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Unit 7: Industrial Relations

The objective is to ensure a convergence of organizational and individual goals, and to Notes
balance individual and organizational needs. With the pressures on enterprises to adapt and
change, it is not surprising that employers are pushing for greater concentration on issues
at the enterprise level. In the final analysis, the quality of an industrial relations system has
to be judged by how it works in practice - and that means at the workplace level. This
relative neglect provided the space for the rise of human resource management. Neither
view is entirely correct or entirely incorrect, because industrial relations problems do flow
from circumstances both external and internal to the enterprise. The problem is that there
has been overemphasis on the environment external to the enterprise, so that inadequate
attention has been paid to the policies and practices needed within the enterprise. As a result,
we may have lost sight of the fact that in the final analysis, sound labour relations have to
be built up from within an organization. The environment external to the enterprise should
be facilitative, and at times “protective” in the sense that it needs to prescribe certain basic
standards relating to such areas as social security, safety and health, freedom of association,
weekly and other holidays and rest periods, etc. In more recent times industrial relations
has been influenced by other social sciences such as organizational psychology and behaviour.
Traditionally, economics and law were two main influences on industrial relations, which
led to a concentration on macro level industrial relations, and therefore on unions, government
and collective bargaining. Organizational behaviour has been influenced by psychology
which centres on the individual, and by social psychology which focuses on relationships
between people and on group behaviour. It is easy to see, therefore, why human resource
management has been influenced by organizational behaviour. Paradoxically industrial
relations, though dealing with relation, has until recently largely ignored the social sciences
relevant to behaviour and human relations. While labour problems are the result of
imperfections in the employment relationship, industrial relations should be seen as the
theories and methods which have been developed over time to address and correct these
problems, in both the external and internal labour markets.
During the past decades labour relations was viewed by governments as a means of preventing
or minimizing conflict. In South and South East Asia this objective was achieved through
dispute prevention and settlement mechanisms external to the enterprise (e.g. conciliation,
arbitration and labour courts). In South Asia the objective was also achieved through
restrictions or prohibitions on the freedom of action of employers in matters such as
termination of employment, closures and even transfers of employees. On the other hand,
several South-East Asian countries resorted to measures to restrict trade union action and
to control unions, as well as to avoid union multiplicity. While in South Asia the focus of
industrial relations was on equity from the point of view of workers and unions, in South-
East Asia, the emphasis was on economic efficiency and less on worker protection laws. Low
unionization in many Asian countries, strong governments in South-East Asian countries and
South Korea, and perceptions that unions could be potential obstacles to the direction of
economic development led to a relative neglect of industrial relations. Moreover, hierarchical
management systems and respect for authority, which have mirrored the external social
system, have been inconsistent with consultation, two-way communication, and even with
the concept of negotiating the employment relationship. Japan, however, was an exception
where, since the 1960s, workplace relations and flexibility facilitated by enterprise unionism
dominated industrial relations in the larger enterprises. Australia and New Zealand continued
to focus on centralized industrial relations, though the emphasis has radically changed in
New Zealand during this decade, and is changing in Australia. But major changes are taking
place in Asia. Employers as well as some governments are viewing labour relations from
a more strategic perspective i.e. how labour relations can contribute to and promote workplace
cooperation, flexibility, productivity and competitiveness. It is increasingly appreciated that
how people are managed impact on an enterprise’s productivity and quality of goods and
services, labour costs, quality of the workforce and its motivation, and on the prevention
of disputes as well as on aligning employee aspirations with enterprise objectives.

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