INTRODUCTIONVariousforms of industrial relations (IR) have been introduced in different countries,keeping in mind various factors such as the economy, nature of industries andworkers, role of the Government, etc.
The Government plays a crucial role inregulating the IR of any country, as they are the chief executors of variouslegislations related to IR. Through the course of this essay, three countrieswill be examined, namely Germany, Japan and Sweden. The role of unions in thesecountries will be looked into in brief. Following this, the role of the Statein regulating IR in each of these countries will be analyzed. The last portionof this essay will show a comparison and contrast of the role of the State inregulating the IR policies in these countries. GERMANYGermanyhas always been seen as a highly coordinated and regulated market economy. TheIndustrial Relations (IR) of Germany is considered to be the cornerstone of itseconomy, as it extends into workplaces, social security systems, boardrooms andthe Government. This coverage is larger than most other countries (Silvia:2013).
It has been considered the ideal social partnership model, as it has adually constructed interest-representation system. There have been somesignificant developments in German IR over the years. A fundamental reason for the success of IR inGermany has been in part due to bargained corporatism. The two fundamentalpillars of the German IR model can be identified as collective bargainingagreements (CBA) at the industry level and distinct worker co-determination atthe workplace (company level) (Hassel: 1999, Haipter: 2013, Addison et al:2017).Employers’associations and trade unions have the right to regulate working conditions andwages without state interference due to the constitutionally protectedprinciple of bargaining autonomy in Germany. CBA’s may be concluded at theindustry level or the company level.
They are legally binding on all unionmembers and employee association members. However, they are also extended toall employees working for the involved employers, regardless of theirmembership status. IR in GermanyUpuntil the end of the 1980’s, the West German system of IR was considered to beextremely comprehensive. However, in the 1990’s, certain authors noticed anincreased diversity in the IR of Germany.
According to Hassel (1999), the majorfacets of the German IR system such as co-determination and collectiveagreements catered primarily to large companies in the manufacturing industry.This meant that an increasing number of employees in small and medium sizedcompanies from the service sector were not covered by plant levelco-determination (Keller: 2004).Thethree main types of employer associations in Germany include business/trade associations(BDI), special employer associations (BDA) and chambers of industry/commerce.These associations are responsible for CBA’s in various industries and regionsof Germany.
Trade unions were established in Germany after World War II basedon the principles of industrial unionism and unitary unionism. While industryunions actively participate in collective bargaining, the peak federation (DGB)is responsible for political activities. It also important to note that noinstitutional tripartite or bipartite economic/social council exists at thenational level.
Role of the StateGermanIR exhibits strong judicial ties based on case law and jurisdiction. Althoughthe state has been considered to have weak involvement in the IR of Germany,the federal government has passed various measures over the recent years inorder to stabilize the system. According to Katzenstein (1987), along withfederalism and a coalition government, the strong role of autonomousinstitutions has resulted in a “semi-sovereign” state. However, this does notmean that German IR is free of government influence. The State plays animportant role in shaping the German “Bismarkian” welfare state, whose fourpillars include the unemployment insurance system, the old age pension system,health insurance and social care insurance. The federal state has protected the dualsystem of IR in Germany over the years by enabling key actors to pursue theirrespective duties. The State assists in the collective bargaining procedures byproviding statutory minimum standards for work. TheCo-Determination Acts regulate the interaction between an employee and employerat the company-level supervisory board.
The Act on Collective Agreementsregulates collective bargaining, and the constitution guarantees the freedom ofassociation. The concept of Collective Bargaining Autonomy (Tarifautonomie) isthe statutory right of employers’ and workers’ associations to achievecollective agreements without the interference of the State. Additionally,specialized and independent systems of labor courts operate at the local,regional and national level under the Labor Courts Act. TheGerman Works Constitution Act states that works councils (WC) are mandatory inall establishments that have more than five permanent employees. The WorksConstitution Act regulates the interaction between an employer and workscouncil at the plant level. However, they are not established automatically.
Negotiations at the domestic level are directed by this act. The WC is elected by the entire workforce ofa particular establishment. The size of a WC is fixed by the law, and riseswith an increase in the number of employees in a plant. Changes in the WorksConstitution Act made by the State have increasingly affected the WC’s abilityto represent workers’ interest at the establishment level. Major reformsinitiated by the government were implements in 1972 and 2001. While CBA’s andWC’s are formal institutions of the German IR system which are protected by thelaw, establishments can choose other less formal or more flexible forms ofworker representation.Inaddition to the all-encompassing rights of consultation and information thatthe German WC have, they also have certain co-determination rights which areprescribed by law on various social matters such as remuneration arrangements,health and safety measures, and working time regulations. Unlike trade unions,WC’s cannot call strikes.
They are also excluded from reaching agreements oncertain issues which would usually be settled by collective agreements betweentrade unions and employer associations at the industry level. The German lawclearly necessitates the WC’s to cooperate with management in the spirit ofmutual trust. Theprinciple of “free collective bargaining” allows the social partners to engagein CBA’s without any active state interference. This provides the socialpartners with a high degree of freedom in determining their own structures anddealings.
However, the State has played an active role through corporatist arrangements,which was highest in the late 1960’s and 1970’s. The State has been Germany’slargest employer, and employment relations in the public sector have beencharacterized by a distinction between public employees and civil servants.Whilethere has been no statutory national minimum wage set in Germany, thegovernment has amended various legislations so that industry wage agreementswhich are binding on all employers can be easily declared.
There has been noprescribed law which governs strikes or lockouts in Germany. Subsequent rulingshave seen the development of various case laws by the Federal Labor Court. Oneof the fundamental legal principles that govern disputes is that any industrialaction must pursue an aim that can be regulated by collective agreements. Therole of the State in the German IR system has resulted in a complex and refinedlegal system, thereby regulating the relationship between both sides of theindustry JAPANJapaneseIR has always been regarded as one of harmony and cooperation between themanagement and employees of the company.
It is a highly economically developedcountry, and industrial/post-industrial characteristics dominate the productionprocess. The three main elements of the Japanese IR system include life time/permanentemployment, seniority based wage/promotion and enterprise unionism. When thesethree elements are combined, the corporate enterprise becomes the organizingprinciple of its labor management relations. Collective bargaining, disputesettlements and union organizations are focused at the enterprise level. IR in JapanEnterpriseunionism is the main form of IR in Japan. Under this system, unions areestablished within individual companies, and workers are organized within thesame company, regardless of their jobs. They collectively bargain with a singleemployer, and conclude collective agreements at the company level. However, itshould be noted that enterprise unionism is not created by the Labor Union Act.
One of the main reasons for the success of enterprise unions in Japan is thehighly developed internal labor market. As Japanese workers are part of thelife-time employment scheme, they tend to stay with the same company anddevelop their careers with them. Therefore, industrial level or national levelcollective bargaining makes very little sense.
Role of the StateEnterpriseunions in Japan are relatively autonomous and are free to make their owndecisions when it comes to modifying the constitution, electing their ownofficers, determining the amount of union dues and calling/terminating the actsof dispute. Article 28 of the Japanese constitution provides workers with thefundamental right to organize and bargain collectively. As it can be seen, theJapanese labor law reveals a de-emphasis on the notion of managerialprerogative. Instead of focusing on “mandatory subjects of bargaining”, theTrade Union Law allows an employer to refuse collective bargaining for a”proper reason”. Oneof the major problems that Japan faces is to make the uniform norms establishedby the state labor protective laws a little more flexible. According to Japanese law, derogatory poweris given not only to labor unions, but also to single workers who are electedas majority representatives in an establishment. In order to balanceflexibility and security, the Japan law has established a unique model offlexicurity, which combines the flexible adjustment of working conditions aswell security of employment in the internal labor market.
Initially, case lawsprohibiting abusive dismissals helped in maintaining employment security.However, due to its rigidity, the Japanese Supreme Court created a special lawwhich allowed an employer to unilaterally modify working conditions as long asthe modifications were considered to be reasonable. As seen above, the Japaneselaw provides an example of decentralized industrial relations and flexiblelabor protective norms.Morethan one union can exist in one company in Japan, same as the case in Europe.According to the Constitution, a minority union has the equal right to bargaincollectively and go on strike, just as the majority union does. Japanese caselaw has established a unique notion of duty wherein employers are required tomaintain neutrality towards all unions, regardless of their size, and anydiscrimination is prohibited and considered an unfair labor practice.Therehave been various laws implemented by the Government in order to protect theworkers of the country. Individual employment relationships between theemployer and employee are regulated by the Labor Standards Act (LSA), theMinimum Wages Act, the Industrial Safety and Health Act, etc.
The LaborStandards Act remains the fundamental law which establishes minimum workingconditions, employer’s duties, and work rules to be followed. Statutory minimumlabor standards to be maintained are mandatory, and lowering them is notallowed. AsCBA’s are established at the company level, they are not extended to workers ofother companies. The LSA mandates the employer to set the working conditions ofthe employee in the labor contract. This is done because work rules areconsidered to be one of the most important legal tools used to regulate theterms and conditions of work in Japan. Themost important third part dispute settlement agency in Japan is the LaborRelations Commission. The primary duty of this commission is to “adjudicateunfair labor practice cases and adjust labor disputes” (Sugeno & Koshiro).Another important function of this Commission is to administer the proceduresfor adjusting labor disputes in accordance with the Labor Relations AdjustmentAct.
SWEDENSeveralaspects of Swedish IR have been known to differ greatly from other countries,especially non-Nordic countries. However, there has also been some level ofhistoric continuity. Contemporary IR in Sweden can be traced back to the latenineteenth and early twentieth centuries. Robust elements of trust, mutualunderstanding and cooperation between employers and workers have characterizedthe Swedish system of IR.IR in SwedenCertainimportant dimensions that are worth noting about the Swedish IR system includecollective agreements-legislation, cooperation-confrontation, selfregulation-state regulation and centralization-decentralization.
Thesedimensions are closely inter-linked with each other. Trade unions and employerassociations use collective agreements as a key instrument for self-regulation.Additionally, the wide coverage of collective agreements without the backing ofState extension mechanisms requires an extremely high level of centralization,which results in the possibility of national industry agreements. Collectiveagreements are the primary instruments used in the process of negotiation.Thereare three main confederations of trade unions which can be seen in Sweden. TheSwedish Federation of Trade Unions (LO) was introduced for the blue collarworkers.
LO has always maintained a close relationship with the main politicalparty in Sweden, the Swedish Social Democratic Workers’ Party (SAP). As aresult, LO has been able to speak to the government with a great level ofconfidence. Two white collar confederations were introduced following LO. TCOwas presented for professional white collar employees while SACO was introducedfor professional associates (academic and university graduates).
Theintroduction of these three confederations has resulted in Sweden containingthe most class-segmented union movement in the world.Industrywide unions usually tend to have regional and local branches. The localbranches act as bargaining agents (usually at the enterprise level).
Regionalbranches usually don’t take part in the bargaining process. Instead, theyperform numerous services for the local unions as well as the industry-wideunions. Role of the StateDuringthe great depressions in the 1930’s, LO and SAF opted for self-regulation underthe threat of state regulation. Centralized bargaining was stimulated by theclose relationship between the social democratic government and LO. Through theinitiative of employers, from 1936, government representatives were excludedfrom negotiations (Johansson : 1989). Preventing state interference in SwedishIR was one of the main priorities of LO. As the social democratic governmentdepended on other parties for support, anti-union legislations on restrictedconflict rules was a possibility (Johansson : 1989).
According to theRehn-Meidner model (named after the LO economists Gosta Rehn and RudolfMeidner), the government was responsible for preventing inflation by means ofimplementing a restrictive economic policy. Sincethe late 1930’s, IR in Sweden has been predominantly characterized bycollective agreements, cooperation, self-regulation and a mixture ofcentralization and decentralization. However, in the 1970’s, a series of laborlaws were introduced and the 1980’s saw a struggle over wage-earner funds. As aresult, in the 1990’s, employees decided to decentralize wage formation. Sincethen, there has been an increase in the activity of state mediators, which hasresulted in a combination of self-regulation and state-regulation. EUInstitutions (mainly the EC court) have restricted the autonomy of the labormarket parties.
The centre right government of Sweden which took office in 2006rejected the demands of employers and limited conflict rights. Untilthe 1970’s, the Swedish State was best described as “non-intervening” in theindustrial relations of the country. The most important law before the 1930’swas the labor laws on collective agreements and labor courts which wereintroduced in 1928. According to Andersson (1990), SAF completely agreed thatunions should play a role in curbing illegal strikes. Duringthe 1970’s, a series of labor laws on co-determination were introduced inSweden.
Most laws were considered to be framework laws which had to beimplemented through agreements. However, the laws on co-determination andemployment protection also required the employers to negotiate in case ofredundancies. Thus, the labor legislations extended the tasks and powers ofunions at the workplace, and further increased the resources of the unionworkplace organizations. It must also benoted that the collective bargaining system remained untouched by the laborlaws that were introduced. Asthe Labor Market Board held a strategic position as a promoter of occupationallabor mobility, self-regulation (solidarity wage policy) was supplemented byState regulation (active labor market policies). The government did notinterfere in collective bargaining from a union perspective too much as theunions would then risk looking superfluous. Unionshave not been undermined by the extensive labor regulations in Sweden. The Employment Protection Act (1982) has beencomprehensively implemented, thereby including collective agreements, workrules and individual employment contracts.
It should be known that tripartitenegotiations in Sweden occur very rarely as the social partners do not welcomethe government or any other party to intervene in collective bargaining. Theidea of self-regulation in Sweden is extremely strong for the social partners. Byitself, labor courts formally represent themselves as a tripartite mode ofregulation. However, in practice, they function as a bipartite body in whichparty representation was considered to be reasonable (Fahlbeck : 2002).
Bothliberal and social democrats protested against the 1901 anti-union law whichwas targeted at protecting strike-breakers. Apart from this law, no otheranti-union legislation was introduced in Sweden. COMPARISONS/CONTRASTS IN THEROLE OF THE STATE IN REGULATING IRAccordingto Badejo (2017), the traditional role of the State is to provide a legalframework for employers and employees and regulate/guide their relationship. Inall the three countries that have been considered in this course, while Stateintervention might be considered limited, various employee/industrial relationlegislatures have been passed by the legal framework set forth by the State.The State has been the primary enforcer of IR laws in all three countries.
However, it is worth noting that the Stateplayed a higher role in regulating German IR than it did with Japanese IR. Whencomparing the trade unions in Germany and Japan, there has been a consistentdecrease in membership. However, Sweden has maintained a relatively stabletrade union density over the years. It is also worth noting that trade unionsin these three countries have been challenged by globalization.
Decentralizedcollective agreements have become increasingly common in these countries,especially in Germany. Japanfollows four legal procedures in order to regulate working conditions. Three ofthese are common with the European model: Law, collective bargaining agreementsand individual labor contracts. However, the fourth procedure followed in Japanis slightly different.
Instead of a works council agreement, work rules/rulesof employment (shugo kisoku) are followed. Over the past four decades, Japaneseemployers have been able to single handedly modify and establish certain workrules. Case laws have created and maintained a unique rule, thereby givingreasonably modified work rules a binding effect. The Labor Contract Act (2007)has incorporated these case law rules and has played an essential role inadjusting the working conditions of Japanese employment relations.Inmost European countries, CBA’s between trade unions and employer associationsare conducted at the national or sectoral level. As a result, collectivebargaining takes place in these levels as well. However, decentralization ofthe negotiation process remains conspicuous.
Most of the regulatory powers aregiven to decentralized parties such as WC’s and individual companies. Anotherchallenge faced by many European countries is the adaptability with uniformlabor protective norms and diversified employment relations in the work place.However, in most of these countries, the state laws have begun to allow acertain level of deviation from the mandatory norms under certain conditions.
Makinga striking contrast to the European situation, it can be seen that Japan hasdeveloped decentralized industrial relations for over half a century. Most ofthe trade unions in Japan are enterprise-based unions i.e., they consist solelyof regular employees and exclude managerial positions in order to eliminateemployer interference.
CBA’s are therefore conducted at the company levelbetween individual companies and their respective enterprise union. Enterprisebased unions have been dominant in Japan as they have been able to respondswiftly and properly to the demands of the workers and the needs of theinternal labor market, which has been highly developed through the long termemployment practice in Japan.InEuropean countries, as collective bargaining takes place at the sectoral level,minimum work standards are applied across companies. In contrast, Japanesecollective agreements take place between a single employer and an enterpriseunion. Therefore, working conditions which are prescribed in CBA’s areconsidered to be the minimum as well as maximum conditions to be held.Anotherdifference between the European and Japanese model of IR that can be seen is inregards to decentralization. In Europe, CBA’s are conducted at the plan andregional level (Germany).
This system is rarely used in Japan as it relies onthe unusual condition in which majority of the workers perform the same tasks,in the same locality and are covered by the same collective agreement. It cantherefore be seen that collective agreements in Japan don’t create a socialnorm. One of the main disadvantages faced by Japan is that the negotiating powersof decentralized parties are relatively weak when compared to that ofcentralized parties which can be seen in most European countries.UnlikeGermany, where all members of an organization could be covered by CBA’s,regardless of their membership status, membership in Japan is limited topermanent and full time employees of the enterprise.
Additionally, blue collarand white collar members are organized within a single union, unlike in Sweden,where blue collar workers, white collar workers and academic/universitygraduates are members of different unions. It can also be seen that unlikeGermany, where the employee community is represented by a body separate fromthe union, unions in Sweden have monopolized employee representation. CONCLUSIONAsseen through the course of this essay, every country has its own form of Stateregulation when it comes to IR. However, certain procedures remain common tothese countries, while certain other procedures are different due to variousinternal or external factors. However, regardless of the extent to which theState is involved in regulating the IR of it country, without the involvementof the State and its implementation of various schemes and legislations, thestate of employee/industrial relations in the country would be absolutelychaotic.
It has been proven that the State plays an extremely crucial role inany country in regulating the IR policies, and has been instrumental insuccessfully maintaining harmonious relationships between the social partnersinvolved in the process.