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Industrial relations is defined as: “... a set of phenomena inside and outside the workplace,
concerned with determining and regulating the employment relationship.”

(a) identify five phenomena that would impact on the employment relationship and discuss
the nature of this impact;

(b) Identify and describe the three main perspectives used in industrial relations and discuss
the differences between them.

[Answer both (a) and (b)]


Table of Contents

Introduction 3

Trade Union and its impact on Employment Relationship 3-4

Economic Factors and its impact on Employment Relationship 4

Politics in Industrial Relations 5

New Technology 6

Global Factors 6-7

Unitary Perspective 7

Pluralistic Perspective 8

Radical/ Marxist Perspective 8

Discussion 9

References 10


(A) The five phenomena identified are: (1) Trade Union, (2) Economic Factors, (3) Politics,
(4) New Technology, (5) Global Factors. It will be explained as to how these phenomena
would impact employment relationship and the nature of the impact will be discussed.

(B) The three main perspectives used in industrial relations are: (1) Unitary, (2) Pluralist (3)
Marxist. These perspectives are going to be described, and the and the differences between
them will be discussed.

Question A.

Trade Union and its impact on Employment Relationship

Trade unions have a significant impact on employment relationship due to the fact that, a trade
union is “an organization of workers that aims to protect and advance the interests of its
members”. The objective of the trade union is to sustain and enhance the terms and conditions of
work for their members. This is accomplished by means of collective bargaining with employers.
The recognition of the trade union by the company is very important for collective bargaining.
Collective bargaining occurs when the trade union negotiates with the employer on behalf of the
employees on matters regarding pay and other terms and conditions of employment. Trade unions
also play a vital role in effective communication between management and employees. They
provide the support system to ensure that the differences of opinion do not turn into major
conflicts. They play an active role in negotiations between management and workers in times of
disagreement, and they not only represent employees to discuss their pay and benefits, but also
provide a voice for the employees to be heard on various other aspects of personnel policies.
These include selecting employees for layoffs, retrenchment, promotion and transfer. The
personnel selection criterion within an organization may not be fair and transparent. From the
management perspective, it is beneficial to deal with trade union members who represent all the
employees rather than deal with employees individually. This saves time and is cost efficient as
conflicts can be resolved in a timely manner. This ensures there is no stoppage of work, thus
preventing adverse effects on employee productivity and efficiency. Management will get to
know from the trade union about the views of employees on various important aspects of the

company polices. They can use this information to make important decisions that affect
employees. Becoming a member of a trade union gives employees the confidence that their needs
and interests are being protected. This is a source of motivation for workers reducing
absenteeism, lower productivity and labor turnover. This ensures that there is optimum utilization
of human resources in the organization (Employee Relations in Trade Unions and HRM 2018).

Economic Factors and its impact on Employment Relationship

The most important influence on Employment relationship is the economic aspect. The economic
constraints, pressures and incentives influence the collective bargaining system. Low economic
growth can affect the industrial relations negatively as it will lead to the inability of companies to
retain their personnel and will lead to a high unemployment rate and vice-versa. Several indices
that makes up the economic environment include but are not limited to the following; Exchange
rate- This refers to the price of a nation’s currency in relation to another currency. When
exchange rates increase, it leads to an increase as well in production costs thereby making
products to be sold at high prices. When products are sold at high prices, employees will want
wage increase as their nominal wage will no longer be sufficient. Monetary/ Fiscal policies-
Monetary policy is a term used to refer to the actions of central banks to achieve macroeconomic
policy objectives such as price stability, full employment, and stable economic growth. They are
sometimes referred to as the federal reserve. while fiscal policy is a broad term used to refer to the
tax and spending policies of the federal government. The federal reserve uses a variety of policy
tools to foster its statutory objectives of maximum employment and price stability. One of its
main policy tools is the target for the federal funds rate (the rate that banks charge each other for
short term loans), a key short-term interest rate. The federal reserves control over the federal
funds rate gives it the ability to influence the general level of short-term market interest rates. By
adjusting the level of short-term interest rates in response to changes in the economic outlook, the
federal reserve can influence longer term interest rates and key asset prices. These changes in
financial conditions then affect the spending decisions of households and businesses especially
industries. Rate of inflation- A consistent increase in the general price level of goods and services
in an economy will bring about employees seeking an increase in their wage. (Block, Berg and
Belman 2004)

Politics in Industrial Relations

Industrial Relations system of a country reflects the current political ideology. The influence this
is going to have on the system is that it is going to make Unions political whereby most exist with
the aim of expressing the political aspirations of its membership. The role of the state in the
industrial relations arena has been most significant over the past century. This has seen it adjust
from the casting of trade unions as illegal entities to an accommodation in a social partnership or
neo-corporatist model with union involvement in the national-level decision-making processes
covering the whole gamut of economic and social affairs. (Emelogu, Political Factors 1994) Legal
institutions provide a preview of public policy on employment relations and act key institutional
actors in the labor market. Government exist to act as regulatory bodies setting minimum wages,
commodity prices, etc. This guide employers’ activities. The Government exist to make laws
determining what happens in the economy. These legislations may bring about misunderstanding
among the actors in the system. Government set up agencies to make sure the laws made are
complied with. These laws might not go down well but must be adhered to as sanctions might
apply to those who don’t adhere to them Although the state aspires to the role of independent
referee and regulator of labor relations matters, as it addresses the worst excesses of liberal
capitalism, it would be inappropriate to evaluate its role as only that of an impartial facilitator. In
any democratic society, the state reflects the differences in power between capital and labor and
endeavors to side with whomever yields the greatest political influence. In effect then, through
their various powers and agencies, successive governments have upheld the established norms,
values and culture of liberal capitalism. The type of government in place i.e. liberal or
conservation system determines a troubled or related industrial relations system. (Wallace, et al.

New Technology

The New Technological Changes are impacting employment relationship forcing organizations to
adopt new structures and to adopt new environment. Obsolescence of certain jobs due to
technological upgrading will make it irrespective for organizations to prepare workers with new
skills and attitudes to cope with changes. Recent spurt in computerization calls for training,
retraining and job shifting for workers. They also need confidence to adjust to technological
revolution in view of confused talks about workers future in a new technological context. Apart
from this, organizations must find ways to the whole person in the job so that work and life are
related more meaningfully. In this context, it should be recognized that money alone is an
insufficient motivator and work must be viewed with a sense of satisfaction. The ability to take
advantage of new technology will also vary among individuals; workers with higher levels of
skills more likely to benefit, while those with lower skills might be less prepared and hence more
exposed to risks of lower job quality and of job loss. Technology is also changing the nature of
employment relationships, with implications for the risk’s individuals face. And there is the even
larger risk of being left behind altogether. In some country’s technology is replacing the human
element of some processes, therefore leading to massive job losses. (The World Bank Group

Global Factors

Globalization has a contradictory impact on employment relationship. On the one hand, it is

accelerating economic interdependence between countries on an intra-regional and inter regional
basis and encouraging similar business approaches of individual companies in competitive
markets. This may lead to some convergence in industrial relations arrangements worldwide. On
the other hand, evidence exists that industrial relations in some countries resist the convergence
trend; such resistance from industrial relations actors is based on particular national and regional
circumstances, such as in Europe and Asia. The effect of globalization on industrial relations
procedures and their substantive outcomes depends on the conditions under which industrial
relations take place within a country. For instance, the pressure for greater flexibility in the use of
labor is omnipresent, but the outcome is constrained by cultural norms valuing hierarchy and

security. Countries’ strategies vary due to historical circumstances, resources and internal political
dynamics, including the influence of trade unions. Thus, the extent and impact of globalization
differs between countries, resulting in similar concerns for policymakers yet leading to variable
responses and industrial relations outcomes. No common understanding exists in research
concerning the influence of globalization on industrial relations; the viewpoints of the social
partners mainly reflect two directions (Emelogu, global factors 1997).

Question B.

Unitary Perspective

The unitary perspective is based on the assumptions that the organization is-or if it is not, then it
should be an integrated group of people with a single authority/loyalty structure and a set of
common values, interests and objectives shared by all members of the organization.
Management's prerogative (i.e., its right to manage, make decisions) is regarded as legitimate,
rational and accepted and any opposition to it (whether formal or informal, internal or external) is
seen as irrational. There is "no conflict between the interests of those supplying capital to the
enterprise and their managerial representatives, and those contributing their labor. The owners of
capital and labor are but complementary partners to the common aims of production, profit and
pay in which everyone in the organization has a stake" The underlying assumption of this view,
therefore, is that organizational system is in basic harmony, and conflict is unnecessary and
exceptional. This has two important implications: (1) Conflict (i.e., the expression of employee
dissatisfaction and differences with management) is perceived as an irrational activity. (2) Trade
Unions are regarded as intrusions into the organization from outside which compete with
management for the loyalty of employees. (Wallace, et al. 2013)

Pluralistic Perspective

The pluralist perspective assumes that the organization is composed of individuals who coalesce
into a variety of distinct sectional groups, each with its individual interest, objectives and
leadership (either formal or informal). The organization is perceived as being multi-structured and
competitive in terms of groupings, leadership, authority and loyalty and this, gives rise to
complex of tensions and competing claims which have to be 'managed' in the interests of
maintaining a viable collaborative structure' the underlying assumption of this approach,
therefore, is that the organization is in a permanent state of dynamic tension resulting from the
inherent conflict of interest between the various sectional groups and requires to be managed
through a variety of roles, institutions and processes. The implications of this view for the nature
of conflict and the role of the trade unions are very different to those of the unitary approach
(Budd, Gomez and Meltz 2004).

Radical/ Marxist Perspective

The radical perspective, which is also often referred to as the Marxist perspective, concentrates,
on the nature of the society surrounding the organization. It assumes and emphasizes that the
organization exists within a capitalist society where, The Marxist general theory of society argues
that: (1) Class (group) conflict is the source of societal change-without such conflict, society
would stagnate; (2) Class conflict arises primarily from the disparity in the distribution of, and
access to, economic power within the society-the principal disparity being between those who
own capital and those who supply their labor; (3) The nature of the society's social and political
institutions is derived from this economic disparity and reinforces the position of the dominant
establishment group, for example, through differential access to education, the media,
employment in government and other establishment bodies, etc. Social and political conflict in
whatever from is merely an expression of the underlying economic conflict within the society.
The economic and social divisions in society between those who own or management the means
of production and those who only have their labor to sell. (Mishra 1981)


In conclusion the Pluralist theory, the Unitary theory and Marxist theory share different and
similar characteristics in terms of their features or assumption. As seen between pluralist and
unitary, they are both conform basically on ‘communication’ that was commonly practices under
the two theory between the management and the employee. On the other hand, they differ in
terms of the organizational structure which based on power distribution, trade union engagement
within an organization, conflict within the organization and the state involvement. Another focus
was between unitary theory and Marxist theory where the similarity of the two theory was “power
possession” which is based on single-source authority, and they both consist of multiple-group
with differ economic and social status. However, they are different in terms of the state
involvement with the industrial relations, and the management role that playing under both
theories. Pluralist theory and Marxist theory are different in terms of how the state regulate the
relationship between the employer and employee/trade union, and the different role of the
management. The Unitary theory is a peaceful and harmonious firm with low conflict but the
unitarist was indicates that management and employee would be share a common goal to promote
a peaceful relationship. While, Pluralist and Unitary theory are considered as conflict was
inevitable because the different groups share a different interest and inequality of power.
Therefore, collective bargain is a major and best solution to deal with issues that exist within a
firm. (TIRINTETAAKE 2017)


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Emelogu, Faith. 1994. "Political Factors." economic factors and its impact on the industrial relation system
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Mishra, Ramesh. 1981. "The Marxist Perspective." In Society and Social Policy, by Ramesh Mishra, 68-96.
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The World Bank Group. 2015. The Effects of Technology on Employment and Implications for Public
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Wallace, Joseph , Patrick Gunnigle, Gerard McMahon, and Michelle O'Sullivan. 2013. Industrial Relations
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