The paper critically examines the effects of global trade expansion on national industrial relations and how USA has responded to the changing business environment to meet its economic targets.
In order to understand the impact on the national industrial relations from the rise in global trade we need to study the historical factors and the future projections that are shaping up the change in the industrial shift. 1990s saw an increasing demand for high technology goods and gave rise to an international competition which changed the nature and operations of the industries substantially. The production processes were altered in order to cater to this new demand across the world. The individual firms with low budgets had to increase their competitiveness in order to meet up with the requirements of the industry.
These industrial changes have put a great deal of pressure on the firms and the employers to formulate strategies and improve their processes. Therefore globalization has given rise to a much more strategic role to be played by the Industrial Relations internally in an organization. This has all led to a more significant role played by Human Resource Department to manage the resources of the organization efficiently.
The direct result of rapid globalization is the changing nature of the industrial relations all over the world. A new approach has arrived to cater the industrial trends and challenges faced at the time being, which is based on providing much more emphasis on the employment relations. The new approach is a combination of Industrial relations and human resource management practices. This approach helps in improving the flexibility of the workforce and increases the capabilities of its employees leading to much higher level of productivity which is necessary to meet up with the requirements of global trade. The global environment also demands a much more sophisticated path for communication and cooperation internally in the organizations. There must be a mutual trust amongst the workers, managers, employees, executives and stakeholders.
Universally different firms have adopted different methods and techniques to counter the challenges of globalization. The principles of globalization have not been universally the same or uniform. Industrialized countries have been affected in a different manner as compared to less developed countries. The PEST forces (Political, Economical, Social and Technological) forces also play a vital role in shaping up the industrial relations of a country. The new economic and business environment possesses a new situation for firms in United States of America.
Industrial Relations are a field of multidisciplinary nature which is based on studying employment relations. It is often used interchangeably with employee relations which highlights its importance in the non-industrial sector as well. Industrial relations are a much broader version of human resource management on the other hand labor unions are a part of industrial relations. The concept of industrial relations emerged in the 19th century from USA, it was quickly picked up by many European countries but the practices were different in every region. The recent times have shown a decrease in the industrial relations as a discipline as it now has a negative correlation with the significance in trade unions.
Industrial relations comprises of three main parts, a) science building b) ethics c) problem solving. The science building phase deals with the social sciences and is based on understanding the relationships within an organization through comprehensive research. There are a lot of disciplines involved in the industrial relations including social history, human resource management economics, politics, law and many other areas, hence it is called a multidisciplinary subject.
Industrial relations in general assume that there is no such thing as a perfect competition in the labor markets. On the contrary the economic mainstream theory suggests that the employers have an upper hand on their employees and have a higher bargaining power. Industrial relations have defined that there a number of inherent conflicts between the employees and the employers which is a natural part of the relationships in an organization especially the employment relationship. The scholars are divided amongst their opinions on the issue of industrial relations and have proposed various methods and mechanism to shape up the employment relationships.
In case the labor markets are imperfect, the conflict of interest in the employment relationships is high and cases of workforce exploitation are high. To prevent this most of the scholars suggest that there must be an intervention from an authority to improve the living standards of the workers and to ensure them fair treatment by protecting their rights. However it is important to consider the nature of the intervention and here the opinions of the scholars are divided.
There are two groups which have different opinions on ideology and mechanisms. One group considers that the employment relations are a mixture of mutual interests and conflicting interests, therefore they suggest countering this issue by the help of making labor unions and establishing work councils to promote the concept of collective bargaining and manage the labor partnerships. A minimum wage law along with the safety standards can lead to healthy employment relationships. These measures might not increase the overall economic efficiency but they will lead to better living standards and healthier employment relationships. In contrast the other group in inspired by Marxist school of thought and relates the industrial relations with the socio political economic system. According to this group the pluralist group is putting excess focus on employer's interest and to change that major structural reforms are required which might hamper the economic progress.
The industrial relation in context with the current scenario is in the times of crisis. The current market in the U.S.A. is highly dominated by the mainstream politics and such is the affect of globalization that the industrial relations have been declining in significance. The policy makers have not been able to stamp their authority in intervening in the industry practices as they want to promote free market economy and its principles. Labor unions are decreasing at a great pace and only a few companies have an independent industrial relation function. All this has led to a decline in the academic programs related to industrial relations and there is an increasing emphasis on human resource management and organizational practices. There is a much more focus on improving the productivity due to the global trade expansion. However industrial relations still are a vital component of the economic system and it is a challenge to revitalize the industrial relations.
Industrial Relations and HRM
Human Resource Management and Industrial relation are different from each other; Human Resource Management is a process that does not involve the state. Traditionally the emphasis has been on the industrial relations to achieve collective growth and profitability at the national level. Human Resource Management deals directly with the individual firm and is aimed at achieving higher productivity for a single entity to attain competitive advantage.
The main purpose of human resource management is to achieve high productivity through integration in the workplace, innovation, commitment, flexibility and learning. In order to ensure that the integration in the organization is playing a crucial role in the development of the organization, higher emphasis is given to all the human resource activities such as recruitment, selection, training, leadership, reward system, motivation and team building. The rewards system plays an integral role in the modern era and it includes intrinsic and extrinsic rewards both.
Human Resource Management is posing a great challenge to industrial relations because it works to undermine the role that trade unions play at the aggregate level. However if managed properly then industrial relations and human resource management can complement each other and work in harmony. If they are utilized in proper harmony then the benefits could be enormous but that happens rarely.
Globalization and Industrial Relations
The most common pattern all across the world in recent time is the expansion of global trade and investment. A number of factors have evolved with the rise in trade expansion which is disrupting the progress of industrial relations. The most successful organizations have shifted to market orientation and they have been supported by the decentralized policies by the governments. The trade barriers have been lessened over the past decade. The formation of trade unions has contributed to the increasing pace of globalization. The governments have also been encouraging the private sector to invest and to do they have liberalized the economies.
Liberalization has been fueled by the globalization of trade by increasing the interdependence of economies. There has been a significant increase in the foreign direct investment and world trade. Almost 70% of the inflow of the foreign direct investment has come from the developed countries that have advanced industrial technologies at their disposal. Most of the investments have come from USA, UK, Canada, Germany and Japan. The newly industrialized companies have also benefited from the globalization of their businesses such…