INTRODUCTION the Government. This coverage is larger than most


forms of industrial relations (IR) have been introduced in different countries,
keeping in mind various factors such as the economy, nature of industries and
workers, role of the Government, etc. The Government plays a crucial role in
regulating the IR of any country, as they are the chief executors of various
legislations related to IR. Through the course of this essay, three countries
will be examined, namely Germany, Japan and Sweden. The role of unions in these
countries will be looked into in brief. Following this, the role of the State
in regulating IR in each of these countries will be analyzed. The last portion
of this essay will show a comparison and contrast of the role of the State in
regulating the IR policies in these countries.

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has always been seen as a highly coordinated and regulated market economy. The
Industrial Relations (IR) of Germany is considered to be the cornerstone of its
economy, as it extends into workplaces, social security systems, boardrooms and
the Government. This coverage is larger than most other countries (Silvia:
2013). It has been considered the ideal social partnership model, as it has a
dually constructed interest-representation system. There have been some
significant developments in German IR over the years.  A fundamental reason for the success of IR in
Germany has been in part due to bargained corporatism. The two fundamental
pillars of the German IR model can be identified as collective bargaining
agreements (CBA) at the industry level and distinct worker co-determination at
the workplace (company level) (Hassel: 1999, Haipter: 2013, Addison et al:

associations and trade unions have the right to regulate working conditions and
wages without state interference due to the constitutionally protected
principle of bargaining autonomy in Germany. CBA’s may be concluded at the
industry level or the company level. They are legally binding on all union
members and employee association members. However, they are also extended to
all employees working for the involved employers, regardless of their
membership status.

IR in Germany

until the end of the 1980’s, the West German system of IR was considered to be
extremely comprehensive. However, in the 1990’s, certain authors noticed an
increased diversity in the IR of Germany. According to Hassel (1999), the major
facets of the German IR system such as co-determination and collective
agreements catered primarily to large companies in the manufacturing industry.
This meant that an increasing number of employees in small and medium sized
companies from the service sector were not covered by plant level
co-determination (Keller: 2004).

three 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 regions
of Germany. Trade unions were established in Germany after World War II based
on the principles of industrial unionism and unitary unionism. While industry
unions actively participate in collective bargaining, the peak federation (DGB)
is responsible for political activities. It also important to note that no
institutional tripartite or bipartite economic/social council exists at the
national level.

Role of the State

IR exhibits strong judicial ties based on case law and jurisdiction. Although
the state has been considered to have weak involvement in the IR of Germany,
the federal government has passed various measures over the recent years in
order to stabilize the system. According to Katzenstein (1987), along with
federalism and a coalition government, the strong role of autonomous
institutions has resulted in a “semi-sovereign” state. However, this does not
mean that German IR is free of government influence. The State plays an
important role in shaping the German “Bismarkian” welfare state, whose four
pillars include the unemployment insurance system, the old age pension system,
health insurance and social care insurance.

 The federal state has protected the dual
system of IR in Germany over the years by enabling key actors to pursue their
respective duties. The State assists in the collective bargaining procedures by
providing statutory minimum standards for work.

Co-Determination Acts regulate the interaction between an employee and employer
at the company-level supervisory board. The Act on Collective Agreements
regulates collective bargaining, and the constitution guarantees the freedom of
association. The concept of Collective Bargaining Autonomy (Tarifautonomie) is
the statutory right of employers’ and workers’ associations to achieve
collective 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.

German Works Constitution Act states that works councils (WC) are mandatory in
all establishments that have more than five permanent employees. The Works
Constitution Act regulates the interaction between an employer and works
council 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 of
a particular establishment. The size of a WC is fixed by the law, and rises
with an increase in the number of employees in a plant. Changes in the Works
Constitution Act made by the State have increasingly affected the WC’s ability
to represent workers’ interest at the establishment level. Major reforms
initiated by the government were implements in 1972 and 2001. While CBA’s and
WC’s are formal institutions of the German IR system which are protected by the
law, establishments can choose other less formal or more flexible forms of
worker representation.

addition to the all-encompassing rights of consultation and information that
the German WC have, they also have certain co-determination rights which are
prescribed 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 on
certain issues which would usually be settled by collective agreements between
trade unions and employer associations at the industry level. The German law
clearly necessitates the WC’s to cooperate with management in the spirit of
mutual trust.

principle of “free collective bargaining” allows the social partners to engage
in CBA’s without any active state interference. This provides the social
partners with a high degree of freedom in determining their own structures and
dealings. 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’s
largest employer, and employment relations in the public sector have been
characterized by a distinction between public employees and civil servants.

there has been no statutory national minimum wage set in Germany, the
government has amended various legislations so that industry wage agreements
which are binding on all employers can be easily declared. There has been no
prescribed law which governs strikes or lockouts in Germany. Subsequent rulings
have seen the development of various case laws by the Federal Labor Court. One
of the fundamental legal principles that govern disputes is that any industrial
action must pursue an aim that can be regulated by collective agreements.

role of the State in the German IR system has resulted in a complex and refined
legal system, thereby regulating the relationship between both sides of the




IR has always been regarded as one of harmony and cooperation between the
management and employees of the company. It is a highly economically developed
country, and industrial/post-industrial characteristics dominate the production
process. The three main elements of the Japanese IR system include life time/permanent
employment, seniority based wage/promotion and enterprise unionism. When these
three elements are combined, the corporate enterprise becomes the organizing
principle of its labor management relations. Collective bargaining, dispute
settlements and union organizations are focused at the enterprise level.

IR in Japan

unionism is the main form of IR in Japan. Under this system, unions are
established within individual companies, and workers are organized within the
same company, regardless of their jobs. They collectively bargain with a single
employer, and conclude collective agreements at the company level. However, it
should 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 the
highly developed internal labor market. As Japanese workers are part of the
life-time employment scheme, they tend to stay with the same company and
develop their careers with them. Therefore, industrial level or national level
collective bargaining makes very little sense.

Role of the State

unions in Japan are relatively autonomous and are free to make their own
decisions when it comes to modifying the constitution, electing their own
officers, determining the amount of union dues and calling/terminating the acts
of dispute. Article 28 of the Japanese constitution provides workers with the
fundamental right to organize and bargain collectively. As it can be seen, the
Japanese labor law reveals a de-emphasis on the notion of managerial
prerogative. Instead of focusing on “mandatory subjects of bargaining”, the
Trade Union Law allows an employer to refuse collective bargaining for a
“proper reason”.

of the major problems that Japan faces is to make the uniform norms established
by the state labor protective laws a little more flexible.  According to Japanese law, derogatory power
is given not only to labor unions, but also to single workers who are elected
as majority representatives in an establishment. In order to balance
flexibility and security, the Japan law has established a unique model of
flexicurity, which combines the flexible adjustment of working conditions as
well security of employment in the internal labor market. Initially, case laws
prohibiting abusive dismissals helped in maintaining employment security.
However, due to its rigidity, the Japanese Supreme Court created a special law
which allowed an employer to unilaterally modify working conditions as long as
the modifications were considered to be reasonable. As seen above, the Japanese
law provides an example of decentralized industrial relations and flexible
labor protective norms.

than 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 bargain
collectively and go on strike, just as the majority union does. Japanese case
law has established a unique notion of duty wherein employers are required to
maintain neutrality towards all unions, regardless of their size, and any
discrimination is prohibited and considered an unfair labor practice.

have been various laws implemented by the Government in order to protect the
workers of the country. Individual employment relationships between the
employer and employee are regulated by the Labor Standards Act (LSA), the
Minimum Wages Act, the Industrial Safety and Health Act, etc. The Labor
Standards Act remains the fundamental law which establishes minimum working
conditions, employer’s duties, and work rules to be followed. Statutory minimum
labor standards to be maintained are mandatory, and lowering them is not

CBA’s are established at the company level, they are not extended to workers of
other companies. The LSA mandates the employer to set the working conditions of
the employee in the labor contract. This is done because work rules are
considered to be one of the most important legal tools used to regulate the
terms and conditions of work in Japan.

most important third part dispute settlement agency in Japan is the Labor
Relations Commission. The primary duty of this commission is to “adjudicate
unfair labor practice cases and adjust labor disputes” (Sugeno & Koshiro).
Another important function of this Commission is to administer the procedures
for adjusting labor disputes in accordance with the Labor Relations Adjustment


aspects of Swedish IR have been known to differ greatly from other countries,
especially non-Nordic countries. However, there has also been some level of
historic continuity. Contemporary IR in Sweden can be traced back to the late
nineteenth and early twentieth centuries. Robust elements of trust, mutual
understanding and cooperation between employers and workers have characterized
the Swedish system of IR.

IR in Sweden

important dimensions that are worth noting about the Swedish IR system include
collective agreements-legislation, cooperation-confrontation, self
regulation-state regulation and centralization-decentralization. These
dimensions are closely inter-linked with each other. Trade unions and employer
associations use collective agreements as a key instrument for self-regulation.
Additionally, the wide coverage of collective agreements without the backing of
State extension mechanisms requires an extremely high level of centralization,
which results in the possibility of national industry agreements. Collective
agreements are the primary instruments used in the process of negotiation.

are three main confederations of trade unions which can be seen in Sweden. The
Swedish Federation of Trade Unions (LO) was introduced for the blue collar
workers. LO has always maintained a close relationship with the main political
party in Sweden, the Swedish Social Democratic Workers’ Party (SAP). As a
result, LO has been able to speak to the government with a great level of
confidence. Two white collar confederations were introduced following LO. TCO
was presented for professional white collar employees while SACO was introduced
for professional associates (academic and university graduates). The
introduction of these three confederations has resulted in Sweden containing
the most class-segmented union movement in the world.

wide unions usually tend to have regional and local branches. The local
branches act as bargaining agents (usually at the enterprise level). Regional
branches usually don’t take part in the bargaining process. Instead, they
perform numerous services for the local unions as well as the industry-wide

Role of the State

the great depressions in the 1930’s, LO and SAF opted for self-regulation under
the threat of state regulation. Centralized bargaining was stimulated by the
close relationship between the social democratic government and LO. Through the
initiative of employers, from 1936, government representatives were excluded
from negotiations (Johansson : 1989). Preventing state interference in Swedish
IR was one of the main priorities of LO. As the social democratic government
depended on other parties for support, anti-union legislations on restricted
conflict rules was a possibility (Johansson : 1989). According to the
Rehn-Meidner model (named after the LO economists Gosta Rehn and Rudolf
Meidner), the government was responsible for preventing inflation by means of
implementing a restrictive economic policy.

the late 1930’s, IR in Sweden has been predominantly characterized by
collective agreements, cooperation, self-regulation and a mixture of
centralization and decentralization. However, in the 1970’s, a series of labor
laws were introduced and the 1980’s saw a struggle over wage-earner funds. As a
result, in the 1990’s, employees decided to decentralize wage formation. Since
then, there has been an increase in the activity of state mediators, which has
resulted in a combination of self-regulation and state-regulation. EU
Institutions (mainly the EC court) have restricted the autonomy of the labor
market parties. The centre right government of Sweden which took office in 2006
rejected the demands of employers and limited conflict rights.

the 1970’s, the Swedish State was best described as “non-intervening” in the
industrial relations of the country. The most important law before the 1930’s
was the labor laws on collective agreements and labor courts which were
introduced in 1928. According to Andersson (1990), SAF completely agreed that
unions should play a role in curbing illegal strikes.

the 1970’s, a series of labor laws on co-determination were introduced in
Sweden. Most laws were considered to be framework laws which had to be
implemented through agreements. However, the laws on co-determination and
employment protection also required the employers to negotiate in case of
redundancies. Thus, the labor legislations extended the tasks and powers of
unions at the workplace, and further increased the resources of the union
workplace organizations.  It must also be
noted that the collective bargaining system remained untouched by the labor
laws that were introduced.

the Labor Market Board held a strategic position as a promoter of occupational
labor mobility, self-regulation (solidarity wage policy) was supplemented by
State regulation (active labor market policies). The government did not
interfere in collective bargaining from a union perspective too much as the
unions would then risk looking superfluous.

have not been undermined by the extensive labor regulations in Sweden.  The Employment Protection Act (1982) has been
comprehensively implemented, thereby including collective agreements, work
rules and individual employment contracts. It should be known that tripartite
negotiations in Sweden occur very rarely as the social partners do not welcome
the government or any other party to intervene in collective bargaining. The
idea of self-regulation in Sweden is extremely strong for the social partners.

itself, labor courts formally represent themselves as a tripartite mode of
regulation. However, in practice, they function as a bipartite body in which
party representation was considered to be reasonable (Fahlbeck : 2002). Both
liberal and social democrats protested against the 1901 anti-union law which
was targeted at protecting strike-breakers. Apart from this law, no other
anti-union legislation was introduced in Sweden.


to Badejo (2017), the traditional role of the State is to provide a legal
framework for employers and employees and regulate/guide their relationship. In
all the three countries that have been considered in this course, while State
intervention might be considered limited, various employee/industrial relation
legislatures 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 State
played a higher role in regulating German IR than it did with Japanese IR.

comparing the trade unions in Germany and Japan, there has been a consistent
decrease in membership. However, Sweden has maintained a relatively stable
trade union density over the years. It is also worth noting that trade unions
in these three countries have been challenged by globalization. Decentralized
collective agreements have become increasingly common in these countries,
especially in Germany.

follows four legal procedures in order to regulate working conditions. Three of
these are common with the European model: Law, collective bargaining agreements
and individual labor contracts. However, the fourth procedure followed in Japan
is slightly different. Instead of a works council agreement, work rules/rules
of employment (shugo kisoku) are followed. Over the past four decades, Japanese
employers have been able to single handedly modify and establish certain work
rules. Case laws have created and maintained a unique rule, thereby giving
reasonably modified work rules a binding effect. The Labor Contract Act (2007)
has incorporated these case law rules and has played an essential role in
adjusting the working conditions of Japanese employment relations.

most European countries, CBA’s between trade unions and employer associations
are conducted at the national or sectoral level. As a result, collective
bargaining takes place in these levels as well. However, decentralization of
the negotiation process remains conspicuous. Most of the regulatory powers are
given to decentralized parties such as WC’s and individual companies. Another
challenge faced by many European countries is the adaptability with uniform
labor protective norms and diversified employment relations in the work place.
However, in most of these countries, the state laws have begun to allow a
certain level of deviation from the mandatory norms under certain conditions.

a striking contrast to the European situation, it can be seen that Japan has
developed decentralized industrial relations for over half a century. Most of
the trade unions in Japan are enterprise-based unions i.e., they consist solely
of regular employees and exclude managerial positions in order to eliminate
employer interference. CBA’s are therefore conducted at the company level
between individual companies and their respective enterprise union. Enterprise
based unions have been dominant in Japan as they have been able to respond
swiftly and properly to the demands of the workers and the needs of the
internal labor market, which has been highly developed through the long term
employment practice in Japan.

European countries, as collective bargaining takes place at the sectoral level,
minimum work standards are applied across companies. In contrast, Japanese
collective agreements take place between a single employer and an enterprise
union. Therefore, working conditions which are prescribed in CBA’s are
considered to be the minimum as well as maximum conditions to be held.

difference between the European and Japanese model of IR that can be seen is in
regards to decentralization. In Europe, CBA’s are conducted at the plan and
regional level (Germany). This system is rarely used in Japan as it relies on
the 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 can
therefore be seen that collective agreements in Japan don’t create a social
norm. One of the main disadvantages faced by Japan is that the negotiating powers
of decentralized parties are relatively weak when compared to that of
centralized parties which can be seen in most European countries.

Germany, where all members of an organization could be covered by CBA’s,
regardless of their membership status, membership in Japan is limited to
permanent and full time employees of the enterprise. Additionally, blue collar
and white collar members are organized within a single union, unlike in Sweden,
where blue collar workers, white collar workers and academic/university
graduates are members of different unions. It can also be seen that unlike
Germany, where the employee community is represented by a body separate from
the union, unions in Sweden have monopolized employee representation.


seen through the course of this essay, every country has its own form of State
regulation when it comes to IR. However, certain procedures remain common to
these countries, while certain other procedures are different due to various
internal or external factors. However, regardless of the extent to which the
State is involved in regulating the IR of it country, without the involvement
of the State and its implementation of various schemes and legislations, the
state of employee/industrial relations in the country would be absolutely
chaotic. It has been proven that the State plays an extremely crucial role in
any country in regulating the IR policies, and has been instrumental in
successfully maintaining harmonious relationships between the social partners
involved in the process.