Exhibit 8-12 shows the percentage of workforce in trade unions in industrialized countries. Notably, there is a trend of falling union membership. This trend is attributable to various factors, including an increase in the proportion of white- collar and service workers as proportionate to manufacturing workers, a rising
proportion of temporary and part-time workers, and a reduced belief in unions in the younger generations.5 But the numbers do not show the nature of the system in each country. In most countries, a single dominant industrial relations system applies to almost all workers. But in both Canada and the United States there are two systems - one for the organized and one for the unorganized; each, according to Adams, has “different rights and duties of the parties, terms and conditions of employment, and structures and processes of decision making.” Basically, in North America, an agent represents unionized employees whereas unorganized employees can oniy bargain individually, usually with little capability to affect major strategic decisions or policies or conditions of employment.52
The traditional trade union structures in Western industrialized societies have been in the following categories: industrial unions, representing all grades of employees in a specific industry and craft unions, based on certain occupational skills. More recently, the structure has been conglomerate unions, representing members in several industries, for example, the Metal Workers unions in Europe which cut across industries, and general unions, open to most employees within a country.53 The system of union representation varies among countries. In the United States most unions are national and represent specific groups of workers - for example, truck drivers or airline pilots - so a company may have to deal with several different national unions. A single U.S. firm, rather than an association of firms representing a worker classification, engages in its own negotiations. In Japan, on the other hand, it is common for a union to represent all workers in a company. In recent years, company unions in Japan have increasingly coordinated their activities, leading to some lengthy strikes.
Industrial labor relations systems across countries can only be understood in the context of the variables in their environment and the sources of origins of unions; these include government regulation of unions, economic and unemployment factors, technological issues, and the influence of religious organizations.ss Any of the basic processes or concepts of labor unions, therefore, may vary across countries, depending on where and how the parties have their power and achieve their objectives, such as through parliamentary action in Sweden. For example, collective bargaining in the United States and Canada refers to negotiations between a labor union local and management; but in Europe collective bargaining takes place between the employer's organization and a trade union at the industry level. This difference means that the North American decentralized, plant-level, collective agreements are more detailed than the European industry wide agreements because of the complexity of negotiating a myriad details in multiemployer bargaining. In Germany and Austria, for example, such details are delegated to works councils by legal mandate.
The resulting agreements from bargaining also vary around the world. A written, legally binding agreement for a specific period, common in Northern Europe and North America, is less prevalent in Southern Europe and Britain. In Britain, France, and Italy, bargaining is frequently informal and results in a verbal agreement valid only until one party wishes to renegotiate.
Other variables of the collective bargaining process are the objectives of the bargaining and the enforceability of collective agreements. Because of these differences, managers in MNEs overseas realize that they musf adapt their labor relations policies to local conditions and regulations. They also need to bear in mind that, while U.S. union membership has declined by about 50 percent in the last 20 years, in Europe overall membership is stifi quite high; it, too, has been falling, but from much higher levels.
Most Europeans are covered by collective agreements, whereas most Americans are not. Unions in Europe are part of a national cooperative culture between government, unions and management, and they hold more power than in the United States. In Ji.me, 1998, for example, thousands of employees at the state- owned Air France airline staged protests in Paris airports against proposed job and pay cuts, thereby causing the government to back down.
Increasing privatization will make governments less vulnerable to this kind of pressure. It is also interesting to note that there are labor courts in Europe that deal with employment matters separately from unions and works councils. In Japan, labor militancy has long been dead, since labor and management agreed 40 years ago on a deal for industrial peace in exchange for job security. Unions in Japan have little official clout, especially in the midst of the Japanese recession.
In addition, there is not much to negotiate, since wage rates, working hours, job security, health benefits, overtime work, insurance, and so on are legislated. Local working conditions and employment issues are all that's left to negotiate. Also, the managers and labor union representatives are usually the same people, which serves to limit confrontation, as well as does the cultural norm of maintaining harmonious relationships. In the industrialized world, tumbling trade bar- Hers are also reducing the power of trade unions, because competitive multinational companies have more freedom to choose alternative productive and sourcing locations. Most new union workers - about 75 percent - will be in emerging nations, like China and Mexico, where wages are low and unions are scarce.
In China the government ordered all 47,000 foreign firms there to be unionized by mid-1996, and new foreign firms to establish unions in their first year of operation. This was in response to a sharp rise in labor tension and protests about poor working conditions and industrial accidents. The All-China Federation of Trade Unions claimed that “foreign employers often force workers to work overtime, pay no heed to labor-safety regulations and deliberately find fault with the workers as an excuse to cut their wages or fine them.”6' Much of the unrest has been caused by workers who are angry about losing their socialist safety net under the government's new economic reforms. Johnson & Johnson's three consumer-products manufacturing plants in China were already unionized and have a cooperative relationship with the unions.
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