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Unit 7: Industrial Relations

function. Industrial relations and human resource management are directly relevant to Notes
competitiveness, and how they are managed will impact on enterprise performance e.g. its
productivity and quality of goods and services, labour costs, quality of the workforce,
motivation, prevention of disputes and not only their settlement, and aligning employee
aspirations with enterprise objectives.

7.5.1 Minimum Wages
In countries which have a legal minimum wage three concerns are evident. The first is that
minimum wage levels sometimes tend to be fixed on extraneous considerations (e.g. political),
or on inadequate data needed to define the level of wages. The second concern is that such
instances have an adverse effect on competitiveness in the global market and on employment
creation where the minimum wage is fixed above a certain level (much of the controversy
relates to what that level is). Therefore many employers prefer to see the minimum wage,
if there is to be one at all, as a ‘safety net’ measure to uplift those living below the poverty
line. The third concern relates to increases in minimum wages not being matched by
productivity gains which help to offset increased labour costs.
7.5.2 Flexible/Performance Pay

Many employers, and even some governments, have expressed a wish to review traditional
criteria to determine pay levels such as the cost of living and seniority. Pay systems which
are flexible (i.e. based on profitability or productivity) so as to be able to absorb business
downturns and also reward performance, are receiving considerable attention. One major
problem in this regard is how employees and their organizations can be persuaded to
negotiate on pay reform. The objectives of pay reform will not be achieved unless reforms
are the result of consensual agreement and are part of a larger human resource management
strategy and change in human resource management systems.

7.5.3 Cross-cultural Management
Asia is a heterogeneous region, characterized by ethnic, cultural, linguistic and religious
diversity. Due to substantial increases in investment in Asia from both Asian and Western
investors, many employers and unions are dealing with workers and employers from
backgrounds and cultures different to their own. Many of the resulting problems and issues
(reflected for instance in the proliferation of disputes due to cross cultural ‘mismanagement’)
fall within the concept of cross cultural management. The problems arise due to differences
in industrial relations systems, attitudes to and of unions, work ethics, motivational systems
and leadership styles, negotiating techniques, inappropriate communication, consultation
and participation procedures and mechanisms, values (the basic beliefs that underpin the
way we think, feel and respond), expectations of workers and interpersonal relationships.
These cross-cultural management issues in turn pose the following problems:
(i) What particular industrial relations and human resource management considerations
at the regional, sub-regional and country level affect the development of sound relations
at the enterprise level in a cross-cultural environments?
(ii) What would be the most effective programmes for this purpose?
(iii) How can investors in Asia familiarize themselves with the environmental and cultural
considerations in the recipient country relevant to their managing people at work?
(iv) How could information be collected, analyzed and disseminated?
7.5.4 Dispute Prevention

Most countries (other than those in transition to a market economy) have long-standing
dispute settlement procedures at the national level (conciliation, arbitration, industrial or

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