Tutorial Presentation- ‘What are Employment relations like in a ‘Liberal Market Economy’? The case of North America’

The Distinctive features of Employment relations in the United States?

We would like to begin our presentation by first outlining and discussing the distinctive features of employment relations in the United States. The majority of you should hopefully be well aware of these features thanks to our blog exercise, so we thought we would ask you guys what you thought the most important aspects of employment relations in the US are?

Just to summarize what you all said, the features of the modern United States employment relations environment that we perceived as being the most distinctive include:

•  Declining union membership and influence (particularly in the private sector)- the share of the labour force represented by unions in the United States has continued to decline from a peak of 35% in the early 1950s, to only 12% in the early 21^st century. This decline in the power of unions is particularly evident in the private sector where employers have aggressively resisted union organisation and taken advantage of new technologies and lax enforcement of labour laws to meet and combat competitive pressures and union organising efforts by shifting work within or outside the United States.
• American unions have relied upon collective bargaining and strike threats as their main weapon- However, when these increasingly less powerful unions are required to represent their members, they generally employ collective bargaining techniques along with strike threats as their main strategic weapons in reaching their goals. This strategy has heavily influenced other aspects of the labour movement and requires that unions be in a strong and solvent financial position in order to develop its credibility and ability to strike.
• Employers are the most powerful and increasingly dominant of the actors involved in US employment relations- A third distinctive feature of employment relations in the United States is heavily resultant from this nation’s liberal and capitalist ideological background and involves employers being the most powerful and increasingly dominant of the actors involved in US employment relations.
• The use of the general court system to resolve Employment Relations disputes- A very unique and distinctive feature of employment relations in the United States that is unusual in comparison to other developed market economies is that disputes involving laws are resolved through the general court system, rather than through specialised labour courts or employment tribunals such as Fair Work Australia (FWA).
• Growth in diversity in employment relations- And finally, as a product of the growth in non-union employment and the variety of employment practices that are implemented in the United States, diversity in employment relations continues to increase as a result of numerous factors such as the breakdown of pattern bargaining across enterprises and industries in the union sector.

Walmart and Costco-

One of the essential readings for this tutorial by Goodwin and Maconachie introduces two diametrically opposed approaches to work, labour relations and business within the US employment relations environment. These contrasting approaches come in the form of the ‘high road’ approach as exemplified by Costco and the ‘low road’ approach which is implemented at WalMart.

Wal-Mart and Costco represent opposite ends of a continuum in terms of their industrial relations philosophies and labour relations practices.

Wal-Mart

Sam’s Club adopts the central Wal-Mart philosophy that consumer demand for low prices means that not only must goods be produced and sold cheaply but retail wages must also be kept as low as possible (Herbst 2005:1). Wal-Mart demands strict obedience from rank and file employees and has designed ‘an elaborate aptitude test for new employees that is intended to weed out troublemakers’ (Head 2004:6). The Wal-Mart labour relations philosophy is totally anti-union.

The company has gone to considerable lengths to prevent its employees from organising (Miller 2004:4). Wal-Mart has issued managers with a ‘toolbox’ that lists ‘warning signs’ that workers may be organising and provides a ‘hotline number’ to company anti-union specialists (Miller 2004:4). Even a cursory search uncovers considerable Wal-Mart anti-union activity, and only a few examples are outlined here. Several former and current Wal-Mart executives faced a federal grand jury investigation over allegations made by a former Vice Chairman that the company authorised fraudulent expense reports to fund illegal anti-union campaigns.

Costco

Possibly reflecting the current CEO and co-founder’s background whose father was a coal miner and steelworker, Costco’s labour relations philosophy is that employees deserve a fair share of the profits they help generate (Herbst 2005:3). The International Brotherhood of

Teamsters (the Teamsters) appears to have representative rights at Costco and has around

15,000 members.

The chief union negotiator with Costco is quoted as stating that the company ‘gave us the best agreement of any retailer in the country’ (Greenhouse 2005:3). Unlike Australia, when a union wins a representative ballot under US law all employees included in the bargaining unit must either join the union or pay a fee to compensate the union for negotiating on their behalf and enforcing the agreement. Thus, although only about 13 per cent of Costco employees are union members, the ‘union effect’ at Costco stores is much greater as the union must represent non-union employees covered by the agreement.

Is WalMart the ‘archetypal’ employer in US employment relations?

Despite the apparent contradiction of having two such divergent models, isomorphism is present. Mimetic processes (imitation) are apparent in the ‘Wal-Martisation’ of the US economy. The glorification of Wal-Mart’s labour relations in the US business media as the central reason for its success results in many executive simply imitating the Wal-Mart low-pay route in search of success.

What is isomorphism you might ask? Isomorphism is defined as a ‘constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions’. Globalisation provides avenues for isomorphism (not only for organisations but also in terms of professions and state policy decisions). Thus large global organisations (such as IBM or McDonald’s) or large nation states (USA for example) are the ‘carriers’ of distinct practices which influence others’ operations such as Australia.

How have North American labour organisations responded to globalisation and workplace restructuring over the last decade?

The last decade has seen a combination of growing pressures on the United States employment relations system, as the force of globalisation has become particularly acute, many workplaces have been comprehensively restructured and polarisation in both incomes and collective bargaining continue to intensify. The major way in which North American labour organisations such as trade unions have responded to increased international competition and other growing pressures over the last decade has been through more aggressive management in the way they operate.

This more aggressive management of the labour movement has resulted in more expenditure and the initiation of new and innovative efforts to stimulate union membership. Another response to globalisation in recent times from North American labour organisations has been division and conflict in the American Federation of labour and Congress of Industrial Organisations (AFL-CIO) regarding how best to rebuild union strength. However all in all most aspects of the employment relations process have remained relatively stagnant in recent times despite the various pressures of globalisation and workplace restructuring.

The Defining Characteristic of Unions in Indian Employment Relations

Employment relations within India is a fascinating topic due to this nations colonialized history and the unique economic conditions experienced in this country. In researching employment relations in India for this blog entry, I encountered one particularly interesting aspect of this ER model and this is the close affiliation that unions possess with political parties.

This distinguishing trait of the Indian trade union movement stems from the importance that unions played in the struggle against colonial rule. The union movement in this nation was led by the same people who fronted the struggle for freedom (e.g. the celebrated Mahatma Gandhi) and as a result, early political leadership in India pursued the policies of unions. Indian politicians also understood that they needed the votes of the substantial working class in this nation, and resultantly formed alliances with trade unions. This strongly suited trade unions, as these partnerships allow for these groups to better defend their members’ interest.

Whilst this affiliation between unions and political parties has benefited both groups in numerous ways, there have also been some negative consequences. The most significant of these consequences has been the fragmentation and polarization of trade unions that has occurred when their allied political parties have experienced difficulties or division.

I find this unique characteristic of unions in Indian employment relations a difficult concept to apply to Australian ER and politics. Imagine if hypothetically the Liberal Party in Australia was strongly associated with a large union such as the Australian Education Union? I feel as though this relationship would cause significant problems for both affiliates.

What are your thoughts on this defining characteristic of unions in Indian employment relations?

References-

• Bamber, GJ, Lansbury, RD & Wailes, N 2011, International and Comparative Employment Relations: Globalisation and Change, Allen & Unwin, Sydney.
• Budwhar, PS 2003, ‘Employment Relations in India’, Journal of Employee Relations, vol. 25, no. 1, p. 132-148.
• Gillan, M & Biyanwila, J 2009, ‘Revitalizing Trade Unions as Civil Society Actors in India’, Journal of South Asia, vol. 32, no. 3, p. 425-447.

The real impact of the Asian Economic Crisis of the late 1990s on Japanese Employment Relations

It has been suggested that the Asian economic crisis of the late 1990s placed a strong pressure to change on the traditions and institutions of East Asian countries. This ‘East Asian model of Capitalism’, which emphasizes government intervention and long term relationships instead of markets, has come to be regarded as a problem rather than a strength in the modern globalized environment. Whilst this crisis certainly forced employment relations in some East Asian countries to change drastically, the impact that this disaster had on Japanese ER is much more divisive and ambiguous.

The main argument advocating that the Asian economic crisis had a significant impact on Japanese employment relations is presented in Bamber, Lansbury and Wailes’ 2011 book ‘International and Comparative Employment Relations: Globalization and Change’. This argument essentially suggests that several marked changes have occurred in the Japanese employment system since this crisis and two specific examples include:

• Firms have experienced surplus labour that has restricted the recruitment of career employment to the strict minimum. Resultantly, young regular employees are often overworked with little paid leave.
• A growth in atypical employment and the subsequent erosion of long term career employment is evident.

However, there is also the opposing argument of Jung and Cheon that is presented in their 2006 journal article entitled ‘Economic Crisis and Changes in Employment Relations in Japan and Korea’ which suggests that the traditional traits of East Asian (and specifically Japanese) employment relations are being maintained and are not being significantly impacted. Whilst these authors concede that issues such as long-term employment and seniority based pay are changing to an extent due to strong pressures from globalisation and the economic crisis of the 1990s, it is incorrect to suggest that the traditional components of Japanese employment relations are changing drastically. Furthermore these authors suggest that the Japanese employment relations model is not replicating Western models such as the system implemented in the United States and that ER changes are dependent on national context.

What are your thoughts on the impact of the Asian Economic Crisis of the 1990s on the Japanese Employment Relations System? Has this crisis resulted in significant changes or have the traditional components of the Japanese system been maintained?

References-

• Bamber, GJ, Lansbury, RD & Wailes, N (2011) (Eds), International and comparative employment relations: globalisation and change, Allen & Unwin, Sydney. Chapter 10 and 11.
• Jung, E (2010), ‘Employment relations in Japan and Korea’ in Research Handbook of Comparative Employment Relations, Eds M Barry & A Wilkinson, Edward Elgar, Cheltenham, pp. 239-259 (unit reader).
• Jung, E & Cheon, B (2006), ‘Economic Crisis and Changes in Employment Relations in Japan and Korea’, Journal of Asian Survey, vol. 46, no. 3, pp. 457-476.

The German Employment Relations Model and its distinguishing feature in Co-Determination

In researching employment relations in Germany for this blog entry, I discovered a curious ER model that has its roots deeply entrenched in the aftermath of World War II and the unique conditions of this nation during this period. I found the principles of industrial unionism and unitary unionism of particular interest, however the one aspect of German employment relations that really absorbed me was its distinguishing feature in Co-determination.

Co-determination is a form of employee participation in management based on the idea of industrial democracy and originated in the Weimar Republic. The Works Constitution Act is the legal basis for co-determination at the workplace level and it gives works councils a set of rights relating to specific issues ranging from the right to information to veto rights. Through these rights, work councils are able to influence issues that remain ‘managerial prerogatives’ in other countries. These rights are legally guaranteed and enforceable, and on the basis of these rights, management and works councils negotiate works agreements that regulate issues such as rostering and redundancies. As works councils and management are obliged to cooperate in good faith and work councils are not allowed to strike, negotiations are generally not conflictual (Weiss & Schmidt 2000).

Two interesting journal articles that focus on Co-Determination in Germany’s Employment Relations System are Ellguth, Gerner and Stegmaier’s ‘Wage Effects of Work Councils and Opening Clauses: The German Case’ and ‘Work Councils in Germany: their effect on Establishment Performance’ by Addison, Schnabel and Wagner which both focus on the influence of co-determination and works councils on the German economy. The first of these articles finds evidence that work councils exhibit not only positive wage effects in general but also accomplish the task of safeguarding employees’ demands in challenging times (Ellguth, Gerner & Stegmaier 2012) and the second article supports these findings whilst also suggesting that works councils in Germany reduce labour fluctuation, increase productivity and maintain innovation levels (Addison, Schnabel & Wagner 2001). However, Addison, Schnabel and Wagner’s article also suggested that profitability levels decreased as a result of work councils.

What are your thoughts on Germany’s unique employment relations system and the concept of Co-Determination?

References-

·         Addison, J, Schnabel, C & Wagner, J (2001), ‘Works councils in Germany: their effects on establishment performance’, Oxford Economic Papers, 53, pp. 659-685.

·         Bamber, GJ, Lansbury, RD & Wailes, N (2011) (Eds), International and comparative employment relations: globalisation and change, Allen & Unwin, Sydney. Chapter 8.

·         Ellguth, P, Gerner, H & Stegmaier, J (2012), “Wage effects of works councils and opening clauses: The German case’, Journal of Employment Research, 35, pp.95-113.

·         Weiss, M & Schmidt, M (2000), Labour Law and Industrial Relations in the Federal Republic of Germany (3^rd Ed), Deventer, Kluwer.

The future of Employment Relations in the United States: The ‘Low’ or the ‘High’ Road?

Hello and welcome to my first international employment relations blog entry for the semester. As it happens, I am also conducting this upcoming week’s tutorial presentation for this topic so I thought I would take the opportunity to provide you all with some additional information regarding the topic of modern employment relations in the United States with particular reference to the diametrically opposed approaches to work, labour relations and business of two extremely large American multinational retail companies.

In considering the future of employment relations in the United States, and subsequently Australia’s ER outlook, Goodwin and Machonachie’s 2006 article entitled, ‘Wal-Mart or Costco: Australia’s 21^st century choice?’ introduces an extremely interesting concept in ‘Institutional Isomorphism’. This idea is defined as a ‘constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions’ (DiMaggio and Powell 1983) and essentially involves organisations duplicating the structures, strategies and practices of other similar organisations.

Essentially this concept of Institutional Isomorphism means that new business within the United States must replicate other successful organisations in order to be profitable and this in where the idea of the 'low' and 'high' road approaches to employment relations become relevant. The 'low' road is an approach exemplified by extremely successful American retail company Wal-Mart which involves extremely low wages, a strong anti-union stance and poor working conditions. Meanwhile, one of its major competitors in Costco exemplifies the 'high' road approach which involves a belief that employees deserve a fair share of the profit that they help generate, a supportive view of union involvement, high working conditions and even a strong health care system.

(‘The high and low road’s exemplified at Costco and Wal-Mart respectively can be thought of as good and evil for American retail workers)

In researching this area of international employment relations, it became extremely apparent to me that more and more US organisations looked likely to follow the ‘low’ road in a process called ‘Wal-Martisation’ whereby labour costs need to be minimised in order to assist shareholders’ needs. However, I personally believe that this is an extremely negative path for employment relations to be taking as it gives the already dominant employer even more power in the employment relationship.

References-

• ·         Bamber, GJ, Lansbury, RD & Wailes, N (2011) (eds), International and comparative employment relations: globalisation and change, Allen & Unwin, Sydney. Chapter 3.
•    Dimagio, P & Powell, W (1983), ‘The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields’, American Sociological Review, 48, pp. 147-60.
•   Goodwin, M & Maconachie, G (2006), ‘Wal-Mart or Costco: Australia’s 21st century choice?’ 21st Century Work: High Road or Low Road: proceedings of the 20th conference of the Association of Industrial Relations Academics of Australia and New Zealand, vol. 1. Refereed papers.