Bargaining Power

Please see the attached documents.

PLEASE READ CAREFULLY

– Please cite your work in your responses

– Please use APA (7th edition) formatting 

– All questions and each part of the question should be answered in detail (Go into depth)

– Response to questions must demonstrate understanding and application of concepts covered in class, 

– Use in-text citations and at LEAST 2 resources per discussion from the school materials that I provided to support all answers. 

– No grammatical errors; Complete sentences are used. Proper formatting is used. Citations are used according to APA

– The use of course materials to support ideas is HIGHLY RECOMMENDED

– Lastly, Responses MUST be organized (Should be logical and easy to follow)

Bargaining Power

Questions:

Discussion #1

What recent factors are leading to multinational firms to move toward more centralized coordination of their internal labor relations functions? 

Interact with at least one other student.

Discussion #2

Compare and contrast the labor relations practices between two different countries. 

356

14

THE CHALLENGE OF GLOBALIZATION

The globalization of markets for products, fi nancing, and labor has made it easier
for companies to produce many of the goods and services they sell wherever in
the world the right skills can be found at the lowest cost. The desire to sell
products worldwide has also created incentives for fi rms to have a presence in
multiple countries. These developments have made labor relations in many industries
global in scope. Globalization is of particular importance in the United States
and in other high-wage advanced industrial economies.

Globalization poses signifi cant challenges to labor relations practices. Until
fairly recently, the laws, markets, institutions, norms, and practices of labor relations
developed on a national basis. Globalization has weakened (though not eliminated)
the role of national systems of labor relations and has given rise to new institutions,
structures, and processes for dealing with all of the labor relations functions we
discussed in prior chapters.

In this chapter, we will discuss these new arrangements and the challenges
globalization poses to labor relations. We will use the framework we laid out in
chapter 1 for analyzing labor relations around the world.

THE EFFECTS OF EXPANDING MARKETS

A key argument John R. Commons, one of the early theorists in labor relations,
put forward was that as the markets for product and labor expanded in scope,
unions and other institutions also needed to expand if they were to “take wages
out of competition” by organizing workers to fi t the scope of the product and
labor markets in which they worked. 1 Failure to match the institutions and policies
to the scope of the market, Commons argued, would reduce the bargaining
power of workers and put downward pressures on wages, what some now call
a “race to the bottom.” Firms would move work to lower-wage regions and
workers willing to work for lower-than-normal wages would migrate to take

Global Pressures: Multinational
Employers, International Unionism,
and NGOs

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AN: 1589152 ; Harry C. Katz, Thomas A. Kochan, Alexander J. S. Colvin.; An Introduction to U.S. Collective Bargaining and Labor Relations
Account: s4264928.main.eds

Global Pressures 357

those jobs. As discussed in this chapter, Commons ’ s predictions have proven
accurate.

Another change in the external environment—advances in communications
technologies—promoted the globalization of employment, especially in sectors
where services are provided. Answering phones in call centers, editing, accounting,
tax preparation, radiology (X-ray reading), legal research, and document manage-
ment, are among the many services that are now provided to U.S. consumers by
workers around the world.

Demographic trends also support the globalization of work. Transitioning
economies have added a signifi cant number of workers to the global labor force
in recent years, adding further competition for available work and putting greater
pressure on higher-wage economies.

The Globalization of Business Strategies

Business competition is now playing out on a global basis as fi rms have become
multinational. A multinational corporation (MNC) engages in economic activity
in more than one country. Over the last sixty years, U.S.-based multinational
fi rms have expanded greatly, to the point that they now have a major infl uence
on world commerce and the conduct of labor relations in many countries.

Every MNC must make strategic choices about where to locate different parts
of their production chain. This brings into play the role of business strategies as
a key factor that shapes labor relations in developing countries. One key variable
that infl uences the business strategy of an MNC is the wage levels at various
potential production sites and in various countries. Although access to resources
and markets also infl uence business strategies, the expansion of trade has led to
a steady movement of manufacturing and service work from higher-wage countries
to lower-wage countries and regions. Box 14.1 illustrates the evolving business
strategy of Nike, a U.S.–based fi rm and one of the early fi rms to globalize its
production of apparel and athletic equipment. 2

The Nike story told in Box 14.1 is similar to that of many other MNCs that
are household names, such as Apple, General Electric, and General Motors. These
fi rms sell products that can be easily transported globally and/or that sell to global
markets have global supply chains . The development of global supply chains
offers economic development and business opportunities to developing countries
and to other companies that supply parts or carry out manufacturing on a contract
basis for the household-name fi rms. Countries around the globe (and individual
fi rms) compete for contracts from MNCs and the jobs that go with them by
offering the lowest cost consistent with quality and delivery requirements. The
effect of this is that competition in labor relations has become globalized.

The Pressure of Diversity on MNCs

Workers in various countries often view work differently, attach different meanings
to work, and place different demands on their unions than is the case in the
United States. 3 The management of an MNC thus must develop new skills to
operate effectively in different cultural, legal, and institutional environments.

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358 Part V. Special Topics

BOX 14.1
Nike ’ s Global Business Model

Nike started operating as a company in 1964. In the early years, its business
model called for the design and marketing of its products to take place in
the United States and manufacturing to take place abroad. First it located
manufacturing in Japan. As Japan ’ s labor costs rose and Nike ’ s business
expanded, the company moved production to Korea and later to lower-cost
countries such as Indonesia, Vietnam, China, and parts of Latin America.

Nike did not own or manage the factories that produced its products.
Instead, it contracted with supplier companies located in these various
countries. In doing so, Nike developed global supply chains. In 2016, Nike
supplied products from 600 contractors in 46 different countries around the
world.

Source : http://about.nike.com/ .

Of course, management in any fi rm faces some diversity in the demographic
and racial composition of their work force and in their workers’ cultures and
attitudes toward work. Some workers are concerned most about their pensions,
while others may be most concerned about their current income and pay little
attention to deferred compensation. Some workers have strong work ethics and
would like to work on their own, while others may need constant supervision.
The extent of cultural diversity increases, however, as a company crosses national
boundaries. For example, compensation policies that work in one country may
be inappropriate in another. Or communication and motivation techniques that
succeed in one culture will fail in another.

There is also wide diversity among countries in the legal regulation of labor
relations and employment conditions and the institutions that shape labor relations
(see Chapter 15 ). In some countries, for example, national laws recognize the
right of workers to form unions and to strike; in other countries unions are
outlawed or are dominated by the government. In some countries, the national
government extensively regulates employment conditions. The ideology and form
of labor movements also differs markedly across countries, as does the structure
of unions.

Multinational Firms and the Centralization of Labor
Relations

MNCs face control and coordination problems because of the wide diversity in
the culture, law, and institutions of countries. The key decision they face in
different countries is how much to centralize the management of labor relations.
At one extreme, labor relations management can be centralized in the corporate
offi ces of the MNC. Alternatively, a company can use local management in each

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http://about.nike.com/

Global Pressures 359

country in which it operates to independently direct labor relations. Management ’ s
problem is how to pursue companywide objectives through labor relations policies
in the face of all the diversity that arises across the MNC.

From the 1950s to 2000, MNCs responded to this problem by allowing a high
degree of local control (decentralization) in labor relations. Analysts of MNCs,
in fact, generally conclude that their administration of labor relations is more
decentralized than other management functions such as fi nance or marketing. 4
Managers of MNCs found that there were substantial benefi ts to be gained from
decentralizing labor relations. These benefi ts include the ability to respond fl exibly
to diversity. Local managers in each country could fashion labor relations policies
that fi t with local conditions and events.

Since 2000, however, MNCs have begun to centralize their control and
administration of labor relations. Although centralization of a corporate function
has the advantage of providing consistency and economies of scale, diversity in
local laws, culture, and union politics made centralization ineffective in the past.

Why have MNCs switched to more centralized control? The explanation
appears to lie in the fact that the expansion of trade and the reduced infl uence
and greater standardization of local conditions have led MNCs to prefer more
centralization in their production strategies. The emergence of ever more global
fi rms leads management to strive to integrate their internal operations and policies
more fully. If production across national boundaries is integrated, for example,
it makes less sense for the MNC to maintain wide variation in labor relations
policies. The opening of trade through mechanisms such as the European Union ,
the North American Free Trade Agreement, and other regional trading blocs
provides additional reasons for MNCs to globalize their labor relations policies.

This trend illustrates an important theme in the recent development of corporate
culture, namely, that managements are increasingly striving to link labor relations
more closely to business strategy. Increased globalization induces MNCs to develop
particular business strategies and then align their production and labor relations
systems with those strategies. While this is not very different from the dynamics
at work in domestic fi rms, labor relations managers in MNCs face a particularly
complex dilemma: globalization has increased the premium on coordination and
centralization, but the cultures, laws, and institutions in the countries they operate
in are very diverse.

The literature on human resources for MNCs provides theories about what
happens when MNCs confront national institutions (i.e., laws and public policies).
Some of the literature suggests that multinational corporations must bend to
accommodate national (and in some cases local) institutional constraints and/or
pressures. Instead of MNCs bringing standardization in workplace practices across
countries, it is the MNCs that must bend and modify their practices to fi t institutional
constraints and pressures. There is evidence that the intersection of MNCs and
country-specifi c institutions leads to hybridization —organizational forms and
practices that are blends between the home-country practices of the MNC and
the practices that are common in the country where the MNC is operating. At
the same time, however, studies of the labor relations practices of MNCs consistently

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360 Part V. Special Topics

reveal a tendency for MNCs to preserve a strong role for home country practices
regarding matters such as pay, career development, and communications with
employees. 5

The Globalization of Labor Relations and Human
Resource Management: The Case of Colgate-Palmolive

Colgate-Palmolive (C-P) is a U.S.-based multinational consumer products fi rm
that has over 100 manufacturing facilities in thirty countries. It serves as a good
case study of how a large MNC has restructured its global labor relations activities
in recent years.

The sales and fi nancial performance of C-P has been quite strong since
1990. A key to the company ’ s success is that it has intensifi ed its globalization.
International sales now contribute most of the company ’ s profi ts. C-P has
also focused its manufacturing and marketing operations in particular regions in
response to the regional trade pacts that have been made in recent years and to
other pacts that are expected in the near future in regions such as Latin America
and Asia.

Regional trade pacts have helped spur a movement in C-P toward regional
“centers of excellence” through the consolidation of manufacturing. The company
has moved away from its past practice of having multiple plants in a region (and,
in some cases, in a country) that produce the same product. Technological
improvements have made it possible to for C-P produce greater volumes in a
single plant, and labor relations policies in the countries where C-P operates
make three-shift-a-day, seven day-a-week production possible.

C-P also moved toward a simplifi ed global supply chain (i.e., more global
sourcing and fewer preferred suppliers) and less product variety across countries.
The latter move has been associated with moves toward making C-P products
more similar around the globe to take advantage of scales of economy in production
and standardization of its marketing. In addition, the ease with which consumer
information now moves across countries is leading C-P to seek greater central
control of how its products are marketed. These factors are all leading to greater
regional and global coordination of production control, marketing, and other
business operations of C-P.

Human resource and labor relations decision making was traditionally decentral-
ized at C-P; most decisions were made by facility managers or factory managers
in facilities. In this traditional way of operating, country-level presidents and
directors of manufacturing at C-P got involved in facility issues only when there
was a crisis. A small corporate staff (a vice-president of human resources and a
vice-president of labor relations) at the company ’ s corporate headquarters in New
York City provided strategic guidance to country- and facility-level managers on
labor relations and human resource matters, but often they became involved in
plant-level labor relations matters only when a new labor agreement was being
negotiated or when a strike or some other emergency was occurring. Even then,
their input was only advisory. On an everyday basis, local managers controlled
the labor relations function.

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Global Pressures 361

In the mid-1990s, corporate managers decided in the mid-1990s that the
company needed to move away from this extreme form of decentralization in
its labor relations function because of the increased need for coordination across
C-P given the increasing role of its global supply chain. In addition, the integration
of trade and the creation of centers of manufacturing excellence led the company
to consolidate is production system. It accomplished this by closing a number of
facilities and expanding output fl ows through increased mechanization and full-day
and full-week operations in the plants that remained. One consequence of this
production consolidation and increased trade fl ows was that a labor disruption at
a center of excellence would now cause greater harm to the company ’ s sales and
profi ts. Corporate managers wanted to have more control during labor disruptions
and to engage regional human resource and labor relations managers in efforts
to minimize their occurrence and effects when disruptions did occur.

A mixture of union and non-union plants evolved at C-P, with much of the
growth occurring in non-union plants. However, since 2000, a disproportionate
amount of consolidation has been occurring in unionized facilities, in part because
the unionized plants tend to be older plants.

Since 2000, in an effort to gain more coordination and more consistency across
the company and greater interaction between human resource and labor relations
managers and those involved in operations, C-P has created (or expanded) regional
human resource offi ces and gave these offi ces more direct involvement in plant-
level labor relations activities. To improve the quality of human resource and
labor relations, C-P launched a series of regional workshops that involved the
company ’ s top manufacturing and human resource and labor relations staffs. The
goals of these workshops were 1) to increase the regional focus across the company ’ s
operations; 2) to increase coordination between manufacturing and human resource
(and industrial relations) staff across the company (these various groups had rarely
met together in focused meetings in the past); and 3) to teach a standard and
strategic approach to the annual setting of key work-rule and operations objectives
in all (unionized and non-union) facilities.

Middle and shop-fl oor managers at C-P are now expected to convey the
company ’ s labor relations goals and methods to employees and to implement
C-P ’ s global human resource and labor relations policies. This is accompanied
by training for workers that focuses on instilling an appreciation for the increased
need for adaptive change in the workplace.

C-P business units are now required to use a standardized “strategic labor
relations process” to guide the preparation for, process of, and evaluation of
collective negotiations (in unionized settings) and employee relations objectives
(in non-union settings). The process includes a country-level planning meeting
to set labor objectives, submission of those objectives for division approval, a
strategically oriented negotiations process accompanied by an appropriate com-
munications strategy, and subsequent evaluation of the overall process. Bargaining
objectives, which typically involve work rules and work processes, and compensation
objectives are identifi ed and then the parties are expected to consider how these
objectives support each another. This process takes place under the guidance of

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362 Part V. Special Topics

a corporate global labor relations strategy that top manufacturing and human
resource managers develop. A key outcome of this process is that various human
resource performance metrics are now collected and compared across plants. The
hope is that this data and comparisons of plant performance will infl uence the
objectives that are set in the strategic labor relations process that guides labor
negotiations and the formation of employee relations objectives.

Additional steps have been taken in other parts of C-P ’ s human resource and
labor relations division to stimulate more regional and global coordination of its
operations. For example, the company introduced software for handling employee
personnel records that gives employees an easy way to monitor and make changes
in their personnel profi le (e.g., when their family status changes because of events
such as marriage or the birth of a child). It also created centralized call centers
to handle employee requests. The move to shared information services was facilitated
by the growing similarity in the nature of the business and technologies in the
company ’ s various business units, spurred in large part by the increased role of
the company ’ s global supply chain.

At the central corporate, country, and plant levels of C-P, there is now increased
attention to work conditions throughout the company ’ s global supply chain.
The company makes a regular corporate audit of labor practices, including the
monitoring of pay levels and work time and efforts to eliminate child labor. This
audit is held at all of C-P ’ s supplier plants and the plants the company directly
operates.

The Impact of Globalization on the Management of Labor
Relations Processes

For all organizations, globalization is raising a series of questions and challenges
related to how labor relations are managed across global suppliers and those who
contract with multinational fi rms:

• Which employer is responsible for labor practices in global supply operations,
the MNC or the local supplier?

• Should an MNC have an explicit global labor strategy? If yes, what should
it be and how should it be monitored and enforced?

• What standards should govern labor practices in an MNC ’ s global supply
chain, given the great variation in content and the level at which standards
are set for issues such as minimum wages, overtime, and child labor regulations?
How should MNCs deal with the great variation in the quality of enforcement
of labor and employment laws across transitioning economies?

• Who, if anyone, represents workers in global supply chains? Unions are
largely organized at the national level and have not expanded to serve workers
across national boundaries and the level of unionization is very low in many
transitioning economies (see Chapter 15 ).

• What are the consequences of globalization for labor relations? Is the “race
to the bottom” that lowers the standards of living in higher wage countries
and holds down wages and working conditions in low-wage countries inevitable

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Global Pressures 363

or does globalization support economic development, employment growth,
and improved pay and other employment terms in transitioning nations?

MANAGING THE POLICIES AND LABOR PRACTICES
OF GLOBAL SUPPLY CHAINS

The Nike company offers one example of how an MNC has dealt with these
key issues. Initially, Nike, like many other MNCs, argued that labor practices
among its global suppliers were not its responsibility. As worker activists brought
media attention the presence of child labor and unsafe working conditions in
companies in Nike ’ s supply chain, the company experience increasing pressure
to question and ultimately to revise its view. By the mid-1990s, Nike leaders
observed that there was a direct correlation between the growing number of
media accounts of poor labor practices and conditions in its supply chain and the
company ’ s falling stock price. In 1998, Nike ’ s CEO Phil Knight famously said
he was tired of the fact that “Nike ’ s products have become synonymous with
slave wages, forced overtime, and arbitrary abuse.” 6

Nike changed its policies and practices and became an early leader by establishing
an internal Corporate Social Responsibility Unit. It charged this new unit to
create a code of conduct that the company would use to monitor and evaluate
labor practices in its supply chain and eventually to make public where its products
are made and the extent to which its suppliers are meeting the standards in its
code of conduct. Box 14.2 lists the practices covered in Nike ’ s code of conduct.
While other large MNCs have followed a similar path, unfortunately, all too
often it has taken a tragic accident to motivate companies to do so. Apple ’ s largest
manufacturer in China, Foxconn, experienced suicides and considerable unrest
in its factories before Apple began to actively monitor and seek to improve
operations in its supply chain. The most visible and largest tragedy to date was
the collapse of an apparel factory in Bangladesh in 2013, which led to the death
of more than 1,100 workers, most of whom were female.

Monitoring Codes of Conduct

Once a company creates a code of conduct, it must decide how to monitor and
enforce it. Should the company do it itself, using audit teams staffed by members
of their social responsibility units? Should it hire and pay directly an accounting
fi rm to audit labor practices? Should it work with and allow NGOs to do the
auditing? Should it audit operations on an unannounced basis or tell suppliers in
advance when audits will be done? Should it coordinate its audits with other
MNCs that purchase goods from a given supplier to avoid having multiple fi rms
using different standards and auditing operations multiple times? What standards
should apply—ones that are consistent with the host country ’ s laws, norms, and
competitive wage rates or company-wide standards?

Some MNCs, such as Walmart, have sought to avoid working with nongov-
ernmental organizations (NGOs) and instead hire consultants and professional
engineering fi rms to monitor suppliers. Others use a mix of internal auditors,

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364 Part V. Special Topics

BOX 14.2
Nike ’ s Code of Conduct

Employment is voluntary

• The contractor does not use forced labor, including prison labor, indentured
labor, bonded labor or other forms of forced labor. The contractor is responsible
for employment eligibility fees of foreign workers, including recruitment
fees.

Employees are age 16 or older

• Contractor ’ s employees are at least age 16 or over the age for completion of
compulsory education or country legal working age, whichever is higher.
Employees under 18 are not employed in hazardous conditions.

Contractor does not discriminate

• Contractor ’ s employees are not subject to discrimination in employment,
including hiring, compensation, promotion or discipline, on the basis of
gender, race, religion, age, disability, sexual orientation, pregnancy, marital
status, nationality, political opinion, trade union affi liation, social or ethnic
origin or any other status protected by country law.

Freedom of association and collective bargaining are respected

• To the extent permitted by the laws of the manufacturing country, the
contractor respects the right of its employees to freedom of association and
collective bargaining. This includes the right to form and join trade unions
and other worker organizations of their own choosing without harassment,
interference or retaliation.

Compensation is timely paid

• Contractor ’ s employees are timely paid at least the minimum wage required
by country law and provided legally mandated benefi ts, including holidays
and leaves, and statutory severance when employment ends. There are no
disciplinary deductions from pay.

Harassment and abuse are not tolerated

• Contractor ’ s employees are treated with respect and dignity. Employees are
not subject to physical, sexual, psychological or verbal harassment or abuse.

Working hours are not excessive

• Contractor ’ s employees do not work in excess of 60 hours per week, or the
regular and overtime hours allowed by the laws of the manufacturing country,
whichever is less. Any overtime hours are consensual and compensated at a

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Global Pressures 365

premium rate. Employees are allowed at least 24 consecutive hours’ rest in
every seven-day period.

Regular employment is provided

• Work is performed on the basis of a recognized employment relationship
established through country law and practice. The contractor does not use
any form of home working arrangement for the production of Nike-branded
or affi liate product.

The workplace is healthy and safe

• The contractor provides a safe, hygienic and healthy workplace setting and
takes necessary steps to prevent accidents and injury arising out of, linked
with or occurring in the course of work or as a result of the operation of
contractor ’ s facilities. The contractor has systems to detect, avoid and respond
to potential risks to the safety and health of all employees.

Environmental impact is minimized

• The contractor protects human health and the environment by meeting
applicable regulatory requirements including air emissions, solid/hazardous
waste and water discharge. The contractor adopts reasonable measures to
mitigate negative operational impacts on the environmental and strives to
continuously improve environmental performance.

The code is fully implemented

• As a condition of doing business with Nike, the contractor shall implement
and integrate this Code and accompanying Code Leadership Standards and
applicable laws into its business and submit to verifi cation and monitoring.
The contractor shall post this Code, in the language(s) of its employees, in
all major workspaces, train employees on their rights and obligations as defi ned
by this Code and applicable country law; and ensure the compliance of any
sub-contractors producing Nike branded or affi liate products.

Source : “Nike, Inc., Code of Conduct,” August 2010, accessed at http://about.nike.com/
pages/transform-manufacturing on January 17, 2017. See also Nike ’ s Corporate Respon-
sibility Report: http://about.nike.com/pages/transform-manufacturing .

consultants, and NGOs. Still others work with global labor organizations to
perform auditing and training functions. We will discuss the roles NGOs play in
these processes in more detail later in this chapter.

The effectiveness of corporate audits is one of the most hotly debated issues
in the fi eld of labor relations today. The results of the best research on this topic
indicate that on a scale of 0 to 100, the average compliance rate tends to peak
slightly above 50 percent. In addition, few plants appear to be on a path of

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http://about.nike.com/pages/transform-manufacturing on January 17, 2017

http://about.nike.com/pages/transform-manufacturing on January 17, 2017

http://about.nike.com/pages/transform-manufacturing

366 Part V. Special Topics

continuous improvement toward 100 percent compliance. Instead, over time,
plants are as likely to exhibit declines in compliance scores.

Some plants do better than others on a consistent basis. Plants located in
countries with strong laws governing labor and other business practices tend to
have higher compliance scores. So do plants with longer-term contracts with
MNCs and plants where there is more management interaction and sharing
of expertise about best practices in lean manufacturing and advanced human
resource management systems. 7 However, the fact that periodic audit inspections
of building safety do not ensure that workplaces are truly safe is well illustrated
by the examples a New York Times account gives of the steps managers at numerous
garment factories have taken to avoid or manipulate the inspection/audit process
(see Box 14.3 ).

BOX 14.3
Fast and Flawed Inspections of Factories Abroad

Inspectors came and went from a Walmart-certifi ed factory in Guangdong
Province in China, approving its production of more than $2 million in
specialty items that would land on Walmart ’ s shelves in time for
Christmas.

But unknown to the inspectors, none of the playful items, including
reindeer suits and Mrs. Claus dresses for dogs, that were supplied to Walmart
had been manufactured at the factory. Instead, Chinese workers sewed the
goods—which had been ordered by the Quaker Pet Group, a company
based in New Jersey—at a rogue factory that had not gone through the
certifi cation process set by Walmart for labor, worker safety or quality,
according to documents and interviews with offi cials involved.

To receive approval for shipment to Walmart, a Quaker [Pet Group]
subcontractor just moved the items over to the approved factory, where
they were presented to inspectors as though they had been stitched together
there and never left the premises.

Soon after the merchandise reached Walmart stores, it began falling apart.
Fifteen hundred miles to the west, the Rosita Knitwear factory in north-

western Bangladesh—which made sweaters for companies across Europe—
passed an inspection audit with high grades. A team of four monitors gave
the factory hundreds of approving check marks. In all 12 major categories,
including working hours, compensation, management practices and health
and safety, the factory received the top grade of “good.” “Working
Conditions—No complaints from the workers,” the auditors wrote.

In February 2012, 10 months after that inspection, Rosita ’ s workers
rampaged through the factory, vandalizing its machinery and accusing
management of reneging on promised raises, bonuses and overtime pay.

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Global Pressures 367

Some claimed that they had been sexually harassed or beaten by guards.
Not a hint of those grievances was reported in the audit. …

An extensive examination by The New York Times reveals how the
inspection system intended to protect workers and ensure manufacturing
quality is riddled with fl aws. The inspections are often so superfi cial that
they omit the most fundamental workplace safeguards like fi re escapes. And
even when inspectors are tough, factory managers fi nd ways to trick them
and hide serious violations, like child labor or locked exit doors. Dangerous
conditions cited in the audits frequently take months to correct, often with
little enforcement or follow-through to guarantee compliance.

Supply chain experts and monitors say that far too often, factory managers
play cat-and-mouse games with inspectors because they are desperate to
avoid a failing grade and the loss of a lucrative stream of orders.

The experts provided real-life examples. To avoid appearing illegally
overcrowded, one factory moved many machines into trucks parked outside
during an inspection, a monitor said. Whenever inspectors showed up at
certain plants in China, the loudspeakers began playing a certain song to
signal that underage workers should run out the back door, according to
several monitors. During inspections in India, some factories displayed
elaborate charts detailing health and safety procedures that, like stage props,
were transferred from one factory to another, another monitor said. …

Mr. [Auret] van Heerden [president of the Fair Labor Association] said,
“You can never visit facilities often enough to make sure they stay compliant—
you ’ ll never have enough inspectors to do that. What really keeps factories
compliant is when workers have a voice and they can speak out when
something isn ’ t right.”

Source : Extracted from Stephanie Clifford and Steven Greenhouse, “Fast and Flawed
Inspections of Factories Abroad,” New York Times . September 3, 2013, http://
www.nytimes.com/2013/09/02/business/global/superfi cial-visits-and-trickery-undermine-
foreign-factory-inspections.html .

Evidence shows that while codes of conduct have helped improve standards,
they cannot, on their own, serve as a comprehensive strategy for achieving
compliance or sustained improvements in labor standards in transitioning countries.
There is evidence that countries with stronger labor laws and good enforcement
practices have better rates of compliance with established labor standards. Research
also suggests that combining the monitoring and auditing of labor conditions
with advice and training for management on state-of-the-art lean manufacturing
and human resource practices generates further improvements. The ILO ’ s Better
Factories Cambodia program suggests that a heavy infusion of incentives (lower
tariffs or other trade restrictions), government and international pressures, and
support for workplace-based unions can also have positive effects.

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368 Part V. Special Topics

The evidence that corporate codes of conduct lead to positive (but limited)
results has led to active debates over what else needs to be done to improve labor
conditions in global supply chains. 8 Meetings of the multiple stakeholders
involved—MNCs, NGOs, unions, government offi cials, representatives from the
International Labour Organization (ILO), and academics—have been held at
various universities to seek consensus on how to improve the monitoring of and
compliance with codes of conduct, but to date no clear consensus has emerged.
One big problem is that a root source of pressures to violate labor standards is
the purchasing and sourcing staff of MNCs. Pressures to deliver products that
have short life cycles (e.g., a popular style of shirts, shoes, etc. or the newest iPad
or similar electronic device) quickly reverberate down through the supply chain
to contractors, who conclude that they have no choice but to pressure their work
force to meet the schedule. Not surprisingly, work hour rules—standards about
overtime, maximum hours, meal and rest breaks, days off, etc.—are among the
most frequently violated features of codes of conduct.

INTERNATIONAL (FREE) TRADE AGREEMENTS

International trade has been expanded in recent years through the negotiation of
various trade agreements. Our review of several of those agreements focuses on
the concerns about labor rights and labor conditions that surfaced during debates
about these agreements and the provisions in them to address those concerns.
We focus on the three trade agreements the United States has made with Canada
and Mexico, Jordan, and Colombia. For a discussion of the important infl uence
of international labor law, see Chapter 3 .

NAFTA

The North American Free Trade Agreement (NAFTA) between Canada,
the United States, and Mexico took effect in January 1994. It removed tariffs
and other trade barriers among the three countries over a fi fteen-year period.
Both the passage and the continuing effects of NAFTA have been extremely
controversial. The agreement has been widely criticized by labor unions who
claim that Mexico ’ s low wages are the reason many U.S. fi rms have relocated
south of the border. Environmentalists worry that companies fl ee south so they
can take advantage of weak pollution controls and lax enforcement of environmental
regulations. The American business community and many economists, on the
other side of this debate, support NAFTA on the grounds that it brings gains
through trade to all three countries. This is the reason Presidents George W.
Bush, Clinton, and Obama gave for their support for this international policy.
NAFTA supporters claim that it will help integrate Mexico more fully into the
world economy and thereby address Mexico ’ s social problems and their spillover
effects in the United States (such as high immigration and the drug trade). To
address its critics, side agreements were added to NAFTA concerning the environ-
ment and labor rights. The labor side agreements create national administrative

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Global Pressures 369

offi ces that are authorized to investigate public charges that one of the NAFTA
countries is not enforcing its own labor laws.

The U.S.-Jordan Trade Agreement

In the U.S-Jordan Free Trade Agreement (2001), both countries committed to
“reducing barriers for services, providing cutting-edge protection for intellectual
property, ensuring regulatory transparency, and requiring effective labor and
environmental enforcement.” 9 The effects of this treaty in Jordan were signifi cant
because U.S. companies such as Walmart and Target quickly established factories
in Jordan and in the fi rst year of the trade agreement Jordan increased its exports
by 213 percent.

The U.S-Jordan Free Trade Agreement was the fi rst such agreement between
the United States and a foreign country that included labor provisions in the text
of the agreement. Both countries agreed to comply with the ILO ’ s Declaration
on Fundamental Principles and Rights at Work and to enforce their own domestic
labor laws. 10 In addition, the agreement established dispute resolution procedures
and trade sanctions to be used if either country was seen as violating its domestic
labor laws.

However, although the labor and environmentalist communities hailed these
provisions, the U.S government ’ s policies regarding its enforcement of labor laws
became much more pro-business when George W. Bush became president. In
2001, U.S Trade Representative Robert Zoellick and the Jordanian ambassador
to the United States announced that both the U.S and Jordan had agreed not to
resort to trade sanctions and that neither country would use the dispute resolution
enforcement procedures outlined in the free trade agreement if doing so would
lead to blocking trade. Consequently, the labor provisions that had been hailed
as revolutionary in this free trade agreement were not applied as had been hoped. 11
In addition, after the free trade agreement came into force in 2001, Jordan passed
the Public Assemblies Law and other legislation that limited freedom of association
and collective bargaining.

In 2006, a representative of the National Labor Committee (an NGO) testifi ed
to Congress that labor laws were not being enforced in Jordan and provided
evidence that the Jordanian garment industry had sweatshops where workers
worked twenty-hour days, were not paid consistently, and were emotionally and
physically abused and that such shops hired migrant workers from China, Sri Lanka,
and Bangladesh who were being forced to work as de facto involuntary servants.

The U.S.-Colombia Trade Agreement

The U.S-Colombia Trade Promotion Agreement (CTPA) was implemented in
2012. 12 The agreement states that both the U.S and Colombia will continue to
maintain in domestic law the right to freedom of association (i.e., the right of
workers to form and join a union) and the right of workers to engage in collective
bargaining. In addition, both sides promised that they would eliminate all forms
of forced labor and child labor.

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370 Part V. Special Topics

Observers claim that as has been the case in Jordan and Mexico, the labor
rights provisions in the Colombia trade pact have proven to be ineffective. Allega-
tions have surfaced that since 2010, 104 labor and human rights activists have
been murdered in Colombia. In addition, the Congressional Monitoring Group
on Labor Rights has provided extensive documentation showing that the right
to organize and engage in collective bargaining is being curtailed and undermined
in Colombia. 13

The Controversy Surrounding Trade Agreements

These three trade agreements make it clear that there is a great deal of controversy
about to the real impacts of trade agreements on workers’ rights and work condi-
tions. Defenders of those agreements argue that trade does ultimately lead to
higher rates of economic growth in transitioning economies and improvements,
albeit gradual, in wages and work conditions. Critics, on the other hand, claim
that trade pacts encourage MNCs to leave countries where wages and work
conditions are better. Critics also allege that any growth in employment largely
occurs in low-wage sectors, often at the expense of indigenous (and frequently
more craft-oriented) production. These debates have contributed to a reluctance
to approve the Trans-Pacifi c Partnership that has surfaced in the U.S. Congress
(see Box 14.4 ).

BOX 14.4
The Debate Surrounding the Trans-Pacifi c Partnership Trade
Agreement

The Trans-Pacifi c Partnership Agreement (TPP) is a trade agreement that
was signed on February 4th, 2016, by twelve Pacifi c Rim countries, including
the United States. The Offi ce of the United States Trade Representative
has stated that the agreement will “promote economic growth; support the
creation and retention of jobs; enhance innovation, productivity and com-
petitiveness; raise living standards; reduce poverty in our countries; and
promote transparency, good governance, and enhanced labor and environ-
mental protections.” The TPP includes provisions that will eliminate or
substantially reduce tariff and nontariff barriers in essentially all trade in
goods and services, including barriers to investment in goods and services.
It will also facilitate the development of production and supply chains,
promote innovation, and ensure that economies of all levels of development
can participate in trade.

Supporters of the TPP in the United States claim that it will bring about
an increase in U.S.-produced exports produced and increased support for
well-paying U.S. jobs that will strengthen the middle class. Although President
Obama has been a fi rm advocate of the agreement, it has been opposed by

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Global Pressures 371

many Democrats. In addition to dissent from high-ranking political fi gures,
there has been a signifi cant amount of union opposition to the TPP. One
of the main reasons for the opposition is due to fear that liberalization of
trade will increase competition between U.S. labor and labor in low-wage
countries that are a part of the agreement. Pacifi c Rim countries include
Vietnam, Mexico, Chile, Peru, Brunei, and Malaysia.

Union leaders believe that the increase in competition that will result
from the TPP will lead to signifi cant losses of U.S. jobs because of outsourcing
and lower wages for those who are able to keep their domestic jobs. Critics
of the TPP also do not believe that the agreement has adequate protections
for workers in the lower-income countries that are parties to the agreement.
For example, independent labor unions are not permitted in Vietnam; only
unions affi liated with the Communist Party are recognized. Brunei has
outlawed strikes and refuses to recognize collective bargaining.

U.S. unions argue that the Obama administration has made concessions
on labor rights issues in order to get transitioning countries to accept the
agreement, despite the statement of the United States Trade Representative
that the agreement promotes “enhanced labor protections.” Unions believe
that what little labor protection provisions the agreement does have are
nullifi ed by inadequate enforcement mechanisms. Critics of the TPP claim
that worker protection effectively is left to the discretion of the individual
countries, which will likely do little to change their current practices.

In order for the United States to ratify the TPP, Congress would have
had to pass a bill to implement the agreement. In early 2017, newly elected
President Trump signed a statement formally abandoning the TPP.

Sources : Offi ce of the United States Trade Representative, “Summary of the Trans-Pacifi c
Partnership Agreement,” October 2015, https://ustr.gov/about-us/policy-offi ces/press-
offi ce/press-releases/2015/october/summary-trans-pacifi c-partnership ; Ben Penn, Len
Bracken, and Rosella Brevetti, “Some See TPP Trade Deal as Harmful to Workers,”
Daily Labor Report , October 5, 2015, C-1, Kevin Granville, “What is TPP? Behind the
Trade Deal that Died,” New York Times , January 23, 2017, https://www.nytimes.com/
interactive/2016/business/tpp-explained-what-is-trans-pacifi c-partnership.html .

LABOR ’ S RESPONSES TO THE POWER ADVANTAGE
OF MULTINATIONAL CORPORATIONS

The expansion of economic activity across national boundaries puts workers and
unions at a disadvantage in terms of bargaining power. Multinational operation
allows management to shift production and capital across national borders and
raises the competitive pressures facing the work force. Imagine, for example, the
pressures high-paid U.S. (and Western European) workers face when MNCs
operating in their countries can shift production to countries where workers
receive hourly wages that are a small fraction of those U.S. and European workers

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https://www.nytimes.com/interactive/2016/business/tpp-explained-what-is-trans-pacifi c-partnership.html

https://ustr.gov/about-us/policy-offices/pressoffice/press-releases/2015/october/summary-trans-pacific-partnership

https://ustr.gov/about-us/policy-offices/pressoffice/press-releases/2015/october/summary-trans-pacific-partnership

372 Part V. Special Topics

earn and where environmental and other social regulations are weaker. Unionists
refer to this as social dumping . When management is struck by workers in
their operations in one country, it has a bargaining power advantage if it can
turn to production facilities or substitute workers in other countries.

In theory, one way a union could counter the advantages management gains
from a company ’ s expansion of its production locations would be to expand its
own jurisdiction to make it coextensive with the boundaries of the MNC. Unions
in the United States (and in a number of other advanced industrialized countries)
have expanded their jurisdiction by shifting from local or regional organizing to
become national in scope as the product markets companies serve also became
national. If this were to happen on a large scale, the resulting multinational
unions would be better able to remove competition across workers in the different
locations where MNCs operate. This section examines how successful unions
have been at becoming multinational.

Even though there are some examples of multinational unions, or at least the
coordination of policies of national unions, this has not happened very often. Let
us consider why this is so and then look at some counterexamples.

Diffi culties Unions Face When Operating Multinationally

Unions have found it diffi cult to become multinational because of the wide
diversity that exists across countries in culture, law, and institutions. It is diffi cult
enough for a union operating in one country to maintain cohesion and solidarity
across its members. When the economic and cultural differences, communication
diffi culties, and fears that exist across workers in different countries are added on
top of the normal problems unions face, maintaining solidarity becomes a nearly
insurmountable problem.

Consider the problems that multinational operation in both transitioning countries
and highly industrialized countries creates for union solidarity. Workers in a
transitioning economy , who earn low wages and face few employment alterna-
tives, are generally very reluctant to support the bargaining demands of their
high-wage counterparts in advanced industrialized nations. There are strong
incentives for the workers in these two countries to view each other as competitors
for jobs.

Also, imagine how hard it is for a union to communicate to its members if
those members speak a variety of languages. Then imagine the diffi culty a mul-
tinational union would face as it tried to obtain and convey the information
union members would need as they entered a bargaining process. Here is another
area where management in MNCs has an advantage over unions. The managers
of an MNC typically have a lot of awareness of company objectives and worldwide
activities, whereas workers and unions are often hard pressed to gain information
about such activities.

The merger of independent unions across national borders has not been a
solution to multinational pressures. It is diffi cult enough to merge unions even
in a single country, where there are strong advantages to be gained in bargaining
power. Even greater impediments would exist if a merger were to involve two

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Global Pressures 373

unions based in different countries that represent workers at the same MNC. It
is most unlikely that the structure of two unions that might consider merging
would be similar, even if the workers were employed by the same fi rm. Similar
problems would exist even if these unions wanted to merely coordinate their
bargaining demands.

Yet even given these diffi culties, examples of cross-national union solidarity
and support can occur short of mergers or coordinated bargaining. We examine
efforts to build cross-national union solidarity below.

Cross-border union strategies have taken many different forms. The strategies
for Thai garment workers, German metalworkers, and U.S. retail workers must
be different. Industry, company, union structure, political traditions, ideology,
levels of bargaining power, and differing sets of goals all affect how cross-border
union activities are structured.

The Role of International Trade Secretariats

Some international trade secretariats provide information to member unions
and coordinate activities across national borders. These autonomous agencies
cover particular industries or groups of industries. The International Metalworkers
Federation, one of the most active of these secretariats, includes members from
both newly industrializing and highly industrialized nations. Among its many
activities, it issues research reports to its members.

Many of the secretariats have a close working relationship with the International
Federation of Free Trade Unions (ICFTU), which includes affi liated unions that
represent 48 million workers around the world. The ICFTU excludes Communist
unions. The World Federation of Trade Unions (WFTU), a federation of only
Communist unions, in the 1960s represented 134 million workers. After the
breakup of the Soviet Union, the role of the WFTU declined precipitously.
While the global expansion of trade is leading unions around the world to
communicate more extensively with their counterparts in other countries, the
infl uence of trade secretariats has been modest in part due to political differences
across the unions that are members of these union federations .

Cross-Border Union Alliances

Some unions have attempted to overcome diffi culties with communications and
political differences and have extended their reach globally either on their own
or by forming alliances across national unions. Airline pilots have the most fully
established international body. The International Federation of Airline Pilots
Associations is composed of 100 national-level pilot unions/associations with a
combined membership of approximately 100,000 pilots (see Box 14.5 ).

Cross-National Union Strategies and Pressure
Campaigns

Similar cross-border networks or formal agreements to coordinate when needed
have occurred in other industries as well. One prominent example was formed
in 2008 when the North American–based United Steelworkers and the United

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374 Part V. Special Topics

BOX 14.5
The International Federation of Airline Pilots Associations
(IFALPA)

The mission of IFALPA is to be the global voice of professional pilots by
providing representation, services and support in order to promote the
highest level of aviation safety worldwide.

This goal is realized through our core function which is to represent our
members by:

Interacting with international organizations to achieve the highest level of aviation
safety.

Developing common policies and positions and promoting the adoption of
such policies by ICAO, regulatory authorities and the State of each Member
Association.

Promoting and enhancing the role and status of professional pilots in ensuring
the safety of the aircraft and well-being of passengers and goods entrusted
to their care.

Promoting a viable and expanding air transport industry.
Providing training and education for the benefi t of professional pilots.
Providing Member Associations with services as needed.
Assisting in the organizational development of Member Associations.
Supporting Member Associations by providing expertise in the areas of Technical,

Safety, Regulation and Industrial issues.
Facilitating the exchange of information and the co-ordination of activities

amongst Member Associations and Pilot Alliances through various forums
such as Conference, Regional Meetings and Standing Committees.

Source : IFALPA, “Mission Statement,” http://www.ifalpa.org/about-us/mission-statement
.html .

Kingdom–based UNITE joined forces. Box 14.6 summarizes the goals of their
joint effort, called Workers Uniting. To date, these unions have supported each
other in strikes involving companies that have operations in Britain and North
America.

Comprehensive Union Pressure Campaigns

Unions that use a mixture of research, rank-and-fi le activism, boycotts, and
political leverage to put pressure on a company globally have developed more
comprehensive campaigns since the late 1980s. These campaigns often target a
single employer where workers have gone on strike, have been locked out, or
are engaged in an organizing drive. Such campaigns use in-depth research to

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http://www.ifalpa.org/about-us/mission-statement.html

Global Pressures 375

BOX 14.6
Workers Uniting: A Global Union

Workers Unite brings together Unite, the biggest union in the UK and
Ireland, with the United Steelworkers, the largest industrial union in North
America. Here are four reasons why this partnership is said to be critical
by Workers Uniting.

1. The economy is globalizing. From Brussels to Beijing, decisions about our
economy are increasingly made far from home. A global union can provide
us a voice in those decisions.

2. Politics is globalizing. Right wing politicians are using the same vicious
tactics to undermine our livelihoods in the UK as they are in the U.S. and
Canada. A global union can help us support progressive politics on both
sides of the Atlantic.

3. Our employers are globalizing. A couple decades ago, only a few of
our employers operated in more than one country. Now, nearly all of them
do. A global union can help us stand up to our employers wherever they
operate.

4. The movement is globalizing. Whether it ’ s standing up for fair trade or
fi ghting back against bank bailouts, progressive groups are mobilizing and
uniting everywhere. A global union can help us join them in the fi ght for
a better world.

Source : http://www.workersuniting.org/ .

identify vulnerabilities in the company ’ s global operations. Comprehensive union
campaigns build coalitions with other unions, communities, and NGOs around
the world to target the company ’ s image, its suppliers, or its customers globally
to pressure the company into improving labor conditions.

The 1986 Shell Oil boycott was one of the earliest truly global comprehensive
campaigns. Using the consumer boycott as its central tactic, the Shell campaign
linked anti-apartheid activists, trade unionists, civil rights activists, politicians,
church activists, and consumers in a global divestment campaign. In North America,
the United Steelworkers have used these types of campaigns to take on global
multinational companies such as BASF, Ravenswood, Bridgestone/Firestone, and
Goodyear to end strikes, lockouts, and support collective bargaining campaigns.
This approach is not limited to North American unions. Central American banana
workers, European dockworkers, and Taiwanese telecom workers have all used
cross-border campaigns since the late 1980s.

While many campaigns have been successful, this type of global coordination
and comprehensive campaigning requires large amounts of resources, funding,
and long-term trust between unions. MNCs have threatened unions with lawsuits

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http://www.workersuniting.org/

376 Part V. Special Topics

for engaging in these types of campaigns, and weak transnational labor standards
have made it diffi cult for unions to enforce gains that have been made.

Cross-Border Union Networks

Union networks are groups of unions at a shared multinational employer that
come together to create a transnational union structure with the goals of sharing
information, coordinating activity, and bargaining with an employer on a trans-
national level. Networks fi rst appeared in the 1970s. Global union federations
have promoted them as a way for unions to overcome the imbalance in bargaining
power with multinational employers. Networks create long-term relationships
between unions that have made it possible for them to share information about
a common employer, to act as infrastructure during cross-border campaigns, and
to act as decision-making bodies that can bargain with employers on a transnational
level.

Dozens of networks have been established in the auto, chemicals, food, and
service industries. Some networks such as those created by unionized workers at
Carrefour and Arcelor have been able to sign agreements with employers on a
transnational level. Examples include international framework agreements
that establish basic health and safety conditions and independent monitoring.
Others such as unions at Volkswagen and Mercedes have created European-style
works councils that meet annually with company management to discuss working
conditions and compliance with basic ILO conventions. Finally, others such as
unions at Gerdau and Sodexo have used networks to create global comprehensive
campaigns. Unions in Brazil have used networking as a strategy to coordinate
bargaining nationally and to establish transnational links with unions in a company ’ s
home country.

However, challenges remain as differences in national labor laws, language and
communication issues, and weak transnational legal regulations have hampered
attempts to build long-term union structures such as networks.

Campaigns against Sweatshops in the Garment Industry

In the 1970s, sweatshops as a form of garment production reappeared in Latin
America, the Caribbean Basin, Southeast Asia, and Southern California. Nations
reeling from debt crises and structural adjustment programs had turned to
export processing zones (EPZs) for growth strategies. EPZs are tax-free industrial
havens for MNCs where they can assemble low-value products such as gar-
ments, textiles, electronics, and toys and can employ a low-wage, mainly female
work force. Aided by free trade agreements and a system of subcontracting and
global production, sweatshops became the symbol of high fashion apparel lines
in the developed world and the face of a race to the bottom for transitioning
countries.

Workers, mainly young women, organizing in places such as Guatemala, Sri
Lanka, Thailand, and Haiti have used global solidarity campaigns as means of
winning improvements in individual garment factories and as a way to increase
pressure for industry- and retailer-wide codes of conduct. These campaigns bring

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Global Pressures 377

together a unique set of actors that includes garment workers and unions, trans-
national NGOs, labor union allies, consumer activists, and North American
university students in advanced industrial economies.

Two factors are unique to organizing in the garment industry. First, many of
the products produced in the apparel factories of Latin American and South Asia
are sold to consumers in North America and Western Europe. This created an
opportunity for garment workers to make alliances with unions and consumer
groups in advanced industrial countries by bringing to light to their working
conditions. Second, many of the factories in newly industrializing countries are
actually subcontractors for large, well-known brand names such as Benetton,
Disney, and Reebok that are headquartered in advanced industrial countries.
Because of the disparity between the high cost of luxury apparel in the advanced
industrial countries and the poor working conditions of workers in the transitioning
countries, the campaigns of garment workers have often relied on publicity
campaigns linking well-known retailers such as the Gap and Walmart to poor
working conditions in transitioning countries as a way to improve working
conditions in garment factories.

In addition, because athletic companies such as Adidas and Nike have large
contracts with universities, U.S. college students have become key supporters of
these campaigns through groups such as United Students Against Sweatshops .

Some unions have promoted international framework agreements (IFAs)
as effective and participatory structures. IFAs are multilateral agreements between
a corporation and a union, usually one of the global union federations , to
ensure equal standards across a fi rm at a global level. IFAs establish core labor
standards such as the abolition of child labor, nondiscrimination, and freedom of
association. They attempt to cover all employees, including workers who are
subcontracted or are employed by subsidiaries and suppliers of the fi rm and are
designed to establish an institutionalized relationship with the fi rm at the headquarters
level that ensures some form of monitoring and a process for improving working
conditions. Unionized workers have had some success in getting MNCs to sign
IFAs, but they are voluntary and are diffi cult to enforce due to a weak regulatory
environment transnationally.

THE ROLE OF NGOS

NGOs are now playing active roles in identifying abuses, lobbying for improved
standards and improved enforcement practices, and in some case actively representing
workers and/or auditing labor conditions in supplier operations. Some NGOs
are funded by employers and some are funded independently by private foundations,
individual donations, or labor unions. Some choose to work at arm ’ s length with
MNCs and some choose to work in collaboration with them. Many NGOs use
both tactics. Various meetings of multiple stakeholders have been held to bring
NGOs, unions, MNCs, and international organizations such as the ILO and the
World Bank together to try to learn from their experiences to date and from the
research that has been done on global labor standards. However, diversity of

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378 Part V. Special Topics

practices remains the norm. (See Box 14.7 for examples of different NGO
activities).

The Worker Rights Consortium

The Worker Rights Consortium (WRC), one of the most active of these NGOs,
has been involved in efforts to improve labor conditions at Foxconn in China,
at apparel factories in Bangladesh, and at Nike plants in various countries. The
history and role of the WRC is described in detail in Box 14.8 .

BOX 14.7
Examples of Labor NGOs and What They Do

Name Activities

Fair Labor Association
www.fairlabor.org

Monitors factories independently and reviews company audits
Certifi es compliance with codes of conduct
Reports on results of audits in participating companies
Governed by Board of Industry that consists of

representatives from industry, NGOs, and universities
Social Accountability

International
www.sa8000.org

Certifi es that manufacturers are in compliance with Social
Accountability International labor standards

Trains auditors
Provides self-assessment software for supply chains with

recommendations for how to improve performance
Lists factories that have achieved SA8000 certifi cation
Governed by mix of industry, NGO, and legal specialists

Worker Rights
Consortium

www.workersrights.org

Investigates conditions in factories that sell licensed apparel to
universities

Publishes periodic reports on factory conditions in different
countries

Maintains public database of factories that supply goods to
universities

Governed by a board that consists of university, student, and
other independent worker rights advocates and experts

United Students Against
Sweatshops

www.usas.org

Campaigns against abuses of workers’ rights in factories that
supply apparel licensed by universities

Advocates for fair working conditions for university
employees

Led by student representatives from participating universities
China Labor Bulletin
www.clb.org.hk/en/

Provides legal assistance to workers and labor organizations
in China

Conducts research on labor conditions in China
Maintains website on strikes and collective bargaining in

China
Led by professional staff; founded by worker rights advocate

Han Dongfang

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www.fairlabor.org

www.sa8000.org

www.workersrights.org

www.usas.org

www.clb.org.hk/en/

Global Pressures 379

BOX 14.8
Policing Worker ’ s Rights in the Global Economy: The Worker
Rights Consortium

The Worker Rights Consortium (WRC), a nonprofi t organization started
by United Students Against Sweatshops in consultation with workers and
labor rights experts, has become a watchdog for international sweatshop
labor. The WRC was started to help enforce the manufacturing codes of
conduct adopted by colleges and universities. These codes ensure that factories
that produce clothing and other goods bearing college and university names
respect the rights of their workers.

The WRC has pressured universities to end contracts with companies
that do not comply with labor standards. For example, in March 2000,
Brown University terminated its contract with Nike Inc., because of Brown ’ s
requirement that Nike comply with the university ’ s licensing requirements
and with a monitoring system that is part of the WRC process. In its
defense, Nike said it had “serious concerns about the code and monitoring
system included under the WRC” and that “the only effective way to make
progress in improving factory conditions around the world is to have all
stakeholders at the table.” Nike claimed that the WRC was excluding
industries that it should be working with.

The WRC at times has clashed with the Fair Labor Association (FLA),
an independent group formed by the Clinton administration in 1999 to
monitor the labor standards of overseas apparel manufacturers that sell their
products to the United States. The FLA grew out of the Apparel Industry
Partnership, a group of apparel manufacturers, consumer groups, and labor
and human rights organizations President Clinton brought to the White
House in 1996. By 2000, over 100 colleges and universities had associated
with the FLA so that they could be assured that clothing with their logos
was not made in sweatshops. However, the WRC has criticized the FLA
for being an industry-controlled monitoring system that only covers up
sweatshop abuses. The WRC supported a nine-day sit-in at the University
of Pennsylvania to protest the university ’ s association with the FLA.

Since 2000, however, the WRC and FLA have begun to forge a working
relationship, including working together on various monitoring projects.
The WRC ’ s membership now includes more than 100 colleges and
universities.

Sources : “Nike Terminates Contract with Brown after University Seeks Compliance
with Code,” Daily Labor Report , April 4, 2000, A-2; “Temple University Reviews
Membership in ‘Fair Labor’ Apparel Monitoring Group,” Daily Labor Report , February
22, 2000, A-5.

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380 Part V. Special Topics

THE NEGOTIATION OF GLOBAL STANDARDS

The challenge of creating negotiations structures, processes, and ongoing relationships
in global operations has generated several different approaches. The most basic
approach is to promote union representation on the shop fl oor of supplier operations
by providing technical assistance to unions in transitioning countries. The ILO
provides this type of technical assistance. In Cambodia, the ILO has developed
a particularly extensive program called Better Factories Cambodia that provides
training, dispute resolution, and monitoring of supplier operations. It also educates
workers about best practices for unions and collective negotiations and labor
standards. Reports on the program are quite positive, unions representing a
majority of workers in some apparel plants in Cambodia. In addition, compliance
with labor standards in the ILO ’ s code of conduct range from 70 and 95 percent.
However, reports continue of collusion and corruption among some employers
and union leaders. This program has been sustained for over a decade in large
part because of the continued support of the ILO and the Cambodian government.
An independent evaluation of the ILO program has shown that the garment
industry has continued to grow in Cambodia since the program was put in place
and that fi rms that complied with the employment standards the program monitors
are more likely to survive over time than those that did not initially comply. 14

While the Cambodian example is encouraging, it has yet to be replicated in
other newly industrializing countries with low rates of unionization rates remain
quite low. In such countries, the challenges of maintaining stable unions in
industries and in companies are quite high.

In some ways, NGOs conduct activities that are similar to what unions do.
Some NGOs have led efforts to publicize abuses of labor standards. Some have
negotiated with companies to upgrade health and safety and pay levels in specifi c
countries. Others have created sophisticated software programs that help fi rms
evaluate the state of labor practices in their supply chains and provide advice
about how to improve them. Other NGOs, such as United Students Against
Sweatshops, have used consumer boycotts and lawsuits against highly visible
companies the produce brand-name products, such as Adidas and Nike, to pressure
them to end labor abuses among their contractors.

NGOs that Do Unionlike Activities

Some NGOs include the direct negotiation of wages and improvements in other
work conditions in their activities. Three prominent examples are found in India.
We present them below as examples of the expanding role of NGOs are playing
around the world in directly representing and bargaining for low-wage workers.

In India, as in most transitioning economies, NGOs perform some the tasks
that unions in advanced industrial countries perform. One such organization is
the internationally acclaimed Self-Employed Women ’ s Association (SEWA). 15
Founded in 1972 by Nobel Peace Prize nominee Ela Bhatt, SEWA represents
poor self-employed women in rural areas of India who are earn money through
their own labor and small businesses. In 2008, the membership of SEWA reached

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Global Pressures 381

over 960,000. Dr. Bhatt ’ s main goals for SEWA include organizing women
workers for full-time employment and improving the compensation and benefi ts
the women workers receive for that work. SEWA also lobbies state governments
and the Indian national government to increase funding for health insurance and
for child care centers run by the association ’ s workers’ cooperatives. SEWA also
lobbies for more access to capital through credit with fi nancial institutions,
microloans, and lower interest rates for fi rst-time borrowers.

Another highly signifi cant NGO/union in India is the Kagad Kach Patra
Kashtakari Panchayat (KKPKP). KKPKP represents waste pickers, waste collectors,
and informal recyclers, all of whom are part of the informal sector of rural India. 16
A key aspect of KKPKP ’ s role is politically lobbying. KKPKP lobbies local
municipalities and state governments to increase grants to its credit cooperative,
which offers loans to members and provides a social security fund so waste
collectors have retirement funds. KKPKP also helps members negotiate and bargain
with local municipalities and private fi rms that hire waste collectors. It also supports
members who cannot reach an agreement with employers. For example, in April
2013, the KKPKP engaged in a sit-in strike in the city of Pune to protest the
low wages waste collectors received. 17

These are just two examples of the many NGOs in India that have taken on
important union-like roles. These organizations represent workers in negotiations
with government agencies as well as private sector employers. Almost 60 percent
of the Indian labor market consists of rural workers, many of whom labor in the
informal sector. These NGO/unions help promote the emergence of an Indian
middle class through advocacy, negotiations, protests, and political lobbying.

Summary

This chapter began with the hypothesis of John R. Commons that it would be
diffi cult to take wages out of competition by organizing the entire product and
labor market in a global economy. He argued without unions as a source of
power, a race to the bottom on wages and other working conditions would
result, and his hypothesis turned out to be correct.

U.S.-based MNCs have benefi ted from much globalization, including gaining
access to cheap labor and benefi ting from the effi ciencies global supply chains
make possible. The internationalization of production has created changes that
have given MNCs more bargaining power by increasing their strike leverage and
their access to cheap labor and as a result of the fact that MNCs can easily shift
production across national borders when facing militant labor in any one country.
To date, no single institutional response or alternative source of power has been
successful in counterbalancing this shift in power. Media exposure has been the
most effective way of putting pressure on MNCs to upgrade standards in their
supply chains. However, this method has proven to be successful only in short
episodes and has not led to sustained institutional change. While media reports
of tragedies or abusive work conditions create a fl urry of corrective activity, they
tend to lose momentum fairly quickly as media coverage fades.

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382 Part V. Special Topics

Consumers in general have not responded in consistent ways or demanded
data on labor standards or avoided products of companies with reported labor
standards problems. However, led by students who have organized on college
campuses, successful consumer campaigns have been mounted that require MNCs
that sell licensed athletic and sportswear bearing university logos to comply with
NGO specifi ed labor standards.

Evidence shows that corporate codes of conduct lead to the positive (but
limited) results. This has led to active debates over what else needs to be done
to improve labor conditions in global supply chains.

In addition, a number of cross-national union efforts have emerged, some of
which involve international networks of unions and workers. Other union campaigns
have linked with NGOs to make use of consumer and political pressure. It seems
to be the case that achieving and sustaining acceptable work conditions in supply
chains of MNCs will require a combination of efforts from management, labor,
NGOs, and governments, perhaps eventually reinforced by consumer purchasing
behavior.

Discussion Questions

1. Why do international production opportunities and international trade
generally advantage multinational corporations and disadvantage union in
terms of bargaining power?

2. In the past, what factors led most multinational corporations to prefer
to structure their internal labor relations function in a decentralized
manner, leaving most control over labor relations issues to local plant
managers?

3. What recent factors/trends are leading many multinational fi rms to move
toward more central coordination of their internal labor relations
function?

4. Why is it so diffi cult for unions to forge cross-national alliances and launch
successful cross-national pressure or bargaining campaigns?

5. Describe some of the steps you would take as the head of labor relations
in a large multinational fi rm to make sure that work conditions are fair and
respectable in your fi rm ’ s global supply chain.

Related Web Sites

ILO on Export Processing Zones:
http://www.ilo.org/actrav/areas/WCMS_DOC_ATR_ARE_EPZ_EN/lang–en/
index.htm

Better Factories Cambodia:
http://betterfactories.org/

Nike Code of Conduct and Corporate Social Responsibility:
http://about.nike.com/pages/transform-manufacturing

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http://www.ilo.org/actrav/areas/WCMS_DOC_ATR_ARE_EPZ_EN/lang%E2%80%93en/index.htm

http://www.ilo.org/actrav/areas/WCMS_DOC_ATR_ARE_EPZ_EN/lang%E2%80%93en/index.htm

http://betterfactories.org/

http://about.nike.com/pages/transform-manufacturing

Global Pressures 383

Suggested Supplemental Readings

Bronfenbrenner , Kate , ed . 2007 . Global Unions: Challenging Transnational Capital Through Cross-
Border Campaigns . Ithaca, N.Y. : ILR Press .

Multinational Companies in Cross-National Perspective: Integration, Differentiation, and the Interactions
between MNCs and Nation States . Special issue , ILR Review 66 , no. 3 ( 2013 ).

Locke , Richard M. 2013 . The Promise and Limits of Private Power . Cambridge : Cambridge
University Press .

Posthuma , Anne , and Dev Nathan eds . 2010 . Labour in Global Production Networks in India .
New Delhi : Oxford University Press .

Notes

1. John R. Commons, “American Shoemakers 1648–1895: A Sketch of Industrial Relations.”
Quarterly Journal of Economics , 24 no. 1 (1909): 39–98. See also Lloyd Ulman, The Rise of the National
Trade Union (Cambridge, Mass.: Harvard University Press, 1958).

2. For more on the history of Nike and evidence of labor conditions in global supply chains, see
Richard Locke, The Promise and Limits of Private Power (Cambridge: Cambridge University Press,
2013). The material in this chapter draws heavily on this book and on the larger MIT-Stanford
University Just Supply Chain research project.

3. See Jan Katz, “Cultural Issues in International Business,” in Handbook of International Business ,
ed. Walter Ingo (New York: Wiley, 1988): 11-1–11-17.

4. For recent research on how MNCs internally structure and operate their labor relations function,
see Multinational Companies in Cross-National Perspective: Integration, Differentiation, and the Interactions
between MNCs and Nation States. Special issue, ILR Review 66, no. 3 (2013).

5. Ibid.
6. Quoted in Locke, The Promise and Limits of Private Power , 49.
7. Ibid., 47–77.
8. See, for example, the Forum on this topic in The Boston Review 38 (May/June 2013): 12–29.
9. Pablo L. Gradi, “Trade Agreements and Their Relation to Labour Standards,” Issue Paper no.

3, November 2009, International Centre for Trade and Sustainable Development, http://ictsd.org/
downloads/2011/12/trade-agreements-and-their-relation-to-labour-standards .

10. Eli Kirschner, “Fast Track Authority and Its Implications for Labor Protection in Free Trade
Agreements,” Cornell International Law Journal 44, no. 2 (2011): 386–415.

11. Justice for All: The Struggle for Worker Rights in Jordan (Washington, D.C.: Solidarity Center,
2005), http://www.solidaritycenter.org/wp-content/uploads/2014/12/Jordan-JFA .

12. Offi ce of the United States Trade Representative, “U.S.-Colombia Trade Agreement,” https://
ustr.gov/uscolombiatpa .

13. “The U.S.-Colombia Labor Action Plan: Failing on the Ground,” 2013. A Staff Report,
Committee on Education and Workforce Democrats, U.S. House of Representatives, October.
http://democrats.edworkforce.house.gov/sites/democrats.edworkforce.house.gov/fi les/documents/
Colombia%20trip%20report%20-%2010.29.13%20-%20formatted%20-%20FINAL .

14. Drusilla Brown, Rajeev Dehejia, and Raymond Robertson, “Is There an Effi ciency Case for
International Labor Standards?” working paper, Tufts University, 2013. See also Kingdom of Cambodia,
International Labour Organization, and Better Factories Cambodia, “Thirtieth Synthesis Report on
Working Conditions in Cambodia ’ s Garment Sector,” July 2013, http://betterfactories.org/?p = 6706 .

15. “About Us,” Self-Employed Women ’ s Association , http://www.sewa.org/About_Us_History.asp .
16. “About Us,” Global Alliance of Waste Pickers , http://globalrec.org/who-we-are/ .
17. Leslie Vryenhoek, “KKPKP ’ s Six-Day Protest Wins a Promise from Municipality,” WIEGO , April 11,

2013, http://www.inclusivecities.org/blog/kkpkps-six-day-protest-wins-a-promise-from-municipality/ .

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http://www.solidaritycenter.org/wp-content/uploads/2014/12/Jordan-JFA

http://www.sewa.org/About_Us_History.asp

http://www.inclusivecities.org/blog/kkpkps-six-day-protest-wins-a-promise-from-municipality/

http://ictsd.org/downloads/2011/12/trade-agreements-and-their-relation-to-labour-standards

http://ictsd.org/downloads/2011/12/trade-agreements-and-their-relation-to-labour-standards

https://ustr.gov/uscolombiatpa

https://ustr.gov/uscolombiatpa

http://democrats.edworkforce.house.gov/sites/democrats.edworkforce.house.gov/fi les/documents/Colombia%20trip%20report%20-%2010.29.13%20-%20formatted%20-%20FINAL

http://democrats.edworkforce.house.gov/sites/democrats.edworkforce.house.gov/fi les/documents/Colombia%20trip%20report%20-%2010.29.13%20-%20formatted%20-%20FINAL

http://betterfactories.org/?p = 6706

About us

Howcan unions continue to remain relevant in a more dynamic
world of labor?

Kavi Guppta

FORBES, October 12, 2016

Retrieved from:
https://www.forbes.com/sites/kaviguppta/2016/10/12/will-labor-
unions-survive-in-the-era-of-automation/#26a88b9b3b22

There is no “one best way” for unions to respond to these challenges, but there
is consensus that unions will continue to remain relevant only by anticipating
and adapting their organizing and collective bargaining strategies to the
continuously changing economy, labor market, demography, work
organization, and human resource management.

Successful stories on unions embedding transnational corporations come from
their ability to engage themselves in international networks and collective
action. For example, thanks to UNI Global Union coordination efforts, the
North American management of SecureCorp was convinced to abandon an
anti-union strategy and sign an international framework agreement (IFA) at
the end of 2008, setting important standards which could be referenced
throughout the service and commerce sectors.

Similar cases can be reported from both US and European countries, where
international framework agreements between MNCs and trade unions have
been signed since 1988 (when Danone concluded the first IFA). Equally
relevant for trade unions committed to the promotion of solidarity is
establishing alliances with community groups and civil society organizations.
Though driven by the initiative of the local mayor, an example can be brought
by the so-called “KeepGM” movement: a multi-stakeholder campaign
organized in the city of Lansing, Michigan in the 1990s when General Motors
was facing serious economic troubles.

The strategy involved the most important local actors, such as the public
administration, the United Automobile Workers (UAW), the University of
Michigan and GM managers: all committed to demonstrating the value of
Lansing and its workforce against closure threats. Subsequently, a new
technical education campus was built to expand training programs for GM,
necessary infrastructures (e.g. roads, utilities and environmental cleanup)
were improved, and UAW embraced an interest-based approach to

negotiations with GM (e.g. leading to fewer job classifications and a two-tier
wage structure). The strategy proved to be successful: GM built new plants in
the area and invested more than $3 billion.

A proactive communication campaign contributed to engaging local
community and sending a clear message to GM headquarters in Detroit.
Communication is indeed an important issue for unions willing to create
awareness of their organization, encourage non-members to join and
demonstrate the benefits of membership. The prevailing views on this topic
argues that in face of current transformations (e.g. labor market
fragmentation, less stable employment relations), workers’ representatives
should embrace social media allowing for immediate communication and
dialogue across vast distances and a potentially fast mobilization of a large
number of workers.

Unions, indeed, have to be able to interpret and communicate reality, take
responsibility and eventually engage in proactive initiatives (e.g. promoting
relationships and a participatory culture in companies and localities, even
within the framework of increasing age, ethnic and employment contract
diversity).

What role can unions play in protecting casual or freelance
workers?

There are some reasons why organizing and representing freelancers and
independent contractors is not an easy task. On the one hand, competition
policy and law may represent a serious constraint for freelance workers to
benefit from the right of trade union representation and other freedoms
enjoyed by other workers. On the other hand, the self-employed may have
contractual relationships with multiple clients at any point of time. This
inevitably results in dispersion of contracts and space and a fragmentation of
bargaining. By and large, the ambiguities of freelance workers’ occupational
identity (whether they are independent or semi-dependent contractors)
engender basic organizational dilemmas for both workers and trade unions.

However, there are many examples of unions organizing in areas of casual and
insecure employment and substantial gains have been achieved both in terms
of providing services to and building new constituencies for this modern
workforce. The German trade union, IG Metal, for instance, provides a virtual
place named faircrowdwork, where freelance workers (and specifically
workers in digital platforms) are allowed to share views and organize
themselves. The U.K. Broadcasting, Entertainment, Cinematograph and

Theatre Union (BECTU) represents both employees and freelance workers in
the sector and has signed an agreement with an employers’ organization, the
Producers’ Alliance for Cinema and Television (PACT), which regulates labor
relations in the U.K. film-making industry. Finally, in the U.S., the Freelancers
Union has recently signed an agreement with Uber. The union is in charge of
advising the company on how to create portable benefits for its drivers.

How can unions be more involved within the organizational
structure of a company?

Union involvement in the organizational structure of a company is not an easy
process. On the one hand, unions can benefit from labor regulations and
socio-political institutions at the national or international level. In Europe, for
example, the Directives 94/45/EC and 2009/38/EC impose the establishment
of a works council and an appropriate information and consultation procedure
in transnational undertakings or groups of undertakings employing more than
1000 workers across European countries.

In Germany, co-determination allows works councils, conceived as competent
negotiating partners, to work out solutions with employers to improve
operations and increase productivity. Furthermore, in Italy the Law 300/1970
allows union channels of workplace representation. This means that only
those unions that have signed a collective agreement relevant to the company
are consented to establish a workplace representation.

On the other hand, unions can enjoy the increasing diffusion of the so-called
“High Performance Work Systems”, which are based on the premise that
workers’ voice can play a significant role in enhancing a firm’s
competitiveness. Reorganization of production in the direction of these new
work systems thus often implies frequent relationships and negotiations with
both workers and their representatives. However, beyond external variables,
unions willing to engage in the organizational structure of a company have to
invest resources in building a culture of mutual trust with management;
implying a shared understanding of common goals, good communication and
joint efforts to resolve mutual problems.

Integrative bargaining can allow unions to have a role in the organizational
structure of a company and achieve win-win agreements delivering mutual
gains for both workers and employers. However, in times of changing
workplaces and work forces, participatory labor relations require unions to be
promoters of, rather than obstacles to, innovation and change. Unions are,
therefore, asked to keep up with technological and organizational

transformations, in order to be aware of issues at stakes for both workers and
managers. To this aim, unions can find it useful to establish relationships or
partnerships with universities, research centers and any technical expert, that
can provide workers’ representatives with the necessary knowledge to both
engage in fruitful negotiations with employers and successfully interpret and
sustain the demands of their represented.

How are unions preparing for large-scale automation in most
skilled labor industries?

Firstly, it must be specified that unlike digitization, automation of production
is a long-lasting union challenge, that traces back to the second half of the
twentieth century. The innovation of current transformations lies in the
combination of automated devices with increasing connectivity. There is no
empirical research providing a general and homogeneous picture on how
unions throughout the world are preparing for large-scale automation.

However, many unions’ attempts to keep up with these changes can be
reported from developed countries. In Italy, for instance, the Italian
Federation of Metalworkers, FIM-CISL, has recently conducted a study on
automation and its impact on production systems and the potential role for
unions. Due to the shift from manual tasks to planning and control, and the
urgency to assess the complex relationship between humans and machines,
the Italian FIM-CISL is promoting professional training as an individual right
for workers, which should be included in the national collective agreement of
the metalworking sector. Finally, even though there is no “one best way” to
reorganize companies in the wake of technological development, it may be
contended that future organizations will require more decentralized work
processes and highly flexible workplace interventions.

As a consequence, a serious union issue is to prevent flexibility and less
hierarchical work structures. As the German model of co-determination
demonstrates, workers’ participation in decision-making can provide an
effective solution to this issue, allowing automation and digitization to become
programs for success for both employers and employees. That is why the
workers voice may be expected to become one of the main union claims in face
of current transformations.

384

15

INSIGHTS GAINED FROM COMPARATIVE
LABOR RELATIONS

One way to gain perspective on the labor relations system in your home country
is to compare it with systems in other countries. The U.S. labor relations system
is unique in many ways. The United States, for example, has one of the lowest
rates of unionization of any advanced democratic economy, and its rate of unioniza-
tion has fallen faster in the past 30 years than that of any other industrialized
country in the world. Management in the United States opposes unions more
strongly than managers in most other countries, and unions in the United States
are less closely tied to political parties than their counterparts are in Europe,
Australia, and many newly industrialized countries.

Other differences between labor relations in the United States and labor relations
elsewhere are noted throughout this chapter. A comparative look at what happens
in other countries makes is possible to assess whether any features of the labor
relations systems in other countries should be imported to the United States. This
question is now on the minds of many U.S. labor relations practitioners.

The three-tiered framework needs to be supplemented to take account of the
important roles that governments, international agencies, and NGOs play in
industrial relations in countries other than the United States (see Figure 15.1 ). A
comparative assessment of labor relations also should take account of the substantial
differences that exist across countries in their laws, political systems, and history.
The diversity in labor relations practices around the globe is so great that it is
not possible to present even a cursory examination of all of them. As a framework
for an international perspective, then, this chapter examines in detail the key
features of the labor relations systems in Germany and Japan as examples of
advanced industrialized countries and in China, India, South Africa, and Brazil
as examples of transitioning economies. 1

AN OVERVIEW OF HOW LABOR, MANAGEMENT,
AND GOVERNMENTS INTERACT

Regardless of where a country is on a spectrum of industrialization, labor, manage-
ment, and government engage in complex interactions that strongly infl uence

Labor Relations in Other Countries

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EBSCO Publishing : eBook Collection (EBSCOhost) – printed on 2/21/2022 2:33 AM via UNIVERSITY OF MARYLAND GLOBAL CAMPUS
AN: 1589152 ; Harry C. Katz, Thomas A. Kochan, Alexander J. S. Colvin.; An Introduction to U.S. Collective Bargaining and Labor Relations
Account: s4264928.main.eds

Labor Relations in Other Countries 385

the evolution of labor relations. For example, unions and other workers’ movements
in some countries have aligned with a political party or are the core constituents
of a labor party that is active in mainstream politics. In this chapter, we will
discuss some cases where unions are aligned with the governing leaders or a
governing party. Another way unions and workers have infl uenced governments
is through their involvement in protests or other political actions that are part of
democratization campaigns or movements. Some of these efforts to promote
democracy have succeeded and have led to major political transformations.

On the other hand, governments in some countries have acted to sharply curtail
trade union activities and power. Governments have done so either by outlawing
union activities or by directly intervening to stop a strike or a union organizing
effort. In some countries unions are allowed, but governments control them or
sharply constrain what they can do. We describe some of those cases. It is important
to differentiate between trade unions that are independent and those that are
dominated by a government.

Governments also critically affect labor relations in companies and sectors that
a government owns or runs. Historically, nationalization of telecommunications,
airlines, or banking industries or resource extraction enterprises, for example, has
infl uenced the labor relations and employment conditions in those companies
and sectors. Governments also have signifi cant infl uence on labor relations through
regulations, in particular through laws that regulate the right to strike and other
union activities.

INTERNATIONAL
AGENCIES

EXTERNAL
ENVIRONMENT

NEGOTIATIONS
OUTCOMES

GOVERNMENT
ACTIONS AND

POLICIES NGOs

Strategic
level

Functional
level

Workplace
level

Union strategies
and

structures

Bargaining
structure

NEGOTIATIONS
PROCESS

Work Organization
Employee motivation and

participation
Conflict resolution

Management
strategies and

structures

Figure 15.1. The three-tiered approach to the study of comparative labor relations

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386 Part V. Special Topics

Management and the interest groups that represent employers are also often
active participants in political processes in many countries that are striving to
promote their interests. For example, in some countries the business community
is strongly aligned with a particular political party or is part of a governing
coalition. Management can use its infl uence to promote the labor laws or the
tax, trade, and other economic policies it favors.

An Example of How a National Government Has Shaped
Labor Relations: China

The role of national governments in labor relations varies greatly. China is an
example of a country where the national government and the Communist Party
played a central role in the past in the functioning of the economic system and
of employment relations. However, the roles of the national government and the
Communist Party have evolved as a result of the introduction of economic reforms
that led to a greater role for market forces, as Box 15.1 describes.

BOX 15.1
China: The Evolving Role of the Government and the
Communist Party

Before market-oriented economic reforms, China had a planned economy
in which the national government was the single employer. In the planned
economy, the government set up detailed national and fi rm-level plans that
included production and wage levels. Communist Party secretaries were
the primary fi gures in enterprises; they helped maintain the infl uence and
political power of the Communist Party and oversaw economic and social
activities in enterprises. In this system, since the Communist Party (and the
national government) claimed to represent the interests of the working class,
there was no representative role for trade unions.

Economic reforms introduced from the 1980s on led the national govern-
ment and the Communist Party to gradually withdraw from the micromanage-
ment of workplaces. This is particularly true for the private sector, where
employers were given autonomy in business operations and employment,
albeit within the constraints provided by laws. In state enterprises, management
no longer needs to fulfi ll political functions for the government. However,
the government still has considerable infl uence in state enterprises, particularly
through its appointment of top managers. These appointed managers still
hold the status of Communist Party offi cials and can be transferred to other
Communist Party or government posts at any time.

In addition, the national government in China continues to act as a
regulator, arbitrator and mediator, and inspector in the employment system.

Source : MingWei Liu, “China,” in Comparative Employment Relations in the Global Economy ,
ed. C. Frege and J. Kelly (New York: Routledge, 2013), 324–347.

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Labor Relations in Other Countries 387

THE ROLE THAT LABOR HAS PLAYED IN
DEMOCRATIZATION

Since World War II, the labor movement has played key roles in introducing or
deepening democracy in a number of transitioning countries. Events in South
Africa and Korea are described in Boxes 15.2 and 15.3 below. A common theme
in these and other countries is that the labor movement and unions often have
aligned with student groups and other active members of civil society to increase

BOX 15.2
The Role Unions and Labor Protests Played in Bringing an End
to Apartheid in South Africa

Apartheid was a racial segregation system enforced by the South African
government from 1948 to 1994. Under apartheid, the rights of black and
mixed-race South Africans were severely restricted. The National Party
controlled the economic and social systems of South Africa during the
apartheid period.

The African National Congress (ANC), founded in 1912, was a major
force of opposition to the apartheid system. Throughout the fi rst forty years
of resistance, the ANC focused on using legal tactics and nonviolent direct
action as its method of protest. However, the perseverance of apartheid
even in the face of these tactics led the ANC to shift to advocating violent
resistance activities, such as bombing government facilities, so long as the
tactics avoided civilian deaths. Then labor protests emerged as a key challenge
to apartheid; black trade unions and eventually trade unions that organized
white workers led these protests.

During apartheid, the government sought cheap labor on mines and
farms, which led to the formation of a migrant labor system among the
black population and a set of laws that reserved specifi c, separate job sets
for different racial populations. In response to such legislation, unions such
as the South African Congress of Trade Unions (SACTU) emerged in the
1960s, only to be brutally oppressed by the state. However, in the late
1960s, leaders of the black consciousness movement, who realized the
potential of union activity, joined with unions to take more aggressive
actions to try to end apartheid.

A key turning point came in 1973 at a large industrial complex in Durban,
South Africa. On January 9, all 2,000 workers at the Coronation Brick and
Tile plant in the Durban complex went on strike, demanding wage increases
and presenting an elected committee to negotiate with management. The
resulting wage settlement spurred widespread union activity throughout the
city of Durban and then in many other parts of South Africa. Transport,
and then municipal, workers followed suit and within one month, 30,000

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388 Part V. Special Topics

workers in Durban were on strike. The apartheid system, which depended
upon black labor to keep its economy running, was facing for a serious
challenge to its continuation the fi rst time.

The Durban-inspired strike wave led to the establishment of several large
trade union federations, including the Federation of South African Trade
Unions (FOSATU) and the Congress of South African Trade Unions
(COSATU). Subsequent strikes organized by these federations led the South
African government to launch investigations of wage levels and to eventually
pass amendments to the Labor Relations Act that established unfair labor
practices and permitted black trade unions to form legally.

Critically, the base of worker militancy was in the manufacturing, com-
merce, construction, transport, and communication sectors. In contrast to
the mining industry, which corralled migrant workers into residential
compounds, these sectors were the most feasible to organize because the
rising cost of white labor meant that mining employers were increasingly
dependent upon the employment of Africans. Industries in the manufacturing
and service sectors were the highest paid in the economy, refl ecting the
developing power and strategic location of black semi-skilled workers.
Meanwhile, the newly emerging democratic trade unions premised their
initial growth on the organization of African labor.

Although the new unions faced severe repression and were always chal-
lenged by the that fact that a mass of surplus labor existed because of an
endemically high level of unemployment among black workers, they managed
to survive, grow, formalize, make wage gains, and erode the foundations
of workplace despotism.

The apartheid regime faced a severe challenge to its authority in 1973,
when the United Nations General Assembly denounced apartheid, which
was followed by the UN Security Council ’ s vote to impose an embargo
on the sale of arms to South Africa in 1976. Facing growing international
pressure, the National Party instituted several reforms, and in 1994, a new
constitution was adopted that enfranchised blacks and other nonwhite racial
groups through democratic elections. A key step in the fi nal end of apartheid
was the release of Nelson Mandela, a leader of the anti-apartheid movement,
from prison. Mandela became the head of the fi rst post-apartheid democrati-
cally elected government. Although he had been imprisoned for twenty-seven
years, he was able to live a long and highly infl uential life (he died at age
94 in 2013).

Although many factors contributed to the ending of apartheid, it is clear
that unions and labor protests contributed much to this transformation.

Source : Lester Kurtz, “The Anti-Apartheid Struggle in South Africa (1912–1992),”
International Center on Nonviolent Confl ict, June 2010, http://www.nonviolent-
confl ict.org/index.php/movements-and-campaigns/movements-and-campaigns-summarie
s?sobi2Task = sobi2Details&sobi2Id = 29 .

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http://www.nonviolent-conflict.org/index.php/movements-and-campaigns/movements-and-campaigns-summaries?sobi2Task = sobi2Details&sobi2Id = 29

http://www.nonviolent-conflict.org/index.php/movements-and-campaigns/movements-and-campaigns-summaries?sobi2Task = sobi2Details&sobi2Id = 29

http://www.nonviolent-conflict.org/index.php/movements-and-campaigns/movements-and-campaigns-summaries?sobi2Task = sobi2Details&sobi2Id = 29

Labor Relations in Other Countries 389

BOX 15.3
The Role of Korean Unions in Democratization and Political
Change

The post–World War II history of Korea was marked by authoritarian rule
by governments in league with the military. Violent political protests erupted
periodically to challenge that rule. Labor unions have played leading roles
in those political protests. In 1960, trade unions played a leading part in
the violent protests that culminated in the fall of the Syngman Rhee govern-
ment. In 1980, violent protests again swept the country as workers demanded
workers’ and union rights and improved wages and working conditions. In
1987, after Roh Tae-Woo, the ruling Democratic Justice Party ’ s presidential
candidate (and eventual victor in a subsequent election), pledged his support
for popular elections to determine a new president of the Republic of
Korea, a democratization movement began. The subsequent democratization
process unleashed popular protests and demands, particularly within the
trade union movement.

A massive strike wave followed, along with a rapid rise in union member-
ship and an explosion in wage levels. On May 2, 1990, for example, there
were violent protests in the port city of Ulsan when 30,000 workers from
affi liated Hyundai companies held rallies at work sites to protest a massive
police raid on strikers at the Hyundai Heavy Industries Company.

Worker protests were in part directed at existing trade unions and union
leaders. An array of unions was affi liated with the Korean Federation of
Trade Unions, and protesting workers opposed the complicity that had
existed between these unions and the government and employers. Workers
not only demanded higher wages and better working conditions but also
sought procedures that would allow unions that were independent from
government and managerial dominance.

The protest wave cooled down in the early 1990s, but another wave of
labor protest occurred in early 1997, spurred by government efforts to
change Korea ’ s labor laws to introduce more fl exibility into the labor market
and address problems that had begun to surface in Korea related to com-
petitiveness in the global market.

Labor protests erupted in January 1997 after a secret session of the National
Assembly proposed a harsh bill that among other things would make it
easier for fi rms to lay off employees. A three-week wave of strikes followed
that focused on the large fi rms, including the Hyundai Motor Car Company.
The strike wave was followed by months of negotiations, often behind the
scenes, that led to a new labor law bill that was adopted in March 1997
with the support of the opposition and government political parties. In
recent years, changes in labor laws in Korea have included the legalization
of collective negotiations for public school teachers and the creation of an

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390 Part V. Special Topics

unemployment fund. The number of irregular and nonstandard workers
has increased in Korea in recent years. While the labor movement has not
been happy about all of these developments, unions have tried to infl uence
events through democratic political channels.

Sources : Wonduck Lee and Joohee Lee, “Will the Model of Uncoordinated Decentralization
Persist?” in The New Structure of Labor Relations: Tripartism and Decentralization , ed. Harry
C. Katz, Wonduck Lee, and Joohee Lee (Ithaca, N.Y.: ILR Press, 2003), 43–65; Byoung-
Hoon Lee, “Employment Relations in South Korea,” in International & Comparative
Employment Relations: Globalization and Change , 6th ed . , ed. Greg J. Bamber, Russell D.
Lansbury, Nick Wailes, and Chris F. Wright (Australia: Allen & Unwin, 2016), 266–290.

democratization. In the case of South Africa, this led to the end of apartheid.
This leads many to question what will happen if union membership continues
to decline, possibly to the point that the political infl uence of unions is greatly
weakened. What forces or social groups, if any, will replace the positive contribution
unions make as defenders and proponents of democracy?

BRIEF DESCRIPTIONS OF THE LABOR RELATIONS
SYSTEMS AND KEY CONTEMPORARY ISSUES IN
GERMANY, JAPAN, BRAZIL, CHINA, INDIA, AND
SOUTH AFRICA

The sections that follow provide brief descriptions of the key features of the labor
relations systems in Germany, Japan, Brazil, China, India, and South Africa and
highlight the key issues that have surfaced in each of those countries. Readers
can fi nd more complete descriptions of the systems and contemporary issues in
the sources provided at the end of this chapter. 2

We fi rst focus on Germany and Japan, as these are two highly advanced
industrial economies with labor relations systems that differ greatly from each
other and from the system in the United States.

LABOR RELATIONS IN GERMANY

The distinguishing feature of labor relations in Germany is the presence of
codetermination , which enables elected employee representatives to participate
in decisions of fi rms related to business and human resources. 3

Codetermination

procedures are mandated by German federal law and apply to all companies in
the country regardless of whether employees in those companies belong to unions.

Codetermination

There are two key parts to German codetermination: the presence of employee
representatives on works councils and company boards. Codetermination gives

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Labor Relations in Other Countries 391

employees a form of representation that parallels union representation. Although
codetermination and collective bargaining procedures are formally distinct forms
of worker representation, there are many close connections between the operation
of these two channels of representation and the individuals involved in each.

Employee Representatives on Supervisory Boards

German federal law mandates that employees elect representatives to the supervisory
boards of all German companies. The number of representatives employees
elect to a supervisory board varies by the size of the fi rm and by industry (special
provisions cover the coal and steel industries). To understand the implications of
these procedures, it is helpful to examine the structure of German company boards.

German fi rms have a two-tiered board structure. The supervisory board
( Aufsichtsrat ) is the higher-ranked board and is responsible for monitoring managerial
promotions and performance and appointing top managers. The lower managing
board ( Vorstund ) runs the fi rm on a day-to-day basis and implements most decisions
of management.

Employee representatives to the supervisory board are elected from the ranks
of blue- and white-collar employees with each category of employee guaranteed
proportional representation. The law also reserves two or three of the supervisory
board seats for union delegates, depending on the size of the board. In impasse
situations, the chair of the supervisory board (who is nominated by shareholders)
can vote to break the tie. Employee representatives on the supervisory board
often run on slates associated with particular unions and are often active in unions.
They are frequently union offi cials.

The consequences of employee representation on supervisory boards varies
across companies and is sometimes hard to detect. Some analysts claim that
employee board representation has provided a major contribution to the low
strike frequency that has been characteristic of the German labor relations system
since World War II.

Works Councils

The works councils mandated by federal law for all private enterprises with more
than fi ve employees are the second major component of the German codetermina-
tion structure. Works councils have many rights to information, consultation,
and codetermination. The 1972 Works Constitution Act, for example, stated that
works councils can be involved in resolving confl icts related to the following issues:

Discipline
Daily working hours and breaks
Temporary short-time or overtime work
Piece rates for jobs
Pay systems
Suggestion schemes
Holiday schedules
How employee performance is monitored

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392 Part V. Special Topics

Safety regulations
Company welfare services
Administration of employee housing

Works councils also codetermine any changes in the pace of work or the work
environment. The law requires that works councils and employers negotiate how
change happens whenever any major changes take place in how a company
operates. When management wants to lay off employees, it must negotiate with
the works council and reach an agreement (specifi ed in a “social plan”) on the
factors that determine who gets laid off and the compensation arrangements for
those who are laid off.

Members of works councils are elected by all employees in a fi rm regardless
of union affi liation. However, works council members usually cooperate closely
with union offi cers or hold union offi ce themselves. Works councils cannot call
a strike, but they can sue management in a case of a breach of contractual rights.

Union Representation and Structure

Unions also play an important role in the German labor relations system. Unions
represent 25 percent of the German work force, but nearly 80 percent of the
German work force is covered by collective bargaining agreements due to the
legal extension of major collective bargaining agreements. 4 After German reunifi ca-
tion in 1990, unions based in the former West Germany extended their jurisdiction
to the former East Germany. While economic transformations and the bankruptcy
of many fi rms has weakened unions in the eastern parts of unifi ed Germany,
unions have played a key role in the restructuring of this region.

German unions provide representation during the negotiation of collective
bargaining agreements that set pay increases and other employment terms. Unions
also typically are actively involved in the codetermination processes, in some cases
through the union activists or offi cers that serve either as employee representatives
on a supervisory board or as works councilors.

German unions also are generally active in political and social issues. The largest
federation of German unions, the Deutscher Gewerkschaftsbund (DGB), is closely
aligned to the Social Democratic Party. 5

Collective Bargaining in Germany

Collective bargaining in Germany is generally highly centralized. Most collective
agreements are reached at the industry or regional level. The most important
unions in the private sector represent workers in one or more industries. IG
Metall, for example, represents workers in the metalworking industries. In 2001,
a superunion, ver.di, which represents workers throughout the service sector,
was formed through the amalgamation of a number of private and public sector
unions (see Box 15.4 ).

German labor law does not give unions exclusive representation rights. More
than one union can (and often does) represent employees at a work site, even
among employees who perform similar jobs.

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Labor Relations in Other Countries 393

Employers are commonly represented by employer associations organized by
industry or in regional collective bargaining. 6 Once an agreement is reached
between a union and an industry association over wages and other basic employment
terms, these terms are extended by law to other employees and fi rms in that
industry. Distinctions between unionized and nonunionized workers are not
allowed in collective bargaining agreements.

Often collective what are called ordinary bargaining agreements last only one
year and include pay in their terms. These ordinary agreements are signed under
framework agreements that last for a number of years. Plant-level negotiations
between a works council and management typically supplement the industry
agreements.

BOX 15.4
German Service Unions Merge to Create ver.di, a Union with
Three Million Members

On March 17, 2001, more than 1,000 delegates from Germany ’ s fi ve service
sector unions voted to dissolve the structures in their respective organizations
and merge into one of the world ’ s largest labor organizations. The new
organization, which has a total membership of three million, is called the
United Services Producers, or ver.di (short for Vereinte Dienstleistungs-
gewerkschaft). Ver.di consists of workers from the Public Services and
Transportation Union (ÖTV), German Salaried Employees Union (DAG),
German Postal Employees Union (DPG), Trade, Banking, and Insurance
Union (HBV), and Media Union (IG Medien).

The founders of ver.di hoped that the merger would create a united
front to combat new problems the labor movement faces in Germany. Their
goal was for ver.di to create a stronger position for combating problems
such as declining union membership levels and rising unemployment rates.
The new superunion also sought to counteract the growing lobbying efforts
of business interests that want to restructure employment markets and weaken
the role of unions.

Ver.di has had limited success in achieving its ambitious goals. It has not
been able to reverse the spread of privatization and concession bargaining
in the public sector. Furthermore, young workers have exhibited reluctance
to join ver.di (or other German unions) at the rates their parents did, and
the political infl uence of ver.di has not increased to the degree its founders
had hoped.

Sources : “Merger of German Labor Groups Would Create World ’ s Largest Union,”
Daily Labor Report , December 29, 2000, A-3; “Merger of German Service Unions
Creates 3-Million Member Union,” Daily Labor Report , March 20, 2001, A-4.

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394 Part V. Special Topics

Since 2000, there has been some movement toward more decentralized collective
bargaining in Germany. This has happened, for example, when fi rms in the
eastern region have refused to honor terms in an industry-level collective bargaining
agreement. Even in the western region, there has also been a growing tendency
toward fi rm-level deviations (“concessions”) in fi rms that face job losses and
threatened closure. However, even in the face of these pressures, the German
collective bargaining system remains relatively centralized.

Vocational and Apprenticeship Training

A very strong vocational and apprenticeship training system supports relations
between labor and management in Germany. Young people must choose among
three educational tracks around age 16: a college-bound program, an apprenticeship
vocational school program, or a general education program.

Two-thirds of high school graduates who do not go on to college enter the
labor force as graduates of a vocational educational program. The apprenticeship
programs in vocational schools are overseen by a joint business-labor group that
sets the qualifi cations for each occupational program. This system of training and
certifi cation provides German employers with a highly skilled labor force and is
often cited as one of the key sources of Germany ’ s economic success.

In summary, the German model of labor relations stresses formal, legally mandated
structures for worker representation and training. These include codetermination,
employee representatives on company boards, works councils, apprenticeship
training, and collective bargaining terms that apply across all the fi rms in an
industry. Through these formal structures, German unions and employers have
achieved high levels of wages and social benefi ts, strong productivity performance,
fl exibility in the use of human resources, and low rates of strike activity.

Although the modernization of eastern Germany has been very costly and led
to high unemployment, it is noteworthy that this transition occurred without
signifi cant opposition from either management or labor. This too attests to the high
level of acceptance of unions and the codetermination system in German society.

LABOR RELATIONS IN JAPAN

Japan has a distinctive labor relations system that has several key features. Some
of these key features are also found in other Asian countries.

Enterprise Unionism

The distinguishing feature of Japanese labor relations is the central role of enterprise
unions. 7 Enterprise unions in Japan represent both the white- and blue-collar
employees of a fi rm, regardless of occupation. They also include management
staff. Of the fi rm ’ s full-time employees, only the higher-level managers do not
belong to the enterprise unions. Thus, supervisors and line workers belong to
the same enterprise union, and supervisors often play a very active role in union
affairs. New hires (other than managers) automatically become union members
and pay dues to the enterprise union.

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Labor Relations in Other Countries 395

Union Federations and Employer Federations

Enterprise unions commonly are associated with industry union federations, which
are, in turn, affi liated with union confederations. 8 Employers commonly belong
to employer federations . Both union and employer federations provide advice
and engage in political lobbying but do not become directly involved in enterprise-
level collective bargaining.

Although industrial, craft, or general unions are rare in Japan, some important
exceptions do exist. In addition, while most collective bargaining occurs at the
enterprise level (between an enterprise union and the management of a fi rm),
industry-level collective bargaining does occur in private railways, bus services,
textiles, and some other cases.

The Lifetime Employment Principle

Japanese fi rms, particularly large ones, tend to hire new employees upon their
graduation from school (high school graduation for blue-collar workers and
university graduation for managers), and employees stay employed with that fi rm
until they reach retirement age. This is lifetime employment. To avoid laying
off “permanent” employees during business downturns, Japanese fi rms transfer
workers across work areas and sometimes into training. If a large fi rm faces
extreme fi nancial diffi culties, it might also shift some of its work force to other
fi rms in its trading group. Trading groups are fi rms linked together through
common owners or through close business connections. These employees are in
effect loaned across companies and return to their original fi rm if it recovers.

The internal movement of permanent employees within and across fi rms is
facilitated by the fact that workers receive extensive training and often rotate
across jobs in a work area (or across work areas) during their work careers. This,
like many of the other industrial relations practices in Japan, leads employees to
strongly identify their personal interests with those of the company they work for.

Japanese fi rms can fulfi ll their promise to avoid laying off permanent employees
because they also employ large numbers of workers on a part-time or temporary
basis. These workers are not included in the lifetime employment system.

In addition, workers retire relatively early in Japanese fi rms. In the past, the
average retirement age was 55; today it has risen to a mean of 64 in the face of
declines in the number of new workers entering the Japanese work force.

Many employees who are promoted to supervisory and/or management positions
were previously union members and some were union leaders. The movement
between union and management careers can go both ways. When conducting
an interview with a vice-president of the Honda Motor Workers Union a few
years ago, one of the authors was surprised to discover that this person had at
one point been a manager at Honda. After serving in a management personnel
job, he decided to run for union offi ce. This practice is not uncommon in
Japan. 9

Lifetime employment is not guaranteed through a clause in a contract or any
other binding agreement between Japanese fi rms and their workers or unions.
Rather, fi rms promise to try to avoid layoffs. Firms do lay off workers when they

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396 Part V. Special Topics

experience extreme fi nancial pressures, however. This informal arrangement is
typical of Japanese industrial relations. Few of the distinguishing features of the
Japanese system are the products of legal requirements or of formal contracts.
Instead, Japanese practices are shaped heavily by norms and customs that have
built up over the years.

The enterprise union system is typical of large fi rms in Japan; by some estimates,
it covers one-third of the Japanese work force. This system is found to a lesser
extent in small and medium-sized fi rms that often serve as suppliers or subcontractors
to large fi rms. 10 In these smaller fi rms, wages are typically 15 to 30 percent lower
and there is less employment security. There is also evidence that although the
lifetime employment system has been declining in importance as workers have
begun to move to other fi rms more frequently, Japan continues to exhibit distinctive
employment security practices. 11

Pay Determination in Japan

Most pay agreements are set in annual negotiations that occur between a fi rm
and an enterprise union. Many pay negotiations occur in the spring as part of
the annual national spring wage offensive ( Shunt ō ). In this offensive, enterprise
unions and managements consider the guidelines their respective union and
employer associations have issued and give special attention to wage settlements
reached in negotiations at a handful of key fi rms.

Workers typically are paid on a salary basis. They also commonly receive
annual bonuses that are on the order of fi ve months’ salary, although the exact
size of the annual bonus varies somewhat in response to the fi rm ’ s fi nancial
performance and management ’ s assessment of the performance of individual
workers.

Workers’ pay grades are heavily infl uenced by seniority with the fi rm. The
combination of seniority-based pay and the lifetime employment system produces
a pay system in which age plays a heavy role. Thus, workers who perform identical
jobs can receive pay rates that vary signifi cantly as a function of their age and
how their performance is evaluated.

Performance Appraisal

Another important feature of Japanese labor relations is frequent performance
appraisals for blue-collar workers receive (many workers are assessed twice a year).
In a given year, a worker who receives a top performance evaluation can receive
up to a 10 percent larger pay increase than a worker who receives a poor per-
formance appraisal. Over a worker ’ s career, these appraisal-based pay differences
can add up and produce sizable differences in pay levels across employees. A
worker ’ s promotion and career path is also heavily infl uenced by the cumulative
effects of performance appraisals.

In the United States, in contrast, while many nonunion fi rms regularly appraise
the performance of their employees, it is rare for blue-collar workers to undergo
performance appraisals in traditional unionized settings.

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Labor Relations in Other Countries 397

Broad Job Defi nitions

Jobs in Japan tend to be defi ned relatively broadly on the shop fl oor, even for
blue-collar workers. Broad job defi nitions go along with the practice of rotating
workers across tasks and substantial training for the work force. In addition, the
strong links between pay rates and the age and performance of each worker
decrease the role of job task in determination of pay. Some analysts argue that
the breadth of job defi nitions contributes signifi cantly to the fl exibility of the
Japanese production system. 12

The Role of Consultation in Japanese Labor Relations

The labor relations system in Japan relies heavily on informal consultation
between labor and management to settle disputes. Grievance and arbitration
procedures are often included in enterprise-level collective bargaining agreements,
but these procedures are rarely used. Instead, grievances are typically settled
through consultation at the work shop level. In addition, consultation over broader
issues commonly occurs in labor-management committees that operate at the
plant and company level. Workers also have input into shop fl oor production
issues through the quality circles that often meet regularly. 13

Union strength in these labor-management discussions is directly related to
their membership and independence from management infl uence. One of the
troubling issues confronting Japanese unions is declining membership. Union
density in Japan stood at around 35 percent of the labor force from the early
1950s on through 1973. Since then, union membership (as a percentage of the
work force) has fallen to 18 percent as of 2014. 14 Some analysts wonder if this
decline is an inevitable product of enterprise unionism.

Debates continue about the extent to which enterprise unions are truly inde-
pendent from management infl uence. This arises as an issue not only because of
the enterprise nature of union structure but also because of the heavy role played
by labor-management consultation in the Japanese system. Critics see in this
consultation the co-optation of independent unionism, whereas others see an
industrial relations system that successfully mediates confl ict as it provides gains
in the form of high levels of employee commitment, economic growth, pay, and
employment security.

LABOR RELATIONS IN TRANSITIONING COUNTRIES

The next sections briefl y review labor relations in four transitioning countries. Each
of these countries has a large gross national product and developments in them
well illustrate the issues that have been surfacing in other transitioning economies.
Even though China, India, Brazil, and South Africa have achieved advanced levels
of economic development and industrialization, their labor relations practices and
procedures are more recent in origin and are in many ways in a state of fl ux.

We account for particular factors that play critical roles in these countries. For
example, we take account of the fact that labor relations are much more political

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398 Part V. Special Topics

in transitional economies than they are in advanced industrialized countries. We
also look at the past role of state-dominated unions in transitional economies and
the recent increased importance of independent unions that have emerged as
alternatives to state-dominated unions in many of these countries. These independent
unions tend to promote collective bargaining at the company or workplace level.

A key issue that underpins labor, management, and government interactions
in transitional economies is the fact that questions of how to create and sustain
more democratic and stable labor relations are a major political and economic
issues. While in some countries unions have been dominated by governments or
sharply limited in their infl uence, history suggests that outlawing truly independent
unions (i.e., unions free from the dominance of governments or employers) does
not eliminate labor confl ict; rather, in some ways such a move only postpones
and intensifi es it. In the end, all countries are forced to wrestle with how to
structure labor relations in a way that provides workers with enough representation
to satisfy them while also maintaining social stability and economic growth.

The informal sector is also much more prevalent in transitional economies.
In the informal sector, where formal collective negotiations may be absent. Col-
lective forms of representation and collective methods of confl ict resolution also
are more varied in transitional economies, not only because they sometimes
include works councils but also because concerns about labor rights have led to
the involvement of various NGOs and other interest groups in workplace matters
(see Chapter 14 ).

Brazil

The end of a military dictatorship and the enactment of a new constitution in
1988 ushered in the contemporary era in Brazilian employment relations. 15 The
key change in Brazilian labor relations was that the state no longer signifi cantly
intervened in the internal affairs of unions, as it had in the past.

Following the return to democracy after 1988, the new constitution of Brazil
and the labor code gave private sector and public sector workers the right to
form trade unions (except for members of the military, uniformed police, fi refi ghters,
and some other state employees). Public sector workers could organize and strike
(with certain limitations). Reform of the labor code gave job security to union
leaders, reduced the maximum work week, increased overtime pay, and added
profi t-sharing provisions to the human resource practices of companies. After the
constitutional reforms, there was growth in the number of union members, most
of whom were civil servants who had previously been prohibited from forming
unions. This growth in membership was accompanied by dramatic growth in the
number of unions, creating increasing fragmentation in the union movement.

However, core aspects of the traditional Brazilian labor relations system remained
unchanged and continue to this day. These include a limit on union formation
to one union per economic activity per territorial unit and a union tax that all
workers in unionized economic or sectoral categories (e.g., metalworkers, chemical
workers) must pay regardless of whether they are union members. A portion of
this union tax is paid to union federations and confederations.

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Labor Relations in Other Countries 399

Trade unions in Brazil have maintained their membership strength over the last
decades and have increased their political infl uence through the Workers’ Party.
The rate of unionization has held steady at around 18–21 percent of the work
force. Approximately twice this proportion of workers is covered by collective
bargaining agreements. While the rate of unionization overall has remained steady,
the rate of unionization in the manufacturing sector has been in decline. In
contrast, public sector unionism has increased since the enactment of the 1988
constitution, which granted public sector employees unionization rights. However,
the number of national trade union centers has increased, as has the number of
small unions and unions that are outside the purview of the country ’ s main labor
confederation. This has contributed to the fragmentation of the labor movement.

In addition to these general trends, the neoliberal reforms that began in the
1990s, notably privatization and the removal of obstacles to free trade, have
transformed and weakened the Brazilian labor movement. Increased market
liberalization and industrial restructuring have dramatically affected the geography
of industrial production in Brazil. Many major new plants that were built in the
1990s and early 2000s were situated outside the core industrial district of greater
São Paulo, in regions where unions were weaker and wages were lower.

China

China ’ s economic reforms, now in their fourth decade, have transformed the
country from a planned economy to a mixed economy with elements of both
market mechanisms and central planning. 16 While market mechanisms have become
increasingly important in allocating resources, the state still plays a critical role in
coordinating the economy, and its role has become even stronger since the 2008
global fi nancial crisis.

Market-oriented reforms have signifi cantly changed China ’ s employment
structure. While agricultural employment has declined signifi cantly, employment
in the industry and service sectors has sharply increased. Employment in state-
owned enterprises has dropped from 60.4 percent of total formal employment in
1978 to 14.5 percent in 2010, whereas employment in the private sector, including
private-owned companies, foreign-invested companies, and township and village
companies, has rapidly increased. 17

Along with the change in the structure of employment, there has been a
transformation of labor relations in China. Under the planned economy, the
Chinese labor relations system was extremely rigid and centralized. In general,
workers in state-owned enterprises and collective-owned enterprises enjoyed
lifetime employment, egalitarian wages, and cradle-to-grave welfare that included
free housing, medical benefi ts, and pensions. Over the last three decades, however,
the so-called iron rice bowl has gradually been smashed. First, there has been a
change from lifetime employment to contract-based employment. In addition,
management has autonomy in making hiring and fi ring decisions, although legal
procedures must be followed and there are still signifi cant limits on the ability of
management to make large-scale dismissals in state-owned enterprises. Second,
the state-administered reward system has been moving toward giving management

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400 Part V. Special Topics

full autonomy to make decisions about wages. Although the state still intends to
infl uence wage levels and growth at the macroeconomic level and in state-owned
enterprises, this infl uence has been declining. Third, contributory social insurance
schemes such as pensions, medical insurance, unemployment insurance, work
injury insurance, and maternity insurance and housing funds have been introduced
to replace the former cradle-to-grave welfare system. However, these benefi t
schemes have been introduced to varying degrees across sectors and regions and
a huge number of workers—especially migrant workers—do not receive social
benefi ts.

The All-China Federation of Trade Unions (ACFTU) is the only offi cial
union in China. Its pyramidal top-down structure consists of three tiers: the
national, regional, and primary levels. At the bottom level, primary unions are
organized at the company level. Regional-level unions are set up along industrial
lines and within geographical boundaries with a structure parallel to that of the
government administration. Trade unions at all levels are under the leadership
of the Communist Party. This structure has remained largely unchanged since
the 1950s. The ACFTU represents the interests of both the state and labor. At
the workplace, unions perform two functions: they promote production and deal
with social welfare issues.

The Chinese system of resolving labor disputes is characterized by mediation,
arbitration, and two trials. When a labor dispute arises, the parties may bring the
case to the company ’ s labor dispute mediation committee. The second stage is
arbitration, which is mandatory before the case can go before a court. If either
party is dissatisfi ed with the arbitral award, they may enter the third stage and
bring the case to a court. However, for certain types of cases (e.g., claims for
small amounts of unpaid wages), the arbitral awards are fi nal and binding. If either
party is dissatisfi ed with the court verdict, they may appeal to a higher court,
whose verdict is fi nal.

India

India has long had an interventionist state. This is codifi ed in the key labor
relations law in India, the Industrial Disputes Act of 1947. Under this law the
state can prohibit even a legal strike and refer any industrial dispute to compulsory
arbitration or adjudication without the consent of the employers or unions.
However, following a balance-of-payment crisis in 1991, the government of India
embarked upon economic reforms that shifted the focus in national economic
policies from import substitution (replacing foreign imports with domestic produc-
tion) to a focus on exports. 18 In the 1990s, the policies of liberalization, privatization,
and globalization marked a new era for India, which since then has had an
inward-looking socialist-style economy based on a strategy of import substitution.
This shift in economic policies has been successful.

The trade union movement in India is highly fragmented. Until the 1980s,
most trade unions in India were affi liated with a political party through a national
federation.

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Labor Relations in Other Countries 401

There are about 400 million workers in the Indian labor market. Of these,
only about 7 percent are employed in the formal sector. The remaining 93 percent
are employed in agriculture or in small and medium-size enterprises in the informal
sector of the economy. Historically, politically affi liated unions have shown little
or no interest in organizing workers in the informal sector and have concentrated
on organizing and representing workers in the formal sector in both the public
and private sectors. In recent years, many workers in the informal sector or those
employed as casual and contract workers in the formal sector have formed their
own politically independent unions, sometimes with the help of NGOs. KKPKP
is an example of such a union (see Chapter 14 ).

Of the total labor force of around 400 million, about 28 million Indian workers
are employed in the public sector and are covered by various pay commissions
that decide on their wage levels. The government-appointed commissions hear
representations from employer associations and trade unions. Thus, negotiations
over wages in the public sector in India takes place within the limits and terms
set by the pay awards sanctioned by the pay commissions.

South Africa

The early history of labor relations in South Africa was heavily infl uenced by the
apartheid system that kept blacks and those of mixed race politically disenfranchised
and out of skilled and higher-paying jobs. 19 By 1994, however, the democratic
union movement had established itself as a major force in the labor relations
system in South Africa. COSATU, which had fi fteen affi liate unions in the
mid-1990s, was by far the largest union confederation. Three other union con-
federations represent a mix of white-collar unions, white unions, and craft unions
and account for most of the remainder of trade union membership.

The Labor Relations Act of 1995 (LRA), sought to replace the adversarial
culture that had characterized labor relations with codetermination between
employers and employees. This law has fi ve key features. First, it brought all
employees into a single system which created bargaining councils, where collective
bargaining takes place. Critically, this enabled unions to have a say in work
conditions across an entire industry, even covering employers with whom unions
had no formal recognition agreement and/or in factories where a union had only
a small presence. Importantly, the LRA extended the right to participate in bargain-
ing councils to farm, domestic, and public employees, workers who had been
excluded from the previous system of industrial councils.

Second, the LRA promoted collective bargaining by guaranteeing the right to
organize to unions. It also gave unions access to employer premises, gave them
the right to hold meetings, and allowed them to have closed shops (compulsory
union membership agreements) under certain conditions. It also compelled employers
to disclose information relevant to collective bargaining to unions that represent
the majority of workers in a workplace. The law also protected the right of
employees to strike, to picket, and to engage in sympathy strikes, although it also
introduced compulsory procedures and timetables for dispute resolution.

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402 Part V. Special Topics

Management in South Africa increasingly favors decentralized bargaining. The
growth of informal employment has also served to undermine various councils
and contributed to decentralization in bargaining.

Events at the platinum mines in Marikana in 2012, when police opened fi re
on striking miners, killing thirty-four and wounding seventy, well illustrate many
of the tensions in the South African labor relations system. The unoffi cial strike
at the Lonmin mine in Marikana involved some 3,000 workers. Workers had
demanded a pay increase of up to 50 percent, well in excess of an existing
agreement between COSATU ’ s National Union of Mineworkers (NUM) and
Lonmin. This demand was refl ective of a far more general sense of worker discontent
with wages and working conditions across the entire platinum mining belt.

Crucially, it appears that the NUM had lost the confi dence of its workers,
who had repudiated the union representatives who had been sent to negotiate
with them to return to work. The leadership of the Association of Mineworkers
and Construction Union (AMCU), a breakaway union from the NUM that the
employer did not recognize, stepped in and replaced the NUM offi cials as the
workers’ representatives. The volatility of the situation, which was compounded
by violence against those who wanted to work and against NUM offi cials, was
ratcheted up by the initial refusal of the employer, the NUM, and the government
to talk to AMCU, arguing that it lacked formal status.

Ultimately, however, in the aftermath of the shooting, the impasse gave way
to concession. Eventually, six weeks after it had begun, the strike was brought to
a close when Lonmin conceded a hefty 22 percent pay increase after negotiations
that involved both the AMCU and the NUM. However, this failed to prevent
labor unrest from spreading rapidly, and employers, unions, and the govern-
ment scrambled to control strikes that were occurring across the entire mining
sector.

These events in the platinum mining sector represent a major challenge to the
South African labor relations system. First, they indicated the development of a
yawning gap between miners and the leadership of the NUM. Workers accused
NUM offi cials were accused of living comfortably while union members suffered.
Second, they exposed an increasing gap between workers and the African National
Congress. Workers accuse ANC leaders accused of siding with management and
not attending to the needs of their core constituency. Third, they raised major
questions about the role of the police, who were widely accused of reverting to
apartheid-style reliance upon brute violence on behalf of the state. Finally, they
posed serious problems for employers, who were ambivalent about the outcome
of the strike.

THE IMPORTANCE OF THE PUBLIC SECTOR

The public sector in many advanced and transitional economies typically accounts
for a signifi cant share of the formal sector. In addition, public sector employees
in these economies often are represented by unions. Public sector employers also
generally follow the bureaucratic employment pattern (described in Chapter 5 ),

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Labor Relations in Other Countries 403

which is characterized by formal rules, structured pay and complaint procedures,
and a relatively high degree of employment security.

However, since 2007 there has been a signifi cant amount of privatization or
“de-nationalization” that has shifted formerly public (i.e., “state”) enterprises into
the private sector or at least made those enterprises semi-private. This has led to
signifi cant changes in employment practices that include signifi cant downsizing
and the introduction of more market- and individualistic-type practices such as
pay for performance. Workers who have jobs that were previously in the public
sector have faced the insecurities more typical of the private sector. And since
2007, especially in transitional economies, public employees have faced or been
threatened with even more drastic erosions of their wages, pensions, and other
benefi ts and a further lessening of job security as part of structural adjustment
policies.

AUSTERITY CRISES AND THEIR IMPACT ON LABOR
RIGHTS AND CONDITIONS

A number of transitional economies have faced an economic crisis since 2007.
In some instances such a crisis occurs at the time of a more widespread fi nancial
crisis across a region or even across the entire globe. These crises typically are
precipitated when a country is unable to pay back loans from international agencies
and external private banks and as a result, the country teeters on the brink of
bankruptcy. In addition, in a number of countries, the unemployment rate and
food prices rose sharply after 2007. International fi nancial agencies such as the
International Monetary Fund and the World Bank then become involved in the
crisis by tying new loans to austerity measures that typically include large cutbacks
in government spending, increases in taxes, wage cuts, and privatization of state-
owned enterprises. These and other reforms that international fi nancial agencies
insist upon as a condition for making new loans to a country experiencing
economic crisis are referred to as structural adjustment.

Structural adjustment reforms they critically affect economic conditions; have
severe consequences for the population, especially public employees, and have
wider economic and social consequences. There are deep debates about structural
adjustment, including about what caused the particular economic and fi nancial
crisis in the fi rst place, whether the austerity measures the international fi nancial
agencies insist upon are effective or self-defeating, and whether it is fair or
appropriate that public employees bear a heavy burden as part of a structural
adjustment plan.

The Recent Austerity Crisis in Greece and Its
Consequences for Labor Relations

After the 2008 global fi nancial crisis, Greece was nearing bankruptcy and economic
collapse. The so-called troika—the International Monetary Fund, the European
Central Bank, and the European Commission—imposed harsh conditions of
austerity on Greece as a condition of a bailout from the European Union. Among

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404 Part V. Special Topics

other measures, these demands included a restructuring of Greece ’ s labor relations
system.

Since the early 1990s, the Greek labor relations system had operated as a
top-down hierarchy of collective bargaining. At the top level, national labor and
employer groups, aided by the government, bargained for a national agreement
that set a minimum wage fl oor and other basic standards for employment. At the
next level were many multiemployer industrial agreements. The government
reserved the right to extend coverage of these agreements to employers as it
deemed appropriate. Thus, in addition to the national agreement, about 65 percent
of workers were covered under multiemployer collective bargaining agreements.
At the next level, individual employers could bargain with union organizations
to build upon the national negotiations. The system was hierarchical because
collective bargaining at any level could build upon a deal established at a higher
level but could not legally set a wage below the fl oor set by an agreement at a
higher tier.

The troika determined that a lack of competitiveness was the underlying issue
causing Greek ’ s economic crisis. It pressured the Greek government to restructure
the labor relations regime. From 2010 to 2012, Greece passed several laws that
restricted collective bargaining rights. Instead of being determined by the national
collective bargaining agreement, the national minimum wage is now set by law.
The national agreement also no longer covers employers who are not members
of the employer associations involved in the negotiations. Nonunion employee
groups, or “associations of persons,” can now enter into agreements with employers.

Clearly, these changes have signifi cantly weakened the bargaining power of
unions in the country. Allowing employers to opt out of the national- and
industrial-level agreements and enabling them to negotiate with smaller “associations
of persons” rapidly decentralized the once highly centralized labor relations system.
In just three years, the number of industry-level negotiations fell from 65 to 14.
The result of this decentralization, unsurprisingly, has been a reduction in wages.
The national minimum wage, which is now set by the legislature rather than by
a collective bargaining agreement, has been cut by 22 percent (32 percent for
those under 25 years old). 20

Protests and Strikes over Austerity in Greece

Unions and citizens have engaged in protests and strikes (including a general
strike) against the Greek austerity plans to no avail. Their protests were strengthened
by accusations that bond holders and other creditors did not absorb much of a
penalty as a result of the austerity plans and that instead, Greek citizens and public
employees bore the bulk of the costs the austerity plans imposed.

The severity of the economic decline that followed the austerity plans imposed
in Greece added evidence to support arguments that the austerity measures were
not only too extreme, they were actually self-defeating. Opponents of the austerity
plan proposed a renegotiation of bond holdings (essentially a managed default)
that would make banks that had fueled the speculative boom that preceded (and

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Labor Relations in Other Countries 405

possibly caused) Greece ’ s fi nancial crisis responsible for more of the cost of the
adjustment process.

THE CONTRIBUTION OF LABOR RELATIONS
TO ECONOMIC PERFORMANCE IN
COMPARATIVE PERSPECTIVE

There are long-standing debates about whether any economic system outperforms
other systems and about what contribution labor relations makes to economic
performance. These debates ebb and fl ow with the ups and downs of the economic
fortunes of various countries. In the 1980s, refl ecting Japan ’ s strong economic
and export growth, some analysts heralded the Japanese economic system. Others
claimed that the Japanese labor relations system played a key role in Japan ’ s
economic success by stimulating employee loyalty and problem solving. The
German economic and labor relations system also received much praise in the
1980s, on the grounds that the codetermination system facilitated confl ict resolution
and the development of skills.

In the 1990s, this debate shifted in response to strong economic performance,
particularly price stability and employment growth, in the United States. The U.S.
economic system then began to receive praise for its fl exibility and promotion of
entrepreneurialism. As the unemployment rate dropped to historic lows in the
late 1990s, some analysts claimed that traditional internal labor markets had been
replaced by “boundaryless” careers (i.e., frequent job changes). 21 In addition,
the tightening of labor markets led to accelerated wage growth, particularly
among highly skilled employees such as software programmers and high-tech
engineers.

This debate shifted once again in recent years, given the relatively weak economic
recovery from the 2008–2009 fi nancial crisis that occurred in Europe, especially
when compared to the U.S. recovery. Once again arguments are being made
that a U.S.-style market system is superior to other systems. However, the increased
income inequality that has emerged in the United States has led others to question
the virtues of the U.S. economic and labor relations systems.

Summary

Around the world, there are substantial differences in the way labor relations are
practiced. In the United States, collective bargaining is relatively decentralized
and written collective bargaining agreements play a central role. The U.S. collective
bargaining system is also noteworthy for its heavy reliance on grievance and
arbitration procedures.

In Germany, by contrast, codetermination procedures are central. Both unions
and works councils provide representation for employees. Collective bargaining
in Germany usually occurs on a regional or industry basis and produces annual
labor agreements.

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406 Part V. Special Topics

In Japan, enterprise unions are dominant. These unions represent both blue- and
white-collar employees in a fi rm. Disputes tend to be settled and information
exchanged through a variety of consultative procedures. Worker seniority and
the economic performance of the fi rm infl uence worker earnings, and annual
bonuses are an important share of worker compensation.

The labor relations systems in transitional countries have some common features
such as a large role for the informal sector and labor movements that often have
strong ties to political parties. However, there are distinctive features in the systems
of each transitional country, such as the traditional heavy reliance on an “iron
rice bowl mentality” in China and the legacy of apartheid in South Africa.

However, there are some common trends in transitional countries. In most of
the countries mentioned in this chapter, there is movement toward more decentral-
ized collective bargaining and ominous declines in the strength of the labor
movement.

Interest in international comparisons of management and labor practices is
currently at an all-time high, spurred in part by the expansion of multinational
fi rms and regional trading blocs. The process of collective bargaining and the
determinants of bargaining power do not change fundamentally as a fi rm becomes
multinational. However, the bargaining leverage of unions is generally weakened
as fi rms expand production across country borders. It remains to be seen how
well high-wage countries will be able to protect their high employment standards
in the face of heightened international trade.

All countries must wrestle with the issue of how to structure labor relations.
While collective bargaining and unions fl ourished in the past, the pressures of
globalization are raising questions about the future viability of these institutions.
However, countries that lack stable labor relations due to government suppression
of a country ’ s labor movement must face the fact that free and independent labor
movements have been central to the development of democracy throughout
history.

Discussion Questions

1. Briefl y describe how codetermination works in Germany.
2. Describe three signifi cant ways industrial relations in Japan differ from labor

relations in the United States.
3. What role did unions play in the end of apartheid in South Africa? What

are the public policy implications of the links between unions and democ-
ratization in both transitioning and fully industrialized countries?

4. What conclusions do you draw regarding whether labor relations practices
and system features infl uence a country ’ s overall economic performance?

Related Web Sites

ILO Legal Database on Industrial Relations (ILRlex):
http://www.ilo.org/global/docs/WCMS_507552/lang–en/index.htm

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http://www.ilo.org/global/docs/WCMS_507552/lang%E2%80%93en/index.htm

Labor Relations in Other Countries 407

ACFTU organizational structure:
http://en.acftu.org/28590/201408/11/140811135244209.shtml

German Trade Union Confederation (DGB):
http://en.dgb.de

Suggested Supplemental Readings

Anner , Mark . Solidarity Transformed: Labor ’ s Responses to Globalization and Crisis in Latin America .
Ithaca, N.Y. : ILR Press , 2011 .

Bamber , Greg J. , Russell D. Lansbury , Nick Wailes , and Chris F. Wright , eds . International &
Comparative Employment Relations: National Regulation, Global Changes . 6th ed . Los Angeles :
Sage , 2016 .

Frege , Carola , and John Kelly eds ., Comparative Employment Relations in the Global Economy .
New York : Routledge , 2013 .

Katz , Harry C. , Thomas A. Kochan , and Alexander J. S. Colvin . Labor Relations in a Globalizing
World . Ithaca, N.Y. : ILR Press , 2015 .

Notes

1. Throughout this chapter, we refer to Germany, even though some of the history recounted
refers to the history of West Germany. After the unifi cation of Germany, the national laws of West
Germany were extended to what was previously East Germany, including laws about industrial
relations. Unifi cation brought substantial changes to labor relations practices and institutions in what
was formerly East Germany.

2. Discussion of the various labor laws that exist in transitioning countries is found in Harry C.
Katz, Thomas A. Kochan, and Alexander J. S. Colvin, Labor Relations in a Globalizing World (Ithaca,
N.Y.: ILR Press, 2015): Chapter 3 .

3. This section draws heavily from Berndt Keller and Anja Kirsch, “Industrial Relations in
Germany,” in International & Comparative Employment Relations: National Regulation, Global Changes ,
6th ed., ed. Greg Bamber, Russell D. Lansbury, Nick Wailes, and Chris F. Wright (Los Angeles:
Sage, 2015), 179–207.

4. Greg J. Bamber, Russell D. Lansbury, Nick Wailes, and Chris Wright report on union membership
as a proportion of the work force and collective bargaining coverage in a number of countries
in Figure 1.1 , “Comparative Union Density and Collective Bargaining Coverage,” in “Introduction,”
in International & Comparative Employment Relations: National Regulation, Global Changes , 6th ed.,
ed. Greg Bamber, Russell D. Lansbury, Nick Wailes, and Chris F. Wright (Los Angeles: Sage,
2015), 7.

5. The DGB had seventeen eight affi liated unions with 6 million members in 2011. See DGB:
German Trade Union Confederation, http://en.dgb.de .

6. The Confederation of German Employers’ Associations (BDA) is the employer
counterpart to the DGB. It includes forty-six branch employer federations that engage in
collective bargaining. One important exception is the negotiation of a companywide collective
bargaining agreement at Volkswagen. This is because of the special fi nancial and legal status of
Volkswagen.

7. Enterprise unions are 94.9 percent of all trade unions in Japan and represent 85.6 percent of
organized employees.

8. In 1982, labor federations in the private sector joined together to form Zenminrokyo (the
Japanese Private Sector Trade Union Council). In 1989, most private and public sector unions
became affi liated with the new Rengo (Japanese Trade Union Confederation). See Labor-Management
Relations in Japan (Tokyo: Japan Institute of Labor, 1990), 19, Figure 2.

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http://en.dgb.de

http://en.dgb.de

408 Part V. Special Topics

9. It remains to be seen if this sort of career movement continues in the future. It may not, due
to the professionalization of managerial training and career development.

10. The modern-day extension of the traditional zaibatsu system often links large and small fi rms
in close business relations. For example, upon their retirement from the large “parent” fi rm, senior
executives often move on to serve as executives of one of the smaller fi rms in the same group.

11. Sanford M. Jacoby, The Embedded Corporation: Governance and Employment Relations in Japan
and the United States (Princeton, N.J.: Princeton University Press, 2007).

12. See Michael J. Piore and Charles F. Sabel, The Second Industrial Divide (New York: Basic
Books, 1984).

13. An informative account of life on the shop fl oor in Japan is provided in Robert E. Cole,
Japanese Blue Collar (Berkeley: University of California Press, 1971).

14. “Trade Union Density,” OECD.Stat, https://stats.oecd.org/Index.aspx?DataSetCode = UN_DEN .
15. This section draws heavily from Mark Anner and João Paulo Cândia Veiga, “Brazil,” in

Comparative Employment Relations in the Global Economy , ed. Carola Frege and John Kelley (New
York: Routledge, 2013).

16. This section draws heavily from Mingwei Liu, “China,” in Comparative Employment Relations
in the Global Economy , ed. Carola Frege and John Kelley (New York: Routledge, 2013), 324–347.

17. Ibid.
18. This section draws heavily from Vidu Badigannavar, “India,” in Comparative Employment

Relations in the Global Economy , ed. Carola Frege and John Kelley (New York: Routledge, 2013),
305–323.

19. This section draws heavily from Roger Southall, “South Africa,” in Comparative Employment
Relations in the Global Economy , ed. Carola Frege and John Kelley (New York: Routledge, 2013),
348–366.

20. “Workplace Representation,” worker-participation.eu: A Service of the European Trade Union
Institute , 2015, http://www.worker-participation.eu/National-Industrial-Relations/Across-Europe/
Workplace-Representation2 .

21. Anda Stamati, “Greece: Impact of the Crisis on Industrial Relations,” EuroFound: European
Foundation for the Improvement of Living and Working Conditions , June 17, 2013, http://
www.eurofound.europa.eu/observatories/eurwork/comparative-information/national-contributions/
greece/greece-impact-of-the-crisis-on-industrial-relations .

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http://www.worker-participation.eu/National-Industrial-Relations/Across-Europe/Workplace-Representation2

http://www.worker-participation.eu/National-Industrial-Relations/Across-Europe/Workplace-Representation2

http://www.eurofound.europa.eu/observatories/eurwork/comparative-information/national-contributions/greece/greece-impact-of-the-crisis-on-industrial-relations

http://www.eurofound.europa.eu/observatories/eurwork/comparative-information/national-contributions/greece/greece-impact-of-the-crisis-on-industrial-relations

http://www.eurofound.europa.eu/observatories/eurwork/comparative-information/national-contributions/greece/greece-impact-of-the-crisis-on-industrial-relations

https://stats.oecd.org/Index.aspx?DataSetCode= UN_DEN