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(Based on: Roy, J. Adams,
Industrial Relations under Liberal Democracy, 1995: Chapter 8)

Yonatan Reshef
School of Business
University of Alberta
Edmonton, Alberta
T6G 2R6 CANADA

The broad characteristics of the industrial relations and HRM systems in place today in Europe and North America may be traced back to labor's, management, and governments' choices of ideology and the associated strategies which took shape between about 1880 and 1930.

In Sweden and Germany, the mainstream of the labor movements adopted a philosophy which called for the establishment of a new socio-economic system. Employers and governments both extended recognition to union federations as legitimate agencies to speak for the interests of working people as a whole. On granting that general recognition, employers insisted that their rights to manage (and thus their legitimacy to direct modern industry) be honored in return. Specifically, they agreed to bargain over wages, hours, and other basic conditions of work but insisted on the maintenance of control within the enterprise. Consequently, the determination of HRM policies and practices remained a management right.

In these two countries, labor federations and employer associations signed comprehensive agreements (The Saltjobaden Agreement of 1938 in Sweden, and the 1919 Stinnes-Legien agreement in Germany) which set the IR/HRM parameters within management and unions operated. Over the years, the Swedish and German labor federations were able to penetrate the political system and secure legislation that would enhance progressive HRM practices. In both countries, however, local unions are relatively weak.

In France, the IR/HRM system developed slowly. Unions are weak at both the federation and local levels. At the federation level, internal divisions as well as radical ideologies have made unions not highly efficient. At the local levels, unions had to wait until 1969, to gain a foothold at the plant level, and until 1982 to enhance their position. HRM is decided by management with unions having very little effect over these decisions.

In Japan, the IR/HRM system developed late. Unlike the Scandinavian and American strategies, the strategy of Japanese management was to agree to the union demand for lifetime employment, egalitarian conditions of work, and a commitment to operate the enterprise in the best interests not only of the shareholders but also of the employees, in return for agreement by the employees to put their full physical and intellectual capacities behind the efforts of the enterprise to compete.

Employees are prepared to work hard and help their co-workers without fearing that their higher productivity might result in redundancies. For the same reason, lifetime employees accept technological changes which might jeopardize particular jobs without affecting overall employment security. Trust in management is also evident in the employees' increasing willingness over time to support management's unilateral promotion and performance appraisal decisions. Lifetime employment thus provides the large Japanese corporations with a cooperative and compliant work force which can be easily directed and redirected in the pursuit of high performance. The policy of retiring lifetime employees to senior posts with subcontractors also enables larger companies to influence smaller ones in its keiretsu or group. This transfer of personnel provides an ideal conduit for transmitting corporate values and thereby ensuring cooperative and coordinated relationships among interrelated firms. The high degree of control provided by lifetime employment thus allows management to make decisions expeditiously and unilaterally, without worrying about the possibilities of countervailing obstructionist behavior so typical in the immediate post-war period. Interestingly, rather than surrendering power, Japanese employers have used life-time employment to enhance their control over the labor force.

In the USA, business unionism competed with and defeated both radical and reform socialism to achieve dominance in the mainstream of the American labor movement. Although aroused some concern, American employers were not sufficiently alarmed to overcome their natural propensity to individualism and competitiveness -- a propensity common to employers everywhere. As a result, contrary to developments in continental Europe, they generally did not form associations nor a national federation; they did not reach a national recognition agreement with the labor movement in the first decades of the 20th century. Instead of welcoming labor leaders who affirmed the principles of capitalism, individual companies, by and large, did all they could to keep unions out.

Britain and Canada form a kind of bridge between continental Europe and the US. In Britain, from the 1930s until the advent of Thatcher in 1979, an unbroken succession of British governments of both left and right recognized the legitimacy of trade unions to speak for the interests of working people and pressured private sector employers to do the same. The Social Contract of 1975-77 demonstrated the importance of unions in England.

However, there was no formal, national basic agreement in Britain, and as a result there was more leeway for interpretation of the existing informal understanding. In this environment, employer opposition to unions and collective bargaining has been more in evidence than it has been in many continental European countries. Consequently, contrary to the common situation on many continental European countries, British unions have traditionally sought to establish mandatory union membership, and until recently British law has tolerated it. HRM decisions are management prerogative. In the 1980s, Britain took an unexpected turn when the highly ideological Thatcher regime rejected the policy of labor-management conciliation and actively sought to weaken and exclude the unions.

Developments in Canada followed a direction influenced by both the US and Britain. The Canadian labor movement was dominated by pure and simple philosophy during the first part of the 20th century, but moved somewhat to the left when large numbers of unskilled and semiskilled workers in the mass-production industries organized from 1930s onward. By the 1960s, the mainstream had embraced reform socialism (working together with the NDP to advance labor interests). The CLC has sought to improve labor conditions through political action. Canadian governments have found it necessary to negotiate with labor representatives. As a result, both federal and provincial governments have generally recognized the right of their own employees to engage in collective bargaining and have insisted that private sector employers act in accordance with the letter of the Wagner-Act model lasts that all Canadian provinces adopted.

Recently, the situation in Canada has changed. First, whereas governments still negotiate with unions, in Alberta, Ontario, Manitoba, Nova Scotia, and PEI, public-sector employees cannot strike. Moreover, where they can strike, the government can designate as many employees as it wishes "essential employees." These employees are not allowed to strike. Moreover, recent developments in Alberta, Ontario, and the Federal Government have demonstrated that unions are left out of policy making (budget cuts, downsizing). When it comes to HRM decisions, management calls the shots, and employee direct/indirect involvement in these decisions depend on management good will. During the conception period (implementing TQM or any other quality initiative), unions and employees have no recourse other than collective agreement, grievance procedure, and strikes (in union companies); or "exit" in nonunion companies. In other words, if management so chooses, unions/employees cannot easily influence policy making. They can only protest the final "product." This is a result of a conservative legal framework and the conservative, "business unionism" philosophy adopted by Canadian unions since their inception.