Labour Relations Management

Categories: BusinessManagement

Comparative Issues in International Management Introduction

Labour relations management differ between countries mainly due culture, political environment and the different levels of economic development in the countries. In most countries however, it is the strength of labour unions that determine whether the unions can mobilise their members to demand for better labour management practices.  Other factors that affect the management of labour relations include internal factors such as history, organisational culture, organisational strategy and individual members’ psychology. In additional, countries are affected by external factors that include competition, technology and the international markets (Mead, R.


In almost all the world economies, different organisations operating either as government organisations or as private enterprises make vital contributions to the development of country’s economies. As such, different government have set up legislation that serves different roles.  In countries like Germany, Canada, the United States and Japan, government legislation allows the labour unions to play significant economic roles. As such, labour unions are more vocal regarding the wages, job security and working hours of their members (Warnich Et al, 2005).

 On the other hand, Latin American countries and some European countries like France, Italy and the United Kingdom have labour unions that are more politically pro-active. As such, labour unions in such countries avoid collective bargaining and opt for political action to air their agitations (Warnich Et al, 2005).

According to Hodgets & Luthans (2006), the different approaches to labour management in different countries are also as a result of the rights granted to individual citizens as opposed to collectivism.

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Democratic governments encourage individualism, while totalitarian governments emphasize on collectivism.

Countries pursuing the Individualism approach allow more freedom to individuals in their pursuit of economic endeavours. In their respective business sectors, capitalist ideologies and free markets are common, as does successful, productive and progressive individual enterprises.  Countries that pursue collectivism on the other hand do not place much worth on the individuals, but instead values the collective goals of the larger society. Some of the ideologies perpetuated in countries with collectivism management approaches include nationalism, corporatism, and totalitarianism. In cases where majority of the labour force is employed in government institutions, fascism, militarism and authoritarianism is also a common thing (Hodgets & Luthans, 2006).

The United States

            The United States is a democracy. As such, the countries grant the powers to conduct business and other activities to the individuals. Labour Unions have a rich history in this country. In 1935, Congress passed the Wagner Act and formed the National Labour Relations Board to administer the provisions in the act. Under the new act, employees in the country’s private sector had the right to collectively bargain for better pay, better working conditions and lesser working hours. The act states that employees can do this either within a labour union or without (, 2009).  In addition, the act prohibited employees from perpetuating specific unfair practices.

In the United States, collective bargaining has taken a central part in labour relations management.  Under such, management representatives negotiate with labour unions on matters such as wages, working hours, working conditions, employment conditions and the working contract (Campling et al, 1999). Since the labour union represents the employees, it has the legal authority to strike deals on behalf of its member employees.

(Numbers in Thousands)

Table 1:  Representation of  salaried or waged workers  in labour unions in the United States for years 2007 and 2008.

In the United States, the labour unions make efforts to solve labour problems quickly to avoid losses in man-hours, which usually halt productivity. As such, management representatives strive to resolve issues first and at the lowest labour unions hierarchy (Nurmi, et al, 1997).  The first step to resolving labour issues in this country usually starts with a meeting between operating level managers in the employer company with union representatives. If they do not get a solution in the first meeting, a second meeting is set where higher ranking employer representatives attend.  Still, if this does not work, the matter is forwarded to an arbitrator or a mediator (Warnich Et Al, 2005).  Most of the disputes are settled either through a 50/50 split between the labour unions demands or through fully supporting either of the suggestions by the two parties. In other cases, the arbitrator or mediator determines what is fair for both the employer and the employee based on the prevailing market conditions.

The United States is hailed as being among the few countries that have effective labour relation management strategies (Warnich Et al, 2005). The country’s approach is credited with the lower labour costs experienced in recent years. So effective is the approach that, the country is today ranked better than other industrialised countries. Despite the lower memberships registered in labour unions in recent years, the unions’ management are also credited with cooperating with US firms thus allowing organisations to introduce technology and efficient machinery in the workplace.


China’s government operates on socialist ideologies (Smith& Thomspson, 1992). Under such an arrangement, the government owns most of the employing institutions, which are operated on some form of moderate collectivism. In this country, profits are usually the ultimate goal, a motive that is well known by the state employees. Labour unions are less prevalent in this country, which translates into less powerful labour movements. In china, employees often times accept the work conditions set by their employers without negotiating.

In this country, trade unions face myriad problems starting with lack of proper legislative support to the outright frustrations by the employers. The conditions in China are so bad such that, human rights body have taken up roles of petitioning the Chinese government with an aim of getting a proper labour legislation. Some of the atrocities include poor working conditions, low wages, delayed pay, lack of employment contracts, lack of insurance, lack of a rest day, lack of training and too much work among others (Cooke, F, 2002).

The trade Union Movement was founded in 1925 in china and took the form of a political entity. To date however, and despite the establishment of other trade unions in the country’s history, only the All-China Federation of Trade Unions is recognised by the government. Challenges within the Trade Unions in China include misguided perception about the role that the organisations should play. They also lack the negotiating and bargaining skills required to impact on the country’s labour. Among the Chinese workers, there exist low opinions by employees regarding trade unions. As such, many have refused to enrol as members claiming the inefficiency history of the unions.

Workplace organisations are more efficient than trade unions as they are able to collectively involve employees and even win support from their employer (Cooke, F, 2002). Workplace organisations in this country register up to 90 percent membership. Even when the Trade Union is in place in such organisations, it usually place roles reserved for Human resource management in the United States. The  shortcoming with the workplace organisations mainly lie in the fact that such organisations are usually  more workplace-specific, are less competitive and have limited bargaining powers.

In a 2002 White Paper by the Chinese government, the government stated its commitment in maintaining harmonious labour relations in the country (, 2002).  The government claimed that in line with its growing socialist economy, it had established a tripartite labour coordination mechanism, trade unions, labour standard-system and a contract system. In addition, the white paper indicated that the government would set up a system to handle labour dispute in addition to setting up a supervisory system that would offer labour protection.

The most active form of labour management system in China from the 1990’s is the Labour contracting system, where employees rights to choose whether to quit or remain in a job are safeguarded. In equal measures, the employers’ rights to select employees who best fit their business objectives are protected under the contract system (, 2002).

Although the 2002 white paper that a standard labour system existed, it also reveals that individual, provinces and cities had taken up the contracting labour system due to delays by government in implementing the standard system through out the republic. Overall, one gets the impression that China has a long way to go if the welfare of its labour force is to be assured. With the high population, high unemployment rates and the overrated profit motives by employers, it would take a collective decision by the government and the employees for there to be faster changes in labour management in this country


Labour management in Japan is the collective responsibility of the government, the employers and the employees (Chalmers, 1989).  The labour laws in Japan institutionalize labour management around collective bargaining and any agreements that may come from such bargains. The law also recognise the employment rules as set by employers.  Prominent laws governing labour management in the country include the 1947 Labour Standards Law and the 1949 Trade Union Law. To a European observer, there is very little labour democracy in Japan. However, the Japanese workers have over the time settled in their system where employers show deep consideration for any ideas that may improve the bottom line performance in the company. More to this, the Japanese managers are oriented within a philosophy that enhances worker performance.  In Japan, Labour unions are established at the company level.  This is necessitated by the Union shop clause in the Labour law. As such, the labour unions are usually company dominated and represent both salaried and hourly employees.  Within the Japanese populace, expectations that labour unions would negotiate or win any benefits for them are minimal (Chalmers, 1989). This stems from the fact that labour unions are largely seen as ineffective organisations.


The table above shows relates the level of discontent and worker involvement in the workplace. The Unionized workers score higher percentages in work involvement and are more satisfied with the working conditions. The employers also value their contribution and opinion regarding management in the workplace because they know gaining the confidence of unionized employees is the surest way to avoid conflict with the labour unions.

In Japan, employees of small firms are less likely to be unionized and represented As such; they may be locked out of the collective agreements by labour unions.  In addition to this, work rules, which also serve to manage labour in Japanese organisations are not obligatory in companies that employ less than ten people (Chalmers, 1989). The welfare of non-salaried workers in Japan is not also adequately addressed especially because there is inadequate policing of the law on labour standards.

Japanese capitalist economy also plays a role in how labour is managed in the country. According to Vogel, S (2006), the labour and financial markets in this country perform better during economic growth periods. This affects the employment system since performance is usually at its peak during periods when labour is scarce and lowest when the labour is in abundance (Vogel, 2006).

 Between 1974 and 1975, the country lost the services of 9 million work hours. In the 1970’s the economic turmoil experienced in the country in the 1970’s and the managers had tried to lay off some workers.  Labour relations took a reconciliatory tone in the 1980’s when the economic situation stabilised. Labour union membership was at 35.4 percentages, a number that reduced considerably since the 1980’s

United Kingdom

In the United Kingdom, collective bargaining is done at both the company and the industrial level (Warnich et al, 2005). However, the bargaining is regulated by a set of laws entrenched in the legal framework in the country. Other factors that affect labour relations in the country include the customs and practices of the populace.

The UK employers view the trade unions activities as empowering to their employees hence a threat to their corporate well-being.  History has it that United Kingdom employers abhorred any form of team building since that would create platforms through which the employees would discuss issues affecting them and hence probably rise against the employers.  In the UK labour market there are set working hours and minimum wages among other provisions within the law, which makes the UK populace among the most catered for by the law. As recently as 2007, laws in the UK were enacted to ensure that the welfare of the employee was well provided (House of Lords Et al 2007).

Trends in Trade Union Membership in the United Kingdom


As shown in the graph above, the steepest drop in Union Membership in the 1990’s was between 1995 and 1998 for men. Ever since, men membership in the trade unions has been on a steady decline.  Women on the other hand registered a steep decline between 1996 and 1999, but soon after registered an increase in membership. In 2001, there was another decline but since then, women are doing much better than the men in union membership are.

In the UK, a central trade union exists and covers all sectors of the economy except the agriculture sector (Blanpain, R. 2004). They also concentrate more on the strategic and tactical concerns as opposed political strategies used by other countries.  Compared to the United States, the unions in the United Kingdom have a deeper and longer history and are more acceptable within the larger society.

In the UK, unions with the highest memberships are associated with the Labour party, which gives the unions the political influence needed to bargain favourable conditions for their members (Blanpain, R. 2004). However, the unions avoid politics especially since the 1980 defeat of the labour party.


            Australia, just like other countries with proactive labour unions has had its share of lobbying from business owners and politicians for the deregulation of labour unions.  According to Campling et al (1999), the growth of economic rationalism and neo-conservatism are some of the reasons why politicians and corporate managers claim that labour unions deleteriously affect profitability, employee cooperation, productivity and employment.  The labour unions are proactive in bargaining for good working conditions for their members, fair wages and lenient working hours.  To the employers however, this curtails the ability of the organisation to self govern by reducing salaries where the work warrants therefore denying the managers the right to manage themselves (Campling Et al, 1999).

            Just like elsewhere in the world, where trade unions are pro-active, the unions in Australia are built on the assumption that collective bargaining is capable of attaining the employee’s objectives better (Ellem Et al, 2004). So far, they have played these roles quite well. Even the low paying jobs are unionized in the country since the country does not have minimum standards for which the labour unions should bargain for their members.

            The Australian government has played a major role in ensuring that legislations proposed by the labour unions are not only fair for concerned parties, but that they are also implemented on time (Campling et al, 1999). Such legislation leaves little room for the employers or the labour unions to comment.  By 2004, the country has 320 registered labour unions, most of which had declined to take up the roles played by Industrial unions in other countries.  Like other countries however, Australia has experienced a gradual decline of union membership. According to Australian Business Statistic (cited by Campling et al, 1999), the 3 million members in the country in 1990 had declined to just over 2.4 million in 1995.  A survey regarding the same revealed that by 1995 union density in all workplaces had fallen to 51 percent down from 64 percent noted in 1990.

In Australia, the trade Unions membership increased by 3 percent according to the Australian Bureau of Statistics (ABS). In 2008, ABS indicated that 1.8 workers were unionized. This means that 20 percent Australian workers are trade union members.  The recent growth in membership was attributed to harder economic times in the country.  According to Sharan Burrow (quoted by AAP, 2009), workers recognize that taking up union membership will shield them from job lay-offs and will protect their wages.


The management of labour is ideally the responsibility of the managers in the different organisations.  The rise of labour unions was thus a response of unsuccessful management systems that failed to address employee welfare.  In the same way, the decline of labour unions can be explained as the rise of better performing managers who not only care about employee welfare, but also recognise that human resource is the best investment that organisations in the modern world can make.

In conclusion, the role of labour of relations cannot be underestimated. According to Blanchard & Philippon (2004), the collective bargaining roles played by the labour unions determine the quality of relations that employers have with their employees. In addition, a direct link between active labour unions and unemployment in different countries has been observed. In European countries for example, countries with bad labour relations registered higher unemployment rates that those that has pro-active labour unions

             The decline has also been because of passive encouragement by politicians and business owners for lower level bargaining, whereby the employers seek organisation level agreements with the aggrieved workers. As such, they intentionally avoid involving the labour unions. With time, the star of the labour unions, which had shown in the 1970 has, is slowly loosing its sparkle especially to the young workforce.


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Labour Relations Management. (2020, Jun 02). Retrieved from

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