Comparative Employment Relations in the Global Economy

Carola Frege, John Kelly, Carola Frege, John Kelly

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781134828968
• Edition: 2
• Topic: Business
• Subtopic: Business General
• Index: Business

Employment Relations is widely taught in business schools around the world. However, an increasing emphasis is being placed on the comparative and international dimensions of the relationships between employers and workers. It is becoming crucial to consider today's work and employment issues alongside the dynamics between global financial and product markets, global production chains, national and international employment actors and institutions, and the ways in which these relationships play out in different national contexts.

Comparative Employment Relations in the Global Economy addresses this need by presenting a cross-section of country studies – including the UK, Germany, USA, Brazil, India, Russia, China and South Africa – alongside integrative thematic chapters covering essential topics such as theoretical approaches, collective representation and employment regulation.

This second edition benefits from:

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• Careful updates to theory and real-life developments

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• Fuller treatment of topics such as labour migration, gender and discrimination, global value chains and corporate governance

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• A more logical ordering of chapters, with globalization issues appearing earlier

This textbook is the perfect resource for students on advanced undergraduate and postgraduate comparative and international programmes across areas such as employment relations, industrial relations, human resource management, political economy, labour politics, industrial and economic sociology, regulation and social policy.

Part 1

Comparative employment relations

1 Introduction

Global challenges at work

John Kelly and Carola Frege

The structure and content of this textbook is based on four main premises: first, the study of comparative employment relations (CER) has to be set in the context of the global economy and its impact on regional, national and sub-national regulation of the employment relationship. Second, the study of CER must be firmly grounded in theory –the subject of Chapter 2 where we set out and discuss in detail the theories that will recur throughout the book. Third, a successful CER textbook must also include genuinely comparative analyses of the main content and challenges of the employment relationship, hence the seven chapters in Part 2 of the book. In order to understand contemporary employment relations in the context of the global economy we must also analyze forms of employment regulation from the individual to the supra-national level, whether they emanate from individual and or collective employee rights and representation to regional and transnational regulation. These are the topics that comprise the third part of the book. Finally, a successful CER textbook must discuss the challenges and regulation mechanisms of employment relations in selected countries – Part 4 of the book.

We begin however with the global economy and in order to appreciate its significance, it is helpful to go back in time to the so-called ‘Golden Age of Capitalism’, from the late 1940s until the mid-1970s. This period was characterized by unprecedented rates of economic growth, dramatic rises in consumption and the lowest levels of unemployment than at any time before or since (Marglin and Schor 1990). The advanced economies of Western Europe and the USA dominated world manufacturing production, trade and investment, a fact reflected in the composition of the labour force. For example, in 1960 almost 50 per cent of the workforces in Britain and Germany was employed in industry and in the USA and France about 34 per cent (Glyn, Hughes, Lipietz and Singh 1990: 44). The output from what were often large industrial plants was intended primarily for the domestic market: in 1950 only 6 per cent of the European market for manufactured goods was supplied from outside of Europe, and most of that was from the United States (Glyn 2006: 97). The workforce in these plants was predominantly male, employed on full time, open-ended contracts with wages and conditions mostly regulated by collective bargaining and promotions linked to internal labour markets (Marglin and Schor 1990). The mid-1970s was both the tail end of the long post-war economic boom, marked by rising unemployment and inflation, and the zenith of trade union power and militancy with its strong upward pressure on wages. Many governments responded to union militancy, rising inflation and unemployment by attempting to negotiate wage restraint and industrial peace with trade unions, often through tripartite (unions, employers and government) institutions (Pizzorno 1978).

The intervening years have witnessed a far-reaching and fundamental transformation of employment relations, even before the financial and economic crises that erupted in 2008 (Nolan 2011). Widespread changes in employment relations have occurred both in the advanced capitalist world as well as in the major new economic powers such as in the BRICS countries of Brazil, Russia, India, China and South Africa as well as others (Dicken 2015). Manufacturing employment has declined in Western Europe and North America but expanded in the Southern Hemisphere, especially in the BRICS countries (Dicken 2015). Trade union membership and strike activity have declined in many countries around the world (see Chapters 8 and 11). A growing proportion of workers is employed on precarious contracts – fixed term and/or ‘zero hours’ – to perform low paid jobs in the ‘gig economy’. The management of employment relations has become the responsibility of human resource management departments but the decline of trade unionism and of collective bargaining coverage and influence has also allowed a resurgence of a more authoritarian approach to labour management and an increased reliance by employees on individual legal remedies for their employment problems (cf. Colling 2010). Multinational corporations have become increasingly influential in shaping the labour policies of governments around the globe (Sklair 2002) and the growth of international supply chains, outsourcing and the fragmentation of firms has rendered the loci of employer power increasingly opaque. At the same time government intervention has increasingly been directed to retrenching welfare and pension systems and weakening employment protection laws (Hamann and Kelly 2011). Although two of the core institutions of employment relations – high collective bargaining coverage and works councils – have remained largely intact in most of Western Europe as of 2019, there is clear evidence of a decline in the membership and effectiveness of trade unions within collective bargaining (Baccaro and Howell 2017). Collective regulation of employment relations has been significantly eroded in ‘liberal market economies’ such as the UK and the USA and remains weak in many developing economies (Wilkinson, Wood and Deeg 2014, Chapters 15–20).

The economic background to this transformation has often been encapsulated under the umbrella term ‘globalization’, a series of processes involving the geographical spread of production, trade and investment and a ubiquitous upheaval of the organization of work in part through the impact of micro-computer technologies (Dicken 2015). The new configuration of the global economy is best epitomized by the rise of China as a major economic power. With an average annual growth rate between 1990 and 2018 of 12 per cent, China had by 2018 become one of the top manufacturing economies. In 2018 it held the highest share of world exports (17 per cent), followed by the EU (16 per cent) and the USA (14 per cent). As for world imports, the USA held the highest share (18 per cent), followed by the EU (15 per cent) and China (12 per cent) (European Commission 2018). Other large economies too were transformed during this period, notably the other BRICS countries (Brazil, Russia, India and South Africa). Over the past decade, BRICS’ contribution to world economic growth has surpassed 50 per cent. The expansion of manufacturing output and employment in the BRICS countries, but especially in China, went hand in hand with a sharp decline in industrial employment in the advanced capitalist economies. In Britain, for example, the manufacturing workforce represented almost one third of employment in 1960; by 2018 that figure was below 9 per cent. In the 28 member countries of the European Union, manufacturing jobs accounted for approximately 15 per cent of employment in 2018.

The intellectual challenge for employment relations scholars has been, and remains, how best to think about these ongoing changes in the forms and outcomes of the regulation of the employment relationship. Insights from the study of Comparative Employment Relations (CER) continue to be necessary for social science and business students in the 21st century; in fact they are more important than ever because of the immense changes to the global economy since the 1970s. Yet for all the changes that have taken place in the world of work, paid employment is still the dominant activity for most citizens between the end of their education and their retirement and the social, family and personal lives of most adults depend on the income derived from paid work (Colling and Terry 2010: 5–7). However paid employment retains its importance in a context where patterns of work, the rewards of work and even its availability have become increasingly precarious and subject to the turbulent forces of the global economy and the actions of governments and employers.

The structure of the book

As previously mentioned, the aim of this textbook is to introduce students to the comparative study of employment relations in a global economy. Unlike many texts in the field, which provide detailed descriptions of employment relations in different national settings, this text aims to be both more analytical and more comparative. It is analytical because we set out a number of major theoretical approaches to comparative employment relations (Chapter 2) and aim to deploy these throughout the book. It has become a truism in the study of comparative employment relations that intensified and global product market competition has contributed to far-reaching changes in the world of work. Yet it is also the case that the impact of markets is refracted through a variety of institutions, such as those covering collective bargaining, employment protection and welfare payments, for example. Within these institutions the actors themselves have some degree of choice over how to operate within existing institutions, how to bypass them or how to reconfigure them (Thelen 2009). Each of these perspectives is brought to bear in the analysis of substantive issues across countries (Part 2) and in the discussion of employment relations within each of the countries that feature in Part 4 of the book.

The book is comparative in two ways: first, we include chapters on substantive topics related to employment regulation such as employee rights and the employee experience of work that include data from a variety of countries and secondly, we include material on regulation at the individual and collective national level, on the European Union and transnationally for example. Our selection of substantive topics and challenges is rooted in our understanding of the employment relationship and its context. The employer pays a wage or salary in order to hire the capacity of the employee to work, usually for a fixed number of hours per week. Yet the precise amount of work to be performed remains unspecified and it is the responsibility of the employer to organize rewards, sanctions, training and controls in order to ensure maximum job performance. These tasks are complicated by the differences in interests between employer and employee. If we consider the firm as a profit maximizing unit of capital then wages and salaries represent a deduction from profits. To this conflict of interests we can add an imbalance in power because typically the employer can replace a difficult worker more readily than the worker can find alternative employment (Colling and Terry 2010).

We start Part 2 by introducing the reader to the topic of globalization, its meaning and significance for the study of comparative employment relations (Chapter 3). From a political economy perspective we first examine the role and significance of the value chains that increasingly stretch across the globe, linking raw materials suppliers in one country, assembly factories in a second to storage and retail facilities in a third. Value chains create both opportunities as well as threats for the firms that organize them and for trade unions and other employee organizations searching for ways of exerting leverage over large MNCs.

We then discuss the employee experience of work across the globe and we include here issues under the broad rubric of quality of work life, in particular work intensity, skill use and job satisfaction (Chapter 4). We then turn our attention to gender relations, equal opportunities and discrimination at work (Chapter 5), and a discussion of the impact of labour migration on the American and European labour markets and to what extent the varieties of capitalism framework can explain varieties of successful migration integration (Hall and Soskice 2001 and Chapter 6). We then provide a comparative analysis of work practices and HR outcomes across Germany, the USA, UK and Japan and their consequences for both employers and employees (Chapter 7). Chapter 8 focuses on the links between employment practices and macro-economic outcomes on the other, including GDP growth, employment and income distribution. Finally in this part of the book Chapter 9 examines the connections between different varieties of welfare regime, electoral and party political systems, civil society and employment relations. The period since 1980 has witnessed widespread government attempts to reform welfare and pension systems, often through tripartite negotiations with unions and employers, raising important questions about the capacities of the ‘social partners’ to engage in radical reforms.

These properties of the employment relationship raise complex and difficult challenges. Part 3 focuses on how these challenges can be effectively regulated and discusses the consequences of different forms of regulation. For example, in many non-union workplaces throughout the UK and the USA employees may be able to exercise legal rights, if they know about them and if the costs of doing so are not prohibitive. Historically employees have almost invariably formed collective organizations, trade unions, in order to counterbalance the power of the employer (who was often in turn backed up by the state). Chapters 10 and 11 therefore look in turn at these two modes of regulation, through individual rights and through collective organization. We then examine the need for regulation of the employment relationship above the national level, a topic of growing importance but one whose significance is rarely reflected in comparative employment relations textbooks. Chapter 12 examines the regulation of employment relations issues in the European Union (EU), the largest economy and largest trading bloc in the world with a GDP per head of €25000 for its 500 million consumers. Under the various treaties that regulate EU membership the member states are obliged to enact into national law the various directives approved by the EU’s governing institutions. Many of these directives have covered core issues of employment such as working time, equal pay and fixed term contracts. This is followed by a discussion of the voluntary codes of practice of multinational companies (MNCs) and voluntary framework agreements (Chapter 13). Both have been pursued by trade unions and a variety of non-governmental organizations (NGOs) as an alternative to the legal regulation that has often evoked hostility from MNCs. We also discuss the largest international body in the field of employment (measured by country membership), namely the International Labour Organization. Created in the early 20th century it remains an active participant in policy debates about work and employment and has been at the forefront of discussions about the global economy.

Finally, Part 4 of the book contains 11 national studies of a wide range of countries, varying in the ways in which they regulate the employment relationship. We chose the UK and the USA as the world’s leading exemplars of ‘liberal market capitalism’. Within Western Europe we then selected three countries that vary significantly in their systems of employment relations, structure of trade unions and employers, welfare regimes and party political systems: one Scandinavian country (Sweden), one ‘statist’ economy (France), Europe’s largest exemplar of coordinated market capitalism (Germany) and Japan as Asian’s largest coordinated market economy. Further afield, we have included five of the world’s largest and fastest growing economies, the so-called BRICS countries of Brazil, Russia, India, China and South Africa. Each of these chapters has a set of common features: there is a brief historical introduction that describes the origins of the national system of employment relations; the next section then describes the main actors in employment relations, the trade unions, employers and government. It ...