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INTERNATIONAL
& COMPARATIVE
EMPLOYMENT RELATIONS Globalisation and change
Edited by Greg J Bamber, Russell D Lansbury and Nick Wailes
CHAPTER 1
Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition . Lecturers using the book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.
Lecture outline
Theories of convergence and divergence in employment relations systems Views on the impact of globalisation and employment relations (ER) The Varieties of Capitalism (VoC) approach
Main features of the approach Applying the VoC approach to ER VoC, globalisation, and the convergence/divergence debate Limitations of the approach
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Comparative ER
A systematic method of investigating ER in two or more countries which is analytic rather than descriptive
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Therefore, effective comparisons require detailed understanding of each national context Researchers choose a comparative research design:
Most similar cases: two or more countries that are similar in as many respects as possible except for phenomenon under study Most different cases: two or more countries that differ in almost every respect except the phenomenon under examination
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Dore (1973) suggested convergence may be towards the Japanese ER model rather than an American one. He argued that countries which industrialised at later stages were able to develop ER institutions that are well suited to industrialisation
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Globalisation
Globalisation is used to characterise changes in the international economy It normally refers to growing interconnectedness of the international economy It is associated with growth in:
Cross-national trade Foreign direct investment (FDI) Growth in international financial transactions
It is argued that globalisation has created a common set of economic pressures across all markets (products and factors) which may impact on ER
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Globalisation and ER
Two views on how globalisation impacts on employment relations: 1. Simple globalisation approach
economic pressures associated with globalisation will result in a convergence of employment relations policies and practices
race to the bottom in terms of wages and labour standards as mobile capital seeks lowest labour costs governments lose autonomy in policy making and can no longer guarantee labour rights Instead, legislation to accelerate decentralisation and deregulation of the labour market and to attract capital investment
2. Institutionalist approach
Despite common economic pressures associated with globalisation, diversity in national patterns of ER will persist
existing ER institutions mediate and filter those pressures, and will do so differently in different countries
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Each of these forms of capitalism include a set of complementary institutions that form the basis of a countrys economic competitiveness and lead to good economic outcomes The firm is at the centre of their analysis In order to develop, produce and distribute goods and services profitably, a firm must effectively coordinate with a wide range of actors e.g. investors, employees, unions, the state, suppliers, buyers.
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A firm must coordinate with other actors in 5 spheres:
Industrial relations Vocational training and education Corporate governance Inter-firm relations Relations with its own employees
The relations with actors in these spheres are problematic Firms can resolve coordination problems
Internally within the firm (hierarchies) Externally (market or non-market institutions)
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National institutions shape how firms resolve these coordination problems
In LMEs, firms resolve coordination problems mainly through hierarchies and markets i.e. arms length relations and high levels of competition In CMEs, firms resolve coordination problems not only through hierarchies and markets but also through non-market institutions i.e. strategic interaction
Both these solutions to coordination problems form institutional equilibria which have comparative advantage
In LMEs, the comparative advantage arises from the flexibility of these coordination arrangements In CMEs, the comparative advantage arises from cooperative behaviour among actors, based on information exchange, monitoring and sanctioning of defections
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Institutional complementarity
Complementarity occurs where the presence of one institution enhances the returns from another institution In this way comparative advantage arises from the bundling of complementary institutions Hence, countries cluster around bundles of complementary institutions two distinct clusters are LMEs and CMEs This important departure from comparative IR studies which sought to link single features (e.g. collective bargaining structure) with economic performance The effect of single institutions may be misleading as performance may arise from a constellation of institutional arrangements Implications for bolt on policy responses Comparative institutional advantage: the institutional frameworks (either LME or CME) provide nations with comparative advantages in performing certain activities and producing certain kinds of goods and services
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VoC approach emphasises the importance of institutions (institutions matter) Different sets of institutions will mediate and refract the pressures associated with globalisation in different ways Regarding ER:
in LMEs, we can expect deregulation and a race to the bottom as outlined in the simple globalisation approach in CMEs, we can expect firms and workers to resist deregulation as that threatens comparative institutional advantages
This results in a bifurcated response to globalisation; globalisation will have a different impact on IR in LMEs than in CMEs
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Labour internationalism
Labour as a passive victim of globalisation or as a global actor? International union confederations
Global confederations e.g. International Trade Union Confederation ITUC (was ICFTU) Regional confederations e.g. European Trade Union Confederation ETUC Global union federations which link together national unions from a particular trade or industry e.g. International Metalworkers Federation IMF
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Multinational companies
Country of origin/home country effect and host country effect shape ER practices in subsidiaries Current questions about ER in MNCs:
Do ER practices of MNCs spill over into other (local) companies in the industry? Is there any reverse diffusion, i.e. transfer of ER practices from foreign subsidiaries to the headquarters of MNCs?
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Source: Hughes, S (2005) The International Labour Organisation, New Political Economy, 10 (3): 413425. 29 Introduction
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Conclusion
Globalisation is having a profound influence on the way that work is regulated. Studying internationally comparative employment relations allows us to develop an understanding of our own and other employment relations systems. The Varieties of Capitalism approach is a useful framework for studying internationally comparative employment relations. It allows us to study employment relations within a broader institutional context.
Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition . Lecturers using the book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.