Labor Relations in a Globalizing World

Harry C. Katz,Thomas A. Kochan,Alexander J. S. Colvin

• Publisher: ILR Press
• Year: 2015
• ISBN:
  9780801455513
• Topic: Politica e relazioni internazionali
• Subtopic: Lavoro e relazioni industriali

Compelled by the extent to which globalization has changed the nature of labor relations, Harry C. Katz, Thomas A. Kochan, and Alexander J. S. Colvin give us the first textbook to focus on the workplace outcomes of the production of goods and services in emerging countries. In Labor Relations in a Globalizing World, they draw lessons from the United States and other advanced industrial countries to provide a menu of options for management, labor, and government leaders in emerging countries. They include discussions based in countries such as China, Brazil, India, and South Africa which, given the advanced levels of economic development they have already achieved, are often described as "transitional, " because the labor relations practices and procedures used in those countries are still in a state of flux.Katz, Kochan, and Colvin analyze how labor relations functions in emerging countries in a manner that is useful to practitioners, policymakers, and academics. They take account of the fact that labor relations are much more politicized in emerging countries than in advanced industrialized countries. They also address the traditional role played by state-dominated unions in emerging countries and the recent increased importance of independent unions that have emerged as alternatives. These independent unions tend to promote firm- or workplace-level collective bargaining in contrast to the more traditional top-down systems. Katz, Kochan, and Colvin explain how multinational corporations, nongovernmental organizations, and other groups that act across national borders increasingly influence work and employment outcomes.

PART 1

The Strategic Level of Labor Relations

Chapter 1. A Framework for Analyzing Labor Relations

Chapter 2. Labor, Management, and Government Interactions

Chapter 3. The Law and Legal Systems

Chapter 4. The Role of the Economic, Technological, and Demographic Environments

1

A Framework for Analyzing Labor Relations

A PERSPECTIVE DRAWN FROM THE FIELD OF INDUSTRIAL RELATIONS

Whether we are at work or at leisure, we are affected by the conditions under which we work and the rewards we receive for working. Work plays such a central role in our lives and in society that the study of relations between employee and employer cannot be ignored.

This book traces how labor, management, and governments acting as individuals or as groups have shaped and continue to shape the employment relationship. Employment is analyzed through the perspective of industrial relations, the interdisciplinary field of study that concentrates on individual workers and groups of workers, unions and other forms of collective representation, employers and their organizations, and the environment in which these parties interact.

The discipline of industrial relations differs from other disciplines that study work because of its focus on labor-management interactions. Thus, this book describes how unions and other forms of collective representation (such as works councils) influence working conditions and workplace outcomes and helps explain, for example, why workplaces have high wages in one situation and low wages in another. It also identifies how effective labor-management relations can contribute to improved economic performance, both in specific workplaces and enterprises and in the national economy.

Although the agricultural sector in emerging countries involves work and the production of food, we do not address the relationship between those who work on farms and those who own or manage those farms. Even though many of the concepts addressed in this book have some relevance in describing agricultural work, work of that type is sufficiently distinct from other forms of work to warrant separate consideration.

The study of labor relations focuses on the key participants involved in the employment relationship, the role of industrial conflict, and the performance of unions and other forms of collective representation. This chapter defines these key components of labor relations and describes how this book analyzes them.

THE PARTICIPANTS

The key participants (or parties) involved in labor relations in emerging countries are management, labor, government, international agencies, and nongovernmental organizations (NGOs).1

Management

The term management refers to individuals or groups who are responsible for promoting the goals of employers and their organizations. Management encompasses at least three groups: (1) owners and shareholders of an organization; (2) top executives and line managers; and (3) labor relations and human resource staff professionals who specialize in managing relations with employees, unions, and other forms of collective representation. Management plays key roles in negotiating and implementing a firm’s work practices and employment outcomes.

Labor

The term labor encompasses both employees and the unions and other entities that represent them. Employees are at the center of labor relations. They influence whether the firms that employ them achieve their objectives, and they shape the growth and demands of the entities that represent them.

Government

The term government encompasses (1) national, regional, and local political processes; (2) the administrative agencies responsible for making and enforcing public policies that affect labor relations; and (3) roles and activities through which the interests of the public are represented. Government policy shapes how labor relations proceeds by regulating, for example, how workers form unions, what rights unions may have, and how workplace disputes are resolved.

International Agencies and Nongovernmental Organizations

Labor relations in any country are greatly influenced by the globalization of economic activity. This raises the importance of two sets of institutions: international (quasi-governmental) agencies and NGOs. Key international agencies, such as the World Bank and International Monetary Fund (IMF), influence the economic policies and economic development strategies of emerging countries in part through the loans they provide and the conditions attached to those loans. The World Trade Organization (WTO) also is critical because its policies affect tariffs, import and export quotas and rules, and other issues that influence the flow of goods and services across national boundaries. The International Labour Organization (ILO) establishes standards and principles for employment through negotiations that involve the employers, governments, and union representatives that make up its governing body. These international agencies both constrain and support emerging countries as they design and implement labor relations policies and practices.

History shows that these quasi-government agencies frequently propose and seek different (and sometimes conflicting) objectives related to labor relations. The ILO, for example, influences international labor standards through conventions and recommendations. Once ILO conventions are ratified by a country, they become legally binding international treaties, whereas the organization’s recommendations are simply nonbinding guidelines for its members. The ILO also has proclaimed a set of four basic principles for workers that it calls core labor standards. The ILO calls on all its member countries to comply with these core standards, regardless of whether those countries have formally ratified the relevant conventions. The core labor standards are (1) freedom of association and the right to collective bargaining; (2) the elimination of forced and compulsory labor; (3) the abolition of child labor; and (4) the elimination of discrimination in the workplace.

The ILO has mechanisms for monitoring compliance with its labor standards, such as the Committee of Experts on the Application of Conventions and Recommendations and the Committee on Freedom of Association. The latter receives complaints against any state deemed to be in violation of the principle of freedom of association. However, despite the existence of these mechanisms, the ILO faces difficulties in enforcing the core labor standards, since it lacks effective means to sanction countries that do not comply with these standards.

The IMF and the World Bank have more tools to effectively influence the design of national labor policies. Although the IMF’s primary goal is to ensure international monetary stability in order to facilitate international trade and the World Bank seeks to provide sustainable private sector investment in emerging countries, promoting these objectives ends up affecting national labor policies. This occurs because both the IMF and the World Bank can and sometimes do impose conditions on critically needed loans. Whether they like the recommended labor policies or not, governments often adhere to IMF and World Bank recommendations related to labor relations in order to gain access to these loans.

The World Bank and the IMF have favored government policies that promote labor market flexibility, which often comes down to giving employers more authority to hire, fire, and regulate work hours. In recent years, the IMF and the World Bank have also promoted pension system cuts and pay cuts and layoffs in the public sector. These policies generally place the burden of economic adjustment on workers and unions.2

In reaction to the World Bank and the IMF’s promotion of labor market flexibility, various international labor federations and unions tried unsuccessfully to compel the WTO to incorporate adherence to the ILO’s core labor standards in its policy recommendations. The labor movement has argued that violations of labor rights in export sectors constituted unfair trade advantages that should have triggered WTO trade sanctions.3 Labor supporters reactivated efforts to get the IMF and the World Bank to promote the ILO’s core labor standards after high unemployment followed the 2008 financial crisis in many countries. In recent years, as discussed in box 1.1, in response to further criticism for inappropriately promoting labor market flexibility, the World Bank modified the construction of a key indicator used to compare country economic performance to include measures related to workers’ rights.

BOX 1.1

How the World Bank’s Employing Workers Indicator and Doing Business Report Were Modified in Response to Criticisms

The Doing Business report is the most popular World Bank publication. When the first edition was published in September 2003, the World Bank defined it as a report “investigating the scope and manner of regulations that enhance business activity and those that constrain it.” One of the goals of the report, which compared data from 130 different countries, was to motivate reforms through country benchmarking.

Among the five indexes the 2003 report measured, countries were evaluated on their rules about the hiring and firing of workers, based on the argument that rigid employment regulation is associated with more poverty in developing countries. Countries were ranked according to the flexibility of their hiring and firing rules, and the report presented reforms that established the employment “at will” rule or that eliminated limits on fixed-term contracts as examples of good reform practices.

During the following years, other measures were added to the Employing Workers Indicator (EWI), but always with the basic idea of ranking countries according to the extent to which they promoted flexibility in the labor market. In the 2007 report, the United States and the Marshall Islands shared the top EWI ranking.

Concerned that the Doing Business report was leading to socially and economically harmful labor reforms, the International Confederation of Free Trade Unions (ICFTU) and later the Interna...