International Industrial Relations Meaning

01/12/2021 1 By indiafreenotes

Industrial Relations” refers to all types of relations between employers and workers, be they at national, regional or company level; and to all dealings with social and economic issues, such as wage setting, working time and working conditions. Each industrial relations system is grounded in the national historical, economic, and political context and therefore differs from country to country. As part of industrial relations, social dialogue is key for communication and information sharing; for conflict prevention and resolution; and for helping overcome work-related challenges. Social dialogue has demonstrated its potential as an instrument for democratic governance and participation; a driver for economic stability and growth; and a tool for maintaining or encouraging peaceful workplace relations.

Industrial relations or employment relations is the multidisciplinary academic field that studies the employment relationship; that is, the complex interrelations between employers and employees, labour/trade unions, employer organizations and the state.

The newer name, “employment relations” is increasingly taking precedence because “industrial relations” is often seen to have relatively narrow connotations. Nevertheless, industrial relations have frequently been concerned with employment relationships in the broadest sense, including “non-industrial” employment relationships. This is sometimes seen as paralleling a trend in the separate but related discipline of human resource management.

While some scholars regard or treat industrial/employment relations as synonymous with employee relations and labour relations, this is controversial, because of the narrower focus of employee/labour relations, i.e. on employees or labour, from the perspective of employers, managers and/or officials. In addition, employee relations are often perceived as dealing only with non-unionized workers, whereas labour relations are seen as dealing with organized labour, i.e unionized workers. Some academics, universities and other institutions regard human resource management as synonymous with one or more of the above disciplines, although this too is controversial.

No doubt, the global shift towards more liberal markets, privatization factors of production, and greater division of labour has opened up the opportunities for specialized talents. However, at the same time, it has resulted in adverse consequences with respect to the matters relating to wages, employment, working conditions, and, most importantly, the labour relations in many developing countries. Critics argue that globalization has evidently contributed to rising unemployment levels, contingent labour force, and weakening labour movements. This scenario is clearly evident, especially in the context of third world developing countries that have to deal with the multidimensional effects of globalization on industrial relations. Non-standard forms of work such as part-time, fixed-term, and self-employment (sometimes, freelancing) are common occurrences in the modern-day labour market today. In general, industrial relations has been drastically affected by the increased competition in the global labour market.

The increasing global demand for flexible labour has led to changes in the manner in which the human resources are mobilized in the workplace, working practices and wages, mobility of the workforce, and the set of skills expected from individual labour. However, this process naturally challenges institutionally and statutorily regulated industrial relation systems in many countries. The global economic integration and interdependence have made the industrial relations susceptible to international competition and changes, which previously used to be confined within the national rules and regulations. In this context, the industrial relations system has to undergo critical changes, especially in the case of the power and legitimacy of trade unions. The critical issue here is to find the balance between the government regulations regarding industrial relations and the global trend of labour market deregulation while remaining competitive.

Permanent employment has become a thing of the past. Technology and automated industrial processes have made it possible for employers to get the same (or increased) level of output with a reduced workforce. The hierarchical boundaries and distinctions between the management and laborers have blurred, and focus is given on innovation, efficiency, and productivity. The emergence of new concepts in organizational designs such as cross-functional teams, virtual and boundaryless organizations are preferred over traditionally rigid organization structures. The production process has thus evolved to become more standardized, stable, and segmented. As a result, employment conditions are independently determined by the company policies rather than the government rules and regulations. This changing environment provides little to no opportunity for trade unions and collective bargaining, which is fundamental to any industrial relations.

Theoretical perspectives

Industrial relations scholars such as Alan Fox have described three major theoretical perspectives or frameworks, that contrast in their understanding and analysis of workplace relations. The three views are generally known as unitarism, pluralism, and the radical or critical school. Each offers a particular perception of workplace relations and will, therefore, interpret such events as workplace conflict, the role of unions and job regulation differently. The perspective of the critical school is sometimes referred to as the conflict model, although this is somewhat ambiguous, as pluralism also tends to see conflict as inherent in workplaces. Radical theories are strongly identified with Marxist theories, although they are not limited to these.

Pluralist perspective

In pluralism, the organization is perceived as being made up of powerful and divergent sub-groups, each with its own legitimate interests[30] and loyalties and with their own set of objectives and leaders. In particular, the two predominant sub-groups in the pluralist perspective are the management and trade unions. The pluralist perspective also supports that conflict is inherent in dealing with industrial relations since different sub-groups have different opinions in the day-to-day operations.[citation needed] Consequently, the role of management would lean less towards enforcing and controlling and more toward persuasion and coordination.[citation needed] Trade unions are deemed legitimate representatives of employees,[30] conflict is resolved through collective bargaining and is viewed not necessarily as a bad thing and, if managed, could, in fact, be channeled towards evolution and positive change.

Unitarist perspective

In unitarism, the organization is perceived as an integrated and harmonious whole with the idea of “one happy family” in which management and other members of the staff all share a common purpose by emphasizing mutual co-operation. Furthermore, unitarism has a paternalistic approach: it demands loyalty of all employees and is managerial in its emphasis and application. Consequently, trade unions are deemed unnecessary since the loyalty between employees and organizations are considered mutually exclusive, and there cannot be two sides of industry. Conflict is perceived as destructive and[citation needed] the result of poor management.

Radical or Critical perspective

This view of industrial relations looks at the nature of the capitalist society, where there is a fundamental division of interest between capital and labour, and sees workplace relations against this background. This perspective sees inequalities of power and economic wealth as having their roots in the nature of the capitalist economic system. Conflict is therefore seen as a natural outcome of capitalism, thus it is inevitable and trade unions are a natural response of workers to their exploitation by capital. Whilst there may be periods of acquiescence, the Marxist view would be that institutions of joint regulation would enhance rather than limit management’s position as they presume the continuation of capitalism rather than challenge it.

Key Issues in International Industrial Relations

Who should handle Labour Relations; Headquarter or the subsidiary in the concerned country.

The national dissimilarities in economics, political, and legal systems create diverse labour-relations system across countries, MNCs HQs typically delegate the control over labour relations to their foreign subsidiaries. Having said that, the participation of the MNC headquarters in host-country labour relations is impacted by 4 key elements:

  1. In case there is a high level of inter-subsidiary production integration,the labour relations function is centralised and is coordinated by the head quarter.
  2. The nationality of ownership of the subsidiary has an influence on who should take care of employee relations.
  3. Furthermore, subsidiary character has a bearing on who should deal with employee relations.
  4. Finally, where a subsidiary is dependent more on its parent company for resources, you will see a greater corporate involvement in labour relations.

Trade Union Tactics

Trade Unions make use of a number of tactics to deal with international business:

  1. The most common one is ‘strike’. A strike is a concerted and temporary suspension of work, intended to put pressure. Unions should be cautions prior to resorting to a strike in international scenario because the bargaining power of a union could possibly be threatened or weakened by the financial resources of an MNC. This is specially evident where a multinational firm uses transnational sourcing and cross subsidization of its products or parts across different international locations.
  2. Form International Trade Secretariats (ITSs): There are Fifteen ITSs who help the exchange of information. Main objective of ITSs is to accomplish transactional bargaining with the MNCs.
  3. Lobbing for limited national legislations: Trade unions have for several years lobbied for restrictive national legislation in the U.S. and Europe. Trade unions pursue restrictive national legislation to avoid the export of jobs via multinational investment policies.
  4. Intervention from the global body like ILO, UNCTAD, EU, OECD: ILO has issued guidelines which cover disclosure of information, competition, financing, employment, industrial relations, taxation, science and technology.


There is little doubt that national industrial relations (IR) systems continue to be greatly different. There are 3 faces of industrial relations which the international union movement encounters in the international environment, specifically social democracy, neo-liberal and authoritarian. The dissimilarities in national industrial relations systems are also mirrored in the structure, power and status of individual actors in the system. For example, trade unions maintain a comparatively strong position within the Scandinavian IR model while their role is a lot more limited in the US context. The international labour movement is usually prohibited direct access to robust intergovernmental establishments like the WTO. So they have to depend on national government to represent their interests to these institutions. Significantly, the interests of government might not always be directly in-line with the union movement.

Social and Identity

A key problem with the international labour movement and specifically international collective bargaining is the absence of identity that individual workers have with their international associates. Additionally, they see these peak associations to be a lot more conservative than activists at the local level. Associated with this point, there is a common lack of solidarity between actors at a national level. Additionally, there are endemic cultural, social and language differences among individuals in different countries resulting in lowering the degree of a shared identity between workers on an international level.