Comparative Industrial Relations - Essay Example

?Comparative Industrial Relations Table of Contents Introduction 3 Components of Industrial Relations 5 The British System of Industrial Relations 7 The French System of Industrial Relations 9 The Swedish System of Industrial Relations 10 The German System of Industrial Relations 11 The Hungarian System of Industrial Relations 12 Fundamental Similarity between German and Swedish Systems of Industrial Relations 12 Fundamental Difference of British Industrial Relation Systems from the Industrial Relation Systems of the other four Countries 14 Conclusion 15 References 17 Bibliography 20 Introduction The concept of ‘Industrial Relations’ came into existence in the 1920s in the United Kingdom and North America. Over the period, the theory of industrial relations was united with the concept of personnel management as well as human resource management. These three concepts actually signify the administration and handling of people. At times ‘industry’ is related to manufacturing only. However, the principle of Industrial relations is not so limited. The principle entails to enclose the associations amid managers and their employees in aspects of trade and industry activity. The main issue under consideration in the industrial relations is employment. Thus, industrial relations cover all the economic activities where a human resource works under the control of an employer and obtains a salary in exchange of his work. Consequently, industrial relations do not take into account domestic labour as well as self-employed individuals (Edward, n.d., p 1). Industrial relations play a vital role from the employers’ point of view. This is mainly because, in the present times, capital as well as technologies have become increasing obtainable for the companies. And hence, the competitive situation of a company relies on the knowledge and expertise of its human resources to a large extent. Furthermore, it should be noted that the human resources are distinct from any other form of resources. This is owing to the fact that human resources cannot be detached from the individuals in whom they are present. As a result, industrial relations are concerned with managing human resources in view of the productive goals of the business as well as the objectives of the workers (Edward, n.d., p 2). The point of view of industrial relation is fundamentally collective as well as pluralist. It involves the associations and dealings which take place at and out of the place of work. Thereby, it comprises of the relationships amid individual employees, the relationships amid the employees and their manager, the associations the companies and their employees have with the institutes created to support and safeguard their individual interests, in addition to the association-ship amongst those institutes among others. In addition, industrial relations takes account of the practices by means of which these associations and dealings are expressed, for instance collective bargaining; employee participation in decision-making; and settlement of complaints as well as disagreements. Furthermore, it also includes the handling of disagreements amongst managers, employees and trade unions, as and when it occurs. These associations as well as practices are subjective to the policies, regulations, and programmes formulated by the government and its agencies. Additionally, these practices are also influenced by the overall political, social, cultural, economic and technological attributes of each nation. Consequently, the industrial relation strategy and its framework in a particular nation are built up in the course of bipartite review procedures (to be precise between the company and its employee representatives, and by them, separately, with the government) as well as tripartite discussion and collaboration (concerning government and other social associates) (Macdonald, 1997, pp. 3-4). Components of Industrial Relations The employment relationship or industrial relationship consists of two segments, to be precise, managerial relations as well as market relations (Flanders, 1974, p 355). Market relations involve the cost of labour, which covers not only the basic salary but also number of hours of labour, leaves as well as retirement fund rights. Akin to any other commodity, labour comes with a charge which signifies the total expense of for its utilization. Nevertheless, labour is different from the other commodities in the manner it is utilised because it is personified in individuals. The employer or manager has to convince and influence the employee, namely, the individual within whom the labour is personified, to labour. Managerial relations are the associations that characterize how the process of persuading an employee to work takes place. The market relations determine a charge for a fixed number of hours of labour. While on the other hand, managerial relations establishes the amount of work that is performed in that time, at what definite task or tasks, who has the authority to describe the tasks and alter a definite mix of tasks and what punishments will be set out for not fulfilling these responsibilities. (Source: Edwards, n.d., p 9). The employment relationship can be defined as an association amid an employer with its employee. However, this direct relationship may be intervened by the two other major components of industrial relations, namely, the employee representatives and the government or the state (Refer Figure 1.1). The unions or employee representatives connect with the workers by means of attempts to categorize and manage them along with enlistment around sets of demands. They connect with companies by participating in collective bargaining. The unions may also involve with the government in making demands for regulations or in participating in more enduring forms of accommodation. The Government bears an impact on the employment relationship directly by means of regulations and legislations on salaries (for instance, minimum wages), working circumstances (for instance, hours of labour) and so on. Additionally, the government can influence the relationship by way of its position as the employer of employees working in the public sector. The government or the state also has a sequence of indirect impacts on the industrial relations. It has dealings with unions, by means of regulations or via bilateral measures, or by way of trilateral associations concerning employers, often referred to as corporatism. Over and above corporatism, the government might have bilateral associations with the companies and also outline the conduct of the companies via legally authorized collective bargaining. Lastly, the state also has a significant influence in the quality of market and managerial relations of a particular nation (Edward, n.d., pp 8-10). The British System of Industrial Relations The industrial relations structure in the United Kingdom is customarily typified and distinguished by the voluntary associations amongst the social associates, with the least degree of interference by the government. Britain had experienced industrialization at a very early stage. Moreover, UK had a very noninterventionist political culture, where the government rarely mediated in the matters and issues related to private institutions. As a result of this, all across the nineteenth century, the employee representative groups in UK strengthened their membership and control base. Additionally many of the legislative advances in UK granted the employee representatives the authority to manage the employees and take part in industrial activities. In UK, collective bargaining has always been more influential than the impact of legal policies, in context of industrial relations (Eurofound, 2009a, p 2). However, in the recent times the approach of the British government towards industrial relations was to employ individual service rights to guard employees. A remarkable example of this approach was the introduction of a nationwide bare minimum level of income. A large proportion of these authorized rights originated from the European Union, and in the recent times there have been a noticeable rise in the control of legal guideline in the employment correlation or industrial relations existing in UK. On the other hand, the membership level of employee representatives continued to fall over the time period. In the past couple of years, the British structure of industrial relations has been displaying a combination of attributes. Even as the previous practice of the government not interfering or mediating in associations amongst the social associates is still apparent in the non-legally obligatory characteristic of collective accords in addition to in the information that employee representative establishments and employer companies bear diminutive legislative participation in public guidelines and modest recourse to bipartite or tripartite discussions at the nationalized stage. Nevertheless, at the present the lawfully recognized employment rights emerge to be an enduring characteristic of the UK system of industrial relations (Eurofound, 2009a, p 3). Consequent to the global financial crisis in the year 2008, the rate of unemployment have amplified significantly in the United Kingdom. As a result, in response to the economic catastrophe, the trade unions have called for superior government involvement to uphold the employment levels. Simultaneously, collective agreements have been reached by the social associates at the UK corporate level with the objective of diminishing the hours of labour with the intention of protecting the employment levels in the country (Eurofound, 2009a, p 3). The French System of Industrial Relations The industrial relations in France have always been governed by the complete participation of the government and the legal system. The industrial relations have been strongly persuaded by the existence of anarchists as well as radical socialists in the labour faction, in addition to the explicit nature of the French companies, who were likely to be either paternalistic or uncompromising. Thus, it can be comprehended that there was a customary lack of reciprocated recognition amongst the social associates and the domineering character of the government in issues pertaining to industry and society as a whole. The French system of industrial relations is till date debatable and uneven. Consequently, it is complicated for the social associates in France to recognise and extend their authority within the trade and industry system. This problem is strengthened by reinforced by a incessant and mounting flaw of the trade union association (Eurofound, 2010). In the current period, the structure of industrial relations has altered outstandingly. A decentralized bargaining structure has evolved where organizations enjoy superior independence from labour regulations and collective accords. Over the years, the outline of the industrial relations moved to a considerable level from earnings or salary to various aspects related to employment as well as production. Thus, the industrial relations of France emphasise more on the plan of the companies rather than the agenda of the trade unions and the employees. Consequently, it can be stated that in France, the conventional form of employment representation by means of the trade unions is often overlooked by non-union employee representation or protest groups (Eurofound, 2010).   The Swedish System of Industrial Relations In the Swedish system of industrial relations, there exists a widely acceptable belief that the parties related to the workforce market should be accountable for the formation of wage structures as well as wage policies. An important aspect of the industrial relations in Sweden is the unity of the trade unions. This indicates that in Sweden there is a centralised, united trade union group that is striving for the accomplishment of common goals. For instance, Sweden has had a unified wage strategy historically and has predominantly accepted the solidarity trade union activities and agreements (Blanpain et al, 2005, pp 139-140). The labour laws prevailing in Sweden are formed on the hypothesis that employee representatives such as the trade unions exist at both the central as well as the local stage. In Sweden, the system of industrial relations is formulated on discussions amongst the employee representatives and the company at the local level. These consultations are conducted regularly and form the core of the collective bargaining structure (Blanpain et al, 2005, pp 139-140). However during the last decade or so, the Swedish system of industrial relations in general and the collective bargaining structure in particular have become comparatively more decentralised. The social associates have a tendency to pass on the authority to discuss and bargain the remunerations as well as working hours to the local level. A number of collective agreements are accomplished with no specific figures on wages or no definite guarantee levels. In this manner, it is left upon the local parties to make a decision the particulars in their discussions related to salary configuration and the laying down of income rates (Eurofound, 2009b). The German System of Industrial Relations In the German system of industrial relations, the state plays a more effective role in the formation of collective agreements. This is unlike that of the Swedish system of industrial relations. This disparity is obvious when the whole labour market is taken into consideration. Contradictory to the Swedish system, in the German system of industrial relations, the local level discussion and consultations between the company and the trade unions are almost non-existent, due to the weak presence of trade union groups (Blanpain et al, 2005, pp 139-140). However, with the passage of time, the trends of industrial relations in Germany have changed. There has been a considerable downturn in the membership of both the employee representative unions as well as the employers. The eastern Germany has been facing a definite challenge in terms of industrial relations. A large proportion of companies in that region prefer not to connect with the employer organizations and opt to negotiate at the organizational level. As a result, the coverage of collective bargaining is diminishing in Germany. In addition to this, there has been a rise in the count of opening clauses in the collective contracts, resulting in disparities at the factory level. In an increasing quantity of private sector industries, it has become more and more difficult to conclude and realize collective agreements. Consequently, in the face of an expanding low-wage division, the function of the German government in deciding the minimum salary levels and employment standards is debated (Eurofound, 2007, pp 2-4). The Hungarian System of Industrial Relations In Hungary, the conventional institutionalised system for the companies and their workforces to concur on remunerations, labour hours, service terms and conditions and so on, have been the technique of collective bargaining between the two parties. Since 1968, majority of the organizations based in Hungary have taken part in the collective agreements. However, due to the existence of state socialism, the collective agreements were essentially an execution guidebook of the Labour Code, adapted to the local requirements. In the past, due to the lack of independent bodies, collective concords did not come to pass in reality (Eurofound, 2009c). Over the precedent decade, there has been decentralisation of collective bargaining in Hungarian system of industrial relations in addition to the individualisation of remuneration negotiation. This implies that informal or individual bargaining is spreading fast and outpacing the concept of collective agreements in Hungary. The Hungarian structure of industrial relations opts for decentralisation because there is a widespread belief that only the contracts made at the organizational level can sufficiently act in response to the existing financial circumstances and work administration of the given company in addition to the home employment market relations and the particular requirements of the concerned workers (Kotlay & Neumann, 2006, p 122). Fundamental Similarity between German and Swedish Systems of Industrial Relations A fundamental historical resemblance between the German and the Swedish systems of industrial relations exists in their collective bargaining procedures. In both the countries, the collective agreement is considered to be a private law agreement subjective to the universal beliefs of contract law. It should be noted that the Swedish industrial relations has retained this attribute. On the other hand, as a result of post-war development, there have been certain modifications in this aspect in the German system of industrial relations. However, there exist significantly strong similarities in terms of the technical as well as the structural aspect of legal outlines controlling the collective agreements of industrial relations in Sweden and Germany. This is particularly true for the technical attributes of the industrial relations. In reality, the legislative endeavours of Germany in the twentieth century had a major influence on the progress of the industrial relation structure in Sweden. Additionally, the configuration of the peace obligation is essentially comparable for both the nations. The elementary values of the obligatory as well as the direct consequence of the terms and conditions in collective concords on employment associations of individuals are also observed to be comparable for both Sweden and Germany. The collective concords reached by the employee representatives form an apparently incorporated section of the political and economic structure in both the countries (Blanpain. et al, 2005, pp 138-140). Kathleen Thelen (1993) in her article “West European Labour in Transition: Sweden and Germany Compared” accentuated on the function of the institutions, some of which were politically inactive formerly, in intervening widespread stress to improve industry-level flexibility.  Thelen (1993, pp 24-46) stated that while the movement towards industry flexibility resulted in the termination of conventional bargaining activities in Sweden, analogous drive for industry flexibility in Germany were more effectively incorporated in its ‘dual’ structure. In context of both the nations, institutional connections between various levels and stages of bargaining formed the strategic relations of labour as well as resources. However, these institutional links convoluted the process of agreement amongst the conventional bargaining organizations in case of Sweden. On the contrary in context of Germany, it assisted the exploration for settlement and negotiation within traditional bargaining establishments. Fundamental Difference of British Industrial Relation Systems from the Industrial Relation Systems of the other four Countries The system of industrial relation in UK has been often termed as ‘voluntarist’. Voluntarism refers to the nonparticipation or refraining of the government from directly mediating in the management of industrial relations. Voluntarism is commonly termed as legal nonparticipation. However, voluntarism is more than just legal refraining. It is rather based on the concept of ascendancy of deliberate action in matters of industrial relations. The companies, employee representatives and the government in the UK had defended the voluntarist system of industrial relations on the basis that accords which are reached via voluntary means were expected to be more steady and enduring in comparison to those forced by means of state intervention. Over the decades, the regulations of the UK government have influenced various facets of industrial relations, for instance legislation related to matters concerning health and safety, safeguard of particular collection of employees in addition to the entire aspect of social security legislation. Nevertheless, unlike the other core nations, the major attributes of the British system of industrial relations are untouched by the state law. Furthermore, the collective agreements pertaining to industrial relations in UK are unenforceable at law and obligatory in honour only. In UK, the impact of law on regulating the performance and employment activity of trade union has been minimal, unlike the other European nations. This has been particularly true with regard to strikes and other categories of industrial activities. A vital characteristic of voluntarism is the persistence by its advocates on the dominance of controlled and deliberate collective bargaining as the favoured technique of industrial guideline. The focus of industrial relations strategy in UK under the voluntarist framework is on the formation and growth of the organizations of collective bargaining via some other way instead of direct government intervention. One of the options used by the authorized body of UK in this matter is to persuade and promote union recognition in addition to widening the concept of collective bargaining in the publicly owned businesses as well. However there have been instances when there have been legal interventions in the system of British industrial relations. One such example is the formation of the Trade Boards, which later came to be known as Wages Councils, to determine the least terms and conditions of service in industrial segments. This is because the human resources in these segments were not able to build up collective defence system and hence were being greatly exploited by the industry. Nevertheless even in this case, the ultimate purpose of the government was to replace their legal interference or involvement with open collective bargaining (Eurofound, 2009d). Conclusion Conclusively, it can be stated that industrial relations comprise of associations which occur at the work place. To be precise, it encompasses various forms of association, for instance those between the employees, between the employees and the organization, between the organization and its workers as a whole with the employee representative groups, in addition to those between the administrative institutes. The nature of these relationships depends on the strategies and legislations enforced by the state, besides being dependent on the legal framework of the country. As a result, the industrial relation system of a particular nation is strongly influenced by its political, social, cultural, economic and technological attributes on the whole. The review of the industrial relations structures of UK, France, Sweden, Germany and Hungary revealed that there are both similarities as well as dissimilarities between the various systems. Additionally, fundamental correspondences were observed in between the Swedish and the German system of industrial relations. This can be justified by the fact that the concept of collective agreement was detected to be the same in both the countries. Moreover, the two nations also bore technical similarities in the legal framework controlling the collective agreements of industrial relations. Furthermore, it has been stated that the governmental activities of Germany during the twentieth century had a strong impact on the evolution of the Swedish system of industrial relations. Moreover, the assessment of the various systems of industrial relations also revealed that the British structure of industrial relations was fundamentally different from that of the other countries. This is owing to the basic characteristic of voluntarism that exists in the UK industrial relations. Unlike the other countries, in UK, the state does not directly participate of interfere in issues related to various dealings pertaining to the nation’s industrial relations. References Blanpain, R., et al, 2005. Collective bargaining and wages in comparative perspective: Germany, France, the Netherlands, Sweden and the United Kingdom. UK: Kluwer Law International. Edward, P., No Date. The Employment Relationship and the Field Of Industrial Relations. 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France: Industrial relations profile. [Online] Available at: http://www.eurofound.europa.eu/eiro/country/united.kingdom.pdf [Accessed 20 March, 2012]. Flanders, A. 1974: The tradition of voluntarism, British Journal of Industrial Relations, 12 (3), 352–70. Kotlay, J., & Neumann, L., 2006. In Focus Industrial Relations in Hungary. [pdf] Available at: http://econ.core.hu/doc/mt/2006/en/infocus2006.pdf [Accessed 20 March, 2012]. Macdonald, D., 1997. Industrial Relations and Globalization: Challenges for Employers and Their Organizations. [pdf] Available at: http://www.ilo.org/public/english/dialogue/actemp/downloads/publications/dmirglob.pdf [Accessed 20 March, 2012]. Thelen, K. 1993. West European Labor in Transition: Sweden and Germany Compared. World Politics Vol. 46, No. 1, pp. 23-49. Bibliography Ferner, A. and Hyman, R. 1998. (eds.). (2nd Edition) Changing Industrial Relations in Europe. Oxford: Blackwell. Marginson, P. and Sisson, K. 2004. 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