are highly based on the ‘worker – management cooperation but also on the trade-union militancy’ (Bong 2005, 205); on the other hand, it seems that industrial relations in Korea have a weak point: workers in large firms are likely to be benefited more from their counterparts in small and medium enterprises. The differences in the form and content of industrial relations across the country’s industries in accordance with the firms’ size prove that social inequalities in South Korea affect the level of support provided to firms of different size; under these terms, any change in the country’s current social beliefs and practices could result to the change of existing industrial relations, mostly regarding to the criteria used in order to support firms of different size. From a different point of view, the views of managers working in Korean firms are likely to be influenced by the social trends and principles held in the specific country – in this case also, the relationship between social changes and industrial relations is made clear; this issue is examined in the study of Lee and Deog-Ro (2009) where the data retrieved through 139 Korean firms were analyzed aiming to help to identify the potential role of ‘specific management techniques on industrial relations quality’ (Lee and Deog-Ro 2009, 432); it was proved that management techniques can affect industrial relations quality but the level of influence is not standardized. 3. Impact of political changes on industrial relations. Howella (2007) notes that industrial relations can be affected by the political framework and principles that characterize a specific country; reference is made to the case of Britain and its influence from capitalism – an influence that led to the radical increase of the country’s industrialization; however, through the decades industrial relations in Britain were not depended exclusively on capitalism; the demand for continuous political and social change led to the differentiation of industrial relations across Britain– referring specifically to unionism. From a similar point of view, industrial relations are considered as being an expression of the state’s obligations towards its citizens – referring to the right of the latter for fair social security; Cho et al. (2008) explain the practical implications of the above fact by referring to the case of Korea where the social security system is customized to the needs of workers in large firms – the rights of workers in other parts of the country’s industries are not given the appropriate attention, a fact that could negatively affect industrial relations in the specific country. At the next level, political decisions can affect a country’s industrial relations indirectly – referring to those political decisions developed by international bodies which have the right – in the context of specific agreements – to intervene in a country’s political initiatives – as for example, the case of European Union which has the power to impose its decisions on its members; Romo (2005) focused on the effects of Economic and Monetary Union (EMU) on the political and economic decisions developed in Spain and Italy during the 1990s; it is revealed that under the influence of the EMU, political decisions in regard to fundamental social rights in Italy and Spain were differentiated – a fact which is reflected in the wage bargains developed in these two countries. The power of political parties in USA in regard to industrial relations is influenced by a series of facts: a) ‘changes in the industrial, age, and sex distribution of the labor force’ (Estey 1961, 1) has affected the development in the country’s industrial relations through the decades, b) not all employment issues are open to bargaining (Blanpain 2008, 618), c) employers in USA have to face the following issues: c1) the wages of employees can reach high levels, c2) their entrance in markets worldwide has not been guaranteed – the case of imperial markets of Britain can be mentioned as an example of such advantage. In accordance with the above, political changes in USA can affect the country’s industrial relations at the following points: a) the potentials of USA firms to enter the foreign markets, b) the level of wages could be differentiated; c) foreign investment on USA firms would be affected; d) the number of immigrants in the workplace would be differentiated; the effects of political changes on the above factors would be either positive or negative in accordance with the form of the political changes initiated by the US governors. South Korean has been a newly industrialized country, a term used in order to show the high rate of current industrial growth but also the high prospects for further industrial development in the future; it was because of specific political initiatives that the country’s most important industrial complex, the Kaesong industrial complex, was developed (Heo and Roehrig 2010, 143). The change in the country’s industrial relations framework has been resulted by the change in the political environment. In accordance with Frank et al. (2009) the development of industrial relations in South Korea has been enforced by the efforts of the country’s government to support the foreign investment on the country’s various industries. Foreign investment has been encouraged – a fact that led to the increase of business activities across the country; in the study of Chua (1998) it is noted that ‘workers affect democratization in a macro-structural sense, both by influencing the agenda of the oppositional movement and by shaping the contour of socio-political conflict of society’ (Chua 1998, 185); the above study refers to the political characteristics of Taiwan and Korea – as these characteristics can be influenced by these countries’ political rules. At the next level, the political changes in South Korea have affected the country’s industrial relations in regard to the following issues: a) the terms of negotiations between employer and employees have become fairer for the latter, b) the level of wages has been increased – compared to the past – a fact that is also related with the increase of the country’s industrialization, c) in the context of the ‘Greater Labour Strength of 1987’ employees in South Korea have secured their right to ask for equality and fair compensation, d) still issues like social security and level of compensation – in case of redundancy, have not been adequately addressed. 4. Impact of economic changes on industrial relations. The relationship between economic changes and industrial relations cannot be denied. Moreover, this fact is proved by the cases of USA and South Korea; in both these countries economic changes are related with the changes observed in their industrial relations. Economic changes would affect industrial relations in USA; the specific issue is clearer today; the global financial crisis that also strongly affected the US economy has led to differentiations in the country’s industrial relations; for example, the level of wages in certain industries has been decreased; the rights of employees in the case of firing have been limited – under certain terms, employer is not obliged to pay compensation – especially in case that the business face severe financial turbulences. On the other hand, the crisis led to the development of existing social security framework in USA; political decisions and economic conditions both played their role on this development: existing social security framework in the above country was reviewed in order to become accessible by more people across the country. South Korea achieved a significant economic growth in the post 1960s period; the changes in the country’s economy were followed by changes in its industrial relations aiming to develop modes of employment that would effectively serve the economic growth; however, this effort led to limitations in employees’ rights, a fact that is reflected in the ‘Great Labour Strength of 1987’ (Kim and Bae 2004, 13). In practice, the industrialization of South Korea is related with the growth of the country’s economy – as explained above; in this context, it can be supported that economic changes in the above country are related with the country’s industrial relations; however, this impact is not necessarily positive – at least not at all its aspects; still the rights of employees are under pressure – as reflected in the view of Kim and Bae (2004) presented above. 5. Conclusion The examination of the relationship between industrial relations and political, social and economic changes has led to the assumption that industrial relations are closely related with a country’s political, social and economic framework; the above phenomenon explains the fact why countries with different industrialization have different social, political and economic frameworks. Moreover, the structure and the performance of industrial relations in USA and South Korea prove that, currently, the specific framework is not given the appropriate attention; in fact industrial relations are rather considered as a tool for the enforcement of specific political and economic initiatives. On the other hand, the effects of industrial relations on the development of a country’s economy have been proved to be significant; at the next level, industrial relations are expected to influence stability and integrity in society – under the terms that the rights of employers and employees are recognized and adequately protected. The differentiation of countries in regard to their level of industrialization has not been proved to have significant effects on their potentials to further increase their industrial performance; moreover, the level of a country’s industrialization has not been found to influence the consequences that political, economic and social changes can have on industrial relations. In fact, both in USA and South Korea the political and economic initiatives have been strongly based on industrial relations – aiming to have the support of workers who represent a high part of the population. Even if South Korea has a rather short history in terms of industrialization, since its potentials for industrial growth are significant – a fact that indicates the political and social support offered to industrial relations in the specific country. The theories examined in the context of this study led to similar assumptions: industrial relations are influenced by a country’s political, social and economic environment but the terms and the extension of this influence are not standardized – indicating that different forms of industrialization can be developed worldwide in accordance with each country’s political, social and economic characteristics. The political and economic decisions initiated worldwide can lead to similar forms of industrialization – especially under the influence of globalization and of the need to secure each country’s position in the international community. The above fact does not influence the dependency – in each country – of industrial relations on the political, economic and social framework and priorities. 6. Recommendations In accordance with the issues developed above it is made clear that a series of initiatives should be developed regarding the management of industrial relations internationally; the increase of independency of industrial relations from political and economic environment should be a first part of the effort for the improvement of existing industrial relations framework – which is based on common principles and rules in countries internationally. At the next level, it would be valuable for each state to promote the participation of individuals in the development of industrial relations; such participation would guarantee fairness and equality in the rules regulating the specific framework – a problem that made clear through the case of South Korea where industrial relations present different levels of development across firms of different size. The achievement of the above targets would require the change of priorities set by governments worldwide in regard to the management of industrial relations in all industries; industrial relations should be considered not as a tool for the promotion of specific political plans but rather as a means for the improvement of a country’s social and economic life. Bibliography Addison, John and Paulino, Teixeira. 2009. Are Good Industrial Relations Good for the Economy? German Economic Review. 10(3): 253-269 Blanpain, Roger. 2008. 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