WELCOME!

Lecture 1
Introduction – Origins and Theories of
Industrial Relations
MGT 659 – INDUSTRIAL RELATIONS
DR. KATY FOX-HODESS
Module Overview
Industrial Relations is the study of the relationship between workers, employers and states.

Industrial Relations exams both micro-level concerns (within the workplace) and macro-
level concerns (within the society at large).

Unlike Human Resource Management, Industrial Relations takes a critical approach to

employment, assuming that workplace conflict is an inevitable part of the working
relationship as a result of asymmetries of power between workers and employers.

A major focus of research, then, is on understanding conflict, including various

mechanisms for its potential resolution, such as collective bargaining and state regulation.
 Teaching Methods
 
Lectures will be delivered on Wednesdays from 9:00-11:00 am in SUMS B015.

 
Tutorials will begin in the second week of classes and will be held on
Wednesdays in C038. 

Work will be set for each tutorial and you are expected to fully prepare. The
tutorials will involve a mix of case studies, presentations and discussions of
research articles.
Lecture Schedule
Week Date Lecture and seminar topic Location Lecturer
1        28 Sept Introduction: Origins and Theories of Industrial Relations SUMS-B015 KFH

2 5 Oct The State and Employment Relations SUMS-B015 KFH

3 12 Oct Industrial Relations and the Economy SUMS-B015 KFH
4 19 Oct Managing Employment Relations SUMS-B015 KFH
5 26 Oct READING WEEK – NO CLASS    
6 2 Nov Trade Unionism SUMS-B015 KFH
7 9 Nov Pay and Working Time SUMS-B015 KFH

8 16 Nov Workplace Conflict SUMS-B015 tba

9 23 Nov Trade Union Decline SUMS-B015 KFH
10 30 Nov Trade Union Revitalisation Strategies and Non-Union Channels of Employee SUMS-B015 KFH
Representation

11 7 Dec Revision Session. SUMS-B015 KFH

Reading
 You should read widely – books, academic journal articles, policy reports.

 The syllabus lists some recommended textbooks for general

understanding.

 In addition, ‘exam readings’ and ‘recommended readings’ are listed for

each week of the module.

Please note that you are expected to have completed the ‘exam readings’
listed for each week’s session BEFORE lecture each week.
Tutorials
 In our tutorials, we will apply and develop the knowledge acquired during
lectures.

 They will usually involve readings or case studies which you have to prepare in advance
based on the materials provided by the instructor as well as based on your own research.
 They will require you to critically apply theories and concepts discussed during lectures and
to understand and interpret data.
 We will be doing group work and group presentations.

 Tutorial tasks will be available on the Blackboard website the previous week.
 Attendance is compulsory.
Assessment
 3 hour exam containing eight essay questions

 You will have to choose three out of the eight essay questions

 Passing mark is 50 (out of 100)

Consultation and Feedback Hours
 By appointment.
 You may make an appointment via email:
katy.fox-hodess@sheffield.ac.uk
Today’s Lecture

Part II: Origins of Industrial Relations

Part III: Scope and Key Actors
Part IV: Theories of Industrial Relations
The Origins of Industrial Relations:
Industrial Revolution
Beginning in the late 18th c., industrialization radically reshaped
class relations in Europe:

• Shift of people from rural to urban areas

• Created a class of workers dependent on wage-work rather than self-
employment
• Rapid technological advances led to the replacement of workers by machines
and declining wages and working conditions.
Enclosures Push Workers into Cities
High Density Housing and Pollution in Manchester, 19th c.
“Satanic Mills” in the Textile Industry and Appalling
Working Conditions in the Mines
The Origins of Industrial Relations:
Trade Unionism and Institutionalisation
In response, workers began to organise themselves into trade
unions, mutual aid societies and political parties to counter the
economic, political and social power of their employers.

• Workers recognised that they had more power when they bargained with
employers collectively rather than individually.

Over time, governments sought to institutionalise collective

bargaining in law, creating systems of industrial relations to
regulate the sphere of employment.
Establishment of Institutionalised Trade Unionism by
the Late 19th c.

• Trade Union Congress (TUC)

established in 1868

• Trade Union Act 1871

legalises trade unionism

• London Docks Strike in 1889

leads to the establishment of
the Transport and General
Workers Union
What Is Industrial Relations (IR)?

Industrial Relations is the study of the relationship between

workers, employers and states.
Micro-level relationships (in individual workplaces,
between workers and management)
Macro-level relationships (across sectors or the society
at large, between trade unions, employer associations
and states)
Industrial Relations Actors
 The term actors in an IR context refers to collective bodies that are able to
exercise power in an employment context and thereby influence the
environment, processes and outcomes associated with employing people.

 The three main industrial relations actors are employers, workers (trade
unions) and the state.

 Other actors may be important as well, for example NGOs, social movements
or international bodies such as the International Labour Organisation.
 All images in this presentation are used for educational purposes. Fair dealing.

Industrial Relations Actors

STATE
Labor Ministry; Other actors
Political Parties may be
Courts;
important as
Parliament well, for
example
NGOs, social
movements or
international
EMPLOYERS WORKERS bodies such as
the
International
Employer Associations; Trade Unions; Labour
Management Employee Associations Organisation.

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Employers
• The term employer refers to any organisation that employs workers
• Employers operate in the public (state) sector, private sector and voluntary
sector (third sector, not-for-profit)
• Employers differ in other important respects, including:

• Size (small, medium, large firms)

• Business sector (services, manufacturing)
• Industry
• Geographical reach (domestically-oriented firms, multinational corporations)
• Ownership (owner-managed businesses, private limited companies, public limited
companies)
• Collectively, employers may organise in employers’ associations.
Workers and Trade Unions
 IR is primarily concerned with workers as groups rather than individuals.
 In particular, IR focuses on workers organised in trade unions.
 Trade unions represents workers and provides them with a ‘collective voice’
in dealing with management.
 Workers elect trade union representatives to act on their behalf.
 Trade unions may be organised at the company level, industry level or in a
given occupation.
 In some countries, trade unions are organised along political lines.
 They are present both in the public and the private sectors.
Why Trade Unions?
‘’Most industrial relations academics would probably accept the
following claims: workers join unions in order to overcome their
weakness as individuals in the employment relationship. A group of
workers organized in a trade union meets the employer on a more
equal footing than the individual, and confronts the employer with
collective power. When union and employer engage in collective
bargaining their relationship involves the threat or deployment of
power and the outcomes of bargaining reflect the balance of power.’’
(Kelly 1998 p 9)
The State
 The term ‘the state’ refers to a country’s government, public
administration (civil service) and means of enforcing rule (laws, judiciary
etc.)
 The state can influence industrial relations in many ways. For example:
 It can enact and enforce individual and collective employment rights.
 It can pursue economic and social policies that affect workers’ ability to find work, or
their dependency on paid work (via the welfare state).
 It can intervene directly in the labour market by setting minimum wages or act as an
employer.
 It can involve unions and employers in aspects of economic and social policy making
(social dialogue).
 It can increase or decrease the freedom of workers to join trade unions and take
industrial action (e.g. strike action).
IR in Cross-National Perspective
 Industrial Relations systems vary considerably across countries as a result
of economic, political and cultural differences.
 Some key variables across countries include:
 Trade union density
 The form that collective bargaining takes, whether local or national
 Legislation governing industrial action, wages and working conditions
 The robustness of social welfare systems
 The size of the public sector
 The strength of the economy
 The strength of class-based political parties.
 100

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Task - take two minutes

 How does the state impact industrial relations in your country, in

particular, the ability of workers and trade unions to achieve their goals?

 Discuss with your neighbour for 2 minutes and think of some examples.
Theories of Industrial Relations
 Unitarism

 Pluralism

 Marxism (radical perspective)

Key Theoretical Questions in Industrial Relations
• Do workers and employers share the same interests? Why or why not?

• What are the causes of workplace conflict and is it inevitable?

• Is it possible for workers and employers to cooperate? How can this be facilitated?

• What role does the state play in shaping the playing field for workers and employers?

• What is the balance of power between workers and employers? Where does their power come
from in each case?

• How do workers come to define their interests collectively and act upon their interests?

• Which form or forms of worker organisation and industrial action are most effective and why?
What Are the Differences?

These theories differ primarily in terms of how they understand the

long-term interests of labor and capital and the potential for conflict
and/or cooperation that these interests imply.

The theories therefore imply different political perspectives (i.e.,

different attitudes towards trade unions and the state) as well as
different theoretical perspectives.
Unitary Theory

“A managerialist stance which assumes that everyone in an organization is

a member of a team with a common purpose. The unitarist view is implicit
in American models of Human Resource Management. It embodies a
central concern of Human Resource Management, that an organization's
people, whether managers or lower-level employees, should share the
same objectives and work together harmoniously. From this perspective,
conflicting objectives are seen as negative and dysfunctional.”

--From HRM Guide

(http://www.hrmguide.co.uk/glossary/unitarism.htm)

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The Unitary Perspective
Workers are purported to share common interests with their employers.
Metaphor of a ‘family’ or ‘team’.

Harmony between workers and employers in pursuit of common

interests is therefore viewed as the norm.

Conflict is considered abnormal and is treated as an individual problem

(i.e. troublemaking workers or poorly trained managers) rather than a
structural problem.
Critiques of the Unitary Perspective
From the perspective of workers, as well as scholars in the Pluralist
and Marxist traditions, Unitarism may appear as management
ideology, rather than an accurate reflection of the realities of the
workplace.

Politically aligned with Thatcherism in the UK and the “Reagan

Revolution” in the US (1980’s): primarily a means of
disciplining/repressing trade unionism and collective action by
workers.
Implications for Practice
•Trade unions are viewed as intrusive “third parties” disrupting and creating trouble
within the otherwise harmonious relationship between workers and employers.

•Employers may therefore pursue strategies of union-avoidance, in violation of the

internationally recognised right to organise.

•Workplace conflict is dealt with individually, with management as the sole

authority.

•Human Resource Management has its roots in this perspective.

Summary of the Unitary Perspective
Managers

l
ro
nt
Co

Workers State
Pluralist Theory

Mainstream Industrial Relations theory dominant in the

1950’s and 1960’s.

Draws from pluralist theories of politics dominant in the west

in the same period.

Politically aligned with Fordist social democracy: historical

context of the Cold War.

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Pluralism
Workers and employers have both convergent and divergent interest.

Conflict is therefore a natural by-product of the employment relationship. It is a

structural problem, rather than an individual problem.

Conflict can be managed via institutionalised procedures and rules, particularly those
instituted by the state.

While unitarism is largely silent on the role of the state, pluralism sees the state as
playing a potentially very positive role in shaping industrial relations for the benefit of
employers and workers.
 Pluralist Theory and Trade Unions

Trade unions are functional for capitalist employment relations because

they organise and channel workplace conflict in productive, rather than
destructive, directions through collective bargaining.

The focus is on finding a middle ground where both parties (workers

and employers) get some – but not all – of what they want from the
employment relationship.

Pluralists therefore take a far more positive view of trade unions than
unitarists and see the possibility of both cooperation and conflict between
trade unions and employers.
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Implications for Practice
 Procedures should be put in place to ensure that disagreements can
be settled before they turn into harmful disputes.
 Pluralism emphasises the importance of rules, which may be
instituted unilaterally via management, jointly via collective
bargaining, or by law via the state.
 Rules provide workers with protection from arbitrary management
decisions and help to create a degree of predictability and stability
in industrial relations, for example, via grievance procedures or
laws governing redundancies.
Summary of the Pluralist Perspective
Managers

Re
lic

gu
nf
Co

la t
ion
Workers State
Regulation
Critiques of Pluralism from the Marxist Perspective
“to define the subject [of industrial relations] exclusively in terms of rules and
regulation is far too restrictive, and has unfortunate evaluative overtones. The
implication is that what industrial relations is all about is the maintenance of
stability and regularity in industry. The focus is on how any conflict is contained
and controlled, rather than on the processes through which disagreements and
disputes are generated. From this perspective, the question whether the existing
structure of ownership and control in industry is an inevitable source of conflict is
dismissed as external to the study of industrial relations – which must be
concerned solely with how employers, trade unions and other institutions cope
with such conflict.”
--Richard Hyman (1975: 12)

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Marxist Theory
Historical context of the 1970’s: decoupling of productivity and wages and
waves of wildcat strikes against a background of political radicalism.

Like pluralist theory, and in contrast to unitarist theory, Marxist theory views
conflict as inherent to the employment relationship under capitalism because
workers and employers have divergent interests.

However, while pluralist theory views these divergent interests as ultimately

reconcilable through institutionalised collective bargaining, Marxist theory views
these divergent interests as ultimately irreconcilable.

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Marxism
Marxists view conflict as inherent to the employment relationship because workers
and employers have divergent interests that are ultimately irreconcilable.

Why are their interests irreconcible?

• There is an imbalance of power between workers and employers: 1) workers must sell
their labor power in order to get by, 2) individual workers are replaceable and 3)
employer prerogative is backed by the state.

• Profits arise from exploitation of workers by employers (creation of ‘surplus value’).

• Surplus value might also be increased by intensifying work effort or extending

working time or via the introduction of new technology – all of which come at the
expense of workers.
Marxist Theory and Trade Unionism
Marxist Theory views trade unions as playing a contradictory role under capitalism.

On the one hand, the experience of trade unionism can provide workers with insight
into the true nature of labour under capitalism and experience in organising to resist
exploitation and alienation.

On the other hand, as pluralist theory might suggest, trade unionism can co-opt or
channel worker dissent in less radical directions.

Rather than resolving workplace conflicts, the fundamental nature of capitalism

means that collective bargaining and trade unionism can only defer crises to a later
date.
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Implications for Practice
Workers should seek to challenge the imperatives of capital through collective
organising and collective action.

Workers should recognise that their interests will always diverge from the
interests of capital and so any gains will be temporary and ephemeral.

Workers should resist the institutionalism and bureaucratisation of workplace

conflict in order to preserve its radical potential.

Workers should link the difficulties they are facing in the workplace to the
broader problems workers face in capitalist societies – in other words, they
should seek to politicise conflict.
Summary of the Marxist Perspective
Managers

Sh
a
red
e
nc
ta

i nte
sis

res
Re

ts
Workers StateResistance
 Summary
• Industrial Relations is the study of the relationship between workers, employers and the
state. The relationship among these three key actors varies considerably from country to
country.
• Unitarists instead argue that workers and employers have convergent interests. Conflict is
the result of troublesome individuals and must therefore be dealt with individually. Trade
unions and the state are viewed in a negative light, as meddlesome outside actors.
• Pluralists argue that workers and employers have both convergent and divergent interests.
Conflict can be managed through institutionalised collective bargaining and rule making,
with a particularly important role for the state. Trade unions are viewed as desirable.
• Marxists, by contrast, argue that workers and employers have divergent interests that are
ultimately irreconcilable because of the nature of profit-making. Attempts to manage
conflict, then, only defer crises to a later date, rather than resolving them. Trade unions are
viewed with ambivalence and the state is viewed as a partner of management.