GODARD CHAPTER 3 - UNDERSTANDING
LABOUR-MANAGEMENT RELATIONS
EXPLANATIONS OF INDUSTRIAL CONFLICT ARE VARIED
Neoclassicals/neoconservatives
Claim that government intervention & unions interfere with the selfcorrecting force of the free market, which is based on individual choice.
While the theory has some merit, the empirical evidence is that monopoly
forces whether in the consumer market, labour market or the capital market
tend to limit competition and deprive society of the theoretical advantages of
the free market.
As we shall see in future classes, the free market ideology arguably did not
work in the industrial revolution because power between workers and large
corporate employers was unequal. It should be noted that large corporations
have also made it difficult for many small businesses to survive. See impact
of big box stores, difficulty of small businesses to enter markets, get loans
etc., built in obsolescence of consumer goods eliminating repair and service
businesses.
Managerialists tried to adjust labour market imperfections by providing
better working conditions and sense of belonging. However, managers are
frequently under pressure from the competitive system that attracts capital
for investment.
Pluralists
They tend to base their approach on Durkheim’s industrialism thesis that the
problems of industrial relations and society in general in late 19th and 20th
centuries were transitional and remedied by government programs and
democratization of workplaces through collective bargaining. At least two
questions arise:
(a) What evidence is there that potentially destructive industrial and
societal problems are being effectively resolved by the methods of
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pluralism? Such evidence should be sought in readings and
discussion in this course. A key concern is the arguments and
policies of governments, corporate leaders that social programs
are not sustainable and must be ended or privatized, or avoided by
moving production abroad.
(b) If the answer to (a) is that such methods are not working, there
remains the question of the underlying causes of such problems.
Perhaps answers are not to be found in the pluralism inspired by
Durkheim’s thesis but in the analysis of Weber or of Marx.
A key assumption of the industrialism thesis is that chronic or excessive
imbalances of power can be prevented by the intervention of free market
forces, government regulation or economic activity (Keynesian economics)
or by the diverse organizations, individuals, interest groups that make up
civil society or the civic sector.
See 48-50 of Godard for summary of the three theses; capitalism Marx;
industrialism (Durkheim); and industrial capitalism (Weber). These theses
attempt to explain the broad reasons for the conflict that existed and exists in
workplace relations and in society at large.
Cooperation
While there is evidence of conflict in historical and contemporary labour
relations a number of points must be made.
(a) Conflict can be positive
Not all conflict is harmful or destructive of societal cohesion. As individuals
and groups see the world from different perspectives, it is natural that
disputes and conflicts arise. However, such conflicts may be positive if they
can challenge the participants to compromise their own self-interest to
incorporate conflicting views or interests of others.
(b) Cooperation exists in Canadian workplaces and society at large
Cooperation is necessary even in competitive contexts. For example, in
sports, cooperative behaviour is just as important as competitive. Agreement
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on the rules and adherence to them makes competition possible.
While conflict is inevitable and at times destructive of workplaces or
society, substantial cooperation already exists in Canadian society and
workplaces. There is ample evidence of employee satisfaction at work,
enlightened managerial practices, social programs and policies to meet
workers’ and individuals’ needs, political systems to promote social
cohesion.
Unions play a role in workplace and societal democracy by giving voice to
the collective needs of workers. This involves reconciling individual
interests and conflicts among workers prior to negotiating the “rules” of the
workplace with management. Individuals’ needs are also of interest to trade
unions beyond the scope of collective bargaining. For example minimum
employment standards, health and safety, human rights, fair treatment, and
job security are all issues of concern to unions.
Why does workplace conflict exist?
Godard suggests two kinds of conflict exist:
(i)
(ii)
inherent conflict in the system of capitalist economies; and
conflict specific to particular relationships.
The first is underlying conflict, the second is contextual conflict.
Underlying sources of conflict
There are four sources of underlying conflict:
(i) legal alienation;
(ii) objective interest conflicts;
(iii) the nature of employment relationship;
(iv) the nature of employment contract.
Legal alienation
Adam Smith talked of Britain as nation of shopkeepers. Ownership was seen
as an incentive to work. But today, 85%+ of Canadians work for someone
else. Godard suggests such persons are alienated from the means of their
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work, and from the products and the proceeds of their work. There may be
other incentives to work but not that of ownership as Adam Smith suggested.
If we are to reap the benefits of ownership as an incentive to work, we must
consider societal laws and policies that promote ownership by workers.
However, the trend seems to be the opposite. Workplaces are typically
owned by large corporations. Managerial policies are often influenced by the
stock market rather than long term policies.
It should be noted that many small businesses are scarcely viable and
frequently go under due to lack of capital. Many such businesses are
franchises essentially owned by large corporations. Failure to meet the
demands of the franchise agreement will lead to the franchisee’s losing
the business.
The incentives of ownership are recognized by employers, Stock options as
a means of paying employees are a method used by some employers to
promote employee loyalty and commitment, as “owners”. Of course, such
“ownership” does not typically give employees influence over policy
decided by management or senior executives.
Worker cooperatives and consumer cooperatives are also methods designed
to tap into the incentives derived from ownership. Their purposes are usually
to localize and democratize capital created by work. These will be dealt with
in the course, if there is interest in the class. You may find the following
websites of interest.
http://dmoz.org/Business/Cooperatives/
http://www.sfworlds.com/linkworld/mondragon.html
http://www.adamsec.com/
Objective interest conflict
Whether or not one accepts Marx’s ‘exploitation thesis’, the primary object
of organizations is the pursuit of profit. Other things being equal, employers
benefit by harder work and lower pay of workers. Workers require the
converse, higher pay and less work. So while productivity measures
efficiency for the employer this is not necessarily beneficial to the worker.
The extent of workplace and societal conflict may depend on the extent to
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which employers seek to maximize profits, and the strategies they adopt to
do so. Unions have a role to play in advancing workers’ interests when they
conflict with the employer’s.
Note the managerial revolution in North America that reduced shareholder
power. Yet, the pressure on management to maximize profit may be even
more intense due to the financial markets. There is pressure to increase
companies’ share prices in the short run, with cost-cutting, redundancies,
and work intensification. Work intensification can increase health and safety
risks, particular if redundancies require more work to be done with fewer
resources.
See for example Stelco.http://www.uswa.ca/flash.htm Lawrence McBrearty
416/487-1571; 416/575-2486 (cell); Wayne Fraser 416/243-8792; 416/5774045 (cell). In such instances, unions attempt to negotiate employees’
interests.
Conflict also arises in the public sector where government policies on public
spending, influenced heavily by business lobbies often lead to outsourcing,
privatization, debt reduction, and lower corporate taxation. The pressure is
on public sector managers to follow the profit motive.
Note a variation of North American Capitalism in Germany where firms
usually owned by large banks see their role as maximizing long-term
stability of Germany. Wolfgang Streeck German Capitalism. Does it Exist?
Can it Survive? In Crouch and Streeck eds. Political Economy of
Modern Capitalism (Sage, London, 1997). Such owners are conscious of
the social and political instability that may arise from massive lay-offs of
workers, or chronic unemployment.
In Japan, there are many cross holdings in enterprise groups, so firms are
accountable to other firms within the enterprise group rather than
shareholders of the firm. See Ronald Dore The Distinctiveness of Japan
(Crouch and Streeck eds., as above).
Japan and Germany appear to be more concerned than North America with
long term needs rather than short term. Are there approaches potentially
useful to deal with objective interest conflict?
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Nature of the employment relationship
In employment there is no legal right of workers to elect superiors. Why?
There is no accountability of management to the workers. Depending on
their situation, workers have the right to exit, grieve, or strike. Workers can
also engage in informal withholding of co-operation. However, these are
reactive and may be counter-productive to the worker. For example, if the
firm loses business in a strike, workers may be more vulnerable to
redundancy. Workplaces are legally authoritarian, though this may be
limited by other legal measures e.g. minimum standards, human rights
legislation. There can be consultation of workers by management (see e.g.
statutory health and safety committees) but the system in workplaces is
essentially legally authoritarian.
This always creates issues of trust and legitimacy. Paul Blyton and Ali
Dastmalchian noted in their research that even though workers are typically
satisfied in workplaces, they have little trust of management that they won’t
be fired as soon as the bottom line dictates.
The authoritarian nature of employment continues even in unionized
settings. See the concept of management rights, founded on the old
master/servant relationship.
Nature of the employment contract
By their nature, the terms of employment contracts are uncertain with
respect to what, when, how and how much etc. work must be done. Much is
not written down. Expectations and understandings arise. The psychological
contract developed from the original characterization of an employment
contract as merely a wage-effort bargain. The neoclassical/neoconservative
concept of employment is essentially one of a wage/effort bargain.
This purely monetary approach became embedded in the common law of
employment where employees have no legitimate right or expectation to
continuing employment. At common law in Canada, an employee can be
fired without cause for any reason or no reason, provided that, if no cause
can be shown, the employer provides pay in lieu of notice. Such pay
represents an estimate of the loss of earnings the employee will incur
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between his or her dismissal and the commencement of a new job. Until
very recently, the courts recognized no psychological aspects of work. It was
viewed purely as the trading of commodities. Labour for money.
Yet, in reality psychological factors are part of the implied contract of
employment. Employers expect their employees to be honest and faithful.
An employee could traditionally be dismissed for breaking confidence and
not working in the best interests of her employer. Public criticism of an
employer or whistle blowing are grounds for dismissal at common law (but
see recent legislation and the Criminal Code).
While employment contracts traditionally protected employers’ expectations
of employees’ loyalty, confidentiality etc. the employment contract has few
protections for employees’ psychological needs of safety and job security,
employer loyalty, expectation of job security, promotion, and fair treatment.
This is not to say that employers do not attempt to meet employees’
psychological needs. Many do. However, employees’ needs are typically
subordinate to those of investors and the psychological employment contract
can easily be broken when employees’ interests clash with investors’
interests.
Psychological contracts (as opposed to monetary) are ambiguous, capable of
a variety of interpretations. Disagreements can readily arise about how safe
must safe workplaces be or how fair should management be. Such ambiguity
and flexibility is an advantage of work organizations. However, ambiguity
inevitably leads to disagreement and conflict.
The employer’s need for flexibility in the workplace also encourages
employers to impose new obligations on employers, whether it is
intensification of work rate, learning new technology, taking more risks etc.
There is little recourse for employees short of quitting. However, for those
who stay, this is a source of potential conflict that may produce distrust,
insecurity, and an adversarial workplace culture.
There is a serious question of whether workplaces in the capitalist system
can deliver the measure of security, freedom from risk, sense of belonging
etc. that modern employees frequently expect as part of the psychological
contract.
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Contextual sources of conflict
Broader social inequalities
1998 Ekos Research survey of 2000 Canadians. 56% found salary adequate
for basic needs, 29% moderately adequate and 13% inadequate. This may
suggest there is little need for unions. However “relative deprivation” may
be an issue. The combined wealth of the top 1% of Americans or Canadians
exceeds the aggregate of the bottom 90%. Bill Gates’ (Fortune Magazine)
personal wealth of $90 billion exceeds that of the bottom 100 million
Americans.
Former BoM CEO Matthew Barrett took home $20 million+ annual salary,
bonuses and stock options – the equivalent of the annual earnings of 847
bank tellers and 1569 workers on average minimum wage.
Individuals and families at bottom 20% of earnings receive 5% of the total
income received by Canadians. Inequality appears to be increasing.
Statistics Canada data suggest that around 16% of Canadians live below
poverty line. This concept of poverty is subjective. See John Rawls’ concept
based on the minimum standard of living that an individual in society would
accept as legitimate for him or her to live.
Incomes stagnant since in past two decades.
Particularly for the bottom three fifths of the Canadian population, real
incomes have been stagnant for the past two decades. Capitalism generally
promises growing wealth. Failure to do that seems to trigger resentment.
Note the “marketing of affluence” under the system. Does this generate
unrealistic expectations?
Frequently popular hostility is directed at governments and public sector
workers for failure to deliver quality health care and education, affordable
housing, affordable child care…….and so on.
Labour market experience
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In recent times, there has been an improvement in certain workplace
conditions, e.g. less arbitrariness on the part of management, a greater sense
of belonging, etc. but…….
There is a growing lack of security among workers at all levels.
See the economic issues of growth, instability, equal distribution. This is
always a trade off. Who should decide? Instability can produce periods of
high unemployment and lack of sense of security through government aid.
See also structural unemployment – around 20% of non-employed workers
have given up looking for work. This reduces official unemployment
figures. Also the average length of time to find jobs is longer. When
employees do find jobs, they are frequently part-time with no fringe benefits.
Multi-part-timers are more frequent.
Health and Safety
Price Waterhouse study.
Main health and safety risks are stress, exposure to dust noise, radiation,
chemicals
Women bear disproportionate hardship in labour market. Women earn less
than men Around 72%. Of average male earnings. See child care issues
which are typically viewed as “female issues”.
The Price Waterhouse study suggested around 6% of women had been
sexually harassed at work in the previous year.
Nature of Work Itself
See alienating work – is it endemic in the system?
Can jobs designed for profit be made more challenging? If so, who should
do it?
Surveys tend to indicate quite high levels of employee satisfaction but some
concern is expressed about powerlessness.
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The combined effect of the many foregoing factors are Godard’s (and
others’) explanation of why workplace conflict occurs.
Indeed, such factors raise the question of why cooperation exists?
Workers generally accept their role in and the legitimacy of the workplace
system. Why?
No alternatives available?
Improved conditions due to managerialist policies to improve working
conditions?
But the majority of those polled by in the survey agreed with need for unions
and believe employers don’t treat employees well.
The foregoing suggestions explain conflict but don’t explain why typically
respondents to surveys are typically satisfied with most aspects of work
except lack of security and a sense of powerlessness.
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