Page 194 - DMGT548_GLOBAL_HRM

Unit 10: International Industrial Relations

Notes

Notes A key section of OECD guidelines is the umbrella or chapeau clause that precedes
the guidelines themselves. This clause states that MNCs should adhere to the guidelines
within the framework of law, regulations and prevailing industrial relations and
employment practices, in each of the countries in which they operate. Employers have
understood the chapeau clause means compliance with local law superseding the guidelines,
while trade unions have interpreted this clause to mean that the guidelines are a supplement
to national law. The implication of this interpretation is significant: a firm could still be in
violation of the OECD guidelines even though its activities have complied with national
law and practice. Given the ambiguity of the chapeau clause and the fact that the OECD
guidelines are voluntary, it is likely that this issue will remain controversial.

Task Critically analyse the international unions in Germany and India.
10.3.1 Regional Integration

Regional integration is a process in which states enter into a regional agreement in order to
enhance regional cooperation through regional institutions and rules. Regional integration is
association of states based upon location in a given geographical area, for the safeguarding or
promotion of the participants, an association whose terms are fixed by a treaty or other
arrangements. It is a worldwide phenomenon of territorial systems that increase the interactions
between their components and create new forms of organisation, co-existing with traditional
forms of state-led organisation at the national level.
It is the joining of individual states within a region into a larger whole. The degree of integration
depends upon the willingness and commitment of independent sovereign states to share their
sovereignty. Its objectives could range from economic to political although it has become a
political economy initiative where commercial purposes are the means to achieve broader
socio-political and security objectives. Regional integration have often focused on removing
barriers to free trade in the region, increasing the free movement of people, labour, goods, and
capital across national borders, reducing the possibility of regional armed conflict.
Regional integration initiatives should fulfil following important functions:
1. the strengthening of trade integration in the region

2. the creation of an appropriate enabling environment for private sector development
3. the development of infrastructure programmes in support of economic growth and regional
integration

4. the development of strong public sector institutions and good governance
5. the reduction of social exclusion and the development of an inclusive civil society
6. contribution to peace and security in the region
7. the building of environment programmes at the regional level

8. The strengthening of the region’s interaction with other regions of the world
European Union (EU): Regional integration such as the development of the European Union
(EU) has brought significant implications for international industrial relations. In the Treaty of

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