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Unit 7: Industrial Relations

consultation mechanisms etc. Therefore labour management relations should be geared to Notes
creating the climate appropriate to securing the cooperation necessary for productivity
growth. Labour Management Relations (LMR) and Labour Management Cooperation (LMC)
are also important to create a culture which is oriented towards innovation, adaptable to and
encourages change, where authority is decentralized and two-way communication, risk-
taking and maximizing opportunities are encouraged, and where the output rather than the
process is what matters. Changing attitudes, awareness and behaviour to move from a
counter productivity to a productivity culture requires the appropriate labour management
relations climate based on labour management cooperation.
The experience of countries and regions which have good productivity records underlines
the link between labour management relations and productivity. For example, the Japanese
productivity movement which began in the 1950s emphasized employment security and this
fact did much to secure acceptance by unions of the productivity movement at that time. The
Japan Productivity Centre, which was supported by the government, reached agreement
with the national labour organization and employers on the following matters:
• In the long-term, productivity increases employment security. Therefore redundant
workers should be relocated by the employer.
• Concrete measures to enhance productivity should be decided through labour
management consultation which will be promoted.
• Productivity gains should be distributed fairly among management, employees and
customers.
Similar principles were recognized by the productivity movement in Europe. The underlying
theme here relevant to the present discussion is that all three principles mentioned above
form a part of labour management relations and cooperation.

Another important link between labour management relations and productivity has arisen
in the context of recent events in many societies and major changes in industrial relations
such as the move towards labour market flexibility. The latter involves the need for employers
to adopt, in the interests of competitiveness, new working time and work arrangements,
atypical contracts of employment, new methods of pay and remuneration, and control over
the size of the labour force. These developments have partly resulted from intense
competition, new technologies, shorter product life and so on, all of which require flexibility
in the use of resources if an enterprise is to remain productive and competitive. These
changes are more likely to achieve the objectives of increased productivity, if they are
introduced through cooperation and consensus at the enterprise level. Therefore labour
management relations and cooperation have a vital role to play in achieving, with the least
possible conflict, the changes of the type referred to above which are critical to productivity
and competitiveness in the modern enterprise.

7.2.3 Sound Labour Management Relations System
A sound labour management relations system is important to the removal of one of the main
objection of workers and unions to productivity drives by employers. Productivity increases
have sometimes been opposed by workers and unions on the grounds that they do not result
in equitable sharing of benefits to workers and that increased productivity may lead to
redundancy. Developing understanding of basic productivity concepts and of the methods
of increasing productivity, as, well as of the formulation of equitable productivity gain-
sharing schemes help to dispel such suspicions. This task is easier where there are mechanisms
which provide for dialogue and two-way communication between management and workers.
Labour management relations therefore play a crucial role in securing acceptance by workers
and unions of the need for productivity improvement, and also in obtaining their commitment
to achieving it.

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