Labor Relations and Industrial DemocracySlide 2Labor Relations in the International ArenaLabor Relations in the International ArenaSlide 5Slide 6Slide 7Slide 8Slide 9Slide 10Percentage of Trade-Union Members, 2001Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Annual Average Days Lost Due to Labor Disputes 1993-2002Slide 20Slide 21Slide 22Slide 23International Structure of UnionsSlide 25Slide 26Slide 27Slide 28Industrial DemocracySlide 30Slide 31Slide 32Slide 33Slide 34Slide 35Slide 36Slide 37Slide 38Slide 39Employee Participation in All Levels of Danish FirmsSlide 41Slide 42Slide 43Slide 44Strategic Management of International Labor RelationsSlide 46Slide 47Slide 48Comparison of Average Weekly Hours Worked in ManufacturingSlide 50Slide 51Percentage Change in Manufacturing Unit Labor Costs, 2001-2002Slide 53Slide 54Slide 55Slide 56Slide 57Slide 58Slide 59Slide 60Chapter15Labor Relations and Industrial DemocracyThe specific objectives of this chapter are:1. DEFINE labor relations, and examine the approaches used in the United States and other countries.2. REVIEW the international structure of labor unions.3. EXAMINE the nature of industrial democracy, and note some of the major differences that exist throughout the world.Chapter15Labor Relations and Industrial DemocracyThe specific objectives of this chapter are:4. DESCRIBE the philosophical views and strategic approaches that MNCs use to manage international industrial relations and future strategies.3Labor Relations in the International ArenaCollective BargainingThe process whereby formal labor agreements are reached by union and management representatives; it involves the negotiation of wages, hours, and conditions of employment and the administration of the labor contract.UnionAn organization that represents the workers and in collective bargaining has the legal authority to negotiate with the employer and administer the labor contract.The U.S. Approach to Labor Relations4Labor Relations in theInternational ArenaEfforts are made to solve problems at the lowest level of the hierarchy as quickly as possibleFirst step usually involves a meeting between the union representative (shop steward) at the operating level and the employee’s supervisor – they attempt to agree on how to solve the grievanceUnresolved grievances may involve union officials and higher-level management representatives – these conciliatory approaches usually solve the grievanceSometimes the matter ends up in the hands of a mediator or an arbitratorThe U.S. Approach to Labor RelationsSteps of a Grievance Procedure5Labor Relations in theInternational ArenaMediatorA person who brings both sides (union and management representatives) together and helps them to reach a settlement that is mutually acceptable.ArbitratorAn individual who provides a solution to a grievance that both sides (union and management representatives) have been unable to resolve themselves and that both sides agree to accept.The U.S. Approach to Labor RelationsMediation and Arbitration6Labor Relations in theInternational ArenaThree of the most common arbitration approaches for resolving wage-related issues include:50/50 SplitSplitting the difference between the demands of the two partiesEither/OrUsing an either-or approach: one position is fully supported and the other is rejectedWhat’s Fair?Determining a fair wage based on market conditionsThe U.S. Approach to Labor RelationsMediation and Arbitration7Labor Relations in theInternational ArenaThey directly determine labor costs, productivity, and eventually, even profitsLabor costs in the United States are lower in recent years than in most other major industrial countries. Thanks to union–management cooperation, U.S. companies have been able to introduce high-tech, efficient machinery. Much of this outcome is a result of effective labor relations strategies.The U.S. Approach to Labor RelationsImportance of Positive Labor Relations8Labor Relations in the International ArenaLabor relations strategies vary greatly from country to country—the strategy used in one country is sometimes irrelevant or of limited value in another. A number of factors can account for this: Economic development of the countryEntry strategies must often be modifiedChanges in the political environmentStrike activityOther differences are more regionalLabor Relations in Other Countries9Labor Relations in the International ArenaEUROPEEuropean firms typically negotiate agreements with unions at the national levelMany European unions have more political power than U.S. unionsSalaried employees in Europe (including those at managerial levels) often have unions of their ownEuropean unions have existed longer than those in the United States and occupy a more accepted position in societyLabor Relations in Other CountriesRegional Differences10Labor Relations in the International ArenaIn developing and emerging economies such as China, India, and Southeast Asia:Labor is less powerfulUnions are less prevalentWorkers are often compelled to accept conditions of work set by managementLabor Relations in Other CountriesRegional Differences110 20 40 60 80 100Percentage of Trade-Union Members, 2001Adapted from Figure 15–1: Percentage of Employed People Who Were Trade-Union Members, 2001DenmarkSwedenIrelandAustriaItalyGermanyBritainNetherlandsJapanSpainUnited StatesFrance12Labor Relations in the International ArenaGreat BritainA labor agreement in Great Britain is not a legally binding contractViolations of the agreement by the union or by management carry no legal penaltiesBritish unions are relatively powerful and strikes are more prevalent than in the United StatesBritish union membership has declined in recent yearsBritish labor agreements do not usually include provisions for arbitration of disagreements or grievancesLabor Relations in Other CountriesDiffering Approaches to Industrial Relations13Labor Relations in the International ArenaGermanyRights of workers are addressed more carefully by managementUnion power in Germany is still quite strongUnion membership is voluntary—generally one union in each major industryA minority of the labor force is organizedIndividual workers are free to negotiate either individually or collectively with management to secure wages and benefits that are superior to those spelled out in the agreement even