Employment Relationship in Industrial Relations

Employment Relationship in Industrial Relations The employment relationship between an employer and an employee has often led to being described by two different terms ‘Industrial Relations or ‘Employee Relations. These, though seen as interchangeable terms often have been under the scrutiny of writers. Employee relations in general can be seen as a relationship between any employer and his workers, i.e., be it in the form of domestic labour, self-employed employers or professionals. On the contrary, Industrial Relations take into account employment in all spheres where economy activity takes place, i.e., industrial relationship. Since there is a misconception that Industrial Relations is just concerned with the study of trade unions, strikes, labour markets etc., and hence in some books writers have used the term employee relations to evade these among general public. However, in context with UK, the term industrial relations is seen to be more appropriate. Industrial relations is a multidisciplinary field and is influenced by a lot of internal as well as external factors. The main actors that play an important role in affecting a countrys industrial relations system are employers and management of an organisation, third-party agencies like the state and finally, employees and their representatives, i.e., trade unions. However, it must be noted that each of these actors have functions towards themselves as well as towards the role of other actors. In other words, there is a dependency between all of them. Brief Overview of the Current Changes in Industrial Relations over the last three decades In the last three decades, i.e., since 1980s the industrial relations in Britain has undergone a massive reform. The major changes undergone include the demise of collective bargaining, decline in trade union recognitions and membership density, a reduction in the number of strike activities and an increase in the intervention on law in the industrial relations since 1979. Moreover, there have been reforms in the organisation of the work which is related to restructuring of labour market, new management practices adopted by the employers and globalisation. However, in order to understand how these changes have played a role and influenced the present industrial relations, it is important to have a look at the historical background of it prior to the reforming. Industrial Relations in UK Historical Overview, i.e., before 1979 Earlier, it was seen that the central matter of industrial relations in UK was the concept of ‘free collective bargaining, a term introduced by the Webbs and developed in practice by the trade unions. According to this, the rights of the employees like wage determination among others were supported by the trade unions present in organisations. It was their peak presence during 1960s and 1970s which contributed to the decline of UKs economy because of them leading to increasing unemployment and lower productivity. The employers believed in the old tradition of unscientific management where all the costs regarding technical staff as well as capital were kept to minimum. And any alternative systems regarding organisation of work and for controlling of labour were looked upon as risky. Also, it was seen that the state was not looked upon as a part of the industrial relations system and a contributor towards labour strength due to both the employers and trade unions implying collect ive bargaining or voluntarism phenomenon (as it was called) not wanting any kind of legal intervention. Unions believed that the presence of law might take away workers from unionising and hence just believed in a labour law system and moreover, since employers looked for employee cooperation and productivity, they encouraged trade unions. Owing to all these factors, the Industrial Relations in UK till 1960s started being looked as a problem because of low wage, low productivity and increasing strike activity. Therefore, the concept of reforming it was a prime concern. Now we shall see how there has been change in the management of industrial relations during the last three decades and what does it tell us about the influence of the three major actors on the current framework of industrial relations in UK. Change in the Role of State and Law and its influence During the last three decades, there has been a drastic change in the legislative frameworks with the coming up of Conservative Governments during 1980s and 1990s and the Labour Party beyond 1997 contributing to the development of participation by the law in industrial relations moving beyond the traditional voluntary approach among organisations. The criticism by pluralists that state couldnt play any role in industrial relations was not justified during the Conservative Government Period of 1979-1997. During this period, the government curbed the presence of the trade unions and eradicated the collective bargaining phenomenon with an aim to restricting individual employment rights, giving more freedom to the employers. However, owing to the EUs directive influence on the domestic UK Law, there were a number of issue mismatches between the UK policies and the EU employment policy. As a result of which, UK opted out of the EU Community. Nevertheless, the influence of the EU is still seen there. These de-regulatory measures did not contribute much towards juridification of the industrial relations and the employment relationship was still determined voluntarily. Also, due to the changing law, it was seen that in the period after 1980s and 1990s, the number of days which had been lost in dealing with strikes suffered a decrease indicating that the strike pattern in UK observed a diminishing trend. The influences of these successive Conservative Governments show that the role of the state has had only a negative impact on industrial relations. Though, a number of acts and commissions were developed in order to combat certain issues, but the outcome was very different. In regard to the trade unions, The Employment Act in 1982 made sure that they suffered penalties for all their wrong doings as a result of which the statutory immunities enjoyed by them were gradually reduced. This showed the restoration of the private law. Also the restrictive re-regulation of collective action made changes in the unfair dismissal law to protect the rights of strikers. Both these regulatory techniques made sure that a fully functional labour market was restored unlike before. However, it is noted that though the legislative change provided unions with some national leadership like controlling of strike ballots, it has also led to the deterioration of the financial expenses of the unions. Similarly, the rising influence of the European Community Law saw policies like equality in pay for equality in work between men and women and employment protection taking place in Britain. In spite of restoration of the Equal Pay for Equal Work in 1983, the negative economic outcomes of legislative action relation to pay and productivity have been there. The removal of wage councils has led to pay differences in low-wage sectors and hence widened the pay inequalities in UK. As for the contribution of legislation in improving economic performance, it has only been seen in areas where unionism and closed-shops have eradicated. Moreover, it was Conservatives who were keen on the idea â€Å"of de-regulating labour markets and removing ‘obstacles to the free operation of market forces (Blyton and Turnbull, 1998)† for which they wanted to remove trade unions. However, adopting a strategy based on cost-reduction (i.e., the least labour costs) in times of high levels of unemployment, bad economic activity state, deficits in payments etc., only led to the uprising of an economy having low skill, productivity and wage along with being technologically backwards. Therefore, it is seen that although the successive Conservative laws has reformed the old traditions of UK industrial relations relying on centralised bargaining systems and absence of statutory rights but it hasnt managed to solve many of the problems like that of still continuing unemployment and no legal protection right with employees (be it collective or individualistic). But, post 1997, Labour Party came into force and has been there since then been, maintaining a balance between using legal regulation where required like in new concepts of national minimum wage, individual employee rights and supporting collective bargaining and employee representations along with retaining some earlier Conservatives approaches like restrictions on strikes and internal trade union procedures. But still some restrictions on industrial relations from previous times like the ballots are still there. Moreover, in this period UK signed up with the EU Social Charter which resulted in current legal framework developments like working time regulation and improved rights for non-standard workers among others. This new legislation has also affected the British industrial relations in a different number of ways with having positive along with negative implications. The current Labour Law sees that a legal intervention is a source of employment rights in Britain and the Labour Party seems to maintain labour flexibility with fair universal minimum standards unlike the previous governments. The most important piece of legislation introduced by the Labour Party was the introduction of National Minimum Wage and its influence is seen in the sense that it prevented employers from cutting pay and hence did not affect employment and inflation adversely. Also, in order to support collective bargaining, there was a statutory procedure to gain trade unions recognition under the Employment Relations Act 1999. Though, the current legal framework in UK shows there has not been an aim to remove old philosophies and accept new changes but the aim is to maintain continuity. Nevertheless, it is still evident that there have been tensions and contradictions due to the present Labour Government balancing between pressures from the domestic law as well as maintaining the standards of the EU employment law. This has led to compromises between many aspects like those between managerial freedom and workers relationship and not all EU developments being welcomed in spite of the no longer opposition to becoming a part of it. Furthermore, though the Labour Government has advocated social partnership and fairness, but it is unclear as to how it will achieve these by retaining the old Conservative Law practices of restriction on trade union governance and strikes along with ensuring flexibility in labour market. Also, in UK the employees still have no rights to bargain which is considered important by the all the other European states as necessary and legitimate elements for the industrial relations to work effectively. It is also questionable that how will productivity and flexibility increase in an environment of removed individualistic legal rights and counteracting collective representation. Change in Employers and Management Strategies and their outcomes The earlier British management style was predominant on collectivism but depended on a hostile union-management relationship along with the cost-driven individualism. Moreover, till 1980s, management as an actor in Industrial Relations was not given much importance due to it being considered as not interested in changing things and just responding to the other actors being trade unions and the state in its decision making. However, after the period of 1980s, management has started getting lot of attention owing to its increased activity in taking a lot of initiatives leading to the emergence of lot of key issues. Firstly, it is due to the development of management models which shows the respective roles of it as being a system actor, a strategic actor and a capital agent. However, all these three models arent sufficient to explain the role of management which is diverse consisting of complexity and variety. Secondly, due to the non-presence of legal regulations and multi-employer bargaining, it might be easy for British managers to opt for any choice but this is not as such and can be influenced by variables like sector, size, occupation etc., indicating the variety of management practices. Also, as the British economy shifted after 1980s, the industrial relations underwent a change and the interest of employers too changed. The current framework sees an attitude of social partnership and voice arising from EU policy giving much more rights to employees though not to a great extent as also indicated by the role of state. This new UK policy has begun to reshape the participation of the employees by a direct and an indirect impact and also though the increased legal regulation. Moreover, attempts to involve EI into management practices and consolidate and integrate voice measures indicate the confident approach of the current British management towards organisational participation. Furthermore, new management prerogatives have emerged with changes in the thinking of management and strategic intentions of large firms to manage labour with an emphasis on individualism moving away from the traditional norms of collectivism in 1970s. They are looking forward to a single-employer bargaining system which helps firms link its labour to the product market and brings in new payment systems and grades along with need for more flexibility, single unionism and individualisation of industrial relations. Therefore, this new strategy shows moving away from external market structures by linking industrial relations to the needs of business. In spite of all these changes, the influence of the new management too hasnt been that good. It is clear that employers after 1980s and 1990s adopted individualistic manners for determination of pay conditions and shift from the collectivism approach led to the introduction of two different styles involving high commitment practices in a union as well as non-union environment. However, what ais seen contrasting here is that, even though union presence led to encouraging efficient management along with the high commitment practices and partnership agreements with the employees relating to a new form of collective bargaining so as to increase productivity, still it has not been possible to identify the current style of management. The main reason seen to be is that after 1980s, the decline in unionism has allowed management wider choice to choose which style to adopt be it with unions or without. And evidence still suggests that â€Å"management are driven more by a cost-minimisation and opportunistic approach to employees, reflecting more than anything a traditional lifestyle (Edwards, P. 2003)†. Also, the deregulation of collective bargaining has led to the development of organisational employment systems with employment relations dependency on human resource management having minimized unionised role. Furthermore, there also have been problems with individualism or non-collective reforms stating that they cannot comply with a single formula. An example of this is seen from the fact that in order to restructure and reorganise its business when Knowco created an individualised employee relations it was faced with employee insecurity and low trust between managers and staff. And hence it is worth questioning that whether, the use of individualism will protect the firms or worsen competitive tendencies. These facts state that the present influence of management is to manage its employee relations both individually and collectively. To add to all this, despite decline in unions as a means of employee representations, still more and more companies are indulging in partnership in the presence or absence of trade unions. And even though there has been a shift from conflicting industrial relations to a one with new employment trends, still the new employers and unions have a striking relationship. This is due to the new management strategy model consisting of its effects on trade unions and partnerships. Hence, even without partnership or with it, trade-unions will have to make organisational participation work as well as manage tensions and conflicts in employment relationship skilfully. Lastly, it should be pointed that the managements main aim is cooperation and compliance both in regard with its employees, but the problem faced by the former till date is the old managerial issue of maintaining a labour which is cost-effective, productive and co-operates. This is due to the fact that the management in UK still relies on short-term tendencies. Moreover, the absence of the trust between employees and management is the biggest obstacle for a better industrial relations system in UK. This is evident from the so called Labour Partys social partnership strategy, according to which where there are no employee rights either governed by law or through rights in a de-regulated market; employees can just trade their pay for their labour resulting in exploitation by employers. Therefore, for management to effectively contribute for the development of better Industrial Relations and improve the UK industry, it should bring about a change in its attitudes so as to build up trust and confidence in its workers along with concentrating on enhancement of productivity than maintain cost-minimising approach. Changes in Trade Unions and their influence Though the unions have been at their highest peak till 1979, but after this with the emergence of the Conservative Governments, there has been a decline in Union membership from 55% in 1979 being at its peak to 33% presently along with a huge demise in collective bargaining indicating a continual drop in trade union recognition after 1980s. Though, union membership is required, but if it doesnt influence dealings with the management it is not worth anything. The 2004 WERS survey showed that in comparison to the 1998 survey there has been a fall in union recognition from 33 to 27 percent. Also, 77 percent managers agreed that they would directly speak with the employees instead of wanting trade unions to fight for employee rights in comparison to 8 percent who disagreed to it. Moreover, 33 percent stated that unions dont help in improving performance at the workplace in comparison to 23 percent who agreed that they improve. These results show that management believes in generally sett ing terms for its workers, with legislation, trade unions and industry agreements playing a minimalist role. In the current scenario, by means of interviews with different industry employers and unions, a case study shows the impact of Employment Relations Act (ERA) 1999 on trade unions and employers. According to the study, there has been a widespread agreement between the two with employers recruiting mangers with an ability to deal with unions showing no hostility towards unions and unions tolerating the legal law interference by the government. Most of the employers have agreed to the statutory recognition of the unions and started reviewing their policy of anti-unionism. Though they have accepted the presence of unions, still they give them limited rights seeking their views for organisational changes but giving them no influence on pay-setting. However, while giving employees consultative rights, ERA moves away from the contemporary industrial relations practices taking it back to the adversarial system. This can affect trade unions by giving them a chance to develop their presence wi th no-members. This indicated that collectiveness of workers is returning but with an attitude of representative and consultative agreements rather that the old norm of free collective bargaining. Contrary to this is a fact that though this collectiveness gives consultations rights, it might make unions have more influence on employers by the former just letting the latter know of the key issues and this might make them freer from the dependence on the fundamental levels of the lay activists. This weakening of power of the unions can be attributed to have taken place due to a variety of global changes highlighting an employment shift from unionised to non-unionised sectors due to competitive product markets and internationalisation of labour markets. Also, restructuring of employment led to more self employment and a fragmented workforce with the size of the workplace being smaller, indicating challenges for the unions to recruit elsewhere which they couldnt afford due to lack of resources and organisation skills. Though a contrasting point was that in 1980s during unemployment rise in the entire Europe, when all countries unions brought a wage cut to stir employment opportunities, UK was the only exception with its distribution of wages brining a real gain. A discussion on union membership in countries outside and within OECD during 1970-2003 showed that there is a level of decline in the union density in many of these countries (except four) with unions being more popular in public than private sectors. This was also evident from the WERS 2004 Survey, according to which union density in public sector was 64 percent compared to meagre 22 percent in the private sector. Although there was a probability that more male members were a part of unions but females too were there though in public sectors noted again by the WERS Survey (53 percent women being members compared to 46 percent men). The most important feature which came out from the discussion was that age plays a major role in deciding to be a member in unions and it follows an inverted U-shape with maxima at 50. This is due to a main factor that since young and new workers in a union are usually paid less than that of the older union workers, it becomes an added advantage to employ ers to hire them. Also, a number of possibilities arise like older union members quit their jobs and get promoted to non-union jobs in order to increasing their earning levels, older members though enjoy union benefits, they forget to pay their union due etc. The increasing decline in Unions in 1980s and 1990s along with the increase in non-union workplaces show that the reversal of this trend is unlikely. However, these findings indicate that unions now know how they can get recognition through different routes (example: the participation in ballots) by the ERA. But, the potential of this act to control decline can be seen as a future research agenda for industrial relations. Unions have not been able to influence the Industrial Relations in a positive way, in spite of the fact that during the reforms of unions in 1980s and 1990s, their decline has been able to stop the decline of UKs economy to an extent, because of the new legislation adopting a ‘third way of interaction between the government and the unions, thereby eradicating the phenomenon of anti-unionism. They still are faced with a number of challenges. The key problem is that there is still rivalry between unions for members in UK which leads to a lack in coordination between union movements and depicts further problems of recruitment and organisation. They also have to deal with the challenges of their decreasing membership along with the increasing managerial attack in the form of policies of cost-reduction leading to the unions having to bear a scope with limited finances. Also, there has been evidence by a research conducted on to test unemployment measures effects on inflation results , which lead to the fact that high union density can cause unemployment and hence shouldnt be there. Finally, though the presence of the traditional unionism approach of collective bargaining can although lead to a less attrition rate, it also contributes to low productivity and poor performance in jobs in firms. Thereby, it should be stated that in order for the industrial relations in UK to not crumble further and rise again, the unions have to find a way to deal with these current problems. Conclusion In the end we should examine whether Industrial Relations in UK has really improved from the previous times. There have been some positive as well as negative outcomes. Firstly, though there has been a decline in the number of strike activities saving work stoppage days but other problems have also arisen particularly relating to an increase in number of ACAS or tribunal cases with employees complaining about the behaviour of their employers. This suggests that the climate at workplaces still shows a dispute between managers and employees perceptions. Secondly, diminishing collective measures and resorting to individual measures indicate the present scenario has little place or role for trade unions to influence events. However, a contrary point to this is that, the concept of individualism is already seen as a failure and hence the recognition for the efficaciousness as well as legitimacy of representation by collective interest is seen to be encouraged both by the UK as well as the European Law. Also, the efficacy of challenging systems of workers involvement, i.e., partnership and high performance workplaces indicate more scope for trade unionism analysis in future. Finally, in spite of the fact that Labour Party will maintain legal regulations in employment conditions and markets, UK becoming a part of the EU Social Charter, leads to the imposition of EU laws into the national laws which can have implications on domestic laws like the directive introduced in national system for informing and consulting workers. To sum it all it can be said that the Industrial Relations in UK can be improved to a greater extent if all the actors in it, i.e., state, management and trade unions realise the need for long-term measures indicating a wider area for the rights of employees and the joint regulation of the employment relationship.