Key Issues in International Industrial Relations

We have seen a growing curiosity about the issue of internationalization and best practices adoption and its impacts on the convergence of employment relations. Before we discuss about the key issues in international industrial relations, we should know what is IR and IIR.

Industrial relations refers to a set of phenomena, both inside and outside the workplace, worried about identifying and managing the employment relationship. International Industrial Relations (IIR) handles the complicated associations between employers employing foreign nationals, employees of various nationalities, home and host country governing bodies and trade unions of the organizations functioning in different nations around the world in addition to their national & international federations.

Globalization and international trade has put stress on organizations to standardize practices and policies. Globalization’s influences on Human Resource Management come through the opening and penetration of economic systems to outside forces. This is certainly a two-way procedure, with both local organizations and multinational corporations embrace one another’s HRM practice.

What are the Key Issues in International Industrial Relations (IIR)?

Issue 1: 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.

Issue 2: 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.

Issue 3:  Political

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.

Issue 4: 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.

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Issue 5: Power and knowledge

While labour’s power continues to be local in scope, capital has grown to become more global in nature and decisions effecting workers are increasingly being made at a supra-national level. The locus of Multinationals decision making stretches beyond national borders and key facts are seldom transparent or accessible to trade unions. Additionally the well-rehearsed point that multinational organizations can counter the strength of local unions by threatening to move manufacturing to another place so that they can outmanoeuvre trade unions or following threats of industrial action is significant.

In this article, we have discussed the key issues in international industrial relations. A lot of attention has been centered on issues like information sharing, building cross-border alliances, building expertise, etc. But not much genuine attention paid to building global or indeed regional collective bargaining structures.