Differences in Labor Relations Management Across Countries: A Focus on Australia, Britain, the United States, Canada, and Japan

Introduction

Approaches to the management of labour relations in the world vary from country to country. Many countries in the world have embraced capitalist economies in which most resources used in production and the methods applied are owned by the private sector and individuals (McIlroy, 1995). Such economies are perceived to exploit employees and thus need regulating mechanisms to ensure that employees are shielded from harassment. According to Kuper (1985), labour unions stabilize economies by institutionalizing labour relations. Along this line, many countries have labour unions, which act as mediators between employers and employees. The labour unions in different countries operate differently according to the respective countries’ labour laws. This paper will examine the management of labour relations in Australia, Britain, the United States, Canada and Japan. In particular, the paper will present the countries’ status of labour unions by highlighting membership statistics in each of the aforementioned countries. Finally, the paper will evaluate how labour relations affect the competitiveness of different countries or industries.

Management of labour relations in Australia

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Significant changes occurred in the Australian labour industry over recent years. Some of the changes include the reforms in labour laws instituted by the country’s parliament in the year 2005. The current changes are contained in a set of legislative measures referred to as “WorkChoices”. Work Choices aims at preserving the existence of enforceable laws that existed in the Australian past legislative systems but does not allow creating new awards (laws that regulate labour in Australia). Australia has over 4000 awards, implying that the country has more than 4000 labour laws for its relatively small population of ten million people. Australia’s labour system comprises a highly regulated minimum wage system. In view of this, the country has over 105,000 distinct minimum wage categories, which are also implemented under WorkChoices. In this regard, mandatory minimum pay starts at a stated recommended federal level and extends through various levels categories to lower-level jobs such as management staff. This means that mere bargaining does not set minimum wage standards. Even if bargaining between employees and employers is done, it is only after the application of the minimum standards. This is in contrast to the labour relations in many other countries where bargaining is linked to labour conditions as well as related market rates. In order to facilitate the implementation of the various policies, the government of Australia chose to internalize the processes of drafting various legislations, allowing labour unions and employer organizations an only limited scope to give comments.

According to Fleming (2004), most labour unions in Australia are have declined to be structured as industrial labour unions. Along this line, the country had 320 federally registered unions, of which the 16 largest ones accounted for 50,000 employees by the year 2004.  The dependence of trade unions on the government has resulted in some fluctuation in their membership particularly in the private sector but this varies depending on the union category. According to the Australian Bureau of Statistics (2008), Australia had about 19 per cent of its 1.8 million employees in labour unions.

• Category
  Value
• The proportion of total employees in labour unions in 2007
  19 %
• The proportion of total employees in labour unions in 2008
  19 %
• The proportion of public sector employees in unions (2008)
  42 %
• The proportion of private-sector employees in unions (2008)
  14 %
• The proportion of full-time employees in unions (2008)
  21%
• The proportion of part-time employees in unions (2008)
  15 %

Source: Australian Bureau of Statistics (2008)

The figures above indicate that labour unions currently have low membership probably because of the government’s intervention in the labour industry, which has sidelined labour unions as major players in the labour industry. In addition, labour unions seem to be more popular among public sector employees than private-sector employees (42 per cent and 14 per cent membership respectively), indicating that the public workers have more freedom to join labour unions.

Management of labour relations in Britain

According to McIlroy (1995), Britain’s labour industry is linked to the world’s oldest labour unions. The labour industry operates in accordance with the Trade Union and Labour Relations Act of 1992. The Act controls the operations of labour unions and activities such as industrial action and governs the relations between employers, employees and labour unions (McIlroy, 1995). Trade Union and Labour Relations Act also ban agreements of conditions in employment that are discriminative in the context of union membership and protects workers or picketers participating in industrial action (Ashley & Grenville, 2005).  This ensures that all demonstrations by workers are peaceful and that both employers and employees take part in negotiation concerning labour-related issues. As part of the Trade Union and Labour Relations Act, industrial action is not protected in Britain but can only be allowed if it is approved by a secret ballot supported by over 50 per cent of labour union members at any workplace. In addition, the Act bans secondary strikes and provides that collective bargaining accords should be controlled according to the Employment Act of 1999.

As highlighted above, the British labour industry is influenced largely by policies made under the guidance of the government. Thus, labour unions do not have much influence particularly after the era of Margaret Thatcher as Prime Minister under whose reign most of the powers held by labour unions were truncated. The standoff between the Thatcher government and labour unions in the 1980s and early 1990s affected labour unions as the government took much control of labour relations  Thus, membership to trade unions has been fluctuating as shown by the membership statistics between 1995 and  2007 (Mercer and Notley 2007). For instance, was 0.3 per cent decline in membership from 28.3 per cent (of total employees) in 2006 to 28.0 per cent in 2007 (figures 1).

Figure 1: trends in labour union membership in Britain (1995-2007)

Source: Adapted from Mercer and Notley (2007) (originally produced by Labour Force Survey, Office for National Statistics).

The decline in labour union membership in Britain is experienced most in the private sector perhaps due to the fact that since labour unions have no much influence, employers in the private sector have much control over their employees, which makes employees refrain from union-related activities such as industrial action. The point is that currently, labour unions in Britain have a much-reduced impact, leaving most employment-related issues such as grieve-handling in the government’s court. As a result, membership to labour unions is steadily declining as shown in figure 1

Management of labour relations in the United States

Labour issues in the United States are managed by the Federal Labor Relations Authority (FLRA) (Federal Labor Relations Authority).  FLRA is an independent arm of the government that is in charge of relations between the federal government and employees in the United States. The authority is the arbitrator in disputes that arise under the Civil Service Reform Act and decides on cases with regard to collective responsibility (Federal Labor Relations Authority). In addition, the authority has a statutory responsibility of providing leadership and developing policies to guide participants in various labour relations programs (Federal Labor Relations Authority).   In view of this, the Authority helps federal agencies and labour unions in understanding the responsibilities and rights that pertain to them (Federal Labor Relations Authority). Labour unions in the United States were formed primarily to shift the power balance between labour and its management and have been affected by several policies. For instance, when the government outlawed the activities of the unions such as mass picketing and strikes, their influence in the labour industry declined significantly (the United States, Office of Technology Assessment, undated). In addition, the judicial system of the United States restricted union activities, leading to a great decline in their membership (the United States, Office of Technology Assessment, undated).

With the trend of activities in the United States, membership to trade unions declined gradually between 1950 and 1975, and thereafter declined more sharply due to stiffer government regulations through labour laws (the United States, Office of Technology Assessment, undated). For instance, the percentage of unionized private-sector employees declined sharply from 31 per cent in the year 1970 to about 12 per cent in 1989 (the United States, Office of Technology Assessment, undated). In addition, the blue-collar sector also realized a decline in unionized members from over 50 per cent to less than 25 per cent in the same period (the United States, Office of Technology Assessment, undated). Further declines of membership to labour unions in the United States have been caused by the collapse of several industries in the steel and machinery industry, which had most labour union representatives (the United States, Office of Technology Assessment, undated). With the collapse of many labour unions, most responsibilities in labour management and relations have been left under the federal government. Nevertheless, the Bureau of Labor Statistics has indicated that government workers in the United States are about five times more likely to join labour unions than workers in the private sector.

Note: Figures are given in thousands

The data presented indicate members of any labour union or an employee association. These data regard members of any labour union or any employees association that has similar as labour unions and workers who have no affiliation to unions but whose jobs categories fall under unions or employees association categories.

Source: Adopted from the United States Department of Labor (2009)

Management of labour relations in Canada

Canada’s labour industry is managed by the Canada Labour Code, which is comprehensive legislation that covers labour relations, particularly in the private sector. The Code has three parts: Part I that deals with certification of unions, arbitration and negotiations; Part II that covers occupational health and workplace health issues; and Part III that deals with work conditions such as hours of work, minimum wage and so forth. The Canada Labour Code stipulates the formation of the Canada Industrial Relations Board (CIRB), which is an administrative tribunal that deals with labour issues. CIRB promotes effective industrial relations through collective bargaining and amicable settlement of disputes between employers and employees, as well as those involving labour unions. Labour unions in Canada have been considerably uninfluential except during instances of labour shortages that were experienced in the 1960s or during the period of unrest. This coupled with the significant government intervention in the labour industry has caused a considerable fluctuation in membership to labour unions.

Management of labour relations in Japan

The Japanese labour industry is a model that comprises political institutions, financial systems, intermediate associations such as labour unions and so forth (Vogel, 2006).  Japan’s labour relations system combines an impressive bargain of moderating wages and ensuring a few strikes in return for employment security (Vogel, 2006).  This has promoted good employment relations that have rendered unions almost moribund. In the past, labour unions in Japan were organized fundamentally at the enterprise level as opposed to the sectoral level, thus facilitating amicable agreements between labour and management (Vogel, 2006). Consequently, large Japanese corporations have developed channels through which they incorporate labour into the management, that is, dealing directly with employees without having to involve labour unions (Vogel, 2006).  The impact of this has been a steady decline in labour union membership in recent years as shown in figure 2.

Figure 2: Declining labour Union numbers between in Japan between 2000 and 2006

Source: Benson (2008)

The declining membership to labour unions suggests a number of issues. One could be that as discussed above, employing organizations have set up very effective mechanisms to address worker’s issues, which satisfy worker’s needs, thus making them shy away from labour unions. Secondly, since Japan’s labour relations policy aims at achieving employment security, there is a slim chance for workers to be engaged in strikes, which are usually instigated by labour unions.

 How labour relations affect the competitiveness of a country or industry

The nature of labour relations in a country greatly affects the performance of its industries, which ultimately affects the country’ economic status. According to Hodgetts, Luthans and Doh (2006), collective bargaining by a country’s individual firms and labour unions affects various aspects of the labour industry such as competitiveness and creation and protection of employment. Policies that promote employment creation and protection are important in ensuring a country’s competitiveness since its industries remain stable and operational at all times. On the other hand, if a country’ policies lead to instability in employment, they affect the rate at which industries can retain employees, which adversely affects their productivity. In addition, if industries are characterized by constant industrial action, their competitiveness is lowered since a lot of time is wasted in unproductive disputes. A country’s legal environment is very vital in determining its competitiveness in the labour industrious. As noted in the discussion of the five countries above, the significance of labour unions is steadily declining because of government intervention in the labour industry. While this intervention may be beneficial to employers, it also creates avenues for capitalists to exploit employees since there is no mediation through labour unions.

Conclusion

The different labour relations in Australia, Britain, the United States, Canada and Japan have resulted in different dimensions, mostly a decline in activity of labour unions and their membership. This suggests that most governments are streamlining their labour industries to avoid situations that need labour union intervention such as poor work conditions, pay and other conflicts.

Reference

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