LABOR RELATIONS

1
LABOR RELATIONS INDUSTRIAL DEMOCRACY
2
Labor Relations in the International Arena

• Labor relations
• Process through which management and workers
  identify and determine the job relations that
  will be in effect at the workplace
• Specific approaches to labor relations varies
  from one country to another

3
US APPROACHES TO LABOR RELATIONS

• Collective bargaining
• Process whereby formal labor agreements are
  reached by union and management representatives
• Involves negotiation of wages, hours, and
  conditions of employment and the administration
  of the labor contract
• Union
• Organization represents workers in collective
  bargaining
• Has the legal authority to negotiate with the
  employer and administrator the labor contract
• Unions gain representation rights only after
  certification
• Unions can decertify a union with which the
  members are dissatisfied
• Workers may strike to support unions demands
• Grievance
• Complaint brought by an employee who feels that
  s/he has been treated improperly under the terms
  of the labor agreement
• Settlement of grievance attempted at various
  hierarchical steps

4
SOLVING DISPUTES

• Mediator Person who brings both sides together
  and helps them reach a settlement that is
  mutually acceptable
• Arbitrator
• Individual who provides a solution to a grievance
  that both sides have been unable to resolve
  themselves and that both sides agree to accept
• Labor relations are important because they
  determine labor costs

5
LABOR RELATIONS IN OTHER COUNTRIES

• MNCs have to adjust labor relations strategies
  because host countries differ in terms of
• Economic development
• Political environments
• Strike activity
• Regional differences
• Great Britain
• Labor agreement is not a legally binding contract
• Violations of the agreement carry no legal
  penalties
• Labor agreements are less extensive than in the
  U.S.

6
SOME OTHER COUNTRIES

• Germany
• Unions and management have been cooperative in
  the past
• Labor harmony not adversely affected by
  unification of East and West
• Union power is still quite strong
• Rights of workers addressed more carefully by
  management
• Japan
• Unions and management have cooperative
  relationships
• Contracts tend to be general and vague
• Disputes regarding the labor contract usually
  settled amicably
• Unions most active during the spring and end of
  the year

7
SOLVING INDUSTRIAL CONFLICT

• Strike
• Collective refusal to work to pressure management
  to grant union demands
• Lockout
• Companys refusal to allow workers to enter the
  facility during a labor dispute
• United States
• Most contracts outlaw strikes
• Rely on grievance procedure to resolve disputes

8
OTHER COUNTRIES

• Great Britain
• Strikes more prevalent than in the U.S.
• System is not geared toward efficient resolution
  of conflicts
• Grievance handling is informal, cumbersome, and
  costly
• Germany
• Strikes and lockouts are prohibited while the
  contract is in force
• Contracts have different expiration dates
• Cooperation between union and management is not
  unusual

9
JAPAN

• Japan
• Strikes and lockouts are very rare
• Few areas of disagreement between unions and
  management
• Developing countries
• In countries with military dominated governments,
  strikes are illegal there is usually a friendly
  relationship between the authorities business
  owners.

10
Annual Average Days Lost Due to Labor Disputes
in Economically Advanced Nations 1990-1999
11
International Structure of Unions

• Intergovernmental Organizations
• International Labour Office (ILO)
• U.N. affiliate, consisting of government,
  industry, and union representatives, that works
  to promote fair labor standards
• Organization for Economic Cooperation and
  Development (OECD)
• Government, industry, and union group founded in
  1976 that has established a voluntary set of
  guidelines for MNCs
• Transnational Union Affiliations
• International Confederation of Free Trade Unions
  (ICFTU)
• International Trade Secretaries (ITS)
• Focus on a particular industry

12
Industrial Democracy

• Rights that employees have to participate in
  significant management decisions
• Common Forms of Industrial Democracy
• Codetermination
• Participation of workers on boards of directors
• EU directive requires all companies with more
  than 50 employees by 2008 to inform and consult
  workers representatives about company strategy
• Works Councils
• Result of either national legislation or
  collective bargaining
• Function to improve company performance, working
  conditions, and job security

13
OTHER FORMS OF INDUSTRIAL DEMOCRACY

• Shop Floor Participation
• Variety of approaches available (e.g., quality of
  work life)
• Financial Participation
• Profit and productivity sharing
• Collective Bargaining
• Can be a mechanism to obtain industrial democracy
  
• Industrial Democracy in Selected Countries
• United States
• Collective bargaining is the most common form
• Problem-solving teams
• Employee groups that discuss ways of improving
  quality, efficiency, and the overall work
  environment

14
OTHER COUNTRIES

• United States
• Special purpose team
• Employee groups that design and introduce work
  reforms and new technology
• Self-managing teams
• Employee groups that take over supervisory duties
  and manage themselves
• Great Britain
• Collective bargaining and reliance on teams
• Germany
• Industrial democracy and codetermination are very
  strong
• Work councils perform a number of important
  functions

15
Employee Participation in All Levels of Danish
Firms
16
OTHER COUNTRIES

• Sweden
• Industrial democracy geared toward ensuring the
  quality of work life
• Workers sit on some boards of directors
• China
• Little known about industrial democracy in China
• Two policy-making committees within Chinese
  enterprises
• Japan
• Industrial democracy used to enhance workers
  performance
• Quality circle
• Enterprise unions
• Represent both the hourly and salaried employees
  of a particular firm

17
Strategic Management of International Labor
Relations

• Philosophical Backdrop
• MNCs can use a number of starting points for
  their approach to labor relations
• Ethnocentric
• Polycentric
• Geocentric
• Labor Costs
• Wages differ greatly from country to country
• Sweatshops are common throughout the world
• Hours worked are inversely related to hourly
  compensation
• High paying jobs are transferred to low paying
  regions

18
Real Wages of Low-Paid Workers
19
NEW LABOR FORCE TRENDS

• Companies are trying to regain lost
  competitiveness due to high labor costs
• When national values collide with the realities
  of global competition, the latter is likely to
  win
• Major industrial countries will have to increase
  immigration to have the workforce to maintain
  economic momentum
• Increased reliance on flexible working
  arrangements that contain costs and link work
  demands with employees

20
Manufacturing Labor Costs (per unit of output,
annual average percentage change 1990-1997)
21
FLEXIBLE WORK

• Part-Time Work
• Most widely used form of flexibility in Europe
• Shiftwork
• Popular in Europe
• Nonpermanent Employment
• Temporary employees
• Fixed-term contractual agreements
• Subcontracting
• Replace employment contracts with commercial
  contracts
• Many creative subcontracting approaches

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THE WORLD OF BUSINESS WEEK - REVISITED
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QUESTIONS

• What are the two major issues that unions in
  Latin America are most likely to negotiate with
  the automakers?
• Would you expect the industrial relations
  approaches that are used in Latin America to be
  more similar to those employed in the United
  States, Asia, or EU countries, if the latter,
  which ones in particular?
• In what way are the auto firms in Latin America
  using strategic stretch in their operations?

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DENMARK
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QUESTIONS

• What are some current issues facing Denmark?
  What is the climate for doing business in Denmark
  today?
• Do the workers have to be included on the board
  of directors? Can the company force them off?
• How important is worker participation in decision
  making in Denmark?
• What would you recommend that STI do at this
  point?

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THEYRE BACK
A Volkswagen in Brazil!
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QUESTIONS

• What was the logic behind Volkswagens decision
  to close its U.S. plant?
• How critical will labor relations be in helping
  Volkswagen further increase its market share in
  the U.S.? Defend your answer.
• What would you recommend that Volkswagen do in
  coordinating its worldwide labor operations so as
  to produce the lowest price car thus further
  increase its competitiveness?

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SECOND EXAM

• COVERAGE chapters 9-17
• DATE 22/4/2003, 12-2 pm, B3009
• FORMAT
• A few multiple choice
• Short answers essays
• LENGTH
• Approximately 1 ½ hours

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GOOD LUCK!!!!!