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5TH EDITION

INTERNATIONAL
& COMPARATIVE
EMPLOYMENT RELATIONS Globalisation and change
Edited by Greg J Bamber, Russell D Lansbury and Nick Wailes

CHAPTER 1

International and comparative employment relations: An introduction


Nick Wailes, Greg J. Bamber and Russell D. Lansbury

Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition . Lecturers using the book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

International and Comparative Employment Relations


Definitions Objectives of the field of study Research challenges

Lecture outline

Theories of convergence and divergence in employment relations systems Views on the impact of globalisation and employment relations (ER) The Varieties of Capitalism (VoC) approach
Main features of the approach Applying the VoC approach to ER VoC, globalisation, and the convergence/divergence debate Limitations of the approach

Transnational employment relations


Capital and labour as transnational actors
International labour organisations International employer organisations Multinational corporations (MNCs)

Transnational regulatory bodies


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Chapter 1: Introduction International Labour Organization (ILO) World Trade Organization (WTO)
Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

What is employment relations?


Employment relations (ER) can be seen as encompassing the study of all aspects of people at work. It is concerned with the relationship between employers and employees and their interaction at the workplace. It is also concerned with employers and employees representative bodies, such as trade unions and employer associations, and with how they interact at the workplace, industry, national and international levels. It encompasses both industrial relations and human resource management.

3 Introduction

Chapter 1:

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Industrial relations and human resource management


Industrial relations (IR) traditionally focuses on formal and informal institutions of job regulation. Human resources management (HRM) focuses on the level of the individual organisation and is concerned with issues such as recruitment, selection, pay, performance and human resource development.

4 Introduction

Chapter 1:

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Key elements of industrial relations


The Parties include:
Employers Employees Unions and professional associations Government and state agencies

The Processes include:


Collective bargaining between unions and employers or employer associations Industrial disputes and dispute resolution mechanisms Employee participation at the workplace

The Outcomes include:


A collective agreement between employees (and their unions) and employers (and their associations) A decision by a tribunal or conciliation committee that resolves a dispute An agreement between employees and an employer on an issue at the workplace
5 Introduction
Chapter 1:
Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

What is international and comparative ER?


International ER
Transnational: institutions and phenomena which cross national boundaries, e.g. multinational corporations (MNCs); international labour movement; European Union; International Labour Organization (ILO) Foreign: studying employment relations systems in other countries

Comparative ER
A systematic method of investigating ER in two or more countries which is analytic rather than descriptive
6 Introduction
Chapter 1:

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Objectives of international and comparative ER as a field of study


To learn about ER in different countries To provide insights into our own system of ER To develop theories and explanations for different patterns of ER To guide policy-making by learning from successful ER systems

7 Introduction

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Challenges in comparative ER research


There are important international differences in ER
The meanings and significance of key ER terms differ across countries (e.g. differences in the nature and role of unions) Data is collected in different ways (e.g. differences in how industrial disputes are defined, categorised and how their incidence is recorded)

Therefore, effective comparisons require detailed understanding of each national context Researchers choose a comparative research design:
Most similar cases: two or more countries that are similar in as many respects as possible except for phenomenon under study Most different cases: two or more countries that differ in almost every respect except the phenomenon under examination
8 Introduction
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International & Comparative Employment Relations 5th edition

Convergence and divergence in national patterns of ER

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

One of the most enduring debates in international comparative ER is:


whether national patterns of ER are converging (becoming more similar) whether they are diverging (becoming more different) whether a more complex pattern of convergence and divergence is taking place

9 Introduction

Chapter 1:

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Convergence theories of comparative ER


Convergence theories assume that there are common pressures across societies to adopt a particular (best practice) ER system Original convergence thesis was developed by Kerr et al. in Industrialism and Industrial Man (1960)
Logic of Industrialism: industrialisation creates pressures across societies to adopt a certain, American-style ER system. Critique of this argument: technological determinism; American perspective Later revised by Clark Kerr: convergence as a tendency among democratic industrialised societies

Dore (1973) suggested convergence may be towards the Japanese ER model rather than an American one. He argued that countries which industrialised at later stages were able to develop ER institutions that are well suited to industrialisation
10 Introduction
Chapter 1:
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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Divergence or partial convergence theories


Comparative ER research has found that:
Some country differences persist and some even increase But overall there may be convergence towards 2 or more patterns of ER Some aspects of ER are converging while others are diverging Common trends dont necessarily result in common outcomes There is increasing variation in ER practices within countries
Chapter 1:

11 Introduction

Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Globalisation
Globalisation is used to characterise changes in the international economy It normally refers to growing interconnectedness of the international economy It is associated with growth in:
Cross-national trade Foreign direct investment (FDI) Growth in international financial transactions

It is argued that globalisation has created a common set of economic pressures across all markets (products and factors) which may impact on ER
Chapter 1:

12 Introduction

Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Globalisation and ER
Two views on how globalisation impacts on employment relations: 1. Simple globalisation approach
economic pressures associated with globalisation will result in a convergence of employment relations policies and practices
race to the bottom in terms of wages and labour standards as mobile capital seeks lowest labour costs governments lose autonomy in policy making and can no longer guarantee labour rights Instead, legislation to accelerate decentralisation and deregulation of the labour market and to attract capital investment

2. Institutionalist approach
Despite common economic pressures associated with globalisation, diversity in national patterns of ER will persist
existing ER institutions mediate and filter those pressures, and will do so differently in different countries

13 Introduction

Chapter 1:

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

The Varieties of Capitalism approach


Main features of the approach Applying the VoC approach to ER VoC, globalisation, and the convergence/divergence debate Limitations of the approach

14 Introduction

Chapter 1:

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Main features of VoC 1


There are two ideal-typical forms of capitalism
Liberal market economies (LMEs) Coordinated market economies (CMEs)

Each of these forms of capitalism include a set of complementary institutions that form the basis of a countrys economic competitiveness and lead to good economic outcomes The firm is at the centre of their analysis In order to develop, produce and distribute goods and services profitably, a firm must effectively coordinate with a wide range of actors e.g. investors, employees, unions, the state, suppliers, buyers.
15 Introduction
Chapter 1:
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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Main features 2
A firm must coordinate with other actors in 5 spheres:
Industrial relations Vocational training and education Corporate governance Inter-firm relations Relations with its own employees

The relations with actors in these spheres are problematic Firms can resolve coordination problems
Internally within the firm (hierarchies) Externally (market or non-market institutions)

16 Introduction

Chapter 1:

Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Main features 3
National institutions shape how firms resolve these coordination problems
In LMEs, firms resolve coordination problems mainly through hierarchies and markets i.e. arms length relations and high levels of competition In CMEs, firms resolve coordination problems not only through hierarchies and markets but also through non-market institutions i.e. strategic interaction

Both these solutions to coordination problems form institutional equilibria which have comparative advantage
In LMEs, the comparative advantage arises from the flexibility of these coordination arrangements In CMEs, the comparative advantage arises from cooperative behaviour among actors, based on information exchange, monitoring and sanctioning of defections
17 Introduction
Chapter 1:
Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Liberal market economies


Classic example: United States
Corporate governance: outsider shareholder dominated; performance represented by current earnings and share prices; management agency controlled by shareholder exit Employee relations: short term, market relations between employee and employer; top management has unilateral control of the firm Industrial relations: employer organisations and unions relatively weak; decentralised wage setting; insecure employment (hire and fire; fluid labour markets) Vocational training/ education: vocational education offered on market; labour force has high general skills Inter-firm relations: market relations, competition; use of formal contracting and subcontracting relationships.
18 Introduction
Chapter 1:
Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Coordinated market economies


Classic example: Germany
Corporate governance: long-term bank-dominated insider systems; cross-directorships; cross-shareholding; management agency controlled through network reputational monitoring Employee relations: long term, formalised participation of employees; consensus decision-making with management Industrial relations: trade unions and employers organised; industry-wide collective bargaining and pay determination; employment relatively secure Vocational training: elaborate industry-based training schemes; labour force has high industry-specific and firm-specific skills Inter-firm relations: development of collaborative networks; cooperation among firms in diffusing technologies

19 Introduction

Chapter 1:

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Institutional complementarity
Complementarity occurs where the presence of one institution enhances the returns from another institution In this way comparative advantage arises from the bundling of complementary institutions Hence, countries cluster around bundles of complementary institutions two distinct clusters are LMEs and CMEs This important departure from comparative IR studies which sought to link single features (e.g. collective bargaining structure) with economic performance The effect of single institutions may be misleading as performance may arise from a constellation of institutional arrangements Implications for bolt on policy responses Comparative institutional advantage: the institutional frameworks (either LME or CME) provide nations with comparative advantages in performing certain activities and producing certain kinds of goods and services
20 Introduction
Chapter 1:
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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Applying the VoC approach to ER


ER concerns are a central feature of the VoC model (e.g. collective bargaining, unions and employer associations, skill development, relations with employees at the workplace) VoC approach places ER in a broader political economy context Focus on institutional complementarity overcomes tendency to treat ER institutions in isolation VoC approach brings firms and employers into the centre of analysis
Chapter 1:

21 Introduction

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International & Comparative Employment Relations 5th edition

VoC, globalisation, and the convergence/divergence debate

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

VoC approach emphasises the importance of institutions (institutions matter) Different sets of institutions will mediate and refract the pressures associated with globalisation in different ways Regarding ER:
in LMEs, we can expect deregulation and a race to the bottom as outlined in the simple globalisation approach in CMEs, we can expect firms and workers to resist deregulation as that threatens comparative institutional advantages

This results in a bifurcated response to globalisation; globalisation will have a different impact on IR in LMEs than in CMEs
22 Introduction
Chapter 1:
Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Limitations of VoC approach


There is a large literature criticising the VoC approach, in part because it has been so influential.
1. Not enough variety
LME/ CME distinction doesnt capture all of the diversity of market economies (several OECD countries that dont fit)

2. Ignores differences within varieties


Especially among CMEs

3. Static and Determinist


Compares two countries at the same point of time Only 2 varieties of capitalism are viable; change to other category is impossible Makes it difficult to explain change Downplays role of agency, conflict, power, politics

4. Downplays or ignores international factors


Neglects linkages between nation states
Chapter 1: 23 Introduction
Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

International industrial relations


Capital and labour as transnational actors
International labour organisations International employer organisations Multinational companies MNCs

Transnational regulatory bodies


International Labour Organization ILO World Trade Organization WTO

24 Introduction

Chapter 1:

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Labour internationalism
Labour as a passive victim of globalisation or as a global actor? International union confederations
Global confederations e.g. International Trade Union Confederation ITUC (was ICFTU) Regional confederations e.g. European Trade Union Confederation ETUC Global union federations which link together national unions from a particular trade or industry e.g. International Metalworkers Federation IMF

European works councils

25 Introduction

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International & Comparative Employment Relations 5th edition

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Activities of international union organisations


Representational activities at ILO and other international forums Services to member unions, especially in less developed and newly industrialising countries Information sharing International campaigns International Framework Agreements IFAs on minimum labour standards between global union federations and MNCs
26 Introduction
Chapter 1:

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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Employers international dimensions


International Employers Associations, e.g.
International Organisation of Employers IOE represents employers at ILO BUSINESSEUROPE (formerly Union of Industrial and Employers' Confederations of Europe UNICE) represents employers in EU institutions

Multinational companies
Country of origin/home country effect and host country effect shape ER practices in subsidiaries Current questions about ER in MNCs:
Do ER practices of MNCs spill over into other (local) companies in the industry? Is there any reverse diffusion, i.e. transfer of ER practices from foreign subsidiaries to the headquarters of MNCs?
27 Introduction
Chapter 1:
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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

The International Labour Organization (ILO)


Established in 1919 in association with the League of Nations In 1946 became first UN agency Has a unique tripartite structure - government, employers and union representatives Key contribution is a series of Conventions and Recommendations which set international labour standards Major source of international labour law: 181 conventions, 188 recommendations Important role in technical advice and assistance to less developed countries (LDCs) and newly industrialising economies (NIEs)
28 Introduction
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International Core Labour Standards


Ratification of conventions by member states of the ILO create binding obligations to put their provision into effect (181 conventions ratified so far).

Source: Hughes, S (2005) The International Labour Organisation, New Political Economy, 10 (3): 413425. 29 Introduction
Chapter 1:
Copyright Allen & Unwin, 2011

International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Criticisms of the ILO


Bureaucratic structures and procedures which are resistant to reform Inadequate monitoring of compliance and policing of conventions The tripartite model of governance of the ILO is outdated and impotent. The governing body of the ILO is dominated by the advanced industrialised economies although less developed economies comprise the majority of ILO members It has lower status and is weaker than many other international bodies, e.g. WTO and the World Bank (which are competing with the ILO is some areas)
30 Introduction
Chapter 1:
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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Proposals for reform of the ILO


The adoption of more innovative and pragmatic approaches to issues (e.g. the current campaign for Decent Work) Focus on fewer issues on which it can have a major impact Build stronger linkages with other international bodies e.g. non-governmental organisations (NGOs) Place more emphasis on technical assistance to the less developed economies Provide for greater representation of third world countries on the governing body of the ILO
31 Introduction
Chapter 1:
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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

World Trade Organization


Established 1996 United Nations agency Aim is to promote free trade and provide mechanisms for the resolution of trade disputes There was debate around whether labour standards should be included in the rules of the WTO not included
32 Introduction
Chapter 1:
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International & Comparative Employment Relations 5th edition

Edited by Greg J Bamber, Russell D Lansbury & Nick Wailes

Conclusion
Globalisation is having a profound influence on the way that work is regulated. Studying internationally comparative employment relations allows us to develop an understanding of our own and other employment relations systems. The Varieties of Capitalism approach is a useful framework for studying internationally comparative employment relations. It allows us to study employment relations within a broader institutional context.
Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition . Lecturers using the book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.