Industrial Relations - Term Paper Example

 «Industrial Relations» Introduction Ireland, a small country in the north west of continental Europe, is characterised by an open economic system that is dependent on foreign direct investments (FDI) and international trade, mainly with US. Its unprecedented economic growth during the 1990s was preceded by a severe depression during the 1970- 80s. Ireland showcased what is termed as a ‘basket case’ during the eighties, when the unemployment rate was around 17% and GDP only half of UK and Germany. This picture was completely changed during the 1990s, when economic prosperity was seen to be rising with GDP rates of 9% per year, while unemployment rates dropped to 4% (Nolan, O'Connell, & Whelan, 2000). Increased prosperity came from the large number of foreign investments made mostly by the American MNCs. However, there was another important factor that contributed largely to this impressive turnaround made by the Irish economy. This factor was the industrial peace that existed at this time, which came mainly after the signing of the first National Pay Agreement, under the Programme for National Recovery or PNR, established in 1987. The workers and the management both comprehended the need to keep an atmosphere of stability in order to attract more foreign and domestic investments, and decided to bide by the PNR. As per the guidelines, the unions decided to opt for a less contentious relationship with regards to the management, and settled for a modest pay rise and other non-financial benefits. As economy boomed during the late nineties, the need for trade unions also became zero, and they were disregarded altogether, by the employer and employees, both. However with the global recession setting in from 2008, it has reversed the fortunes of the Irish economy allowing the trade unions to make a comeback. This article will explore the worker unions within the Irish economy, and will study to find out whether these groups can be considered to be redundant in today’s context. Discussion What are Trade unions? “Trade union means any organisation, whose membership consists of employees, which seek to organise and represent their interest birth in the workplace and society and, in particular, seeks to regulate their employment relationship through the direct process of collective bargaining with management” (Salaman, 1987). Most trade unions are formed independently, and do not have any connection to the employers. However, for their workers benefit, most of the trade unions try to foster a good working level relationship with their employers. This can sometimes lead to the formation of ‘partnership agreements’ between the trade union and the employer management, on the basis of their common aims and objectives. This kind of relationship based on social partnerships opened a new chapter in industrial relationships in Ireland with the signing of the PNR in 1987, and made it possible for “social dialogue and cooperative relationships between employers and unions” to take place (McLaughlin, 2007, 9). Industrial relationship in Ireland: Traditionally industrial relationship in Ireland has been characterised by the concept of ‘voluntarism’, which implied that there was minimum intervention by the law and its enforcement agencies. Voluntarism meant that it was more of an immunity based system, rather than being rights based, and under this system there were provided certain immunities to the workers which would be termed illegal in other instances. This system was further complemented in 1946, in the wake of the formation of a ‘non-legalistic dispute resolution institution’ (the Labour Court) by the Irish government (Dobbins, 2007, 2/13). In 1978 the Irish labour ministry created a Commission of Inquiry to seek the cause of Irish industry unrest, and to find a resolution to this problem. This later led to the formation of the Labour Relations Commission in 1991, under the Industrial Relations Act (1990). There was a change in the attitude of the trade unions, when in by the late 1980s they became “acutely aware of the economic and organisational challenges they faced” (Wallace, 2001, 1). This led to a consensus in the industrial relationship, and the signing of the PNR which was actuated “by their concern at the interlinked national economic crisis combined with the organisational threats, chiefly a fear that Thatcherite anti-union policies might be replicated in Ireland” (ibid). Starting with the early 1980s the trade unions all over Europe have been facing problems. “The post-World War II "advance of labour", evidenced by high and growing union density, came to an end in the 1980s. Union give-backs, employment restructuring, the reintroduction of two-tiered employment systems (traditionally anathema to trade unions) and growing relative social inequality are practical dimensions of the difficulties experienced” (Wallace, 2002, 1). The Irish trade unions had somewhat managed to score better during these difficult times, than their other European counterparts, which is seemingly portrayed in the figures showing that the absolute membership of the Irish trade unions fell only by 7% within the years 1981-1991. This was however a false image and when we look closer we find that “from 1980 to the late 1980s trade unions in Ireland suffered their most serious membership losses since the 1920s” (The Labour Relations Commission in Ireland, Challenges to Trade Unions). During this period trade union density numbers dropped drastically owing to a large number of people being unemployed and this picture of negative economic conditions prevailed till around 1993. After the economic conditions recovered completely, the consensus social/ national level industrial relationships came into the picture, and after this Ireland saw the impressive rise to economic prosperity. With the PNR in place, there were sharp limits on the salary rises of the workers, and also a limit was imposed on social spending. In favour of the workers there were tax cuts and various other government implemented social policies. With an upward rise of the economic curve soon there was an increase in the average amount of disposable income, giving way to any other agreements, based on similar social relationships (Hardiman, 2002, 1-24). While the older agreements, prior to the development of social relationships within the Irish industrial arena, were primarily centred on economic and labour market issues, the newer agreements bought into limelight various social inclusion factors. Social relationships are ‘neocorporatist’ in nature and are represented by the worker union, the management, and the government; that together decides on a framework of economic and social progress. In Ireland in 1987, the series of agreements that were negotiated by the tripartite: Irish Congress of trade unions, the Irish trade and employers’ Congress, and the Irish government; decided on a clear cut wage increase guideline, and it was observed that acquiescence between all the concerned parties was quite high in all the agreements that followed after the 1987 PNR (Gunnigle, McMohan and Fitzgerald, 1999). As this social partnership has developed over the years, there has also been a parallel development of many institutions that act as supporting bodies. These bodies look into the reviewing of the various agreements, for resolving disputes, for giving directions, for bringing all the concerned parties into an agreement, and for addressing all matters pertaining to the economic and social concerns of the workers and the management. Thus it is no longer a system where the participating members meet once after every 3 years. Social relationship based on industrial relations is now a continuous process that nurtures mutual trust, consensus building, exploration of various new policies and also social learning. Thus, modern industrial relationships in Ireland are more based on the “process of deliberation that has the potential to shape and reshape their understanding, identity and preferences” (O'Donnell, 2001, pi). This process of social relationships amongst the management and trade unions has benefitted both the parties. The management has derived the benefit of a controlled wage increase, thus increasing competitiveness of Ireland in the international market (Aust, 1999). The workers on the other hand have received various types of social benefits, growth in terms of the rate of employment, while getting ‘real rise’ in their wages. The poor performers are also given protection to a certain extent, were the workers with a service record of more than one year are protected by the Unfair Dismissals Act (1977-2001), under which an employer is obliged to follow certain guidelines while culling a poor performer, and this act is akin to the British legislation (Wallace, Gunnigle, & McMahon, 2004). Though, till today there are evidences of inequalities in the Irish society, this social partnership has proven to show positive results in case of Irish industrial scenario, and there has been no real decrease in the income levels as was evident in the various neo-liberal economy based countries (Hardiman, 2000). It had also helped to bring down the debts and gain fiscal control, during the period, just after the 80’s economic recession, after social spending was limited under the guidelines of social relationship. The relegation of the trade unions into the background during the economic boom in Ireland (1995-2008): Despite such positive outcomes there were quite strong anti-union sentiments present amongst the Irish workforce (D'Art & Turner, 2005) during the nineties, and this is evident in the low incidence of office based partnerships with the trade unions at that time(Roche & Geary, 2000). This situation was further aggravated with the absence of support from the formal institutions for the official recognition of these trade unions. The situation seemed unlikely to change as the foreign MNCs that had opened in Ireland, and had helped the country’s economy to surge, preferred to function in a non –union work environment. These MNCs that were mostly American, had been so successful in their various business ventures that the indigenous Irish companies also started preferring a union free work environment (Boucher & Collins, 2003). A compromise had to be finally reached with the ‘right to bargain’ legislation in 2001 (The 2001 Act), where the unions could take the matter to the Labour Court if the management refused to deal with their trade union workforce. This act was subsequently amended in 2004 under the Industrial Relations (Miscellaneous Provisions) Act 2004, and made mandatory that if the management did not make collective bargain then the union could approach the Labour Court; which would then investigate into the matter and give verdict accordingly. However there were grave doubts on how effective this legislation would be, as many experts feared that this legislation in effect actually eroded the principle of ‘voluntarism, and ’ legalised the non-union status of a reputable company that had good working conditions; since under such conditions a union would not be able to lodge a complaint. In this context it is worthwhile to mention the case of “Ryanair vs. the Labour Court, as the directives meted out by the Irish Supreme Court in this case is important as regards the 2001 Act /amended 2004 Act. In this case the Labour Court had originally ruled that the management will have to “accept jurisdiction of the referral from the union” (Matheson Ormsby Prentice, 2008, 2). This ruling was overturned by the Supreme Court, which stated that the Labour Court had misinterpreted the 2001 Act. Though not overtly in favour of the management, the Supreme Court handled out a very balanced judgement, and made it very clear that “that the particular union may have been improperly exploiting the legislation in order to force Ryanair into recognising it for the purpose of collective bargaining...despite the fact that the 2001 Act expressly provides that employers may not be compelled to do this” (ibid, 3). This judgement which was true to the principles of the 2001 Act, ensured that the employers get a fair hearing, before and during the investigation. It was a welcome decision to the non-unionised companies functioning in Ireland, since it has now mandatory for the unions to seek and establish certain existing conditions before referring the case to the court. This case is more interesting in the fact that involuntarily it had brought the dissatisfaction of the Irish trade unions back into the forefront, where it again came into a position to seek official status, since trade unions are recognised in almost all other EU countries. Another very important development in this line is The Information and Consultation Directive-Council Directive 2002/14 (Directive 2002/14/EC, 2002) that decrees an outline for the consultation and informing of the employees, by the management. An important landmark in the case of European Employment Laws, it is bound to have some sort of repercussions on the Irish industrial relations. This directive is applicable to all establishments having 20 or more employees and is a first of its kind since it is a law from the European Union that postulates the necessity of consulting and informing the employees. Before the directive was framed there were certain identified situations where the employers were under obligation to exchange notes with the employees, as for example, in situations arising out of al large number of employees being dismissed, where companies relevant to the European Work Council, and when a company was being transferred from one owner to the other (New Worker Information and Consultation Directive, 2002). Under the article 10, which is seen as the most important one,states that “no general, permanent and statutory system of information and consultation or of employee representation at the workplace” (ibid). This directive is seen by most experts to have strong implications in the future of the industrial relationships in Ireland. In one hand the various information and consultation committees could be acting as a strong adjuvant to the unions, as the workers look for expert knowledge and guidance; while the management on the other hand will see no further necessity to keep unions alive, in order to give information and guidance to its employees (O’Mara, 2003). Here it is also important to note what the European Commissioner for employment and social affairs Anna Diamantopoulou, commented as regards this directive “the Directive provides a fail-safe protection for employees and, used intelligently, can be a modem business tool” (New Worker Information and Consultation Directive, 2002). Thus, if a minimalist approach is taken, and all the necessary information and guidance made available to the employees then the very need for the trade unions can be dispensed off with. Thus, a careful handling of this directive will ensure that the employee and the employer have direct connections and the middle man (trade unions) can be easily done away with. So, now we find that the existence of the trade unions depend on how the government and the companies decide to interpret this directive. Already a decline in the union density had been noticed in the Irish work scenario during the late nineties and early twenty first century, “The fall of some 10 percentage points, between 1995 and 2001, represents a reduction in employment density of some 19%. The fall, between the high point of 61% employment density in 1981 and a 43% employment density in 2001, is 18 percentage points or 30%” (Wallace, 2002, 3). The employment density has been the lowest in the private sectors, with the percentage numbers touching as low as 23% (Sheehan, 2002). This decline has been noticed to have been the highest during the years that the social relationship developed; however a research paper by Roche and Ashmore in 2000 has shown that social relationships had no relationship with this decline. These figures are also typical of the Irish market and do not reflect the general trade union picture in other EU countries. We find that there were quite levels of unionisation in Norway (55%), Denmark (76%), Finland (78%), and Sweden (86%) (D'Art & Turner, 200, 15). Though Irish trade unions were not going downhill as fast as their America counterparts, but were certainly showing signs of flagging. The main reasons for this decline was shown to be that these trade unions “are no longer relevant; they do not appeal to younger employees; they are out of sync with the trend towards individualisation; they are old fashioned/out of date and need to adapt/modernise; they need to be more service orientated; they need to concentrate on recruiting the new worker: females, part-time workers, temporary workers and those in the services sector” (Wallace, 2002, 5). However in the last 2-3 years there have been certain changes in the industrial and economic scenario, worldwide. In 2008 the world witnessed turbulence in the global economic market, and the Irish economic graph took a nosedive, resulting in many workers becoming suddenly jobless. It had been predicted by the economic and social research institute (ESRI) that “in May 2009 that predicts that gross domestic product (GDP) will fall by 9.2% during 2009. It also foresees that unemployment will rise to 13.2% by the end of 2009; in May, it was already at 11.8%” (Dobbins, 2010, 2). This downward spiralling of the Irish economy is being seen in certain quarters (especially the socialist arena) as the end of the ‘golden era of Irish capitalism’, thus forcing the famed Irish Celtic tiger (Celtic tigers refer to the high growth economic period that was seen in Ireland during the time period 1995–2007) to come to a screeching halt. With many workers losing their jobs suddenly and the rest being dissatisfied with their current salaries and situation, industrial relationships has been brought back into the limelight, and trade unions have gained new importance in the industrial scenario as regards to Ireland. Thus it as Roche suggests “industrial relations regimes are unlikely to become generalized in advanced economies. Instead, new industrial relations will remain one of a series of coexisting regimes shaping relations between employers and unions... [and] we may thus be witnessing the end of new industrial relations as a generalizable regime for unionized enterprises and sectors in advanced economies and as a major explanatory paradigm for comprehending the dynamics of industrial relations systems”(Roche, 2000, abstract). Conclusion Trade Unions and industrial relations have come a long way in the Irish economy, and is unlikely to disappear from the scenario altogether, especially in the wake of the global economic recession that has affected Irish economy quite heavily. Though trade union density figures did show declining statistics during the rule of the ‘Celtic tigers’ when the Irish economy was booming, and both the employers and the employees felt that there was no need to consult the industrial relations department, and take guidance from the Trade Unions (a situation that was borrowed heavily from the American non-unionised industries) During these era (1995-2007) the trade unions and industrial relations almost became redundant within the Irish economy. However with the global economic recession setting in and majorly affecting the Irish economy, the ‘Celtic tiger’ stopped roaring, and with it signalled the coming back of the trade unions and the reopening of the chapter of Industrial Relations in Ireland. Bibliography Aust, A., 1999. The "Celtic Tiger" and its beneficiaries: "Competitive corporatism" in Ireland. Mannheim, ECPR Joint Sessions. Boucher, G., & Collins, G., 2003. 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