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1 (c) 2008 by Nelson, a division of Thomson C anada Limited. Chapter Ten International Industrial Relations

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Page 1: Ihrm chapter10

1(c) 2008 by Nelson, a division of Thomson Canada Limited.

Chapter Ten

International Industrial Relations

Page 2: Ihrm chapter10

2(c) 2008 by Nelson, a division of Thomson Canada Limited.

Chapter Learning Objectives

After reading this chapter, you should be able to:

• outline the key issues in international industrial relations and the policies and practices of multinationals

• discuss the potential constraints that trade unions may have on multinationals

• name key concerns for trade unions

Page 3: Ihrm chapter10

3(c) 2008 by Nelson, a division of Thomson Canada Limited.

Chapter Learning Objectives

• identify recent trends and issues in the global workforce context

• discuss the formation of regional economic zones such as the European Union and the impact of opponents to globalization

Page 4: Ihrm chapter10

4(c) 2008 by Nelson, a division of Thomson Canada Limited.

Terms

• industrial relations• trade unions• regional economic

zones• collective bargaining• enterprise unions• strike-proneness

umbrella or chateau clause

‘golden handshake’

‘investment strike’

‘social policy’

Social ‘dumping’

‘converging divergences’

European Union (EU)

National Contact Points (NCP)

Single European Market (SEM)

International Trade Secretariats (ITSs)

Page 5: Ihrm chapter10

5(c) 2008 by Nelson, a division of Thomson Canada Limited.

OpeningVignette

Four Season Goes to Paris

Restrictive labour laws • capitalism that maintains social equity with laws and tax

policies• social spending that reduced income disparity • reduction of the work week to 35 hours. Unemployment

and retirement benefits were generous • terminations require dues process and good cause

Page 6: Ihrm chapter10

6(c) 2008 by Nelson, a division of Thomson Canada Limited.

OpeningVignette

Some flexibility

• allow work hour increases during peak business

periods and less during a lull

• could hire 10 percent to 15 percent of staff on a “temporary,” seasonal basis

Page 7: Ihrm chapter10

7(c) 2008 by Nelson, a division of Thomson Canada Limited.

Industrial Relations

Difficult to compare systems and behavior across national boundaries

• concept change considerably when translated from one industrial relations context to another

• cross-national differences emerge as to the objectives of the collective bargaining process and enforceability of collective agreements

• can not be understood without an appreciation of its historical origin

Page 8: Ihrm chapter10

8(c) 2008 by Nelson, a division of Thomson Canada Limited.

Historical Evolution of Industrial Relations

• developed from the social values of the societies and countries in which they have operated

• cannot be understood without an understanding of the way in which laws, rules, and union management power relationships, interests and decisions were established and implemented

Page 9: Ihrm chapter10

9(c) 2008 by Nelson, a division of Thomson Canada Limited.

Factors Underlying Historical Differences in Structure of Trade

Unions

1. the mode of technology and industrial organization at critical stages of union development

2. methods of union regulation by government

3. ideological divisions within the trade union movement

4. the influence of religious organizations on trade union development

5. managerial strategies for labor relations in large corporations

Page 10: Ihrm chapter10

10(c) 2008 by Nelson, a division of Thomson Canada Limited.

Trade Union Structure in Leading Western Industrial Societies (Table 10.1)

Page 11: Ihrm chapter10

11(c) 2008 by Nelson, a division of Thomson Canada Limited.

Trade Union Structure

Industrial unions• represent all grades of employees in an industry

Craft unions • based on skilled occupational groupings across industries

Conglomerate unions• represent members in more than one industry

Page 12: Ihrm chapter10

12(c) 2008 by Nelson, a division of Thomson Canada Limited.

Trade Union Structure

General unions• open to almost all employees in a given country

Enterprise unions• increasingly evident in industrialized nations

Page 13: Ihrm chapter10

13(c) 2008 by Nelson, a division of Thomson Canada Limited.

Industrial Relations Policies and Practices

• policies must be flexible enough to adapt to local requirements

• differences in economic, political, social and legal systems

• MNEs generally delegate the management of industrial

relations to their foreign subsidiaries

Page 14: Ihrm chapter10

14(c) 2008 by Nelson, a division of Thomson Canada Limited.

Key Issues in International Industrial Relations

MNE involvement in industrial relations policies and practices is influenced by

• degree of inter-subsidiary production integration• nationality of ownership of the subsidiary• international HRM approach• MNE prior experience in industrial relations• subsidiary characteristics• characteristics of the home product market• management attitudes towards unions

Page 15: Ihrm chapter10

15(c) 2008 by Nelson, a division of Thomson Canada Limited.

Union Membership for Selected Countries (Table 10.2)

Page 16: Ihrm chapter10

16(c) 2008 by Nelson, a division of Thomson Canada Limited.

Trade Union Limits on MNE Strategic Choices

1. influence wage levels

2. constrain the ability of MNEs to vary employment levels at will

3. hinder or prevent global integration of operations of multinationals

Page 17: Ihrm chapter10

17(c) 2008 by Nelson, a division of Thomson Canada Limited.

Influencing Wage Levels

• directly impact the organizations competitiveness due to increased cost structures and wages

Page 18: Ihrm chapter10

18(c) 2008 by Nelson, a division of Thomson Canada Limited.

Constraining Ability To Vary Employment Levels

• legislation that limits plant closures, redundancy, and layoff practices

• union striking and lobbying governments and

international organizations for increased restrictions

Page 19: Ihrm chapter10

19(c) 2008 by Nelson, a division of Thomson Canada Limited.

Preventing Global Integration

• hindering MNEs operations

• increased costs

Page 20: Ihrm chapter10

20(c) 2008 by Nelson, a division of Thomson Canada Limited.

Trade Union Concerns About MNEs

MNEs have• formidable financial resources• alternative sources of supply• production facilities to other countries they can move• a remote locus of authority• production facilities in many industries• superior knowledge and expertise in industrial relations• the capacity to stage an ‘investment strike’

Page 21: Ihrm chapter10

21(c) 2008 by Nelson, a division of Thomson Canada Limited.

Trade Union Concerns About MNEs

• these characteristics act to limit the bargaining 

power of unions

Page 22: Ihrm chapter10

22(c) 2008 by Nelson, a division of Thomson Canada Limited.

Trade Union Responses to MNEs

• International Trade Secretariats (ITSs)• lobbying for restrictive national legislation• regulation of multinationals by international

organizations

Page 23: Ihrm chapter10

23(c) 2008 by Nelson, a division of Thomson Canada Limited.

International Trade Secretariats (ITSs)

• loose confederations providing worldwide links for the national unions in a particular trade or industry

• mainly operated to facilitate the exchange of information to achieve transnational bargaining with each of the multinationals in its industry

Page 24: Ihrm chapter10

24(c) 2008 by Nelson, a division of Thomson Canada Limited.

Chapeau Clause

OECD guidelines for multinationals

• disclosure of information, competition, financing, taxation, employment and industrial relations, and science and technology

• multinationals should adhere to the guidelines within the framework of law, regulations and prevailing labour relations and employment practices, in the countries in which they operate

Page 25: Ihrm chapter10

25(c) 2008 by Nelson, a division of Thomson Canada Limited.

Regional Integration: The European Union (EU)

1. disclosure of information and European Works Councils

2. the issue of “social dumping”

Page 26: Ihrm chapter10

26(c) 2008 by Nelson, a division of Thomson Canada Limited.

“Social Dumping”

• MNEs movement to another region/country that has lower labour costs, (relatively low social security) to gain a competitive advantage

Page 27: Ihrm chapter10

27(c) 2008 by Nelson, a division of Thomson Canada Limited.

1. Why is it important to understand the historical origins of national industrial relations systems?

2. In what ways can trade unions constrain the strategic choices of multinationals?

3. Identify four characteristics of MNEs that give trade unions cause for concern.

Discussion Questions

Page 28: Ihrm chapter10

28(c) 2008 by Nelson, a division of Thomson Canada Limited.

Discussion Questions

4. What is ‘social dumping’ and why should unions

be concerned about it?

5. Can you give other examples of documentary films which are critical of large multinational firms?

Page 29: Ihrm chapter10

29(c) 2008 by Nelson, a division of Thomson Canada Limited.

Case: Advice for Companies Going Global

1. Discuss the different approaches and strategies that global players such as McDonald’s can select to deal with the local labour unions when entering a new country.

2. Do you agree with Quinlan’s statement that unions do not ‘bring much to the equation’ of the employee/employer relationship? Explain!

Page 30: Ihrm chapter10

30(c) 2008 by Nelson, a division of Thomson Canada Limited.

Case: Advice for Companies Going Global

3. Considering McDonald’s relatively standardized product and service, does it come as a surprise to you that McDonald’s employs so relatively few expatriates?

4. If McDonald’s achieves its goal of 100 percent local employees what are the advantages and disadvantages of having solely local management negotiating with the local labour unions?