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Unit 10: International Industrial Relations

Notes
Example: General Motors is an example of this “sub-optimising of integration.” GM was
alleged in the early 1980s to have undertaken substantial investments in Germany (matching its
new investments in Austria and Spain) at the demand of the German metalworkers’ union (one
of the largest industrial unions in the Western world) in order to foster good industrial relations
in Germany.
Union influence delays the rationalisation and integration of MNCs’ manufacturing
networks and increases the cost of such adjustments. But in automobiles industries at least,
it permanently reduces the efficiency of the integrated MNC network.

Therefore, treating industrial relations as incidental and relegating them to the specialists
in various countries, is inappropriate. In the same way as government policies need to be
integrated into strategic choices, so do industrial relations.

Self Assessment

Fill in the blanks:
1. International industrial relations play a crucial role in ………… formulation and
implementation in international business.
2. …………….. factors include home and host country government policy, labour legislation,
voluntary courts, collective agreement, employee courts, employers’ federations, social
institutions.
3. ……………. factors that affect Industrial relations, include mechanisation, automation,
rationalisation, computerisation, information technology etc.
4. Three major participants or factors of industrial relations are workers and their
organisations, management and the ……………..

5. A …………. is a continuing long term association of employees, formed and maintained
for the specific purpose of advancing and protecting the interests of the members in their
working relationship.
6. ……………. divisions within the trade union movement factors are identified that may
underlie the historical differences in the structure of the trade unions.

7. Multinationals that fail to successfully manage their wage levels, suffer …………
disadvantages that may narrow their strategic options.

10.2 Key Issues in International Industrial Relations

Because national differences in economic, political, and legal systems, there are different industrial
relations systems across countries, so, MNCs delegate the management of industrial relations to
their foreign subsidiaries. A policy of decentralisation does not keep corporate headquarters
from exercising some coordination over Industrial relations strategy. Corporate headquarters
will become involved in or oversee labour agreements made by foreign subsidiaries because
these agreements may affect the international plans of the firm and/or create precedents for
negotiations in other countries.

Example: The U.S. firms are less to recognise trade unions, preferred not to join employers
associations, had more highly developed and specialised personnel departments at plant level,
and tended to pay higher wages and offer more generous employee fringe benefits than local
firms.

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