C13-1
COMPARATIVE LABOR RELATIONS
• Note the sometimes great differences with the U.S. system:
• But also similarities around:
• Universal contemporary pressures such as
globalization.
• Objectives of efficiency, equity, and voice.
• Importance of balancing labor rights and property
rights.
• Labor relations outcomes determined by environment
and individual decision-making.
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C13-2
MAJOR DIMENSIONS OF INDUSTRIALIZED
LABOR RELATIONS SYSTEMS AROUND THE
GLOBE
• Social Partnership—peak-level discussions of broad economic and
social issues
• Sector Bargaining—centralized industry-level collective bargaining
• Centralized Awards—occupation-level arbitration awards
• Enterprise Unionism—Company-specific unions
• Exclusive Representation/ Majority Rule—Bargaining only when
union represents majority of employees
• Codetermination—workplace-level shared decision-making
• Voluntarism—representation and bargaining based on economic power
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C13-3
Box 13.2: UNION MEMBERSHIP DOES NOT
ALWAYS EQUAL CONTRACT COVERAGE
OECD data, 1997
Bargaining
Coverage
Union
Density
18 %
16 %
Japan
21
24
United Kingdom
47
34
Spain
78
19
Australia
80
35
Sweden
89
91
Germany
92
29
France
95
9
United States
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C13-4
U.S. AND CANADIAN LABOR LAW:
SMALL DIFFERENCES THAT MATTER?
In Canada. . .
• Some provinces allow card-check certification or instant
elections.
• Some provinces provide for first contract arbitration.
• Most provinces ban use of permanent replacements. Two
provinces ban all replacements.
• No province has a right-to-work law. Unions are
guaranteed at least an agency shop in many provinces.
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C13-5
MEXICO
• Workers’ rights are guaranteed by Constitution, but extent
of enforcement is questionable.
• Unions must register with government.
• Union(s) does(do) not have to represent majority of
employees to engage in collective bargaining, but does in
order to strike.
• Once approved by government, contracts are legally
enforceable.
McGraw-Hill/Irwin
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C13-6
MEXICO: APPEARANCE V. REALITY
• Labor negotiations and unions have traditionally been
controlled by government as part of larger economic
development strategy.
• Dominant union federation has traditionally been
very closely connected to ruling party.
• Legitimacy of Mexican labor unions is questionable,
especially in Maquiladora sector where there is need to
attract foreign investment (note Box 12.3).
• As in many other developing countries, sharp clashes
between government and independent labor unions occur.
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C13-7
GREAT BRITAIN
•
British labor relations system based on voluntarism.
• Labor and management use their economic power, not legal rights, to get other
side to do something, especially to bargain or abide by contract.
•
•
•
Labor movement has close association with Labour Party
Contacts are not legally enforceable. Labor and management abide by contract
as long as costs of following contract are smaller than costs of breaking it.
Number one issue is probably declining union density
– Union representation fell to 29% in 2004, down from 54% in 1979 (WSJ, 12/11/07)
•
•
Under Thatcher’s conservative government, laws passed in 1980s restrict
unions’ ability to conduct secondary boycotts, outlaw closed shop, and require
democratic procedures for elections and determining strike support.
British labor starting to look more toward EU as method for leveraging labor
standards and public policy in favor of workers
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C13-8
IRELAND
• On top of voluntaristic system, Irish labor relations also
includes peak-level social partnership
• Peak-level discussions that result in national
agreements on social and economic issues.
• Social partnership agreements include centralized
bargaining over wages, but also agreements on broader
social issues.
• Can promote aggregate stability and predictability.
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C13-9
FRANCE
•
•
•
Mix of often militant and politically oriented unions but weak collective
bargaining; also, very low union density but very high coverage rates.
France is example of political or ideological unionism.
• Six major union federations which often have distinct political or
ideological perspectives.
French unions pressure (as “outsiders”) government to enact policies favorable
to union’s agenda, rather than participating directly in policymaking (as
“insiders” in social partnership).
– Industry-level agreements can be extended to all employers
•
Collective bargaining agreements are weak by U.S. standards, but this is offset
by national laws that favor workers.
•
French law provides for several forms of workplace-level employee
representation separate from labor unions
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C13-10
GERMANY
• Two key features— sector bargaining and codetermination.
• Sector bargaining—centralized, industry-wide bargaining that
produces contract for entire industry (sector).
• Each industry has dominant union and employer association.
• Sector bargaining establishes minimum, industry-wide
standards.
• Standards can be extended to all employers in industry
irrespective of union status.
• Sector bargaining complemented by codetermination—workplace
system of employee voice in decision-making.
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C13-11
GERMAN CODETERMINATION
• Employee representation on corporate supervisory boards
• German supervisory boards are less powerful than
U.S. boards of directors, but employee
representation nevertheless provides workers with
voice when strategic decisions are being considered.
• Works councils
• Workplace-level committees which represent nearly
all workers in dealings with management.
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C13-12
RIGHTS OF GERMAN WORKS
COUNCILS
• Codetermination
• To jointly determine issues pertaining to work rules and
discipline, daily working hours, leave schedules, performancebased pay and bonuses, overtime, safety and health, training,
and employee selection methods.
• Consultation
• To be consulted before employer changes nature of work.
• Information
• To be given financial information regarding firm’s balance
sheet, investment and marketing plans, and other corporate
intentions.
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“VW’s Woes Mount Amid Claims
of Sex Junkets for Union Chiefs”
Dozens of Lustriesen (pleasure trips) to exotic locations were taken by
VW worker representatives and paid for by Co from mid-90s until
recently
– Former HR mngr says he was given blanket instructions by his boss to use trips to
win worker reps’ support for Co mngt
– Underscores close relations btwn mngt and labor that have been hallmark of
German economic model
• For much of postwar period, this close relationship helped explain Germany’s success,
allowing for avoidance of labor strife that has hurt other economies
• Now, however, it is seen by some as part of problem, encouraging backroom deals and
forcing mngt and labor to take half-measures that fail to solve underlying problems
– In September 2005, VW labor reps said they would accept lower wages and longer
hours for some workers at German plant, after Co threatened to shift production of
new SUV to Portugal
• Co has also warned that it has several thousand more ees than it needs in Germany
» Source: Wall Street Journal, 11/17/05
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C13-14
SWEDEN
• Similarities with German labor relations.
• High contract coverage rate.
• Dual representation structure with centralized industry-wide
collective bargaining and strong workplace representation.
• As in other countries, economic pressures are causing greater
decentralization in bargaining.
• Union density is high, so workplace representation is widespread.
• Would U.S. unions be less resistant to change if they were
institutionally secure as in Germany and Sweden?
McGraw-Hill/Irwin
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C13-15
STALINIST INDUSTRIAL RELATIONS
• In centrally-planned Stalinist economies, managers of state-owned
enterprises and unions were both controlled by Communist party.
• Unions were a critical part of this economic and political system,
acting as “transmission belt” for party by delivering its agenda to
working class.
• Unions also administered government’s various social benefits such as
housing and recreational programs and therefore membership rates
were very high.
• Strikes and independent unions were illegal. Collective
bargaining didn’t occur because wages and other items were
determined by central planners.
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C13-16
FALL OF COMMUNISM
• Polish workers won right to form independent unions and
Solidarity union was born.
– Martial law was imposed in 1981 and Solidarity outlawed.
• Polish strikes in 1988 again pressured government to
legalize Solidarity and it was allowed to participate in free
elections in 1989.
• Fall of Berlin Wall in 1989 marked end of communist East
Germany and by end of year, communism was collapsing
throughout Eastern Europe.
• Events triggered by Solidarity movement underscore
power of collective action and need for independent labor
movements.
McGraw-Hill/Irwin
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C13-17
EASTERN EUROPE TODAY
• Collective bargaining, economic strikes, and independent
unions have been legalized in Eastern Europe.
• But stable systems of labor relations have yet to emerge
and unions have struggled to find their most effective roles
in new transition economies.
• Stalinist model left legacy of weak unions at enterprise and
workplace levels who have no experience in collective
bargaining and little rank and file involvement.
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C13-18
AUSTRALIA AND NEW ZEALAND
• Central feature has traditionally been centralized arbitration awards
system.
• Federal or state arbitration commission issues award that specifies
minimum standards for pay and working conditions for an
occupation.
• Workplace conditions and over-award pay was established through
adversarial collective bargaining, but arbitration was cornerstone.
• Macroeconomic concerns and employer attempts to improve labormanagement cooperation, flexibility and responsiveness to firmspecific conditions have weakened centralized awards systems.
– Australian labor movement has actively pursued union mergers to
transform large number of small unions into smaller number of industrybased or general unions (balance union strength and responsiveness?)
• Unionization rate was 20% in 2006, down from 46% in 1986 (WSJ, 12/11/07)
– New Zealand labor relations is now voluntaristic.
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C13-19
JAPAN
• Because of strong enterprise identification, enterprise unions very
concerned with company’s performance and tailor demands and
agreements accordingly.
• Japanese labor relations often characterized as cooperative or
consensual.
– Complemented by annual wage negotiation process: Shunto
• Some companies also have joint labor-management
consultation bodies and consultation sometimes more
important than bargaining.
• Is this a more cooperative and productive model of unionism than
adversarial U.S. model?
• Or are enterprise unions really just management-dominated sham
unions?
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C13-20
ASIAN DEVELOPING COUNTRIES
• As with developed countries, Asian developing countries
have taken different approaches:
• High-level tripartite or corporatist model
(Singapore)
• Pluralist model with varying combinations of
political representation and collective bargaining
(Philippines and India)
• Government-controlled model (Malaysia and
Indonesia)
• Systems that are in flux (China and South Korea)
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C13-21
ASIAN DEVELOPING COUNTRIES
• Within these developing countries, government
frequently exercises tighter control over unions
and labor relations than in developed countries
• Important underlying thread in all of these
developing countries is subservience of labor
relations to country’s industrial development
strategy
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C13-22
CHINA
• Before 1980s, similar to Eastern Europe (unions as
transmission belts).
• Economic system now moving from Socialism to mixed
economy, but little loosening of Communist party’s control
over political system.
• Union leaders still closely interlinked with
Communist party
• Strikes still restricted.
• One legal union federation: All-China Federation of Trade
Unions (ACFTU).
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“In China, Workers Turn Tough”
• Assembly-line wages have not risen in recent years nearly as fast as
cost-of-living
• Image-conscious U.S. retailers have demanded better treatment and
human rights for Chinese workers
• Broader general freedoms in China have reduced traditional fear of
authority
– Protests by factory workers, farmers, others, many violent, have broken out w/
increasing frequency in recent months
• ACFTU recently issued reminder that law requires foreign as well as
Chinese companies to accept federation branches wherever workers
demand it
– In practice, however, near-total lack of representation for millions of workers, most
of them 18- to 22-year-old women who work on assembly lines 60+ hrs/wk for
wages =~$120/mo
• Most live at factories in Er-provided dormitories and eat in Er cafeterias (and then hand
back 1/3 of pay for food and lodging)
»
McGraw-Hill/Irwin
Source: Washington Post, 11/27/04
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.
“Wal-Mart Says It Would Allow Unions in Its
Chinese Operations”
• Wal-Mart said it would allow trade unions in its
Chinese operations, an apparent response to
pressure from Chinese authorities
– Wal-Mart has 42 outlets in China, ~20,000 ees
• Wal-Marts in Germany aren’t unionized per se, although they have
works councils
• Labor officials hope development will put
pressure on other MNCs to follow suit
– In March 2004, national legislature began investigation of
compliance w/ country’s labor law
– Finding: some leading MNCs were resisting efforts to set up
unions within operations
» Source: Wall Street Journal, 11/24/04
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C13-25
BARGAINING OR LEGISLATING LABOR
STANDARDS?
• Political activities of labor movement in many countries outside U.S.
are as important as their workplace activities.
• Political strength can result in labor standards that are legislated for all
workers rather than confined to workers covered by collective
bargaining.
• Outside of U.S., many employment conditions, especially
pertaining to benefits and dismissals, established by
government regulations.
• Political aspect of comparative labor relations should not be
overlooked, and important question for future is whether labor
standards should be negotiated or legislated, or neither.
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C13-26
Box 13.11: EMPLOYEES COVERED BY
UNJUST DISMISSAL PROTECTIONS
INSERT BOX BOX 13.11
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Globalization Reconsidered
• Most important effects of globalization
on labor relations across many
countries are declining union strength
and intense corporate pressure for
increased workplace flexibility
– Pressures for decentralization
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Implications
• To what extent should aspects of labor
relations in other countries be adopted
in U.S.?
– E.g., should the U.S. adopt mandatory works
councils?
– Review Box 13.11: What are the pros and cons
of the lack of widespread unjust dismissal
protections in the U.S.? Is policy reform
needed?
McGraw-Hill/Irwin
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