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Changing Social contract between employer

Dr Amit Kumar singh
Department of management
Mizoram University,Aizawl

The balance of economic efficiency and social equity is the

burning issue in the employment relations. By meeting the
employment needs of employer, generating profits to establish
and maintain economic efficiency; whilst maintain a balance with
the employee and creating social equity that benefits the worker
so that he can find and enjoys healthy living.

Globalization has affected these issues by creating certain

economic factor that disallow or allows various employment
issues. Economist Edward Lee(1996) studies the effect of
globalization and finds that in industrialized countries an average
of almost 70%of workers are employed in service sector , most of
which consist of non-tradable activities. As a result, works are
forced to become more skilled and develop sought after trades, or
find other means of survival. Ultimately this is a result of change
and trends of employment, an evolving work force and
globalization that is represented by a more skilled and increasing
highly diverse labor force that are growing in non-standard form
of employment.

Due to the affect of economic liberalization careers are

changing rapidly, especially in knowledge based organizations
where the measure of actual works performed by the employee is
difficult therefore, established norms for long term employment in
a single firm with career opportunities become under serious
challenge. Some authors have suggested that the implicit social &
employment contract of post word war period is breaking down
and it is being replaced by a much less clear, less mutual and less
binding set of mutual expectations between employee and
employer (eg.Kochan1997). Other Scholars note the “fraying” of
the psychological contract that used to bind employees and
employers together.

Conception of social or employment contract seems to

require updating for at least two reasons. First, if there ever was
an implicit “employment contract” it is changing dramatically
.Secondly this requires a new conception of the employment
relationship ,which is more fluid, more adaptable to different life
stages and needs ,and more variable than the traditional
conception s found in current Industrial Relations employment
contracts are written agreements between an employer and an
employee that detail the work place duties and responsibilities of
the employee and the compensation that the employer provides
in return. Employment/ Social contracts typically lay out the
wages, bonuses, vacations medical leaves, stock options and
other benefits and compensations that the employee receives for
fulfilling his obligations to the employer. These obligations are
also specified in the contract, as is the duration of the employer –
employee arrangement, the authority of the employee, ownership
of intellectual property and dispute resolution mechanism, and
these agreements also includes termination provisions, and they
may also include post- employment confidentiality , non-compete
,and non –solicitation clauses.

Some business experts, however contend that employment

contract can have negative impact on long-term business health.
According to this point of view, employment contracts undercut
employee trust , loyalty and dedication toward employers
because they are seen as cold and impersonal documents that
send on “everyone needs to look out for oneself “message .The
new employment contract inherently de-motivates employee
sprit ,and over the long run .will sub optimize organizational
performance ,becoming a self destructive business society .
Critics contend that the emotional detachment that accompanies
employment contracts will lead to increased turnover in important
positions ,especially since demographic trends and the
ascendancy of the information based economy are expected to
increase the competition for experienced workers in the early part
of the twenty first century.

Old Social Contract

(1)Job Security:- Under the old employment contract employees

expectations were more on long stable career and employment
relationship that they observes what acts are available to present
the employees of industrial establishment from having “different
contracts of employment with different workmen employed by
them under the same roof and performing similar duties.” The Act
requires the employer to lay down precisely the terms and
conditions of employment with regard to discharge ,misconduct
,disciplinary action ,dismissal ,leave and holidays ,hours of work
and redressed against unfair treatment and so forth.

(2)Life Career with one Employer:- Under the philosophy of old

social contract employees are expected to pursue a careering the
organization that are mainly related to the time that they spend in
the organization .A life time career path exist in the organization .
In return of this career commitment, employees have tenure; that
is they will be retained even if they “burn out” or if their skills
becomes obsolete.

(3)Stable Positions/Job Assignments:- It refers to the degree to

which the jobs or positions within the organization are
standardized. If a job is highly formalized, the job incumbent has a
minimum amount of discretion over what is to be done, when it is
to be done and how he/she would do it . Employees can be
expected to always handle the same input in exactly the same
way, resulting in a constant and uniform output. In old social
contracts there are explicate Job descriptions , lots of
organizational rules and clearly defined procedures.

(4)Loyalty to employer:- The code of discipline has came to be

accepted not only by the organization but by the employers that
their members will not engage or cause other employees to
engage in any union activity during the working hour nor they
discourage unfair labor practices such as negligence of duty,
careless operations, damage of property, interference with or
disturbance to normal work and in subordinations ,and will always
take prompt action to implement awards, agreement, settlements
and decisions.

(5)Paternalism:- Paternalism refers to the establishment of

fundamental virtue of Ren (benevolence) within the originations.
Under such influence ,the concept of ‘work place is family’ is wide
spread among organizations . It requires organization to look after
the interest of fellow employees, while employees have high
commitment to the origination. The outcome of such contracts
can be reflected in management and individual behaviors such as
– employee security, compensation and reward schemes, training
and development system from the management aspects and high
commitment, self discipline and blurred time boundary between
work and leisure and so on from the employee aspect .The
eventual goal of such effort is to achieve a peaceful and orderly
work place.

(6)Employ Sense of employment: - In the employment process Job

description contains the entitlement of jobs that clearly reflects
the authorities and responsibilities associated with that
entitlement it also dignifies the employee that holds the post and
it create a sense what the organization expects from the

(7)Stable, Rising Income:- A potent objective of legislation on

wages is the regulation and fixation of quantum of wages.
Although prior to state intervention in the field wages, it was
accepted that free contract between the individual employee and
their employer would result in fixation of such wage rates which
would satisfy both. Strong Public opinion, however gradually
forced the state to adopt legislation for fixation of wages in

(8)Job Related Skill Training: - In old social contract companies

that attempt to employ only people who already have needed
skills, Place very less emphasis on training. The employee in this
method learns to master the operations involved on actual job
situation under the supervision of his immediate boss .It is
necessary here to make sure that supervisor who is importing
training is trained and motivated to be good trainer.

New Social Contracts

(1)Few Tenure Arrangements:- Under the new social contract

,restructuring and downsizing have changed the relationship
between employees and employers .But organizations can
address the effect of displacement and fulfill their responsibilities
in the new environment . For one things there has never been any
portability in pensions, or very little, meaning that you could not
take a pension if you want to grow larger. Situation arises in which
employees have 4 years in one placed and 8 years in another’s.
Portability is also an issue for health care ,and there are similar

(2)Fewer life careers :- Tung (1998) Suggest that ‘boundary less’

careers are becoming the pattern for international assignees –as
with other ‘high demand’ professional s. A boundary less career
assumes that individual will move from one company to another
to peruse the best opportunities for their own professional
development. Recently authors have suggested that professionals
may accept the global assignment s to gain the additional skills
and experience that they perceive to be valuable for their
advancement in their career not in their company .Data from the
U.S. suggest that in early 1970s a manager works for one or two
companies in his or her entire career. The U.S. managers of today
are more likely to hold 7 to 10 jobs in their life time.

(3)Temporary Project Assignment:- Project assignment identifies

the important task required on the global assignment and the
type of cross cultural knowledge and skills needed to perform
those tasks effectively .As for as the assignment analysis of each
type of global assignment is concerned , caligiuri provides a
broad range of tasks that are carried out by each type of assignee
and identifies the general level of cross –cultural knowledge and
skills required to successfully complete. It clearly indicates that
new assignment is a job context not a job description.

(4)Loyalty to self:- Under the new social contract the employee is

more oriented towards the activities and attributes that serves to
strengthen the employees self esteem , self confidence , self-
control, self awareness, self regulated and mental hygiene.

(5) Relationship for Less Warm Familial:- New social contract

minimizes the degree fundamental virtue of ‘Ren’. Under such
influence the concept of Paternalism vanishes , and individual
becomes more responsible for activities and attributes that serves
to strengthen the expatriates self-esteem & self confidance.

(6) Personal Responsibility for Ones own Career &Job:-The

repatriation ‘problem’ may be very strategic concern for MNCs
,organizations should expect some natural attrition –as they
would with any other ‘high demand’ professionals. Harvey (1982)
found that many returns may have better career opportunities in
MNCs other than the company that sent them on the global
assignments . He suggested that in such cases, many repatriates
would be likely to leave for both ‘Motivational and Monetary
reasons’. As with other individual career decisions rather than
staying individual may chose to leave for a better job offer
elsewhere and not perceive the organizational exit as a negative
job move.

(7)Pay that reflects contributions:- Employees pay should be a

function of the services that he would render to the organization
in future .What service he will provide in different service states
and the value of service states may be the determinant of pay.
Under new social contract pay should not be time bound but is
based on the actual potential and performance of the employee in
accordance with organizational objective.

(8) Learning Opportunities:-Individual can also learn by what

happens to other people and just by being told about something,
as well as by direct experiences. So far example , much of what
we have learned comes from watching models –Parents , teachers
, peers , motion picture ,bosses and so forth.

Expectations from new Social Contract

(A)Employer’s expectations-

1- Best performance by the employees.

2- Commitment to the organization.

3- Participation in developmental activities.

4- Willingness to improve the organization and himself.

5- Ethical or honest behavior

(B)Employees Expectations-

1-Fair Pay and Benefits



4-Opportunities for growth

5-Access to timely information

6-Safe and healthy work place

(c) Joint-expectations-

1-Partnering replaces Partnership

2-Employees are Value- added resources, not merely cost to

be cut

3-Employer and Employee must focus on customer needs

and desires


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