Employment Relations:

MOD003059

Lectures 4 & 5: Influence of wider

context on processes and outcomes:

EU, UK International factors

Lecture Content

Recap: PEST context & employment relations

processes & outcomes

The EU and its impact

Social Policy and employment relations

UK: historical patterns in government

intervention in the labour market and employment

relations

International context

Impact of Globalisation

Critical role of MNCs

Recap: Context & employee relations

Influence of context on employee relations processes and outcomes:

Internal-organisational context

Resources capabilities

Employers and Managers HRM orientation and style

Employee characteristics and associations

Wider business context

Political-legal factors

Economic factors

Social-ideological factors

Technology

European Union: a brief history

Treaty of Paris: founding of the European Coal & Steel Community in

1952 (France, Germany, Italy, the Benelux)

1957 Treaty of Rome created the EEC and Euratom

1966-1986 – period of expansion and stagnation (UK, Greece, Spain and

Portugal joined, but no significant substantive developments

1986 Single European Act – aim for closer economic integration within a

single market by 1992

1992 Maastricht Treaty on European Union

Three-stage programme that would lead to EMU

Significance UK opt-out of EMU and veto of Social policy treaty

2002 introduction of €

2004 further enlargement to 25 - Poland, Hungary, Czech Republic,

Slovenia, Slovakia, Latvia, Estonia, Lithuania, Malta and Cyprus

Rome IGC Draft European Constitution (2004), but ‘killed off’ by defeats

in referenda in France and the Netherlands

1952

1958

1967

1987

1993

1999

2003

2004

2007

Treaty of

Paris

Treaty

of

Rome

Merger

Treaty

Single

Europea

n Act

Treaty of

Maastricht

(Treaty of

European

Union)

Treaty

of

Amste

rdam

Treaty of

Nice

Draft

European

Constitutio

n

Agreemen

t of final

text of

Treaty of

Lisbon

European Coal and Steel Community (ECSC)

European Economic

Community (EEC)

Euratom (European Atomic Energy Community)

European Free Trade Association (EFTA)

European

Communities:

ECSC until 2001,

EEC, Euratom

European Union (EU)

Creation of Single European Market

Initially eleven countries adopt Euro

as common currency (joined by

Greece in 2001 and Slovenia in

2007)

Timeline of treaties and evolution of the EU

European Union institutions

The European Commission 20 members (1 present, 2 Vice and 17 members nominated by member states

Initiates and implements EU policy/measures

The Council Comprise of 25 members one from each member state

Responsible for adopting and implementing Commission proposals and

initiatives

Comprises of Council of Heads of states and governments, Council of

Ministers and bi-annual rotating Presidency

EU Parliament 785 directly elected members

Links citizens to EU institutions

Limited overseeing authority, but some co-decision making powers

European Court of Justice (ECJ) Adjudicates on complaints initiated by the Commission or by member states

Reviews the legality of acts of the Commission, Council or Parliament

Makes rulings on jurisdictional issues between member states and the EU

What are the aims of the EU

Establish a common market, economic and monetary

union by implementing common policies and activities

Promote harmonious and balanced development of

economic activities

Environmentally sustainable and non-inflationary

economic growth

Convergence of economic performance – economic

and social cohesion among member states

High level of employment and social protection and

raising standards of living

Why does the EU matter?

EU matters for two reasons:

Is a major destination for UK exports with 6 of the top

10 destinations for British export being EU countries.

EU social policy increasing influence UK employment

law and, therefore, employment relation processes and

outcomes of UK businesses/organisations

•

Formulating EC Law

Law is formulated at Community level, but can be enforced in national courts of member:

Sources of EU law:

Regulation: general application, binding in entirety, directly applicable

Directive: binding on applicable Member States, but national authorities

have the choice of implementation

Decision: binding in its entirety upon those to whom it is addressed

Recommendations and Opinions: no binding force

In Social Policy field, Directives are generally preferred:

Member state has choice of form and method of implementation

Most appropriate for harmonisation (by co-ordination and minimum

standards)

EU Social Policy & the Social Dimension

Much of EU influence over ERs evolves from social dimensions of EU policy and initiatives

Wide definition of Social Policy (Hervey)

Government action concerned with: • Establishing and maintaining the welfare state for the benefit of its citizens

• Contributing to the rights of employees

The Social Dimension of the European Union

Attempt to regulate social issues at European level as part of the integration process

A multi-level system of governance, with the EU as the central but weakest level

Focus upon employment law

EU Social Policy in relation to employment relations

1974 Social Action Plan Directives:

Equal pay (1975); Collective dismissals (1975); Equal treatment of men and

women (1976); Employees’ rights in business transfers (1977); Employees’

rights on employer insolvency (1980); H&S issues

Impasse - draft Directives blocked (UK government)

Single European Market context 1986-1993:

Qualified Majority Voting (QMV) on H&S (Art 118a)

Social Charter adopted 1989

Directives on Contractual Information (1991); Collective Dismissals (1992),

Maternity Rights (1992)

Social Protocol & Policy Agreement (Maastricht annexed) extend QMV to:

conditions; information & consultation; gender equality etc.

excluded from the labour market (UK – opt-out)

October 1991 Social Partners agreement formalised process of ‘social dialogue’

1997 – UK resends opt-out from Social charter

Social partnership and Social dialogue

The Commission has been supporting the

development of EU-level concertation since the 1980s

both financially and in pronouncements

And the union organisations are keen, but the

employers are less keen – not surprising in light of

their relative powers

The unions have organisational problems, employers

attitude is variable and more complex – effect of NBS

However, sectoral social dialogue committees are now

widespread

But what is Social dialogue?

Mainly an ‘EU invention’ - a highly ambiguous term (Hyman,

2001), reflects in part the changing role and status of social

dialogue within the process of EU integration

Relates to the formal and active involvement of the European level

(and sectoral level) social partners in the process of social policy

formation.

Encourage social dialogue between social partners - 1985:

Representatives of UNICE (European Employers’ Federation), CEEP (Association of Public Service Employers) and ETUC invited to develop social dialogue

Initial dialogue led to ‘joint opinions’ based upon working parties (e.g. relating to new technology COM (90) 581)

Opinions not binding in nature (soft law)

The social dialogue process

Commission required to consult with social partner

on whether Community action is desirable in a

particular field (six week limit)

If action is desirable Commission then required to

consult social partners on the content of the

proposals

Social Partners indicate whether:

they wish to negotiate a Community level agreement

(subject to 9 month limit)

give a recommendation/opinion on the shape of

Community action and ask Commission to draft legislation

Examples of Social Policy Directives agreed in relation to ER- 1990-2002 (1)

Pregnant Workers Directive (1992) - Article 118A

Working Time Directive (1993) - Article 118A

Directive on Parental Leave (1996) - Social Dialogue

Part-time Workers’ Directive (1997) - Social Dialogue

Directive on Burden of Proof in Cases of Sexual Discrimination (1997) -

Social Protocol

Fixed-Term Workers’ Directive (1999) - Social Dialogue

Extension of Working Time Directive (2000) - Social dialogue (EU-wide and

sectoral) and Social chapter

EWC Directive (1994) - Social Protocol

European Company Statute: Employee Involvement (2000) – Social Chapter

Informing and consulting employees (2002) – Social Chapter (co-decision with

EP)

Recap: Changing context of evolution of British ERs

Liberal Collectivism

Liberal Capitalist political ideology

Strong independent trade unions

ERs - Voluntary collective

bargaining

Bargain corporatism

Interventionist political ideology

Strong independent trade unions

Voluntary, tripatite approach to

ERs

Market individualism

Free market political ideology

Weak, regulated role for trade

unions

Unitarist (paternalist style)

employment relations

Corporatism

Corporatist political ideology

Weak, regulated trade unions

Subordinate role for trade union

Changing attitudes of UK governments in relation to ER

Historically government thinking and approaches to

employment relations have been defined by extent

and manner of government intervention and

involvement in the labour market, which are made

manifest mainly through public policy (legislation)

Therefore, understanding the impact of government

on Employment relations requires understanding the

role of the role of law in British employment relations

Government as Legislator of Employment relations

Before 1980, and particularly during the 1950s and to a lesser

extent the 1960s, there was very little legislation which had a direct

impact upon employment relations

Unions were granted immunities by which they were given

protection from common law doctrines of restraint of trade,

conspiracy and inducement to breach of contract

This did not prevent individuals taking unions to court over various

issues and in cases such as Rookes v Barnard (1964) the courts

sought to limit the immunities of trade unions which were

invariably restored by statutory intervention. The situation changed

dramatically from 1980 onwards

But what is the functions of Labour Law in UK ERs

According to Kahn-Freund (1977) the law has three distinct

functions which affect ERs to varying degrees.

The auxiliary function: supporting the autonomous system of

collective bargaining with norms and sanctions to stimulate the

process itself and strengthen the operation by promoting the

observance of concluded agreements

The regulatory function: can provide code of substantive rules

to supplement the substantive rules agreed by the parties.

The restrictive function: provide the ‘rules of the game’ of

what is allowed and what is forbidden in the conduct of

industrial hostilities, which is necessary in order to protect the

parties from each other, and protect the interests of the

community at large.

The post-war consensus 1945-1979 Keynesian economic ideology – State as major economic actor

Relatively little legislation directly affecting the conduct of ERs

– with the major exception of the 1971 Industrial Relations Act.

Legislation concerning aspects of the individual’s relationship

with his or her employer did exist, and grew during the 1970s.

Examples include safety regulations, statutory bodies such as

wages councils which regulated pay in some industries and

occupations.

But, essentially, employees’ rights were derived primarily from

their contracts of employment and, there was little attempt, in

law, to regulate collective ERs except trade unions immunity

from civil actions for damages.

Dundon and Rollinson, ch 6; Rose, ch 4

Monetarism and supply side economic ideology

Greater frequency and extent of changes to employment legislation

The sequence of ‘step-by-step’ legislation significantly increased

role of the legislation - ‘the … final death of voluntarism, under

which law was essentially an adjunct to an autonomous, self-

regulated system of industrial relations’

Motivation generally a need to dilute trade union power, to

emphasise individualist rather than collectivist values, and to

reinforce market sovereignty

Legislative developments centre on three broad areas:

the relationship between employer and employee;

the relationship between employer and union;

the relationship between the union and its membership.

Legislation 1979-1997: return to market individualism

The Relationship Between Employer and Employee

Attitude to ER based on view that scales were too heavily weighted

in favour of employees and employers faced unnecessarily high labour costs and a heavy burden - ‘red tape’ that is central to Britain’s lack of competitive edge.

Thus focus on the individual employee and market forces and policies aim at reduction or even removal of employee statutory rights considered to have constraining effects on the labour market

Encouragement of labour ‘flexibility’ in a context of a climate that sought to facilitate and allow entrepreneurial initiatives to flourish

Thus, committed to a programme of labour market ‘deregulation’

Nevertheless, many statutory rights that the 1960s and 1970s legislation granted (e.g. those concerning sex and race discrimination, remained largely unaffected

The Relationship Between Employer and Union

Changed considerably during the 1980s and 1990s influenced by

legislation in two ways:

Promotion of individual rights at the expense collectivist approach (collective bargaining)

By repeal of the legislative supports for collective bargaining, compulsory trade

union membership and trade union recognition

Constraints on unions’ ability and rights to take industrial action

the withdrawal of immunities from specific types of industrial action, (e.g.

Secondary picketing - (Employment Act 1980);

redefining ‘lawful’ industrial action as action taken only ‘in contemplation or

furtherance of a trade dispute’;

Unions, as oppose to individual organisers, became liable for taking ‘unlawful’

industrial action,

Changes in balloting for industrial action

The Relationship Between the Union & its Membership

The main concern of the legislation here is the introduction of

secret ballots by unions in union elections

So, the 1984 Trade Union Act, for example, required secret

ballots every five years to elect union executive councils and

this was extended to the election of all union general secretaries

and presidents in 1988

Government concern about balloting requirements extended not

only to industrial action but also to unions’ political funds which

became subject to ‘review’ ballots every ten years (1984)

Legislation 1997-2010: the so call ‘third way’ agenda

A problematic ideological direction

The 1997 manifesto proposals included:

more efficient use of public expenditure, in partnership with the private

sector where necessary, and adhering to planned public spending for at least

two years of a New Labour government;

fair taxes to encourage work and reward effort;

encouraging small businesses and local economic growth; and

reducing long-term unemployment.

Despite a number of labour friendly policy positions (ending opt-

out from Social chapter of EU, National minimum wage, the

Warwick agreement, New labour generally tended maintain

market individual ideology of preceding government

Coalition Gov’t: programme for government in relation to ERs

A new, single welfare to work programme that builds on the

market individualism policies of preceding Conservative and

Labour government:

Realignment of contracts with welfare to work service providers

to more closely monitor their performance

reform the funding mechanism used by government to finance

welfare to work programmes

We support the National Minimum Wage because of the

protection it gives low ­income workers and the incentives to

work it provides

Self-employment - support for would-be entrepreneurs as

strategy for employment creation

International context for employment relations in

Globalisation

Multinational Corporations as the

dominant economic actors

Competing National Business systems?

Regime competition

Integrated but disperse Production

systems

Defining Globalisation

A qualitatively different form of international economy?

Deep-seated (irreversible) shift in structure and operation of production and markets

Undermining of nation-states as significant actors

Cultural Homogeneity or dominance without hegemony?

Global corporations (TNCs) with no allegiance to place and community

Defining Multination Corporation

Can be narrowly defined as direct ownership of operations overseas measured by FDI (foreign direct investment)

Broadly an organisation that directly or indirectly controls production or provision of services in a number of countries, which can licensing, franchising, sub-contracting, joint ventures and strategic alliances as well as FDI

Have a dynamic relationship between TNCs and national (or supranational) regulatory regimes and growth of product market competition

Competing views about the role of MNCs in employment relations

Globalisation as a process which has led to ‘regime competition’ between national capitalisms

MNCs as ‘proxies’ in the competition between highly regulated and highly deregulated systems (of employment relations)?

Do multinationals act as vehicles for transmitting HR/IR practices from the parent country.. to the host countries in which they operate, or do they attempt to drop what they see as the constraining elements of their business systems once they leave their own borders? (Ferner, 2003)

What is indisputable, is the role of MNCs as agents of international transfer of practices (policy diffusion)

Implications of globalisations for ER processes and outcomes

The ability and propensity to relocation has weaken collective organisational capacity

Organisational basis of trade unions is (at best) national, while that of employers is increasingly transnational

Regime competition in the form of national regulatory regimes that are intended to attract FDI and lack of (enforceable) international labour regulations.

The ‘new international division of labour’ and the integration and disperse production systems do not allow any single group of employees control over the entire production process.