COMPARATIVE LABOR RELATIONS
COMPARATIVE LABOR RELATIONS
In each country where an MNE operates, it must deal with a group of workers whose approach will be affected by the sociopolitical environment of the country and by the traditions and regulations of collective bargaining.
Sociopolitical Environment
There are striking international differences in how labor and management view each other. When there is very little mobility between the two groups, there may be little direct cooperation toward reaching an overall corporate objective. This type of separation may be enhanced if a marked class difference exists between management and labor. Certainly, much labor strife may be traced to labor's and management's perceived involvement in a class struggle, even though labor may have been gaining a greater share of total income and wealth for some time.
In such countries as the United States, Brazil, and Switzerland, labor demands are largely met through an adversary process between the directly affected management and labor.48 The adversarial relationship in the United States has perhaps given employers an added incentive to oppose unions and set up nonunion operations. Between 1970 and 1989 the percentage of workers belonging to unions fell by about two thirds to only 16 percent, whereas
union membership in the 17 major industrialized competitors of the United States rose to slightly over half of the work forces.49 In the United States unions have little influence on how members actually vote in political elections. In contrast, labor groups in many countries vote largely in blocs, resulting in a system in which demands are met primarily through national legislation rather than collective bargaining with management. Such mechanisms as strikes or slowdowns to effect changes may also be national in scope. This implies that a company's production or ability to distribute its product may be much more dependent on the way labor perceives conditions in the country, as a whole. For example, French truckers demanded lower taxes on diesel fuel, insurance, and a subsidy to modernize French trucking. To make their demands known, the truckers set up blockades, closed off major airports, and set fire to the Paris-Lyon railway line.50 The entire economy was affected.
The use of mediation by an impartial party to try to bring opposing sides together varies as well. In Israel it is required by law; in the United States and the United Kingdom it is voluntary. Among countries that have mediation practices, attitudes toward it are diverse; for example, there is much less enthusiasm for it in India than in the United States.51 Not all differences are settled through either changes in legislation or through collective bargaining. Another means is the labor court or government-chosen arbitrator. For example, in Austria wages in many industries are arbitrated on a semiannual basis.52 Settlements may be very one-sided if appointments to labor courts in a country have been made by political parties that are pro- or antilabor.
Union Structure
Companies in a given country may deal with one or several different unions. A union itself may represent workers in many different industries, in many different companies within the same industry, or merely in one company. If it represents only one company, the union may represent all plants or just one plant. Although there are diversities within countries, the most prevalent relationships vary from one country to another. For example, in the United States, unions tend to be national, representing certain types of workers (e.g., airline pilots, coal miners, truck drivers, or university professors), so a company may deal with several different national unions. Each collective-bargaining process is usually characterized by a single firm on one side, rather than an association of different firms that deals with one of the unions representing a certain type of worker in all the company's plants. In Japan a union typically represents all the workers in a given company and has only very loose affiliations with unions in other companies. This allegedly explains why Japanese unions are less militant than those in most other industrialized countries: They seldom strike, and when they do, they may stop working for only a short period of time or may continue working while wearing symbolic arm bands. Because of the closer company affiliation, Japanese union leaders are hesitant to risk hurting the company's ability to compete in the world
markets.53 In Sweden the bargaining tends to be highly centralized in that employers from numerous companies in different industries deal together with a federation of trade unions. In Germany employers from associations of firms in the same industries bargain jointly with union federations.54
Protection from Closures and Redundancy
In response to proposed layoffs, shifts in production location, and cessation of operations, workers in many countries have moved into plants to prevent the transfer of machinery, components, and finished goods.55 They have even continued to produce until they ran out of raw materials and components and sold the output on the street in order to prolong their ability to occupy the plants. The results of these efforts have been mixed, sometimes preventing the plant's closing and other times not.
The fact that workers will go so far to try to prevent a plant from closing indicates how important this issue is in some countries, particularly those in Western Europe where prenotification has been negotiated or legislated almost everywhere. The Western European situation is in contrast to that in Canada and the United States where fewer than one fifth of contracts require employers to give more than a week's notice of closure.56
The lifetime-employment custom within Japan offers some contrasts to labor practices in North America and Western Europe. Within Japan some employees, usually skilled male workers in large firms, enjoy lifetime employment. In turn, these employees voluntarily switch firms less frequently than those in North America and Europe. Other workers are considered temporaries; the number of temporaries is large, constituting about 40 percent of the work force even in a large firm such as Toyota. In addition, there are many part-time workers. When business takes a downturn or when labor-saving techniques are introduced, companies keep the lifetime employees on the payroll by releasing the temporary workers, reducing the variable bonuses of lifetime employees, and transferring workers to other product divisions. Thus far, this system has enabled Japanese firms to introduce robotics more effectively than firms elsewhere because there has been little concern about job security among unionized employees. It has also helped Japanese firms to spend heavily on training because the lifetime employees have a strong moral commitment to stay with their employers. The temporary workers have tolerated the system because of the labor shortage that has existed during recent decades in Japan and because many are women who, by cultural definition, are disinclined toward adversarial behavior.57
Despite some voluntary moves toward codetermination, most existing examples have been mandated by legislation, such as in Germany. These moves have been dictated not only by the philosophy of cooperative leadership but also the sense that labor has risks and stakes in the organization as well as shareholders. Because of a belief that the interests of blue- and white-collar workers are different, some efforts have been made to assure that each group is represented.58 Although there were some early examples of effective blockage of investment outflows, acquisitions, and plant closures, codetermination apparently has had little or no effect on either the types of decisions reached by firms or the speed with which those decisions have been reached. One of the reasons given for the minimal effect is that workers are so divided in terms of what they want that it is hard for their representatives to take strong stances on issues. Where layoffs have been necessary, foreign workers have been given less protection than citizens.59
In Germany, for example, workers elect representatives to serve on the Works' Council of the firm.60 This council makes decisions on social matters (such as the conduct of employees, hours of work, and safety) so that when disputes arise between the Works' Council and the Labor Director of the firm, they are settled by arbitration. In economic and financial matters the Works' Council is provided information and consulted in decisions, but the Council does not have the same strength because, although the shareholders and employees have an equal number of representatives, the chairman (elected by shareholders) has the tie-breaking vote.
The Works' Council and the unions have different responsibilities. For instance, collective bargaining takes place between employer associations and the unions and covers all workers within a German state or part of that state. Since the companies in the employer associations vary in size and ability to cover different possible wage rates, the negotiated annual wage rates are min-imums and can be negotiated upward at the company level. But the unions are barred by law from negotiating at the company or plant level; this is the task of the Works' Council.
Quality Control Circles
To improve worker productivity, companies worldwide have experimented with a variety of means to commit workers to suggest ways to improve output. Codetermination efforts have been motivated partially by this objective, and suggestion boxes are probably the most visible symbol of the movement. Because of rapid productivity increases in Japan recently, attention naturally has focused on Japanese approaches to worker involvement. One such activity is the quality control circle, which involves small groups of workers meeting regularly to spot and solve problems in their areas. It is a participatory effort designed to get people to say things among their peers that as individuals they would be reluctant to communicate to managers.
Team Efforts
In some countries, particularly Japan and its investments abroad, there has been an emphasis on work teams in order to (1) foster a group cohesiveness and (2) get workers involved in multiple rather than a limited number of tasks. In terms of group cohesiveness, it is not uncommon for a portion of the compensation to be based on the group output so that peer pressure is created to reduce absenteeism and increase efforts. In terms of worker involvement in multiple tasks, workers may rotate jobs within the group to reduce boredom and to develop replacement skills when someone is not present. Practices whereby workers' groups control their own quality and repair their own equipment also have been included.61
In each country where an MNE operates, it must deal with a group of workers whose approach will be affected by the sociopolitical environment of the country and by the traditions and regulations of collective bargaining.
Sociopolitical Environment
There are striking international differences in how labor and management view each other. When there is very little mobility between the two groups, there may be little direct cooperation toward reaching an overall corporate objective. This type of separation may be enhanced if a marked class difference exists between management and labor. Certainly, much labor strife may be traced to labor's and management's perceived involvement in a class struggle, even though labor may have been gaining a greater share of total income and wealth for some time.
In such countries as the United States, Brazil, and Switzerland, labor demands are largely met through an adversary process between the directly affected management and labor.48 The adversarial relationship in the United States has perhaps given employers an added incentive to oppose unions and set up nonunion operations. Between 1970 and 1989 the percentage of workers belonging to unions fell by about two thirds to only 16 percent, whereas
union membership in the 17 major industrialized competitors of the United States rose to slightly over half of the work forces.49 In the United States unions have little influence on how members actually vote in political elections. In contrast, labor groups in many countries vote largely in blocs, resulting in a system in which demands are met primarily through national legislation rather than collective bargaining with management. Such mechanisms as strikes or slowdowns to effect changes may also be national in scope. This implies that a company's production or ability to distribute its product may be much more dependent on the way labor perceives conditions in the country, as a whole. For example, French truckers demanded lower taxes on diesel fuel, insurance, and a subsidy to modernize French trucking. To make their demands known, the truckers set up blockades, closed off major airports, and set fire to the Paris-Lyon railway line.50 The entire economy was affected.
The use of mediation by an impartial party to try to bring opposing sides together varies as well. In Israel it is required by law; in the United States and the United Kingdom it is voluntary. Among countries that have mediation practices, attitudes toward it are diverse; for example, there is much less enthusiasm for it in India than in the United States.51 Not all differences are settled through either changes in legislation or through collective bargaining. Another means is the labor court or government-chosen arbitrator. For example, in Austria wages in many industries are arbitrated on a semiannual basis.52 Settlements may be very one-sided if appointments to labor courts in a country have been made by political parties that are pro- or antilabor.
Union Structure
Companies in a given country may deal with one or several different unions. A union itself may represent workers in many different industries, in many different companies within the same industry, or merely in one company. If it represents only one company, the union may represent all plants or just one plant. Although there are diversities within countries, the most prevalent relationships vary from one country to another. For example, in the United States, unions tend to be national, representing certain types of workers (e.g., airline pilots, coal miners, truck drivers, or university professors), so a company may deal with several different national unions. Each collective-bargaining process is usually characterized by a single firm on one side, rather than an association of different firms that deals with one of the unions representing a certain type of worker in all the company's plants. In Japan a union typically represents all the workers in a given company and has only very loose affiliations with unions in other companies. This allegedly explains why Japanese unions are less militant than those in most other industrialized countries: They seldom strike, and when they do, they may stop working for only a short period of time or may continue working while wearing symbolic arm bands. Because of the closer company affiliation, Japanese union leaders are hesitant to risk hurting the company's ability to compete in the world
markets.53 In Sweden the bargaining tends to be highly centralized in that employers from numerous companies in different industries deal together with a federation of trade unions. In Germany employers from associations of firms in the same industries bargain jointly with union federations.54
Protection from Closures and Redundancy
In response to proposed layoffs, shifts in production location, and cessation of operations, workers in many countries have moved into plants to prevent the transfer of machinery, components, and finished goods.55 They have even continued to produce until they ran out of raw materials and components and sold the output on the street in order to prolong their ability to occupy the plants. The results of these efforts have been mixed, sometimes preventing the plant's closing and other times not.
The fact that workers will go so far to try to prevent a plant from closing indicates how important this issue is in some countries, particularly those in Western Europe where prenotification has been negotiated or legislated almost everywhere. The Western European situation is in contrast to that in Canada and the United States where fewer than one fifth of contracts require employers to give more than a week's notice of closure.56
The lifetime-employment custom within Japan offers some contrasts to labor practices in North America and Western Europe. Within Japan some employees, usually skilled male workers in large firms, enjoy lifetime employment. In turn, these employees voluntarily switch firms less frequently than those in North America and Europe. Other workers are considered temporaries; the number of temporaries is large, constituting about 40 percent of the work force even in a large firm such as Toyota. In addition, there are many part-time workers. When business takes a downturn or when labor-saving techniques are introduced, companies keep the lifetime employees on the payroll by releasing the temporary workers, reducing the variable bonuses of lifetime employees, and transferring workers to other product divisions. Thus far, this system has enabled Japanese firms to introduce robotics more effectively than firms elsewhere because there has been little concern about job security among unionized employees. It has also helped Japanese firms to spend heavily on training because the lifetime employees have a strong moral commitment to stay with their employers. The temporary workers have tolerated the system because of the labor shortage that has existed during recent decades in Japan and because many are women who, by cultural definition, are disinclined toward adversarial behavior.57
Despite some voluntary moves toward codetermination, most existing examples have been mandated by legislation, such as in Germany. These moves have been dictated not only by the philosophy of cooperative leadership but also the sense that labor has risks and stakes in the organization as well as shareholders. Because of a belief that the interests of blue- and white-collar workers are different, some efforts have been made to assure that each group is represented.58 Although there were some early examples of effective blockage of investment outflows, acquisitions, and plant closures, codetermination apparently has had little or no effect on either the types of decisions reached by firms or the speed with which those decisions have been reached. One of the reasons given for the minimal effect is that workers are so divided in terms of what they want that it is hard for their representatives to take strong stances on issues. Where layoffs have been necessary, foreign workers have been given less protection than citizens.59
In Germany, for example, workers elect representatives to serve on the Works' Council of the firm.60 This council makes decisions on social matters (such as the conduct of employees, hours of work, and safety) so that when disputes arise between the Works' Council and the Labor Director of the firm, they are settled by arbitration. In economic and financial matters the Works' Council is provided information and consulted in decisions, but the Council does not have the same strength because, although the shareholders and employees have an equal number of representatives, the chairman (elected by shareholders) has the tie-breaking vote.
The Works' Council and the unions have different responsibilities. For instance, collective bargaining takes place between employer associations and the unions and covers all workers within a German state or part of that state. Since the companies in the employer associations vary in size and ability to cover different possible wage rates, the negotiated annual wage rates are min-imums and can be negotiated upward at the company level. But the unions are barred by law from negotiating at the company or plant level; this is the task of the Works' Council.
Quality Control Circles
To improve worker productivity, companies worldwide have experimented with a variety of means to commit workers to suggest ways to improve output. Codetermination efforts have been motivated partially by this objective, and suggestion boxes are probably the most visible symbol of the movement. Because of rapid productivity increases in Japan recently, attention naturally has focused on Japanese approaches to worker involvement. One such activity is the quality control circle, which involves small groups of workers meeting regularly to spot and solve problems in their areas. It is a participatory effort designed to get people to say things among their peers that as individuals they would be reluctant to communicate to managers.
Team Efforts
In some countries, particularly Japan and its investments abroad, there has been an emphasis on work teams in order to (1) foster a group cohesiveness and (2) get workers involved in multiple rather than a limited number of tasks. In terms of group cohesiveness, it is not uncommon for a portion of the compensation to be based on the group output so that peer pressure is created to reduce absenteeism and increase efforts. In terms of worker involvement in multiple tasks, workers may rotate jobs within the group to reduce boredom and to develop replacement skills when someone is not present. Practices whereby workers' groups control their own quality and repair their own equipment also have been included.61
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