Comparative IR Systems in UK and USA

Presented by:Amit Thakur

Dheeraj DeshmukhPrerna Malhotra

Richa BiggheSwati KhannaShreyas Shah

MHROD, 3rd sem

INDUSTRIAL RELATIONS IN UNITED KINGDOM

• MEANING OF INDUSTRIAL RELATION :

Industrial relations are concerned with the systems and procedures used by unions and employer to determine the reward and other conditions of employment to protect the interest of employed and their employers and to regulate the ways in which the employers treat their employees.

The industrial relations parties

Three parties involved in IR:

• EMPLOYEE

• EMPLOYER

• GOVERNMENT

Trade unions

• Current trend trade unions in UK are focused towards union mergers.

• Unlike other Western European countries, Britain has only one main union confederation known as the “Trade Union Congress” (TUC).

OBJECTIVES: • Has no direct role in the collective bargaining

• Considered as ‘left-wing’ and as an important social partner with the British Labour Party

• TUC is considered as coordinating and not controlling body

Collective Bargaining

• The collective bargaining trend in BRITAIN now focused at the enterprise level, Employment Relations ACT (2002)

• collective rights for TU and individual and represented workers Advisory Conciliation Arbitration Service (ACAS)Tripartite Council.

• Both individual rights and collective rights dispute conciliation

• ACAS appoints(experts) mediators and Arbitrators

Role of government

Government passed acts to improve the status and functioning of TRADE UNIONS in three ways:

• By recognizing their legal entity

• By providing voluntary registration with the certification officer

• By defining their functions, rights and responsibilities .

Government also provided statutory recognition of the employers association.

Role of Government

• Many of these legal rights emanated from the level of European Union, and the post-1997 period saw a marked increase in the influence of legal regulation in the employment relationship.

• Nonetheless, trade union membership continued to decline, and in 2008 trade union density stood at 28%. As of 2009, the UK system of industrial relations would appear to exhibit a mixture of characteristics.

Role of government

• As of 2010, the effect of the crisis on the development of the UK system of industrial relations is unclear. Trade unions have responded to the crisis by calling for greater government intervention to support employment levels.

• At the same time, collective agreements have been concluded by the UK social partners amt company level with the aim of reducing working time in order to preserve employment levels

Thus, the IR system prevalent in UK relies on twin mechanism of voluntary negotiation and joint consultation for resolving differences and maintaining peace and harmony in the industry.

INDUSTRIAL RELATIONS IN USA

Growth of IR on USA

• Collective Bargaining .

• Strike( Boston Telephone Strike-1912):

telephone rates increased but telephone operators salary half of that of govt. clerk .

• ‘Right to Organize’ granted by American Constitution: Growth of Trade Union and free bargaining.

• Industrial relation governed by National Labor Relation Act 1935 .

Unions in USA

• Local Union: – Works as collectors of fees and dues, – solve important grievances – local union power to call strike and negotiate agreements

without formal approval from National Union – Officers of Local union- President, Vice President etc

elected

• National Union: – Size varies according to number and size of affiliates– Complete autonomy in fixing dues, formulate policies,

negotiating agreements, calling strikes and organize new local unions

– Private sector union members are tightly regulated by the National Labor Relations Act (1935)

Two important Central organizations: 1. AFL ( American Federation of Labour)-1886

– 1st and largest federation of Unions in USA .– The Federation of Organized Trades and Labor Unions merged to

form AFL Craft union– Conservative as didn't’t challenge capitalism .– The AFL was always hostile to Communists.– Prohibition of child labor, a national eight hour day, and exclusion

of foreign contract workers. – Most AFL leaders were not prepared to take advantage of the labor

law reforms enacted during the administration of Franklin Roosevelt.

– Failed: couldn’t organize into industrial unions when important sectors like auto, steel etc grew.

– Most strikes were assertions of jurisdiction, so that the plumbers, for example, used strikes to ensure that all major construction projects in the city used union plumbers. To win they needed the support of other unions, hence the need for AFL solidarity.

2. Congress of Industrial Organisation (CIO- 1935)

– Organise workers into industrial unions rather than focus on certain crafts

– Dissenters of AFL – Later both merged to form AFL-CIO in 1955 which has

regional councils and local units all over USA

– Now: 60 unions in USA and Canada affiliated to AFL-CIO( American Federation of Labour- Congress of Industrial Organizations)

– Major activities of American Unions: • Represent members at collective agreements • Negotiations over employment relationship • Joint decision with management

Collective Bargaining

• Northern states typically model their laws and boards after the NLRA and the NLRB. In other states, public workers have no right to establish a union as a legal entity. (About 40% of public employees in the USA do not have the right to organize a legally established union.)

• In US, The National Labor Relations Act (NLRA), covers most collective agreements in the private sector. This act makes it illegal for employers to discriminate, spy on, harass, or terminate the employment of workers because of their union membership or to retaliate against them for engaging in organizing campaigns or other "concerted activities" to form "company unions", or to refuse to engage in collective bargaining with the union that represents their employees.

• At a workplace where workers have voted for union representation, a committee of employees and union representatives negotiate a contract with the management regarding wages, hours, benefits, and other terms and conditions of employment, such as protection from termination of employment without just cause.

• Sometimes there are disputes over the union contract; this particularly occurs in cases of workers fired without just cause in a union workplace.

Decreasing Union Density

• A broad range of forces have been identified as potential contributors to the drop in union density (the unionized proportion of the working population) across countries.

• The first relevant set of factors relate to the receptiveness of unions’ institutional environments. For example, the presence of a Ghent System (where unions are responsible for the distribution of unemployment insurance) and of centralized collective bargaining (organized at a national or industry level as opposed to local or firm level) have both been shown to give unions more bargaining power and to correlate positively to higher rates of union density.

• Unions have enjoyed higher rates of success in locations where they have greater access to the workplace as an organizing space (as determined both by law and by employer acceptance), and where they benefit from a corporatist relationship to the state and are thus allowed to participate more directly in the official governance structure. Moreover, the fluctuations of business cycles, particularly the rise and fall of unemployment rates and inflation, are also closely linked to changes in union density

Government’s Role

• After 1920s non-interventionist policy in industrial relations

• Promoted trade unionism Statutory and voluntary procedures for settling labour disputes

• Free collective bargaining with self- corrective mechanism

LABOUR LEGISLATIONS IN US:• Norris La Guardia Act, 1932 • Wagner Act, 1935 Taft- Harley Act, 1947• Landrum Griffin Act, 1959

Legislations in USA1) Norris-La Guardia Act-1932

– It established that that employees should be free to form unions without employer interference

– Unions could enter into collective bargaining

– No unfair employment contracts

– The act outlawed Yellow dog contracts, which were documents some employers forced their employees to sign to ensure they would not join a union; employees who refused to sign were terminated from their jobs.

2) Wagner Act-1935

– Earlier named: National Labour Relation Act– Protection of employees’ rights to organize– Right to strike – Secret ballot elections for representative

unions– Engage in union activities, to bargain

collectively without coercion of employer – Employer can bargain with union regarding

wage, bonus, terms and conditions of employment

– National Labour Relations Board: for representations election and investigate unfair labour practice and remedy them.

3) Taft-Hartley Act-1947

– Named as Labour-Management Relations Act

– Amended Wagner Act – Balance powers of Labour and management

in collective bargaining relationship – Right to self-organize, to form, to join and

assist labour organizations – Injunction on strikes affecting national health

or safety – Established Federal Mediation and

Conciliation Service( FMCS): assist in setting contracts without work stoppages and maintains arbitrators to decide contract interpretation disputes

4) Landrum-Griffin Act-1959

– Regulates labour unions' internal affairs and their officials' relationships with employers

– Bill of rights for union members- equal rights in voting,

– freedom of speech in union matters, – Right to sue their unions – No financial dealing between management and

union – Protect the union members from possible

wrong-doing

Reasons for decline in trade unionism in USA:

• Employment from manufacturing jobs and other jobs represented by unions( railroads and mining) to services and high technological jobs

• More white collar jobs and part-time jobs

• Centralized collective bargaining (national and not local level)

Comparison between IR systems in UK and USA

• Industrial relations systems and developments play an important part in determining economic, employment and social outcomes and are thus a key area of comparison

• Comparison of employment practices– Studies about employment practices of British subsidiaries

show that they allow local autonomy and blend in more to the local style

– US MNCs has shown that they are relatively centralized and ethnocentric in their HRM and IR practices.

– In the UK, for example, US MNCs have implemented innovative human resource practices and there is evidence of parental influence from the US.

Comparison• Comparison of Trade Unions:

– Many employers in the US and to some extent UK MNCs come from a culture have a unitarist perspective.

– Thus Trade unions and collective bargaining are perceived as something to be deliberately avoided.

– In the US, for example, the non-union sector has grown rapidly over recent decades.

• Trade union Organization: – Despite diversity and sometimes division at

national level, trade unionism in the current and enlarged UK is characterised by a high degree of unity and coherence than USA.

Comparison

• A common trend across the UK the USA is towards consolidation and merger of trade union organisations.

– The number of UK has been reduced by mergers in recent years , while the number of member unions of most national union confederations has declined .

– In the USA, the number of unions affiliated to AFL-CIO has fallen from 96 in 1985 to 64 today. However, many of these unions are still small, and the 15 largest represent over 75% of total AFL-CIO membership between them

Comparison

• Trade Union membership and density:

– Overall, union membership has generally been falling across the industrialised market economies in recent decades .This decline seems to have occurred relatively uniformly in both UK and the USA

– Still, the average trade union density in the UK is more than twice that in the USA.

– In gender terms, unionisation levels are higher among men than women in the USA . This reflects the pattern with low to medium in UK

Comparison

• Comparison of Employer Unions:

– In the UK, there is essentially a single umbrella organisation (at least for the private sector) representing companies' employer and business/trade interests, though accompanied by separate SME organisations in some cases

– The USA has no identifiable national intersectoral employer body with an industrial relations role.

– A special organisation has been created to allow US employers to be represented by a single intersectoral body in international organisations and fora - the United States Council for International Business (USCIB)

Comparison

• Comparison of Collective Bargaining: – The level at which collective bargaining is conducted is

one of the most basic differences in industrial relations between UK on one side, and the USA on the other.

– Collective bargaining plays a key role in industrial relations in UK . In USA, bargaining is a relatively marginal activity

• Issues in collective bargaining:– In the USA, collective bargaining plays a far less

important role in setting overall national pay increases than in UK

– the USA, the issue of working time currently seems to have a relatively low profile in collective bargaining.

Great Northern Stores, UK

• Background• Great Northern Stores : major departmental retail organization

with 120 stores in UK• Sell range of foods, textiles, fancy goods and toiletries• Founded in 1890’s by the Muller Family

• Muller family prided in the welfare of the employees

 • Established itself as a leading national retailing organization

during post war period.• 1980: 120 stores in various parts of the UK.

Great Northern Stores, UK

• Expansion Reasons:

Changing and increasingly competitive environment.

Growth of supermarkets and multiple retailers.

Pressure to reduce profit margins and trim quality standards to compete.

Foray into new customer areas.

Decrease in sales volume was the consequence.

• Good housekeeping:• Reduce in man power and costs while retaining employees at

warehouse.

Great Northern Stores, UK

• Centralized Management Structure:

Merchandising by specialist staff at head office and stores.

Store managers losing their discretion to a department at head office and reporting to area superintendent and functional executives at head office.

•  

Great Northern Stores, UK

• Liverpool Store Dispute:

Management policy: No recognition to trade unions and collective bargaining for a long established family business.

Failed attempts by a union to recruit employees at Liverpool store.

July 1982: Normal Monthly Meeting

Sales staff representative submitted a letter

Great Northern Stores, UK

• Staff Manager’s threat to sack agitating employees prior to walkout.• Subsequent strike by the staff outside the store and signing them for union

membership. • Communication between Personnel Director and Regional Secretary of the

Union.• Conduct of the secret ballot at Great Northern Stores • Result: Employees preference to a staff association over trade union. • Association of sales staff to one union and the warehouse staff to another

union.• Strikes by sales and warehouse staff at different stores. • Emergency Board Meeting convened.

Great Northern Stores, UK

Industrial Relation Problems• Management’s unitary view of the organization stating that no

legitimate conflict of interest is permitted. No faulty communication. Employee- management to have identical interests.

• No steps to ensure proper store management. No steps to deal with employee problems at the store management level.

• Lack of communication channel and professional advice and expertise to store management in field of staff relations.

Great Northern Stores, UK

• Alternatives open to the Board• First Option: Maintain Current Strategy

• Alternative Strategy: Management will be forced to recognize more than one union. Conciliation is the best possible solution.

QUESTIONS ????

THANK YOU !!!