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Industrial Relations: Analyzing the Employment Relationship, Lecture notes of Sociology of Work and Employment

Human Resource ManagementEmployment LawLabor EconomicsOrganizational Behavior

An overview of industrial relations, focusing on the employment relationship between managers and workers. It discusses the two components of industrial relations: market relations and managerial relations, and how the state influences these relationships. The document also highlights the decline of unions and collective bargaining, and the impact of international differences in industrial relations structures on wage inequality and the gender pay gap.

What you will learn

  • What are the two components of industrial relations?
  • How do international differences in industrial relations structures impact wage inequality and the gender pay gap?
  • Why has there been a decline in unions and collective bargaining?
  • How do market relations and managerial relations differ?
  • What role does the state play in the employment relationship?

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Download Industrial Relations: Analyzing the Employment Relationship and more Lecture notes Sociology of Work and Employment in PDF only on Docsity! 1 The Employment Relationship and the Field of Industrial Relations Paul Edwards This paper contains the text of Chapter 1 of the second edition of Industrial Relations: Theory and Practice in Britain, to be published by Blackwell in January 2003. This is a wholly revised version, including two completely new chapters, of the book first published in 1995. The chapter refers to other chapters in the text, which are listed below. 1. The Employment Relationship Paul Edwards 2. The Historical Evolution of British IR Richard Hyman 3. Structure of Economy and Labour Market Peter Nolan and Gary Slater 4. Foreign Multinationals and Industrial Anthony Ferner Relations Innovation in Britain 5. The State: Economic Management & Colin Crouch Incomes Policy 6. Labour Law and Industrial Relations: Linda Dickens and Mark Hall A New Settlement? 7. Management: Systems, Structure and Strategy Keith Sisson & Paul Marginson 8. The Management of William Brown, Paul Marginson, & Collective Bargaining Janet Walsh 9. Trade Unions and Collective Industrial Action Jeremy Waddington 10. Employee Representation: Shop Stewards and Michael Terry the New Legal Framework 11. Industrial Relations in the Public Sector Stephen Bach & David Winchester 12. Individualism and Collectivism in Industrial Ian Kessler & John Purcell Relations 13. New Forms of Work Organization: Still Limited, John F. Geary Still Controlled, but Still Welcome? 14. Managing without Unions: the Sources and Trevor Colling Limitations of Individualism 15. Training Ewart Keep & Helen Rainbird 16. The Industrial Relations of a Diverse Workforce Sonia Liff 17. Low Pay and the National Minimum Wage Jill Rubery & Paul Edwards 18. Industrial Relations in Small Firms Richard Scase 19. Industrial Relations, HRM and Performance Peter Nolan and Kathy O’Donnell Concluding Comments Paul Edwards 2 The term ‘industrial relations’ (IR) came into common use in Britain and North America during the 1920s. It has been joined by personnel management (PM) and, since the 1980s, human resource management (HRM). All three denote a practical activity (the management of people) and an area of academic inquiry. Texts in all three fields commonly take as their starting point the corporate assertion that ‘people are our most important asset’: if this is indeed so, there is little further need to justify a text. Yet we need first to explain what lies behind this apparent axiom. It is then important to highlight some of the key current issues about the conduct of work in modern Britain. We can then consider how IR as an academic approach addresses these issues and the distinction between it and the other two fields of inquiry. Finally, the structure of the book is explained. First, some basic explanation. ‘Industry’ is sometimes equated with manufacturing, as in contrasts between industry and services. ‘Industrial relations’ has in principle never been so restricted. In practice, however, attention until recently often focused on certain parts of the economy. These in fact embraced more than manufacturing to include the public sector for example but there was neglect of small firms and large parts of the private service sector. Whether or not there were good reasons for this neglect (and the case is at least arguable), the situation has changed, and recent research has addressed growing areas of the economy such as call centres. To avoid confusion some writers prefer the term ‘employment relations’, and if we were starting from scratch this might be the best label; yet the term ‘IR’ has become sufficiently embedded that it is retained here to cover relations between manager and worker in all spheres of economic activity. The focus is employment: all forms of economic activity in which an employee works under the authority of an employer and receives a wage in return for his or her labour. Industrial relations thus excludes domestic labour and also the self-employed and professionals who work on their own account: the contractual relations between a self-employed plumber and his customers are not ‘industrial relations’, but the relations between a plumbing firm and its employees are. In the UK self-employment comprises about 12 per cent of people in employment (see Table 1.1, below). The bulk of the working population is thus in an employment 5 latched onto this idea, arguing that ‘distinctive human resources’ are the core resource (Cappelli and Crocker-Hefter 1996). Second, and fundamentally, these ‘human resources’ are different from other resources because they cannot be separated from the people in whom they exist. The employment relationship is about organizing human resources in the light of the productive aims of the firm but also the aims of employees. It is necessarily open-ended, uncertain, and, as argued below, a blend of inherently contradictory principles concerning control and consent. Finally, paid employment is important to society for what it expects in terms of ‘inputs’ and produces as ‘outputs’. Inputs include how much labour is demanded (with obvious implications if demand is less than supply, resulting in unemployment) and what types of labour are sought (influencing, for example, the kinds of skills which ‘society’ provides through the education system). If employment is structured on gender lines, this will have major consequences for the domestic division of labour and the roles of men and women in society; the traditional image of the male breadwinner applied not only to paid employment but also had implications for the ability of women to engage in politics, the arts, and sport. ‘Outputs’ include not only goods and services but also structures of advantage and disadvantage. These are properly called structures because they are established features of society which are hard to change, for example differences of pay between occupations and between men and women. Issues in the Regulation of Work If work is important, how many people are in an employment relationship and how many are not, and what has been happening to work relationships? The exercise in Box 1.1 may thus be helpful. 6 Box 1.1 Labour market participation, pay, and inequality Consider the population of working age. Official statistics distinguish between the economically active and the inactive. The former group is then divided into those currently employed and the unemployed. The employed can be divided according to status (employee or self-employed), whether the work is full- or part-time, and so on. Table 1.1 provides some basic figures on these categories, together with information on unemployment and earnings. Table 1.2 gives abbreviated data on the distribution of employment by sector. What are the main patterns that can be observed? It may also be useful to consider what such terms as ‘economically active’ mean and how statistics on such things as unemployment and earnings are compiled. There are several important features of work in Britain which need to be borne in mind in considering the implications of the figures. Details and further discussion can be found in Gregg and Wadsworth (1999). • The number of ‘economically inactive’ people of working age has risen, particularly among the over-50s. Early retirement is a common means for firms to shed labour. What might this say about the nature of jobs? • Work has polarized across households: there are more families where all the adults work, and more where no one is in paid employment. What might this say about links between work and home? Regional differences in employment and unemployment rates are also substantial, as a glance at the relevant figures in Labour Market Trends will show. For example, in January 2001 unemployment (based on those claiming unemployment benefit, not the ILO definition used in Table 1.1) was 6.6 per cent in the region of highest unemployment in the UK, the north-east of England, but within that region rates for localities ranged from 3.4 to 12.3 per cent. In the lowest unemployment region, the south-east, the average rate was 1.9 per cent, with localities varying between 0.5 and 7.4 per cent. • If we look at households where someone is in work, the number of hours per week devoted to work has risen since about 1980. Work effort intensified over the same period, at first in manufacturing and then in services (Green 2001). Why might this be, and what does it say about workers’ experience of work? • Men’s employment rates have fallen while women’s have risen. But this latter rise is largely restricted to women with working partners; there is no change for single women or lone parents. The gender pay gap has narrowed, but it remains substantial, and has in fact widened for women working part-time. Why? • Wage inequality has risen (as it has in other countries, though generally more slowly) to reach levels higher than during most of the twentieth century. Why? 7 Table 1.2 Distribution of employees by sector, UK (thousands) 1990 2000 Mining, quarrying, electricity, gas and water 406 204 ‘Engineering’ 1544 1258 All other manufacturing 3334 2705 All services 16643 18597 Wholesale and retail trade, repairs 3741 4126 Hotels and restaurants 1207 1395 Financial intermediation 1055 992 Renting, research, computers etc 2410 3207 Health and social work 2311 2541 Note: ‘Engineering’ = machinery, electrical equipment plus transportation equipment. Source: Summarized from data in Labour Market Trends, March 2001, which contains a more detailed breakdown. Alongside such trends have been developments in the management of work which are analysed in detail in this book. They include a decline in traditional ways in which people represent their views to their employers (termed ‘indirect’ or ‘representational’ participation), which in Britain means through a trade union. Associated with a decline of unions has been a reduction in the percentage of employees who are covered by collective bargaining. Collective bargaining is a key focus in IR (the term having been coined by two of the UK founders of the subject, Sidney and Beatrice Webb, at the end of the nineteenth century). It means the negotiation of pay and other conditions of employment between an employer (or a group of employers) and a trade union acting for its members (see Chapter 8). There has also been a growth in ‘direct’ participation, that is involvement not through a representative structure but through work-based activity; examples are problem-solving groups and teamworking (see Chapters 7 and 13). The legal framework has also changed rapidly as discussed in Chapters 5 and 6. Some of these developments reflect developments within Britain itself, some stem from Europe, some from the specific influence of multinational companies, and some from broader trends in the world economy. These developments in the management of work are highly important in themselves, in shaping how much autonomy workers have in their work and their ability to shape key decisions that affect them. But what goes on within IR can have substantial effects on wider aspects of society. To take but one example, Chapter 8 shows that the decline of unions and collective bargaining explains some of the rise in wage inequality; 10 often embraces ideas of ‘social partnership’. As discussed in Chapter 7, 9 and 10, these ideas are often imprecise and contested, but at their core is the notion of a common agenda between representatives of capital and labour. • Americanization embraces the continuing decline of unions and the assertion of a market-driven model. The former process is perhaps the more obvious in the light of European integration and the promulgation of a European social model claiming to combine flexibility with security and to promote employee participation without threatening efficiency (see Bach and Sisson 2000: 35). As Bach and Sisson stress, however, such a model is a prescription for what might be rather than an account of what exists, and several aspects of it are under challenge from international cost pressures. At the same time, the rapid growth of the American economy during the 1990s and the European interest in its ability to generate jobs indicate that the American model of weak trade unions and extensive flexibility is equally influential. It is not of course the case that these models are tightly integrated packages or that one can simply choose between them. Different features can be combined in different ways. A third set of issues concerns ‘outcomes’ of a pattern of IR. The most discussed outcome, touched on above, is economic performance. Chapter 19 discusses the linkages between IR arrangements and performance. But other outcomes include the level and pattern of pay. As indicated above, one of the outstanding features of the British economy has been the rise in income inequality since 1980. A closely connected form of outcome is the pattern of gender inequality, as indexed by pay differentials and the degree to which women gain access to the most desirable occupations (see Chapter 16). It has been shown across many advanced industrialized countries that various measures of equality and well-being, including the size of the pay gap between men and women and the degree of pay inequality between the top and bottom of the income distribution, are affected by the extent of collective bargaining (e.g. Whitehouse and Zetlin 1999). Given that collective bargaining has been in long-term decline in the UK, key issues are whether this decline is likely to be reversed and if not what other arrangements might be put in place and what implications they have for economic welfare. Analysing the Employment Relationship Components of industrial relations What has IR to say about how we might analyse such issues? The employment relationship has two parts, market relations and managerial relations (Flanders 1974). The former is the more obvious. It covers the price of labour, which embraces not only the basic wage but also hours of work, holidays and pension rights. In this respect, labour is like any other commodity with a price which represents the total cost of enjoying its use. Yet labour differs from all other commodities in that it is enjoyed in use and is embodied in people. A machine in a factory is also enjoyed in use and for what it can produce. Yet how it is used is solely in up to its owner. The ‘owner’ of labour, the employer, has to persuade the worker, that is the person in whom the labour is embodied, to work. Managerial relations are the relationships that define how this process takes place: market relations set a price for a set number of hours of work, and managerial relations determine how much work is performed in that time, at what specific task or tasks, who has the right to define the tasks and change a particular mix of tasks and what penalties will be deployed for any failure to meet these obligations. A standard text thus defines IR as the ‘study of the rules governing employment’ (Clegg 1979: 1). The importance of this definition is developed below. The employment relationship is by definition a relationship between an employee and an employer. As shown in Figure 1.1, this direct relationship may be mediated by the two other key institutions to IR, the trade union (or more rarely a non-union collectivity representing employees) and the state. Figure 1.1 The Employment Relationship employment relationship employee stateemployer11 employee representatives 12 A trade union in its most basic role represents a group of workers in a specified part of their relations with a single employer. A union’s role can be measured in terms of density, mobilization, extent and scope. • Density is the proportion of an identified constituency who are members of a union. • The extent of a union’s activity refers to the range of the constituency: a union can represent a small group of employees in one locality, or all the employees in an occupation, or all the employees of a given employer, or extend beyond an occupation or an employer. • Mobilization – the degree to which unions identify common interests among their members, persuade the members as to what the interests are, and organize in pursuit of the interests -- is important because, most obviously in countries such as France, a union may be capable of mobilizing more employees than its nominal members. By the same token, members will not necessarily follow a union’s policy. Unions face issues of how far they represent members and of aggregating membership interests into a common policy. • Scope is the degree to which the various aspects of the employment relationship are within the purview of the union: it may bargain only over wages and hours, or cover also working conditions, or extend further to issues including training, the classification of jobs and the system of workplace discipline. Unions engage with employees through efforts to organize them and through mobilization around sets of demands. They engage with employers by taking part in collective bargaining. They may also engage with the state, for example in making demands for legislation or in engaging in more lasting forms of accommodation (such as ‘corporatism’ in the Nordic countries or a series of ‘Accords’ in Australia). The state influences the employment relationship directly through laws on wages (e.g. minimum wages), working conditions (e.g. on hours of work) and many other issues and through its role as the employer of public sector workers (see Chapter 11). It also has a series of indirect influences. It has relationships with unions, either through laws on union government or through bilateral arrangements (e.g. the UK ‘social contract’ of the 1970s in which unions promised to moderate wage demands in return for tax concessions) or through trilateral relationships also involving employers (corporatism). In 15 Consider the unitary view. To assume that all conflict is pathological is plainly an unsatisfactory view of organizational life. Yet the view made two key points. First, surveys have found that managers, and indeed many workers, tend to see their firms in unitary terms; for example, when asked whether a firm is like a football team or whether employers and workers are on opposite sides, workers often choose the former. The first UK study to ask this question found that 67 per cent of a sample of manual workers agreed with the statement that ‘teamwork means success and is to everyone’s advantage’ (Goldthorpe et al. 1968: 73). Similarly, overt disputation is relatively rare. Second, at the analytical level there are areas of shared interest: if workers and managers were totally opposed to each other, workplace relations would simply break down. Consider some deeper analysis of the football team analogy. In reviewing the team analogy, Ramsay (1975) noted, first, that Goldthorpe et al. did not equate teamwork with harmony but rather ‘interdependence’ of management and worker: teamwork was likely to mean pragmatic acceptance of the need for co-operation and not a completely shared vision with management. Second, when workers have been asked whether teamwork specifically describes their own situation, the proportion saying that it does declines. Third, in his own work Ramsay asked workers whether they agreed with the team view ‘because people have to work together to get things done’ or because ‘managers and men (sic) have the same interests in everything that matters’; respondents split about six to one in favour of the former. Pragmatic acceptance of current conditions and not ideological agreement with management was predominant. As this book shows, such results continue to have resonance, in particular in relation to HRM and commitment (see Chapters 13 and 14). As for the pluralist and radical views, there may at one time have been clear distinctions. Differences certainly remain, but the debate has moved on. British pluralism proved to be flexible. Clegg (1979) responded to radicalism in a measured way, arguing that pluralism could embrace many of the radicals’ points and that for many practical purposes there was nothing to choose between the perspectives. This contrasts with the situation in the United States where conventional writers (Kochan 1982) simply dismissed the radical critique (Hyman 1982). Though this difference is hard to explain, one reason is surely the openness of British pluralism (see Edwards 1995). In particular, 16 the stress on the inevitability of conflict at the point of production was compatible with a pluralist view. In his pluralist phase Fox (1966: 14) had noted that ‘co-operation needs to be engineered’; that is, securing workers' consent is an active and uncertain process. Flanders (1964: 243-4) had earlier drawn on the important work of Baldamus (1961) to argue that bargaining was a continuous and uncertain process. This is not to say that pluralism and radicalism are identical, but there has been constructive debate, out of which the approach developed below has emerged. Finally, note the word ‘power’ in the heading of this sub-section. An alleged failing of IR texts is their lack of attention to this concept (Kelly 1998: 9-12). It is true that explicit discussion is often absent. Authors of the classic texts, such as Clegg, might well have replied that power and conflict are the very stuff of industrial relations, for the negotiation of rules necessarily entails power and influence, and hence that separate discussion was redundant. They might also have said that it was the place of disciplines such as political science to debate the concept, and that IR could use the results. There are of course problems with such a neat division of labour, but it has a point. IR is a field of study, and cannot debate the fundamentals of concepts developed in politics, sociology, economics, and psychology. Yet it does have an underlying view of power which might be summarized in propositions such as the following. • Power is a capacity to pursue one’s own interests, and it can be activated through individual or collective means. • Power involves the capacity to oppose the actions of others (reactive power) and to pursue one’s own objectives (pro-active power). For example, in the UK, trade unions are often seen as having had reactive power but as lacking the means to pursue a pro- active agenda. • As in other areas of social life, power is embedded in continuing relationships, and establishing ‘interests’ is never easy. For example, if a management proposes a new payment scheme, workers may favour it on the grounds that it is ‘fairer’ than a previous scheme and that it offers the prospect of increased earnings, but have doubts as to the chance that the promise will be realized and perhaps also fear managerial good intentions (e.g. does the scheme foreshadow a move towards individual merit pay, or job losses or . . . .?) 17 • Power resources can shift over time (most obviously the declining power of trade unions since 1980). • Resources are not fixed ‘things’ but are also developed through use. For example, it is often found that new forms of work organization ‘fail’ for lack of managerial commitment (i.e. the resources were not in fact deployed effectively) or because the initiatives run counter to other activities (i.e. employment relations have many aspects, and the power to impose a new work organization may run counter to the need to retain employee consent). • Power resides in organizational routines and assumptions as well as in overt actions. Managements may exert power over workers by shaping expectations, but workers also have resources which they can mobilize, so that power relations are necessarily fluid and uncertain. Such themes run through this book, and the reader may find it helpful to bear them in mind. Many IR studies, of which the work of Armstrong et al. (1981) still stands out, also clearly deploy analyses of power. They use concepts discussed further below which refine the above bullet points. Rules, power and the negotiation of order It is useful to begin with the nature of rules. Rules do not have to be clearly enunciated, and many of the most important ones are not. A long series of shopfloor studies (summarized in Edwards 1988, 2000) has revealed that expectations about how work is to be performed often arise from informal understandings. For example, a worker new to an establishment may discover that a supervisor permits workers to leave early at the end of a shift. She may then learn that this concession is granted only when work is slack or when a strict manager is absent, and that it is not wise to advertise it too widely. She may even find that this local understanding counts for nothing if managers decide to enforce the formal rules. Whether or not managers in fact enforce the formal rules and how they do so will depend on a variety of factors. These include: • the procedures of the firm. If it has a system of warnings and appeals, it may issue a warning for a first offence, but in the absence of such disciplinary procedures it may act in a more sudden and less predictable way. 20 Second, the broader policies underlying workplace relations received attention. To continue with the example of new technology, what does it mean to say that it entails certain work practices? Are these determined by the technology or, as many writers began to argue, the product of managerial choice? Although at the level of the individual workplace certain developments may seem inevitable, seen more broadly they may themselves reflect choice. There are two aspects of analysis here. • The first considered the various approaches to labour regulation that managers might pursue, with the concept of managerial strategy being intensively debated. From a relatively orthodox IR position, Purcell and Sisson (1983) identified a set of ‘styles’. The way in which analysis was developing is illustrated by their inclusion of two styles which lay outside the usual IR focus on collective bargaining. These styles were an authoritarian non-union approach and a ‘sophisticated paternalist' style, the latter generally involving a refusal to recognize unions and the intensive fostering of a sense of commitment to the company. Seen in retrospect, these styles foreshadowed what were later seen as two leading patterns of the management of labour, respectively, cost minimization and ‘high commitment’ policies. From a labour process approach, Friedman (1977) introduced the distinction between the strategies of responsible autonomy and direct control. These strategies can be seen as underlying the more concrete styles identified by Purcell and Sisson. For Friedman, managements faced the problem of securing workers’ co-operation while controlling them so that they would continue to accept the authority of management and to work as directed. The two strategies represented approaches based on one or the other approach to the problem. Though Friedman sometimes presented the strategies as polar opposites, it is preferable to see them as elements which can be combined in various ways. Thus an employer may introduce quality circles to try to release workers' creativity while also asserting ‘direct control’ over issues such as absenteeism and time-keeping. The analytical task is to show how the various strands of labour management are connected. For example, a major theme to emerge in Britain concerned the lack of deliberate linkages and the absence of a coherent approach implied by the term 'strategy'. A theoretical perspective on this was provided by Hyman (1987), who 21 argued that, because firms pursue the contradictory objectives of consent and control and because, moreover, they are operating in an unpredictable external environment, strategies must be routes to partial failure. That is, a strategy is not a neat package producing clear outcomes but necessarily contains several competing elements and has to be constantly reinterpreted as new results emerge and as the world changes. Management, in short, is not only a continuous, active and uncertain process but also necessarily involves the balancing of forces which are pushing in opposing directions. • The second aspect of analysis concerned the environment of labour management policies. The links between the regulation of labour and business structure and strategy received considerable attention. How far are different approaches to labour the product of different product market circumstances? For example, does a competitive situation promote certain approaches and retard others? Attention was also directed not at variations between firms but at the overall environment in which they operated. How far is the labour policy of British firms shaped by the macroeconomic circumstances of the country and by generic features of its operation, notably the education and training of the workforce? The third level of analysis concerns the fundamental nature of the employment relationship. Many texts note that conflict and co-operation are both important, but they tend to stop at this point. This raises the question of whether conflict is any more than an occasional accident and whether it is more basic than co-operation? The key point about the indeterminacy of the labour contract and strategies of labour control is that managers and workers are locked into a relationship that is contradictory and antagonistic. It is contradictory not in the sense of logical incompatibility but because managements have to pursue the objectives of control and releasing creativity, both of which are inherent in the relationship with workers and which call for different approaches. The relationship is antagonistic because managerial strategies are about the deployment of workers' labour power in ways which permit the generation of a surplus. Workers are the only people who produce a surplus in the production process but, unlike the independent artisan, they do not determine how their labour power is deployed to meet the objective. There is thus a relation of ‘structured antagonism’ between employer and worker (Edwards 1986). This term is used to stress that the antagonism is built into the basis of 22 the relationship, even though on a day-to-day level co-operation is also important. It is important to distinguish this idea from the more usual one of a conflict of interest. The latter has the problem of implying that the real or fundamental interests of capital and labour are opposed, and hence that any form of participation scheme is simply a new way of bending workers to capital's demands. The fact that workers have several interests confounds this idea. A structured antagonism is a basic aspect of the employment relationship which shapes how day-to-day relations are handled but is not something which feeds directly into the interests of the parties. Firms have to find ways to continue to extract a surplus, and if they do not then both they and their workers will suffer. Balancing the needs of controlling workers and securing commitment rests ultimately on ensuring that a surplus continues to be generated. It may well be in workers’ interests that it is indeed generated, but this should not disguise the fact that they are exploited. The contemporary significance is simply that much workplace change is presented as though it cuts through old relations of conflict to promote total unity. Yet any unity has to be actively created, and it cannot be total because of the structural conditions in which employers and workers find themselves. Methods of inquiry What methods have been used to pursue this agenda? A feature of many older texts, and indeed some more recent ones, is the detailed account of institutions and of how bargaining is carried out. There is little self-conscious discussion of methodology or of exactly how information is gathered. This reflects the way in which they are written: they draw on the authors’ personal knowledge of the operation of procedures, which is generally backed up by statistics on wages or strikes and the results of official inquiries. Over the past two decades, analysis has become less institutionally focused and more conscious of the nature of the research base. Two developments stand out. First, a series of surveys has been conducted. The best-known are the three Workplace Industrial Relations Surveys of 1980, 1984 and 1990 and their successor of 1998, now called the Workplace Employment Relations Survey. These are based on large samples which are representative of great majority of workplaces in Great Britain; each survey has involved interviews with the manager responsible for IR and where relevant an employee representative, and in 1998 there was also a survey of employees. The 25 1. A rise in the use of temporary and agency workers. The increase is however from a low base and quite small proportions of the work force are involved. 2. An increased reliance on the measurement of performance and the tying of reward to this measurement. Performance measurement is certainly extensive, but direct links to reward are highly variable, and many appraisal schemes are very standardized rather than offering a strictly individual market exchange between each worker and the employer. 3. A decline in the role and influence of trade unions, which were traditionally the only real means for UK employees to express their voice collectively (works councils – representative structures not based on trade unions but instead being elected by all employees of a firm – on the continental European model being largely absent). Trade union membership fell rapidly during the 1980s and 1990s, with little replacement by other representative structures; hence the widespread concern about a ‘representation gap’. 4. Insecurity in the sense of (a) an increased objective chance of job loss and (b) an increased perception that job prospects are uncertain. There is evidence of insecurity. One measure is job tenure, where as noted above there have been contrasting trends for men and women. Staying in a job can, however, represent insecurity because of fear that another job will not be found. Other aspects of insecurity include career insecurity: a concern that a predictable, or at least manageable, progression of jobs is not possible. Heery and Salmon (2000) argue that the combination of increased risks of unemployment, a rise in temporary and casual work, a reduction in legal protections, and a rise in employee perceptions of an uncertain future together point to a growth of insecurity, though they also note that there will be important differences between sections of the work force. In relation to status, trends in employee voice running counter to that just mentioned include an increase in the use of direct rather than representative participation, for example the use of teamworking and problem-solving groups. Status would also be reflected in other practices associated with human resource management such as improved communication with employees, a move towards ‘single status’ (that is, treating all employees the same in terms of such things as working hours, sick pay and 26 pensions, in place of long-entrenched distinctions between non-manual and manual workers), and the use of profit-related pay and share ownership schemes. There is evidence of growing use of many of these measures, though it is also well-established that the adoption of them in so-called bundles of high involvement practices remains very rare. Streeck’s summary of moves towards contract and status is given in Table 1.3, which also indicates where the matters are pursued in this book. This listing anticipated several developments, notably around team work and shifts away from collective bargaining, which have become more salient since 1987. A particularly foresightful point was the highlighting of ‘the possible contradictions inherent in a simultaneous pursuit of restored contract and extended status’ and the fact that employers will ‘find it exceedingly hard to formulate a consistent strategic approach to building a more flexible system’ of employment relations (Streeck 1987; 295, emphasis added; see further Chapter 7 on the different dimensions of flexibility). As discussed below, contract and status are note poles on a continuum but separate dimensions which can vary independently. Table 1.3 Two Routes to Organizational Flexibility Return to contract Extension of status Chapter Employment status of workers Temporary Permanent 3 Numerical flexibility Hire and fire Flexible working 7, 14 time Functional flexibility Hire and fire Self-regulated 13, 14 job rotation Work organization Taylorist Teamwork 13, 14 Qualifications sought Narrow Broad 15 Wage determination Industrial Payment by ability 8, 12 engineering Management style Unilateral Consultation, 7, 9, 10, prerogative participation 12 Source: Abbreviated from Streeck (1987: 294). One recent research study illustrates the problems of developing consistent employment relations strategies. Grimshaw et al. (2001) draw on studies of four organizations to demonstrate shifts away from structured approaches associated with well-ordered internal labour markets (systems with clear promotion ladders and established pay structures). They argue that they have been replaced with a contradictory mix of policies. As an earlier study (Marginson et al. 1994) put it, employer policies were increasingly ‘eclectic’. The implication is that we are seeing complex efforts to use aspects of contract and status rather than a coherent shift from one form of employment relationship to another. Several strands run through this book’s efforts to make sense of these developments. • First, contract and status can obviously both exist if they apply to different groups of workers. For example, temporary workers may be subject to contractual relations while permanent ones enjoy status. There is also some evidence of a polarization of experience, for example rising skill levels in some but not all occupations, so that contract and status receive different emphases in different jobs. • Second, they often co-exist in the same workplace, for example where employees work in teams but are also subject to closer performance measurement. Figure 1.2 attempts to make this point more analytically. Figure 1.2 Status and Contract S Strong WeakSTATU27 CONTRACT Weak Strong Paternalism ‘Soft’ HRM Performance mgmt Arbitrary mgmt power Hire and fire, formal discip. 30 (which offers a different way of looking at established themes in the management of labour) and some broader analyses (which suggest that these themes need to placed in a wider context). Industrial Relations Systems and Globalization As noted above, writers on industrial relations systems tended to present these systems as self-contained. Influences and borrowings were recognized, for example the role of the British in shaping the German post-war ‘system’, the American influence on Japanese post-war reconstruction, and direct borrowings by the British Conservative government of 1970-74 of aspects of American industrial relations. Yet such events were seen as unusual and often unsuccessful. In the attention to nationally bounded ‘systems’ IR writers were far from alone. Indeed, it was well after Dunlop (1958) popularized the idea in IR that in the study of management more generally the concept of the national business system (that is, a distinctive and connected set of institutions of corporate governance) emerged (e.g. Lane 1989). Given their emphasis on uncertainty and the management of compromises, IR writers might have been more open than they were to challenges to the idea of national systems. In the event, however, it has taken real world events to undermine the idea. Three may be highlighted. First, several countries experienced a wave of Japanese direct investment which, though small in absolute terms (see Chapter 4), was seen as significant in importing new ideas. The term ‘Japanization’ was coined in 1986 (Turnbull 1986). The new ideas included close attention to detail, a focus on the quality of goods and services, and continuous improvement. Second, European legislation had an increasingly direct impact across the European Union. During the 1990s directives on such issues as working time and European Works Councils applied in the UK, and in addition matters as diverse as pension payments and procedures for consultation about redundancy were subject to European legal decision. Third, the concept of globalization attained increasing prominence. Its precise meaning is disputed, as is the extent of the development which it characterizes, but the essential idea is that economic activity takes on a global character, so that national systems lose their distinctiveness and are increasingly influenced by international forces. Some writers identify a ‘hollowing out’ of the nation state, meaning that its influence is weakened through the simultaneous rise of global regulation as in the 31 World Trade Organization, European monetary union, and the international transfer of models of work organization by multinationals (see Chapter 4). Some of the more popular ideas about globalization are ‘historicist’, simply identifying a trend and projecting it forward as well as, characteristically, portraying the present as a complete break with the past and seeing the trend as an asocial and inevitable development (e.g. Ohmae 1995). that is the identification of a trend and its projection into the future. (Note in passing the irony that historicism was seen originally, and most famously by the philosopher Popper (1957; see also Goldthorpe 1971), as a besetting failing of Marxism and yet it is now dedicated anti-Marxists who fall into the trap). Three key problems here are: • the failure to specify the causal processes underlying an observed trend, which is simply projected into the future; • the assumption that a trend in some parts of the economy will become general: it may be that portfolio careers can be identified where they did not exist, but they may reflect very specific circumstances; • and the neglect of countervailing tendencies. These ideas are essentially positive about the effects of globalization. Others use the same method to portray an international ‘race to the bottom’ wherein capital seeks the cheapest site of production and thus undermines legal protections to employees elsewhere. Such ideas have been popular since at least the 1970s when the New International Division of Labour thesis made this argument. Yet it was soon shown that the great bulk of world trade remained within the developed economies and that multinational companies generally retained strong bases in their countries of origin (see Hirst and Thompson 1996). More serious analysis speaks of competing models of capitalism and their intersection: globalization is not a force of nature but an actively managed process (Coates 2000). For present purposes, we do not need to debate the theory of globalization, but may simply note some implications for IR in the UK. First, it is reasonably clear that the economy has been increasingly exposed to competitive pressures (whether these are labelled global or international is not important). Examples from the car industry were given above. Second, it does not follow that the coercive 32 comparisons practised by large firms will necessarily lead directly to a shift towards countries with the lowest unit costs: there are many reasons to produce in particular markets, and many considerations in location decisions. Third, the UK has benefits as a production location, including relatively low wage costs by the standards of some European countries and, it is often argued, labour laws which place few restrictions on redundancies and re-structuring. Fourth, issues of ‘best practice’ in the organization of work are likely to have an increased salience, as are the links between IR and economic performance. Fifth, however, many parts of the economy remain relatively free from direct international competition. Finally, there is little evidence of one dominant route to the management of employment relations. Different models remain in competition, and as this book shows American and European pressures can both be discerned in the British context. Industrial Relations and Human Resource Management The contrast between IR on the one hand and PM and HRM on the other may be specified with the help of Figure 1.2. The contrast with PM is conventionally made in terms of the collective focus of IR and the individual focus of PM. There is a degree of truth in this, with IR having a strong emphasis on organized relationship between managements and trade unions and with collective bargaining between them being both an empirical focus and a key analytical category. PM and HRM have given more attention to such ‘individual’ issues as recruitment and training. Until the 1980s, there was a tacit division of labour between IR and PM which was sometimes mirrored on the ground, with a firm’s industrial relations manager (often a man) dealing with collective bargaining and trade unions while a female personnel or welfare officer handled health and safety, pensions, and the works canteen. This situation was thrown into question by two developments: a decline in the coverage of collective bargaining plus an even steeper decline in one of the staples of IR, organized industrial conflict; and a rise in HRM which claimed to offer an integrated approach to the management of labour, in which IR was only a small part. Expressions of HRM imperialism are, however, misplaced. Whether the rules of employment are established collectively between an employer and its employees acting in concert, or individually, is evidently a major empirical question, but IR is perfectly 35 Underlying these empirical issues are two theoretical problems. The first is common in efforts to analyse contemporary developments, for example claims that ‘employability’ and ‘portfolio careers’ are replacing traditional bureaucratic career structures. They often fall into the error of historicism, In the IR sphere, the trend may be the decline of collectivism, but it would be rash to suppose that this will continue without limit or that it cannot be counteracted by forces moving in the opposite direction. The second theoretical issue turns on the conceptualisation of the employment relationship. IR research has been predicated on the assumption that the relationship is one of conflict, power, and inequality. The core of IR is that it sees the employment relationship as based on a structured antagonism, with any unity and co-operation being built on uncertain foundations and with the creation of consent being inherently partial and uncertain. An irony here is that proponents of new techniques such as business process re- engineering recognize in passing that co-operation indeed has to be engineered. Consider the following from an HRM text: management’s actions often have unintended consequences. Thus, for example, the[re is a] paradox contained in the prescriptive advice to managers which encourages leaders to ‘gain control by giving it up’ (Champy 1996). . . . . [This paradox] suggests that because of persistent and fundamental continuities in the post-industrial labour process, there is no such thing as the ‘right’ human resource strategy, system or technique and that, whatever systems are adopted, they will have to be regularly modified or replaced as their internal tensions and contradictions appear (Bratton and Gold 1999: 28). The irony is the rediscovery of Flanders’s language discussed above without reference to it, yet with the underlying unitarist assumption that re-engineering is a process managed from the top in the interests of all. The idea that there are legitimate competing sources of authority seems alien, as does Flanders’s discussion of the tendency of managers to rely on their right of command and their failure seriously to engage with employees (see discussion of contract and status below). Business process re-engineers could read the conclusion of Flanders’s account of an earlier effort at re-engineering with profit (Flanders 1964). 36 Challenges to IR as a domain It was argued above that British pluralism responded constructively to some challenges, notably the radical view of the negotiation of order on the shopfloor. It has arguably been less open to other challenges. Three may be highlighted. • Worker interests. According to Kelly (1998), IR retains a descriptive approach, its research agenda is unduly driven by employers, and, as noted above, it lacks a proper theory of power. As a result, ‘we don’t know’, for example, ‘precisely why and how union power declined or by how much in the 1980s’ (p. 23). The answer is mobilization theory and in turn ‘the fulcrum of the model is interests and the ways in which people (particularly members of subordinate groups) come to define them. To what extent do they believe their interests to be similar to, different from, or opposed to, those of the ruling group?’ (1998: 25, emphasis original). Other concepts address the degree to which a group organizes around given interests, mobilizes against other groups, and has the opportunity to pursue its interests. This theory has, says Kelly (1998: 126-9) three advantages over ‘rival approaches’: - instead of starting from the employer’s need for co-operation and to secure work performance, it starts from injustice and exploitation; - it does not depend on a simple distinction between individualism and collectivism, but distinguishes interest definition, organization, mobilization, and so on, treating ‘as problematic what previous industrial relations researchers often took for granted, namely the awareness by workers of a set of common interests opposed to those of the employer’; - and it helps address key issues such as how employees define interests in particular ways. • Gender. Traditional IR, according to Wajcman (2000), took the male worker as the norm and saw women as marginal or of secondary interest. More fundamentally, it was not just that women as a group were neglected despite their substantial and growing place in the work force. The gendered processes underlying much of the substance of IR were also neglected. The very institutions of IR are not gender- neutral. For example, payment systems contain gendered assumptions in how they define and measure the attributes of jobs, so that jobs typically performed by women 37 will be rated differently from male jobs. Collective bargaining was not well attuned to the representation of equality agendas (Colling and Dickens 1998). Men’s work is also gendered, for example in the ways in which managers tend to recruit people in their own image and an informal ‘men’s club’ atmosphere creates expectations as to acceptable styles of behaviour. • Work and society. Ackers (2002) criticizes IR for its focus on relations in the workplace, to the neglect of links with the family and other spheres, and for the absence of an explicit ethical dimension. He offers ‘neo-pluralism’ as the means to develop a critical analysis of management practice and an understanding of the normative aspects of the regulation of employment. These views are plainly very different. Kelly focuses virtually exclusively on the traditional terrain of worker-manager relations and has been criticized explicitly by Ackers (2002) for the emphasis on economistic workplace militancy. His text would not be viewed, I believe, as gender-sensitive. Kelly offers a deepening of the agenda, that is a consideration of fundamental conflicts between workers and managers, rather than a broadening. Wajcman and Ackers aim to view the terrain in new ways and to link it to other aspects of society. These issues are raised here partly to stress that texts such as this have been found wanting in the ways specified, and to invite the reader to consider the value of the criticisms during study of the book. It is not, however, wholly satisfactory to leave evaluation up to the reader, and some initial comments on the three views are thus offered here. First, and in opposition to Kelly, in the identification of a field of study, a focus on employee interests is as unsatisfactory as one on those of employers. IR examines job regulation but this is scarcely to adopt an employer’s agenda (whereas HRM arguably does adopt such an agenda). Second, Ackers reasonably points to the need to link IR to other aspects of society, which is not a new call and which raises the question of how broadly a field is defined. The key issue is how far it makes sense to analyse a particular theme while leaving others to one side. For example, the institutions of collective bargaining are shaped by managerial policy elsewhere in the firm, and their operation in practice will depend on the negotiation of rules informally. In the same way, it can be 40 Plainly, one needs to distinguish different types of worker and different types of effect, and we are dealing with some effects such as perceptions of autonomy which are more complex than, say, the number of people belonging to trade unions. Yet research has pursued an agenda which is progressive in the sense that the topic under discussion is understood better (e.g. the balance between autonomy and responsibility) and the causes of different patterns are analysed. In like manner, the links between IR and various outcomes for workers and firms have been detailed. IR is less explicit about its theory than are the core disciplines of social science. Scepticism about the ability of a single discipline to explain complex phenomena has been a key strength. Perhaps the most extensively debated example is pay, with IR research over many years showing that economists’ theories of pay fail to explain important regularities, notably different rates of pay for apparently similar work (see Rubery 1997). It is true that an empiricist stress on ‘the facts’ has sometimes interfered with the development of alternative explanations. Yet if the effort is made the theoretical contribution of IR should not be too hard to find. At the very least, we can say that IR is consistent with those modern social theories which stress the connected nature of social phenomena, which refuse to privilege structure or action, and which argue that the ‘causal powers’ of certain forces are not invariate but depend on their context (see, e.g., Sayer 2000 for explication of one pertinent approach to these matters). Approach and Plan of the Book Texts on industrial relations reflect the analytical developments discussed above. The traditional method was to concentrate on the main institutions and trends, with any explanation being inductive. More recent books pursue theoretical debates on management strategy and the labour process with rather little empirical information being provided. This book tries to steer a course between these extremes. While describing the key trends in British industrial relations, the book is analytical: each chapter provides a strong argument, and issues such as the coherence of efforts to reform industrial relations and the potential different routes of development run through many of the chapters. Chapter authors are experts in their fields, and they do not necessarily share their interpretations. But one reading of the central themes of the book is as follows. 41 • First, there has been massive change over about the last 20 years, with a decline in the extent of collective bargaining, in trade union membership, and in strike activity. In addition, over the period since 1971, the involvement of the law has increased dramatically. New forms of work organization have emerged. The drivers here include tensions within the British mode of managing the employment relationship (see especially Chapters 2 and 5), pressures of globalization and the re-structuring of labour markets (Chapter 3) and the introduction of work organization practices via multinationals (Chapter 4). • Second, this does not mean that industrial relations have moved from one model to another. A traditional model would be one of extensive collective bargaining and joint regulation. But such a model was always far from universal, failing to touch many workers in services and small firms, for example (see Chapters 17 and 18). Various alternative models can be identified, of which some illustrations are listed in Table 1.6; they are discussed fully in Chapters 7, 12 and 13 in particular). It should already be apparent from the discussion of contract and status above that no single model fits all situations. For example, collective bargaining has been reduced but not eliminated so that the free market models do not fit all cases. More importantly, as shown in Chapters 12 and 14, individualism was evident in the past while some contemporary aspects of it display remarkable standardization: the fundamental message of Chapter 12 is the individual and collective methods of managing employment are bound to co-exist, albeit in different combinations at different times. Similarly, some elements of the HRM and partnership models can be discerned, but systems of managing employment evolve relatively slowly and, crucially, actuality on the ground may suggest less change than appearances from company philosophy suggest. Chapters 7 and 8 review the evidence in detail, but the theme of limited practical change runs through many others, notably on training (15) and gender equality (16). • Third, one way to think about the balance between models is to use the contrast mentioned above between Americanization and Europeanization. As Chapters 5 and 6, for example, show, the emphasis in the period 1979-97 was strongly on the former, but since 1997 elements of it remain, notably in the government’s concern to be 42 ‘business-friendly’, while Europeanization has proceeded unevenly and sometimes through drift rather than deliberate choice. • Fourth, the outcomes of industrial relations change are variable and uncertain. There are two kinds of outcome which need to be distinguished. - The first relate to the functioning of the IR system and the parties to it. Does it deliver reasonable wages, the ability to participate actively in one’s work, adequate training, and fairness between workers? There have been some improvements, for example in training and the development of equal opportunities agendas, but as the relevant chapters show performance has been patchy and it remains some way away from a benchmark of multi-skilled workers enjoying freedom of opportunity. Chapter 17 underlines continuing pay inequality. In addition, Chapter 6 shows that the legal framework leaves several issues of fairness unresolved, while Chapter 9 and 10 point to the limited progress of social partnership agendas. - The second set of outcomes relates to the economic performance of firms and the economy as a whole. As Chapter 19 shows, this area is particularly controversial. But it is clear that any view that ‘bad IR’ in the past was the cause of bad performance was inadequate. What is more plausible is that some aspects of the IR system, notably fragmented and competing wage demands, could exacerbate tendencies in other parts of the economy towards inflation. 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