CHAPTER 13: COMPARATIVE GLOBAL INDUSTRIAL RELATIONS
LABOR NEWS: CHINA LABOR UNREST AT HONDA PLANTS
CHAPTER 13: OUTLINE
I. Globalization
A. Globalization has resulted in worldwide investment, technology, deregulation, and
flexible labor markets.
1. Worldwide labor markets, both competitors with and companions to the U.S.
labor movement, for example automobile production, were concentrated at a
2. Transfer of an enterprise from one country to another may adversely affect
3. Workers negotiating with global company
a. Have inadequate access to information about the international financial
4. Some unions are addressing a globalization by entering into international
agreements as outlined in Profile 13-1.
B. Globalization means expansion of international trade in goods and services, the
interdependence that goes along with the integration of production across national
boundaries, and the resulting increase in international investment by multinational
enterprises.
1. Foreign direct investment (FDI)
a. International economic activity was mostly exchange of goods and
2. Multinational enterprises sell exports overseas and moves part of its operations to
another country by investing abroad.
3. Revolution in Information Technology created a global market for investment
and increased the pace and scale of information exchange.
4. Deregulation of financial markets resulted in movement of capital globally.
5. Globalization affects trade unions.
a. The restructuring of production allowed organizations to concentrate on
their core business and to outsource nonessential functions previously
272
6. Additional challenges to workers and their trade unions:
a. Government deregulation weakens nation-centered systems, which
created a degree of social justice and economic equity.
II. World Wide Labor Movement
A. Industrial revolution
1. Through invention and innovation, substituted machinery for human labor and
harnessed new forms of energy to fuel production.
3. The industrial revolution caused the widespread movement of people from rural
B. Democratic revolution
2. France sought to rid itself of an oppressive oligarchy of king, nobility, and
church.
C. Capitalist revolution
1. Rise of capitalism and the spread of the market economy challenged the
mercantile system of economic monopoly
2. Adam Smith introduced capitalism from his market economy philosophy
a. Capitalism allows self-interest, profit making, and market forces to have
4. Employers paid a group of people (employees) to provide labor in the form of
work, and a labor market was created.
a. Was the interplay between employer’s demand for labor and the
worker’s supply of labor.
b. Could be geographical or categories, such as skilled or unskilled.
D. Growth of trade unions
1. Trade unions in the United States, United Kingdom, and Europe were seen as
having three roles:
3. In the United Kingdom and Europe, they tended to embrace all three to some
degree.
III. International Labour Organization
A. Formed in 1919 by Treaty of Versailles as a parallel organization to the League of
Nations.
2. Adopt labor standards to improve the conditions of workers.
4. Humanitarian goal to end the exploitation of workers in industrialized countries.
6. Economic goal was to establish international standards to improve the workplace.
B. Samuel Gompers, president of the American Federation of Labor (AFL), advocated an
organization to support workers’ right to organize and bargain collectively.
1. Many trade unionists and social reformers from Europe believed the ILO should
C. Nine principles written into the ILO Constitution defined its philosophy:
2. Workers had the right to organize.
3. Workers should get a reasonable wage to maintain a reasonable standard of
274
5. One day of rest each week.
7. Equal pay for equal work.
9. Enforcement of labor laws.
D. ILO has a unique tripartite organizational structure: representatives of the participating
governments, employers, and workers as equal parties in its governance.
E. Main work of the ILO
1. Enact international Conventions which must be ratified by a country to be
IV. Anglophone Countries
A. Great Britain
1. Industrial revolution began in Great Britain
a. It had the technological means, government encouragement, and a large
2. Unions organized nationally and were highly centralized.
a. Negotiation and arbitration were accepted practices and more common
means of securing improvements in wages and conditions than strike
action.
b. In 1868, the Trades Union Congress was founded and had success in
lobbying for laws protecting workers such as:
i. The Employers and Workmen Act of 1875 where employers,
c. The militancy of unions during the pre-WWI years led to a wave of
strikes, dubbed “the great unrest”. WWI accentuated divisions within the
labor movement.
d. British labor movement in the 1920s influenced by the following beliefs:
i. Capitalism’s decline was inevitable.
e. Labour government in 1945
i. Nationalized industries and the Bank of England resulting in
f. The trade union movement in the 1950s focused on increasing its
memberships.
3. Britain developed a voluntarism or a collective laissez faire system.
a. Under voluntarism, a union and employer agree to be parties to a
275
collective bargaining agreement and the contract can extend for as long
as the parties agree, although wages are generally negotiated annually.
b. The collective bargaining agreement’s terms and conditions cover all of
the individuals in the bargaining unit even if they are not in the union.
c. Laissez faire in British labor relations came to an end with the election of
the Conservative government.
i. Narrowed a union’s immunity from labor injunctions
d. Labour government in 1997, left the major aspects of Thatcher’s
legislation in place.
e. Some reforms were instituted such as the 1999 Employment Relations
Act that
B. Canada
1. The Winnipeg General Strike in 1919 and fears of Bolshevism led to the
appointment of a Commission.
c. Endorsed a collective voice for workers
2. Until WWII Canada’s economy largely rural, centered on resource extraction
rather than manufacturing.
a. Inhibited the growth of a large urban-based, wage-earning labor force.
b. Economy was more vulnerable to the disruptive effects of strikes.
c. Canada’s labor relations discourage the adversarial scheme of trade
unionism and collective bargaining, and encourage cooperation and unity
of interest between employers and employees.
d. This strategy combined:
i. British-style voluntarism in union recognition,
3. Canadian law on both the federal and provincial levels mirror the protections
found in the U.S. National Labor Relation Act.
a. Workers have the right to form unions, to elect exclusive bargaining
agents. Employers must meet with unions for the purpose of collective
bargaining; grievance procedures and arbitration are mandated, and
strikes during the term of a contract are prohibited.
C. Australia
1. Adopted a federal compulsory conciliation and arbitration system in 1904, which
a. Gave legal protection to collective bargaining
2. Until the 1980s, both labor and employers sought to decentralize collective
bargaining and adopt enterprise (company or industry specific) bargaining.
3. Coalition Government introduced, in 1996, the Workplace Relations Act (WRA).
The key elements of the WRA include:
a. A streamlined “award” system
4. Australian system of industrial relations is still a centralized model.
a. Characterized by industry-wide or company awards (similar to U.S.
collective bargaining agreements).
b. Negotiated by company, union, and sometimes government officials.
c. Submitted to the Australian Industrial Relations Commission (AIRC) for
compulsory arbitration by the AIRC.
5. Eighty percent of all wage and salary earners are covered by the awards system,
V. The European Union Nations
A. The European Union (EU)
1. Regional body of 25 member states formed for the political and economic
2. Began its cooperative and integrative process in 1951. Map of EU member states
in Figure 13-2.
4. Economic and political integration within the EU has resulted in member
5. The Single Market was formally completed 1992, made it increasingly easy for
people to move around in Europe.
277
7. Because of resistance to adopting an EU Constitution, the Treaty of Lisbon was
signed in 2007 to make the EU more democratic and transparent.
8. The EU is a single trading bloc.
9. The European Commission recognizes three European-wide industrial relations
unions as “social partners”:
a. European Trade Union Confederation (ETUC)
10. The Social Charter contained in the Maastricht Treaty is an action program to:
a. Protect workers’ rights in employment contracts
11. The EU Directive on works councils (Table 13-1)
12. Organized labor is well established in the EU.
a. The overwhelming majority of collective bargaining agreements are still
B. Germany
1. Industrial revolution
a. In 1872 a united Germany had an elected Parliament, selected by
landowners and a Chancellor appointed by a hereditary monarch.
2. Trade unionists adopted the three-fold agenda.
3. German industrialists began to cooperate with trade unions during the First
World War.
4. Germany employees are represented in three ways:
a. Trade unions negotiate collective bargaining agreements for wages.
i. On a national or regional basis with a particular industry
278
ii. Result in “pattern” or fairly uniform results
iii. Legally binding on the employers of the association negotiating
and members of the trade union
iv. Employers generally apply the contract to all workers
b. Work Councils negotiate location specific working conditions at the
company or enterprise level
i. Enforce the collective bargaining agreement.
C. Co-Determination Law: In firms with 2,000 or more employees,
company’s supervisory board contains a certain number of employee
5. German trade unions lost political clout under the conservative government and
lost more than 3.5 million members from 1991 to 1999.
a. Unions were blamed for high labor costs and tighter work rules that
caused high unemployment and sluggish growth.
b. Some of the loss was due to fewer national contracts negotiated between
national unions and national employer associations.
C. France
1. Industrial relations in France are characterized by:
a. Legacy of class conflict
2. The evolution of French collective bargaining has been a grant of power from the
State (previously represented by royalty) to the social partners: employers
(previously represented by the nobility) and employees (previously represented
by the feudal system).
a. Industrialization started in the early 1800s with the growth of craft
3. The French system of employee relations emerged from the anarchists and
revolutionary socialists within the labor movement (anarcho-syndicalism).
a. With a working-class culture distrustful of government and employers,
bitter that class divisions still existed.
279
b. Employers hold on authority as a claim of right unfettered by their need
for labor.
4. Collective bargaining legislation
a. Names the employers’ and employees’ bodies that have “representative”
status.
b. Establishes the terms under which bargaining is valid.
5. All employees in a sector or company and all companies are covered by an
agreement if approved by a State extension.
a. The government extends sector-level agreements when they comply with
6. In 2004, a federation of employers published proposals for reform of the Labour
Code.
a. Create individual employee contracts of short duration for specific
assignments and allow fixed-term contracts that expire.
D. Italy
1. The Italian unification movement in 1861 combined wealthier northern regions
with historical and cultural ties to Austria, Switzerland, and France, with a group
of southern regions linked to North Africa.
a. Nation faced many serious problems.
b. During the 1880s, a socialist movement began to develop among
2. In 1948 Italians abolished the monarchy in favor of a republic and adopted a new
constitution under the leadership of its largest political party, the Christian
Democrats:
a. Stressed industrial growth
3. With massive U.S. aid, Italy’s economy recovered with a rapid industrial
expansion and an increase in the standard of living.
5. Industrial relations in Italy is governed by its Constitution, Acts of Parliament,
regional laws, customs, and practice, European Union measures affecting
employment, and any adopted Recommendations and Conventions of the
International Labour Organization. The Constitution recognizes:
a. Trade union freedom and collective bargaining.
6. June 2003 Reform of Italian labor law proposed.
a. To enhance the match between labor demand and supply
b. Relating primarily to job placement services and forms of employment
c. Culminated with “Biagi reform,” named after Marco Biagi whose
assassination in 2002 is linked with the reform law and is discussed in
Profile 13-3
i. Introduced new types of employment contracts
7. The involvement of social partners—employers and employees—in the design
of economic policy, the so-called “concertazione” of the Italian government, has
been promoted by the formal adoption of tripartite agreements or pacts. Such
agreements:
a. Target pension reform
8. Employers are represented by three main organizations:
a. Confindustria (industry)
281
9. The three largest trade unions, CGIL, CISL, and UIL, are united in a single
10. The Protocol on Labour Costs of July 1993 provides for a two-tier wage
bargaining system:
a. At the national industry-level, collective bargaining agreements are valid
for four years as to the terms and conditions of employment and for two
VI. Far East
A. Majority of Asian countries subject to foreign occupation.
2. During the colonial period governments assumed a dominant role; the role was
maintained by the post-independence governments.
B. Japan
1. Industrialization began in the 1880s with ownership of a majority of its
enterprises concentrated in powerful family groups.
a. These families ran their factories in a paternalistic tradition.
2. Prior to World War II, trade unions had very little impact.
3. The Japanese system of labor relations can be summarized as having three key
premises:
a. Concept of lifetime employment
i. Not a guaranteed benefit, rather how enterprises are organized.
ii. Employees enter a firm with the expectation they will be kept on
b. Japanese wage system based on seniority.
i. New employees are given a monthly salary based on the
individual’s level of educational attainment but not job
282
c. Japanese labor unions are organized into three tiers:
i. Enterprise-based unions: 90 percent are enterprise-based unions,
4. Japan is increasing the scope of its employment legislation.
a. Added an explicit clause requiring employers to have just cause when
dismissing employees
5. The Constitution of Japan and Trade Union Law provides:
a. For freedom of association
6. Japanese labor unions basically have a “triplicate structure”:
a. Enterprise labor unions organized at each business.
7. Collective bargaining is practiced widely in Japan as to the terms and conditions
of employment.
a. The Japanese joint consultation system provides a means for continual
information sharing and communication.
b. Joint consultation committees are made up of both senior corporate
C. China
1. The third largest country in the world occupying one-fifteenth of the world’s
landmass.
2. In late 1978, Deng Xiaoping and other leaders began moving the economy from
centrally planned economy to market-oriented system.
3. The transition toward a market economy led to changes in the labor relations
environment.
a. China’s industrial relations system was an economy based on the state
ownership of the means of production; state ownership of the enterprise
b. Strict centralized control of wages, prices, and employment.
c. The trade union, then, is not supposed to represent the employees against
the employer, but the entire enterprise, just as the employers do.
d. Therefore, collective contracting and resolution of disputes were
nonadversarial; resolved on the basis of the common interest of the
whole.
4. Trade unions had been a part of the socialist system, not as workers’
representatives but performing state functions in the workplace.
a. The All-China Federation of Trade Union’s constitution had described
their role as “transmission belts between the [communist] party and the
5. China’s 1994 Labour Law
a. Defines the minimum terms and conditions of labor.
b. Replaced guaranteed lifetime employment with labor contracts.
c. Labor contracts could cover wages, working hours, rest and vacations,
6. But trade unionism in China suffers from its inability to pressure employers
without resorting to conflict causing tactics that might provoke social unrest and
renewed repression.
a. To avoid conflict, a tripartite “consultation” system is used with
government, unions, and employers as the three parties.
b. The goals of the tripartite consultation:
i. To establish an appropriate legal and regulatory framework for
7. The predominant function of trade unions continues to be largely managerial:
a. Encouraging workers to increase productivity and enforcing discipline
8. Role in arriving at a collective agreement is largely done by a consensus method.
a. Trade union prepares the initial draft of a contract based on the previous
9. Wage negotiation is separate from contract negotiation.
a. Management takes the lead in the process.