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WORK5002
Course Coordinator
Dr Ju Li Ng
Lecturer this week
Professor Bradon Ellem
Understanding Industrial Relations
in Practice
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Lecture purpose and outline
What’s this lecture on ‘industrial relations’ doing in this subject?
 Good question: it would not always be in an introductory subject such as this.
• An initial answer: it might help us to understand HR as an academic
discipline and a field of practice.
 We will be building on what we did last time, assessing context, evidence,
challenges.
 … and that means talking about industrial relations.
 … and then briefly discussing the political and economic context that HR
managers face in two countries, Australia and China.
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HRM’s place and its credibility
As some of your readings (eg, Cappelli) have suggested, HR often seems to be
in crisis.
 Professor Thomas Kochan (MIT) argued more than 15 years ago that the HR
profession was facing ‘a crisis of trust and a loss of legitimacy in the eyes of
its major stakeholders’ (2004: 132). He went on to call, among other things,
for research which was specific to national settings and tired to discover the
threats to, and possibilities for, HR practice.
 This raises lots of questions, notably: can HR be really strategic ... or is it
‘contingent’ – see Cappelli – framed by economic contexts and/or by other
managerial agendas?
We have to undertake quite a journey to come back to these questions.
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Concepts and Key Industrial Relations Definitions
This Photo by Unknown Author is licensed under CC BY-SA-NC
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Rather than that image from last week, does the term
‘Industrial Relations’ make you think of images like this?
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… hold those thoughts for a moment
The last lecture began to:
• construct the foundation for learning in WORK5002
• explain the theoretical frameworks we need to understand HR.
In doing this, two matters were especially important:
• the importance of evidence
• the importance of context
We build on these two matters in this lecture, but first a reminder of where we
finished …
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WORK5002 Road Map: Lecture Summary
Foundation
W1 – W3:
Theoretical
Frameworks: Role
of HR & IR,
Evidence-based
HRM
As a HR Practitioner:
• Self-assess and reflect:
Your competency/skill
• How is HR managing
the different
stakeholders ethically?
(using HR and IR
perspective, EBHR)
This Photo by Unknown Author is licensed under CC BYBusiness and HR Trends
Multi-level Framework
Evidence-based HR
Context
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In this lecture, these HR Challenges (Nankervis et al., 2020) are
about ‘context’
• Perceived gap between skills
required by employers and those
possessed by vocational and
higher education graduates
• Fourth Industrial Revolution (FIR,
or Industry 4.0): digital
transformation in society and
business
• E.g. Artificial intelligence, robotics,
machine learning
• Political development (e.g.
Brexit negotiations, trade
deals)
• Demographic factors: ageing
workforce of most develop
countries
• Expansion of organisational
operations across national,
regional and global boundaries
with its associated financial,
marketing, operational and HRM
implications Globalisation
Political and
Demographic
Factor
Work-
readiness
(Employability)
New
Technology
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So, this tell us that HR managers face a complex world
 One industrial relations writer once argued that the job of managers was to
‘manage uncertainty’ (Streeck, 1987). That’s a big job!
 Pick any of the issues on the previous slide to think about that – or perhaps
go even bigger, say globalisation, or ‘left field’, say the Corona virus.
 To go back to our picture of male, blue collar work: there is more to the term
‘industrial relations’ than just that kind of labour and workplace. For most
scholars, the field was/is about how forms of work and its conflicts are
regulated … and economy and society as well as organisations are central
to that thinking.
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From HR ‘contracts’ to industrial relations
 One way into thinking about the differences between HR and IR is through
the concept of ‘contracts’.
 Industrial relations scholars see those contracts – legal, social and
psychological – as important features of what they might call the ‘social
relations of work’ but as themselves subject to ‘context’.
 What’s missing from the kinds of exchanges implicit in these contracts?
• Not much emphasis on some kind of economic exchange.
• Not much about the economic environment in which organisations
operate. (On the other hand, the Cappelli reading from last week is a
great example of how to think about this.)
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So, what are the main frames of reference in the study of
industrial relations?
 You may have studied this as undergraduates. Do any of you know about
the main theoretical schools of thought in industrial relations? (See Bray et
al. (2018), ch. 3, if you want to follow up.)
 There are at least three theories – and they are ‘incommensurate’:
• they have different assumptions about work and also society and
power
• and they have different ways of telling us what evidence means,
particularly, what kind of evidence is relevant.
 This isn’t an industrial relations subject so, let's be brief … and let’s trace the
ideas, not randomly but historically, that is, as they arose over time ...
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‘Unitarism’ in early capitalism
This is a set of ideas that existed ‘avant la lettre’ (before the term):
 Workplaces and organisations are like families, with a common purpose.
 They are also part of a ‘natural’ hierarchy, from master down to servant.
 There are mutual obligations as part of a wider social order.
 What was then called ‘combination’ (workers combining in associations or
unions) disrupts that order. Most countries had laws to restrict such activities.
But these ideas very soon had their critics, none more so than a major influence
in industrial relations theory and practice … socialists and the leading writer,
Karl Marx.
From c1848
Marxism as a critique of capitalist society
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Marxism and industrial relations
 Writing during the industrial revolution, Marx has a totally different
theory about workplaces:
• Capitalism gives managers an incentive (‘surplus value’) to exploit
workers rather than paying them the worth of their work.
• This conflict happens in the ‘labour process’ (work) itself.
• Capitalist societies by definition are class-based.
• Workplace relations are not about harmony/teams – they are
necessary conflictual.
 Marx’s solution – destroy capitalism!
Work during the industrial revolution
William Bell Scott (1855-60) Iron and Coal
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The emergence of pluralist ideas and practices
 There is a ‘plurality’ of interests at work – and this is inevitable and
desirable.
 So, the study of ‘industrial relations’ is not about how to make revolution (as
in Marxism) to overcome those diverse interests, nor is it about burying them
(as in Unitarism).
 Industrial relations is the study of relationships between groups, typically
groups of employers and groups of employees …
 … and of the rules they make to regulate work.
1919-1945: Pluralist ideas gain currency
Without government intervention:
“the good employer is undercut by the bad and the bad
by the worst… Where these conditions prevail you
have not a condition of progress, but a condition of
progressive degeneration”
Winston Churchill, Conservative Prime Minister of the
United Kingdom
1945-1973 Pluralism and Keynesianism: Models for stability
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Pluralism ‘in action’ in most industrial countries after 1945
 Keynes’s solution to the economic crises of the 1930s: governments should
intervene in their economy to create stability.
 Many industrial relations scholars – and government policy-makers –
argued that these ideas should be extended to the regulation of work:
• Governments should intervene to promote stability, reduce conflict.
• This would be achieved by giving workers decent conditions and greater
input into workplace decision-making.
• Unions and collective bargaining should be encouraged to facilitate
employee input, help to resolve workplaces disputes, and counterbalance
employer power.
1970s-1980s: Pluralism appears to fail; unitarism re-emerges
‘Winter of discontent’, United Kingdom, 1978-79
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From the 1980/90s to the present - a struggle between
unitarism and pluralism?
A great example of why ‘theories matter’:
Revisiting the logic of unitarism: if the workplace is a site of shared
goals, then – logically – problems can only arise from (1) poor
communication within the workplace or (2) problems introduced from
outside the workplace.
So, if those assumptions are valid, then there are clear solutions:
(1) Poor communications can be fixed by good managers = well-
trained HR professionals?
(2) External problems can be fixed by the law = new government
policies?
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Is something missing from all the theories?
 Feminists say they are all gender blind – workers and managers have no
gender
 … or it’s implicit that they are males …
 … and Australia has a deeply gender segmented workforce: women and
men don’t do the same sort of work as each other.
 Arguably, IR theory and actual company practices were based on an ‘ideal
worker’ with no family or care duties to complicate personal or work life
 … but we know that one of the most profound social changes in Australia is
the rise of female employment – in particular of mothers.
 This has been a major political and organisational challenge for well over
decade.
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Context and the validity of evidence - 1
 So, for most industrial relations scholars, these ‘big picture’ issues are part of
the context in which we must locate HR
 They are therefore also the evidence we use to understand what HR
managers do, and can do.
 There are different readings of how wide the evidence base can be – and
that is not just a theoretical matter. For example:
• A worker might say: ‘I should have a higher wage because my friend down the
road gets $5 an hour more than I do for the same job.’
• Her employer might inquire into this and find out that it more or less true (ie, the
truth of the evidence is not in dispute) but say ‘well, we have to run the business
along lines that work for us’ (ie, the relevance of the evidence is disputed).
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Context and the validity of evidence - 2
 Another worker might say: ‘I need more flexible hours because I have to
take care of my aged and sick mother’.
His employer might say: ‘I’m really sorry, I feel for you but that’s a family
issue; it’s no concern of ours’.
 So again, the issue is about what’s relevant evidence – and as we’ll see later
it might also be about what is/isn’t ethical – and also what’s commercial.
Another employer might say: ‘I know, this is a growing social problem, we
need to retain staff like you, let’s work it out’.
But can you think of other aspects to this story? One point might be to think
beyond the organisation: What obligations does the law impose in employers and
what rights does it give to employees in this regard?
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Back to the big picture
 Much of the research in HR deals with what HR managers can do … but one
of the implications of what we have been looking at might be to consider
the external and internal pressures that limit what HR managers do.
 Again, Peter Cappelli’s short article is useful by offering some lateral
thinking about how HR managers might create space for themselves.
 So, if we recognise that the wider context shapes what happens in particular
organisations, then we must recognise that national specifics will be
important. We can illustrate this by looking at two countries …
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Australia: summing up the national settings
 Not too much to say that since the 1990s, government policy and national
law have been informed by the competing ideas of pluralism and unitarism.
 An ‘arbitration system’, 1904-c1996, that established minimum standards
not by law or company policy but, essentially, through union claims; the
whole system was union-based.
 Conceptually – classic pluralism, based on collective regulation at the sector
(not firm) level.
 Succeeded in part by an ‘individual agreement system’, 1996-2007.
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The ‘Fair Work’ system
 After four or five years of intense debate, new national labour laws came
into effect in 2009 and 2010 under the Labor Government.
 The Fair Work Act, 2009.
• A ‘good faith bargaining’ system began on 1 July 2009 ….
• Based on minimum conditions:
 The National Employment Standards, legislated by the
Parliament;
 Modern Awards, providing industry or occupational minimum
standards.
 Note the importance of the state – not firms or unions – in setting minimum
conditions.
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A relatively stable framework?
… but many things are happening to put pressure on it:
 Changes to work arrangements, technology and franchising are disrupting
the world of work;
 Employer complaints that the laws are too union-friendly;
 Union complaints that workers’ rights are still infringed;
 Government complaints that at least some unions are ‘rogue’ – out of
control;
 Much media coverage of ‘wage theft’ and also low wages as an economic
problem.
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China: in contrast, what shapes what HR managers do/can
do/must do?
A very different setting from Australia – and a complex one. Could we study what
HR managers do without knowing about things like this?
 This is a once closed economy that continues a now 30+ year engagement with
the global economy and creates a capitalist economy and retains state-owned
enterprises.
 … and does so (unlike Russia) while retaining a one-party system.
 From 1949, a relatively closed economy: state ownership and guaranteed
employment and minimum standards – the ‘iron rice bowl’. From 1978, ‘Open
Door’ policy – adoption of market forms.
 Internal migration now allowed – and the greatest migration flows and
urbanisation in world history have followed.
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From Mao & the working class as leaders ...
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… to ‘The Reform Era’ … ‘opening up’ China
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The regulation of work employment relations
 The important industrial relations laws are relatively new, mostly
from 1995 to about 2010.
 Why then? Partly because China joins World Trade Organisation.
So, that is significant because even in so huge a country, global
factors affect local organisations and HR.
 What firms are there … the whole range of types but it is
interesting to note that while we in ‘the west’ talk about the end of
manufacturing, there are bigger factories than ever in human
history – in China.
 And what institutions are there? The biggest trade union in the
world …
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Chinese unions – one part of a complex IR puzzle
The All-China Federation of Trade Unions (ACFTU) is a massive union – but one
that is different form the west. So, researchers ask many questions – and HR
managers deal with a situation very different from Australia:
 Is the ACFTU integrated with management and the Party: does it provide a
voice for workers?
 Is its job to make China more productive?
 Can it ‘harmonize’ workplaces, as the Party requires, and still represent
workers’ interests?
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Drawing this together
By asking some questions:
 I’ve tried to suggest that IR’s focus on economy, society and politics goes
beyond how some people in HR see ‘context’:
 Is that true?
 If so, is it helpful?
 And/or are IR and HR in opposition to each other?
 Has HR ‘taken over’ from IR as unionism has fallen, and as more elements of
working conditions are (arguably) decided within organisations?
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References
Bray, M., Waring, P., Cooper, R. and MacNeil, J. (2018) Employment Relations: Theory
and Practice (4e), McGraw-Hill: Sydney.
Kochan, T. (2014), Restoring trust in the human resource management profession. Asia
Pacific Journal of Human Resources, 42(2): 132–46.
Streeck, W. (1987), The uncertainties of management in the management of uncertainty:
Employers, labor relations and industrial adjustment in the 1980s. Work, Employment
and Society, (1)3: 281-308.
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Some key IR terms (1)
Collective bargaining
The making of agreements as a group, to cover the working conditions of that group. In almost all countries this is
synonymous with union bargaining but in Australia the Fair Work Act, 2009 allows in effect for non-union
collective agreements.
Fair Work Act, 2009
The main national IR law in Australia regulating relationships between employees and employers, unlike previous
laws which chiefly regulated relationships between unions and employers.
Fair Work Commission (FWC)
The national tribunal established under the Fair Work Act, 2009, to resolve disputes and encourage efficiency
and fairness in workplaces. Its ‘Expert Panel’ sets the national minimum wage. Under different names and with
different powers, a national tribunal has existed since 1904.
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Some key IR terms (2)
Good faith bargaining
The bargaining provisions in the Fair Work Act are based on the principles of good faith bargaining which the
FWC seeks to encourage. There is little recourse for ‘arbitration’, ie, the compulsory resolving of a dispute by the
FWC itself. Parties to a dispute are expected to bargain in ‘good faith’ until they reach an agreement. (The Act
defines what good faith means.)
Modern awards
These are industry or occupation specific documents (122 in all) which are made by the FWC and prescribe ten
minimum conditions for the relevant employees.
National Employment Standards (NES)
Set by the parliament, ten basic conditions for all employees in Australia including, for example, hours of work,
leave, flexible work arrangements.
If you would like an account of the origins of the Fair Work system:
Cooper, R. and Ellem, B. (2008), ‘The Neo-Liberal State, Trade Unions and Collective Bargaining in Australia’,
British Journal of Industrial Relations, 46(3): 532-54