An Introduction to the Study of Industrial Relations

Dr J Richardson

• Publisher: Routledge
• Year: 2013
• ISBN:
  9781134562541
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

This book gives a comprehensive survey of the field of Industrial Relations, focusing on general principles and problems. Illustrations are drawn from the practices adopted in many parts of the world such as Australia, France, Germany and the USA. Contents include chapters on the following:
* Personnel Management
* Training
* Methods of Wage Payment
* Job Evaluation
* Profit-Sharing and Co-partnership
* Trade Unionism
* Employers' Organizations
* Collective Bargaining
* Wage Bases
* Equal Opportunities
* Conciliation and Arbitration

1

Introduction

MAN HAS been described as a social animal and, whether from choice or necessity, individuals spend a large part of their time at work or play in association with their fellows. The hermit prefers to live alone, while force of circumstances compelled Robinson Crusoe to spend several years in the isolation of his desert island, but such are only an infinitesimal part of the world’s 2,000 million population, and the rest in varying degrees live among their fellows and must adjust their individual desires to those of others. Some dislike crowds, they prefer to work on their own, they associate with only a few chosen companions, and they enjoy best a vacation in the remoteness of the moors, dales or highlands. Others are more gregarious, as witness Hampstead Heath, Blackpool, and Margate during holidays, and for such people “getting together” seems to be essential for their enjoyment. This range of individual attitudes towards social relations must be kept continually in mind by those who deal with problems of human association.

The most fundamental human organizations are the family and the tribe or State. In origin the tribe is an extension of the family, but in modern times the State is often more than the tribe grown big, being a political organization which may include many tribes or races who find it convenient to live together under one government for security, cultural relations, and productive co-operation.¹

Political, economic, and social systems extend beyond State boundaries, but big advances in world organization must be made if mankind is to benefit from and not be destroyed by such recent discoveries as jet propulsion and atomic power.

Within the State and also in the wider setting of world affairs, there is an almost infinite variety of relations, domestic, political, economic, religious, social, and cultural. People meet together in societies, clubs, and unions, with their own regulations, customs, and traditions. The laws of the State regulate legal relations, voluntary societies make their own rules, while informal relations in the street and market-place are settled by convention.

THE PROBLEM OF INDUSTRIAL RELATIONS

In this complex mosaic, the pattern of which is continually changing as the needs, desires, and moods of men and women evolve, one of the main elements is the association of people together to earn a living. Unlike those of the State, these associations are mostly voluntary in the sense that people usually choose their own job and place of work, though workpeople have little opportunity to select their workmates and necessity compels them to work. This is the field of industrial relations, the term “industry” being used in its widest sense to include agriculture, mining, and other primary production, the heavy industries (e.g. iron and steel), manufacturing, building and other construction, wholesale and retail trade, banking and transportation. It covers manual, clerical, and technical workers. How people get on together at their work, what difficulties arise between them, how their relations, including wages and working conditions, are regulated, and what organizations are set up for the protection of different interests, these are some of the main problems of industrial relations and indicate the wide scope of the subject. It is concerned with relations between the parties in industry, particularly with the determination of working conditions. No advantage would be gained in attempting a more precise definition of the boundaries, as there are considerable areas of “no man’s land” with other subjects. The emphasis, however, is upon “relations,” human relations in the processes of production. The processes themselves, and the material organization of production, types of machinery and equipment, sales organization, banking and transport systems, are all outside the subject except that improved efficiency yields more production and this provides a basis for better working conditions.

The establishment and maintenance of satisfactory relations in industry is one of the main social and political tasks in a modern community. An industrial worker in the Western world spends in the factory or workshop about eight hours a day for about three hundred days in the year and for forty or fifty years. This represents a large part of his life, and is the part during which he is most active and vigorous. If the lives of workpeople are to be generally agreeable it is essential that working conditions shall be healthy, convenient, and attractive, that the work itself shall be as interesting as possible, and that relations between the workpeople themselves and between workpeople and management shall be friendly and co-operative.

A large proportion of the whole population, at least one-third in Great Britain, spends these long periods at work, but the effects of factory conditions are not limited to the workpeople. They have repercussions upon the lives of the workers’ wives and children. The wages received may provide a good or poor standard of living for the families; if factory conditions undermine the worker’s health, his family suffers, while irritation and discontent during working hours often lead to strain and tension in the home. Thus for these reasons alone improvements in industrial conditions and relations are of benefit to the great majority of the population.

Although this volume is concerned with human relations in industry, these are inseparable from working conditions. The two interact closely and conditions greatly affect the state of relations. Improved relations almost invariably lead to improved conditions, while improved conditions usually react favourably upon relations.

Evolution of Relations

Industrial relations are as old as industry, and, being inherent in industry, will always remain as a feature of industrial life. In medieval times, although industry was on a small and often domestic scale, relations had to be adjusted both in organizing the work and in paying the worker. Included were relations between masters and journeymen, and the organization and methods of guilds of masters and of craftsmen. But conditions in earlier times were both different from and simpler than in the industrial communities of the Western world to-day; relations were more direct, by contrast with the complex problems of modern factories employing thousands of workpeople, many of whom rarely come into personal contact with their employer or with the owners of the capital which they use. Also in earlier times workmen frequently owned the simple instruments which they needed for their work, whereIf the private capitalist is eliminated and an industry as an outstanding development of the industrial revolution has been the use of great factory buildings and costly machines, and the concentration of their ownership and control in the hands, not of the workers, but of the employer or the capitalist.

Industrial relations to-day are largely determined by the conditions of the industrial revolution with its capitalist system and specialized labour, but in the future they will change in pattern as the economic system evolves. Already industrial relations problems are very different in some countries from those in the middle of the nineteenth century. For example, the autocracy of the employer in dealing with labour has gone, trade unions have full recognition for collective bargaining to regulate working conditions, social security is a twentieth-century phenomenon, and laissez-faire policy has been abandoned in favour of partial Government intervention. Again, in the typical nineteenth-century factory the employer owned a large part of the capital and managed the factory, selected the workpeople, and regulated their working conditions. The “profits” which he earned were partly a return on capital and partly a payment for his work of management. When, however, the man who had built up a business died, his children frequently lacked the interest or ability to run the undertaking, and while continuing to profit as owners of the capital they put a manager in charge. Ownership was also increasingly divorced from management when undertakings grew so large that the capital could not be held by one family or a few partners but was spread over a large number of shareholders. Firms vary considerably from one another in the extent to which the persons supplying the capital are different from those who manage the business, though there is a tendency for such persons to become increasingly distinct from one another. Legally, the shareholders control policy, though, except sometimes in a crisis, they remain in the background and policy in many companies is shaped by management. Also in all the main direct relations with its workpeople, a company is represented by its management and not by its shareholders as such. Capital and management are therefore distinct and vital elements in industrial relations.

Effects of Nationalization

If the private capitalist is eliminated and an industry is owned and operated or controlled by the State or municipality, the part played by management is usually still greater than in private industry, though the “power of the purse” remains ultimately with the State or municipality as “capitalist.” Thus in Russia the overall economic plans approved by the State determine the framework within which industrial relations shall operate, but it must be noted that in the shaping of these plans influence can be exercised by the management of undertakings and the trade unions as representatives of the workers.

Not only did problems of relations in industry exist in earlier times, but they also exist within every economic system. Some people argue that the capitalist system is responsible for industrial unrest and that the adoption of socialism would bring an era of industrial peace. Except, however, through effects upon the attitude of management and workpeople towards one another and towards their work, the problems of industrial relations are very similar whether industrial capital is privately or publicly owned. Enough evidence is not available to show what these effects would be. No longer would profits go to private capitalists, but an increase in bureaucratic control might result and efficiency decline when the stimulus of competition was withdrawn. Thus, new problems would be created. This is not the place to discuss the relative merits of private versus socialized industry, but to emphasize that though some problems of industrial relations might be solved by socialism, most of them are common to both systems and are inherent in the organization of production. Wages have to be regulated, including the relation between the wages of skilled, semi-skilled, and unskilled workers within an industry, and the relation between wages in different industries. Piece rates, standards of output, and hours of work, including overtime, must be fixed. Changes in methods of work must be adopted when new machines, processes, and products are introduced. Continuous relations between management and workpeople must be maintained to ensure effective co-operation. Trade unions would have important functions, though their bargaining relations in a nationalized industry would be with a State authority instead of with private employers, and this would involve changes of policy and method. That the problems of industrial relations are not automatically solved by nationalization is shown by the fact that nationalized and other publicly owned industries, like privately owned industries, have experienced industrial unrest and have suffered from strikes. These problems, in varying forms, are a permanent feature of human relations irrespective of the economic system.

Some, though only a small part, of the problems would be solved if a classless society could be established. Such a society is conceivable in theory, and it is also both practicable and desirable greatly to diminish the class divisions which are found to-day in every community. But a system in which all sections of the community are united in complete harmony and identity of interests will not be established in our time, if ever.

To adopt a simple doctrinaire basis would make the writing of a book on principles of industrial relations relatively easy. A thoroughgoing policy of individualism would lead to one system of relations. Other systems and sets of principles would result from a socialistic or other authoritarian approach. Each would enable a logically or intellectually satisfying structure to be built, but the results would be merely façades, which, though architecturally interesting, would conceal confusion in the interior of the building. Neither would be appropriate for practical affairs in the world of industry. Industrial communities cannot be made to conform permanently to logical systems or doctrinaire theories. Individualism may predominate for a time, as it did in Britain during the nineteenth century. Authoritarian and totalitarian systems may sometimes prevail, as in some European countries during the 1930’s. Often the swing of the pendulum goes too far now in one direction, now in the other.

Neither system alone can satisfy the complex needs of individuals or of communities. The more difficult task of achieving a suitable blend of the two must be attempted. In this volume emphasis is laid both upon the needs of the individual worker and firm with their desire for freedom and independent initiative, and upon the equally important need for collective organization and regulation to restrain individualism in the general interest.

Attention is directed in this volume mainly to the problems of industrial relations in modern Western communities, though reference is made from time to time, for comparative purposes, to conditions which preceded those of to-day. Also it must not be overlooked that large numbers of workpeople, for example in Africa, India, and China, still work under primitive conditions which have persisted for many centuries. In these countries there has as yet been little development of large-scale mass production with modern machinery in great factories. They are, however, being compelled to adjust themselves to the impact of Western industrial systems, and it is desirable that, by careful study, they may be safeguarded from the evils which arose during the development of industrial technique and methods in the West. In applying these safeguards the experience of Western industry must be utilized. Some countries, whose industries until recently remained domestic in type, or whose economy depended upon production and export of food and raw materials, are already rapidly transforming themselves by the introduction of Western inventions and organization. The Soviet Union, Australia, Japan, and parts of India, and South America are outstanding examples. They can learn much from the countries which first became industrialized, but they also, by their own experiments made under conditions of freedom from industrial tradition and convention, have a contribution to make to the solution of the problems of industrial relations.

The Human Factor

Interest in human relations in industry has greatly increased during recent decades. This is shown by the work of Governments in promoting collective negotiation, joint consultation, and industrial training. It is also shown by the formation and development of such voluntary organizations in Britain and similar bodies in other countries as the Institute of Personnel Management, the Industrial Welfare Society, the National Institute of Industrial Psychology, the Industrial Health Research Board, and organizations to raise the standards of foremanship and to promote better administration of industry. Trade unions also increasingly recognize that in addition to bargaining about the division of the products of industry they must contribute to greater production by promoting efficiency, better training, incentives, and joint consultation if they are to serve the best interests of their members.

One thread which runs through the whole fabric of industrial relations and which is essential for success is that labour must not be regarded “merely as a commodity or article of commerce.” This was given a prominent place in the labour provisions of the Treaties of Peace in 1919, and is a warning against the danger of thinking of workers in the mass without making proper allowance for individual variations and human needs. In the days when economics was described as the “dismal science” many people believed that attempts to improve working conditions by collective action or State intervention were doomed to failure. Men were in the grip of economic laws which, it was claimed, worked with the inevitableness of the laws of the physical sciences in the material world. Dismal indeed was the iron law of wages according to which, if wages rose above subsistence level population would grow until standards of living were forced down again to that level by increases in the supply of labour. In its crudest form this depressing doctrine ignored the possibility that rising standards of living, better education, and wider interests would lead to greater efficiency of the workers and to a diminution of excessive birth-rates, and it neglected those dynamic factors which, in recent generations, have resulted in such great increases in the productivity of industry.

It must be admitted, however, that these changes operate relatively slowly, and that immediate or quick general permanent improvements in standards of living are impossible. These standards are largely determined in the short period by the existing efficiency of labour and of productive organization, including the capital equipment and inventions being applied in industry. Improvements in efficiency, organization, and capital equipment, and new inventions and discoveries take time, and although the rate of improvement may be accelerated, the course of progress must inevitably seem slow to people whose working lives are limited to forty or fifty years, and who are impatient to enjoy much better standards in their own time. Except through their children they have little interest in subsequent progress. Also, the rate of advance, in its effects upon standards of living, is seriously retarded by costly wars and defensive armaments.

Progress in industrial efficiency, the laws of demand for and supply of labour, statistics showing the state of the labour market, and the detached, impersonal calculation of labour costs have an important place in economics and business administration, and they are also significant in industrial relations. But they are not its main concern. The centre of the stage is held by men and women. However mechanized some branches of industry may become, and however the methods of mass production may result in monotonous semi-automatic repetition, the worker must never be treated as a cog in a machine if industrial relations are to be satisfactory. The necessity for guarding against this danger is especially great in big undertakings.

OBJECTS AND SCOPE OF STUDY

The study of industrial relations is undertaken partly to gain knowledge of the problems involved, including interplay of motives, methods of collective organization, conflicting interests and ways of reconciling them. In addition to making such a study for its own sake there is usually a practical purpose. For some this is to secure the greatest amount of work at the lowest cost and with the minimum of friction and unrest. The proper purpose, however, of the study and practice of industrial relations is to secure the highest possible level of mutual understanding and goodwill between the several interests which take part in the processes of production, trade, and transportation. This will depend primarily upon fair dealing and establishment of good working conditions, including the highest general standards of living and of amenities at the workplace which industry at the time can provide, but a friendly atmosphere and a...