Labor Relations
Labor Relations
I. Collective BargainingE. Robert Livernash
II. StrikesK. G. J. C. Knowles
III. Settlement of Industrial DisputesArthur M. Ross
IV. Developing CountriesMorris David Morris
I. COLLECTIVE BARGAINING
The content and the scope of collective bargaining vary from country to country. The issues in collective bargaining, broadly speaking, relate to wages, hours of work, various benefit provisions, and other terms and conditions of employment. Also involved are questions concerning the recognition and status of unions and collective bargaining procedures.
This article will first discuss briefly some broad differences in the content and scope of collective bargaining in different countries. It will then consider selected collective bargaining issues in the United States. Collective bargaining in the United States, while not extended to as large a proportion of employees as in some other countries, has developed the labor agreement more intensively than elsewhere and hence covers directly a wide range of issues. A concluding section will indicate some developing characteristics and changing issues in various countries.
Institutional environment
Questions and problems about the terms and conditions of employment arise in any industrialized or industrializing society. As John T. Dunlop points out (1958, p. 4), any industrial society, regardless of its political form, creates distinctive groups of managers and workers. Such societies develop industrial relations systems, which he analyzes in terms of three sets of actors—managers, organized workers, and specialized governmental agencies—and three environmental forces—technological conditions, market constraints, and power relationships in the society.
Although all developing countries create some form of industrial relations system, the power relationship in the society may preclude or drastically limit collective bargaining between managers and freely organized and freely led unions. In command societies without private ownership of the means of production, worker organizations are instruments of the state and are largely restricted in function to encouraging higher employee productivity and administering welfare programs. Even among such societies, however, significant differences can be found in the power and status of worker groups. A very interesting variation seems to exist in Yugoslavia (Dunlop 1958, chapter 7), where workers’ councils have substantial power within a system of control which cannot as yet be described as stable. Despite these variations, collective bargaining, as the term is usually used, can hardly be said to prevail in the absence of private ownership and the right to strike.
In countries with private ownership of property but with dictatorial or semidictatorial forms of government, unions have elements of freedom within a highly restrictive political environment. A union movement may provide a useful ally for a dictator in breaking or countering the entrenched power of a landed aristocracy. The allegiance of workers has been obtained and preserved in such countries by various social reforms and legislative codes protecting employees. Although the unions achieve certain goals and employers are considerably restricted, the unions at the same time are likely to have imposed leadership and to be under the ultimate control of the dictator. A limited and weak form of collective bargaining may exist, with both unions and employers restrained and regulated by the power of the state. Collective bargaining under Peron in Argentina and Vargas in Brazil are illustrations of this (Alexander 1962). Apart from particular governmental variations, labor movements in underdeveloped countries commonly are highly political in character and intimately associated with the revolutionary and nationalistic aspirations of the people. A significant impetus to political action is the economic weakness associated with mass underemployment.
In democratic industrialized societies, trade unions function both as collective bargaining and as political institutions. In western Europe unions have, to a considerable extent, been associated with ideological, religious, and revolutionary movements and have reflected the pluralistic political pressures within the countries. Some such union movements have been predominantly political in character and have had limited effectiveness as collective bargaining institutions. Trade unions in France and Italy historically have been cast in this mold. The opposite extreme is to be found in the United States, where unionism has functioned overwhelmingly as a collective bargaining institution, with insignificant ideological aspirations and minimal political objectives. The more middle ground, where unions have been strong both as political institutions and as bargaining institutions, is illustrated by the examples of Sweden and Great Britain.
Goals in democratic industrial societies
In democratic industrialized societies organized workers may seek to achieve their goals and objectives by means of political and legislative action or through collective bargaining with private employers. Various general goals may be related to the alternative means. For this purpose general goals may be classified as (1) wage and hour protection and improvement; (2) social benefits and enhanced security through medical and health plans, unemployment compensation, pension plans, and related arrangements; and (3) detailed regulation and determination of conditions of employment, including layoff, promotion, job and personal compensation, discipline and discharge, and other working rules and policies.
All three of the above general goals may be sought primarily through collective bargaining. If so, collective bargaining will be broad in scope and the issues multifarious. This has been the manner in which collective bargaining has developed in the United States since World War II. During this period unions have developed from a small proportion of the labor force—organized by crafts— into an industrial form of union organization, encompassing the large mass-production industries and embracing a large proportion of blue-collar employees. The labor agreement reflects the change that has taken place, evolving from a relatively simple document to a complex web of rules governing many aspects of employment.
In all countries in which collective bargaining has meaningful status the first general goal, wage and hour protection and improvement, has been sought both through negotiation with employers and, less importantly, through minimum-wage laws and other types of legislative enactment. Where unions have been relatively weak as collective bar-gaining institutions, wage and hour legislation appears to have had a greater relative economic impact. Whereas wage legislation is thus in some degree an alternative means, the most central aspect of and issue in collective bargaining has been various facets of wage determination.
The second goal noted, social benefits and enhanced security, has been sought and achieved in most countries through legislation rather than through collective bargaining. The socialistic political parties, with which unions in Europe have been predominantly associated, have evolved primarily into political advocates of the welfare state. Although unemployment compensation and old-age or retirement benefits have historically been primary legislative objectives, the most important area of development and expansion in the years since World War u has been public systems of medical care. The Scandinavian countries have been outstanding in reducing death rates and providing comprehensive medical care. The United States, on the other hand, developed state old-age and unemployment benefits much later than Europe and retains essentially a private system of medical care. In the postwar years, however, there has been developed through collective bargaining an extensive private “benefit package” that has raised issues about cost and content.
The third goal, detailed regulation and determination of conditions of employment, has been uniquely developed through collective bargaining in the United States. This appears to be the result not only of the weak political orientation of the labor movement but also of the decentralized company-level and plant-level system of bargaining that is characteristic of the United States. Bargaining on an industry-wide basis, or even on a broader confederation basis, which tends to prevail in Europe, appears not to lend itself to, or for other reasons not to focus on, this type of issue. However, to varying extents in different countries this third goal has been sought through legislation. Labor codes, sometimes containing very detailed administrative provisions with respect to employment conditions, are to be found in some European and South American countries and elsewhere, as in India. On the other hand, where this type of legislation is less completely developed, employers are free to establish detailed employment rules and policies, although these are qualified to a growing extent by the emergence of various forms of collective bargaining at the plant level.
Thus, although it can be said that every industrialized or industrializing country has an industrial relations system and that all such systems are concerned with the determination of wages and other terms and conditions of employment, the scope and the content of collective bargaining vary widely from country to country. The existence of a large and broadly based labor movement is not synonymous with a highly comprehensive and strong system of collective bargaining. Such a labor movement may be strong politically but weak economically. Although political strength cannot overcome the economic and technological constraints of a society, it may achieve certain employee goals and impose detailed regulations upon employers. A large labor movement may be relatively weak both politically and economically. This appears to be the case in Japan, where the multitude of plant unions, bargaining locally, impose few restraints upon employers and where the union federations, although decidedly active politically, have not achieved extensive political power. Various degrees of economic and political strength and various degrees of economic and political orientation create considerably different systems of collective bargaining. This must be recognized but cannot be dealt with in this article. (In addition to the two works previously cited, examples and analyses of variations in systems of collective bargaining among countries are to be found in other references in the bibliography.)
Issues in the United States
Through collective bargaining, unions challenge management’s right to make unilateral decisions that affect the terms and conditions of employment. This challenge takes two forms. One form is the negotiation of written labor agreements that establish both general and quite specific rules governing the employment relationship. The second form of challenge is the protest against particular day-to-day decisions and actions of management as not being in conformity with the provisions of the labor agreement. This latter challenge is carried out through a grievance procedure established by the labor agreement. Whereas management retains various rights and unilaterally establishes and maintains some labor relations policies, the total union challenge creates an enlarged web of rules that is jointly determined and binding both for the two parties to the agreement (the union and the management) and for the individual employees.
Issues in collective bargaining in the United States have not remained static. The modern labor movement, with greatly enlarged union membership, began in the political and economic climate of the great depression of the 1930s. It was then that the heart of American industry was organized and began to operate under collective bargaining. The process of collective bargaining has been evolutionary. It has gone through an organizing stage, characterized by violent hostility, and a contract development stage, characterized by continued but diminished hostility, and in recent years has given evidence of a stage of increased accommodation and more orderly relationships. Issues that seriously divided the parties some years ago are now in large measure resolved. This process of resolution will be noted in the discussion of particular issues. New issues arise as older issues are resolved, however. There is always a conflict frontier, although this should not obscure the substantial progress that has been made.
Wages and related benefits
The size of the “economic package” is the most obvious, persistent, and perhaps inevitable issue that divides the parties. The typical economic package consists of a wage increase and benefit liberalizations. Unions have consistently introduced and improved benefit plans. This drive for benefit improvement has increased the cost of such wage supplements from an insignificant amount in 1940 to roughly one-quarter of total employment costs. Conflict has been primarily related to the additional cost of improved benefits, although the appropriateness of each new benefit has also engendered some controversy. Particular benefits and the related issues will be discussed below [see alsoWages, article onfringe benefits].
The cost and income implications of benefits will not be discussed here. [For a discussion of the entire subject of the effect of unions on the general level of wages in the United States and on relative wage levels in different industries and in different occupations, seeLabor unions, article oninfluence on wages.] It should be noted in passing that there has been considerable argument about the effect of unions on the process and problem of inflation and about the power of unions to increase the relative wage level for particular groups of organized employees. The only aspect of wages that will be treated in this article, and this treatment will be brief, will be the compensation structure in the plant. It should be emphasized, however, that controversy over wages and costs tends to overshadow other issues in most particular instances of union-management negotiation.
The following sections will discuss (1) the grievance procedure and arbitration, (2) discipline and discharge, (3) the use of seniority, (4) the plant compensation structure, (5) hours of work and vacation and holiday provisions, (6) supplementary unemployment benefits, severance pay, and subcontracting, (7) pension and medical benefits, (8) recognition and union security, and (9) other labor agreement provisions. None of these subjects can be discussed in depth. (A more extensive treatment is to be found in Slichter et al. 1960.)
Grievance procedure and arbitration
As previously mentioned, a major form of union challenge to management is alleged contract violation. Employees have the right to present grievances in the first instance to the departmental foreman or equivalent first-line supervisor and to be represented by a union steward or committeeman. If the grievance is not resolved at this first step, it may be carried to higher stages, involving union and management representatives of successively higher levels. Grievance procedures are found with two, three, four, and more steps in the appeal procedure. Grievance procedures have been refined to require that grievances be written, that they allege violation of specific sections of the labor agreement, and that written appeals and answers be given within stated time intervals. Written briefs are commonly used in arbitration.
The most notable change that has taken place over the years has been the general acceptance of arbitration as the terminal step in the grievance procedure. Arbitration gives a neutral individual, selected by the parties, the right to make final and binding decisions on unresolved grievances submitted to him. Prior to World War II arbitration was found in only a few labor agreements and was an important issue between the parties. Unions sought such provisions, and management resisted them. Today, however, most managements favor arbitration, and provision for it is to be found in over 90 per cent of labor agreements.
There is no doubt that managements in large part accepted arbitration to induce unions to accept “no-strike” clauses—that is, clauses that prohibit strikes during the term of the agreement. In addition, the combined effect of arbitration and no-strike clauses was to allow management to discipline employees for taking part in “wildcat” strikes—those prohibited by the contract. Furthermore, arbitration was limited to grievances involving the application or interpretation of the labor agreement, thus restricting the arbitrator’s authority. Finally, any particular decision could be modified or negated by subsequent negotiation.
Arbitration is important because it resolves by a private judicial process conflict that arises during the term of the labor agreement. It gives meaning and support to the development and application of labor relations policies. Its scope has necessarily increased as labor agreement provisions have multiplied and become more complex. Its significance goes beyond the making of particular decisions by the arbitrator because both parties are restrained by arbitration precedents and by knowledge of how an arbitrator would probably rule if a particular issue were to be carried to him. No other country is known to have developed a system of private grievance arbitration as extensive as that in the United States.
Discipline and discharge
Perhaps the greatest contribution unions have made to the security of the individual employee has been their substantial assistance in the elimination of arbitrary discipline and discharge. This has been done not by elaborate labor agreement provisions but typically by the simple restriction of the grounds for discipline and discharge to “for cause” or “for just or proper cause.”
Such simple restriction might not have been effective had it not been coupled with arbitration. In arbitration the burden of proving cause is upon the employer. In response to this union challenge and unilaterally with the development of personnel policies, employers created systems of corrective discipline. These involve oral and written warnings and disciplinary layoff prior to discharge, except in the case of serious acts considered to warrant immediate discharge. The systems emphasize corrective behavior rather than punishment. But the essence of the enhanced job security of the individual employee is to be found in the fact that the employer may not take action that will not be sup-ported as fair and reasonable by a neutral arbitrator.
Seniority
Seniority, the according of preference on the basis of length of service with the employer, has two distinct uses in labor agreements. One use may be called benefit seniority. For example, the amount of vacation and the amount of pension to which an employee is entitled are commonly based on seniority. Seniority is used in this manner primarily because entitlement to benefits on such a basis is regarded as equitable, but this use is also a union bargaining device, initially to obtain liberal benefits for long-service employees and subsequently to extend these benefits to employees with lesser service.
The second use of seniority, which may be called competitive-status seniority, is to select one employee rather than another for layoff or promotion or for various other purposes. Seniority is widely accepted at present as the major criterion for layoff; it is more controversial and qualified in its other competitive-status applications.
Seniority systems regulating layoff are highly varied and frequently quite complex. Seniority may be defined, measured, and applied in different ways and combinations—job seniority, department seniority, occupational-group seniority, plant seniority, and company seniority. In actual application, seniority can be more or less qualified by requiring that the employee have the ability to perform particular jobs. Description and analysis of various layoff systems can be found elsewhere (see Slichter et al. 1960, chapter 6).
The principle of seniority appeals to unions and employees as a criterion for making competitive decisions affecting employees because it is regarded as fair, reasonable, objective, and hence nondiscriminatory. It is further supported because it establishes job security for long-service employees. The principle is resisted by management as being contrary to the logic of making business decisions and employee rewards on the basis of efficiency. It is argued that seniority weakens employee motivation to contribute to the goals of the organization and adds to cost by requiring more extensive training and retraining of employees. As stated earlier, management has commonly come to accept the principle of seniority with respect to layoff but has preferred narrow and small units of application, to reduce training costs and internal employee turnover. Unions have worked for broader units of application, typically for plant-wide application. Some constructive compromises have been worked out that minimize internal employee turnover and resulting training costs but that still give plant-wide protection through a labor pool. Layoff provisions at present are seriously controversial only in a minority of instances.
Although management is content to accept seniority as the primary criterion for layoff, it is less content to do so in the case of promotion, even though in practice in most unionized companies a high proportion of promotions go to the senior man.
Labor agreement provisions commonly do not make seniority the single criterion for promotion and frequently provide that seniority shall govern only when skill and ability are equal. But protests in the grievance procedure, when exceptions to seniority are made, have led many managements to promote on the basis of seniority except for rare and unusual cases.
The most controversial applications of competitive-status seniority have been to temporary transfers of employees to meet day-to-day and short-term production needs. Considerable loss in flexibility in the use of manpower can be caused by such requirements, with very little true enhancement of the job security of senior employees. In general, both employees and management now accept seniority as the criterion for permanent layoff and as a factor to be given heavy weight in promotion. However, there is controversy when the use of seniority entails excessive management costs, as it does when it is applied too minutely to the numerous employee shifts caused by short-term changes in production schedules and by employee absence. Controversy also exists where the particular seniority system causes high-cost chainlike movement of employees in the process of layoff.
The quite elaborate development of seniority sections in labor agreements appears to be a characteristic of collective bargaining mainly in the United States. Although custom and practice may impose comparable restrictions upon employers in some other countries, and legal protection may also exist, formal seniority requirements are not commonly found in labor agreements elsewhere.
Plant compensation structure
There has been considerable progress in rationalizing wage structures. Whereas rationalization programs typically have been initiated by management, the prospect of unionization, or grievance experience subsequent to unionization, has been a strong motivating influence. Unionization places management in a position in which it must be able to justify and defend the wage rates paid for particular jobs and to particular individuals.
The problem of justification has been most severe where technological developments create rather minute division of labor and therefore many roughly similar but specialized jobs. Rationalization has taken the form of job evaluation, which analyzes and rates the content of jobs in terms of their skill and responsibility requirements and in terms of unfavorable working conditions and the degree of physical effort required. The result of job evaluation has been to create a logical, simplified wage structure, with all jobs classified by job content into a relatively small number of labor grades and with each labor grade having an attached single wage rate or wage-rate range.
The significance of job evaluation to union-management relations is that it creates a stable wage structure together with orderly change in particular wage rates. Prior to the acceptance and introduction of job evaluation, wage-inequity grievances were brought up during the term of the labor agreement and typically in large numbers. Wage rates for particular jobs became a most troublesome and hectic grievance problem. Acceptance of job evaluation requires agreement that jobs have been equitably classified and that, consequently, wage rates for particular jobs will not be changed unless job content changes. If job content changes or if new jobs are created, orderly change is achieved since evaluation principles have been accepted for the determination of the wage rate for the new or revised job. Disagreement may be resolved, if necessary, through arbitration. The almost complete acceptance of job evaluation, or its near equivalent through more informal procedures, has gone far in the resolution of the issue of the determination of wage rates for particular jobs.
Job evaluation developed in the United States primarily as an application of scientific management. Its use was greatly stimulated by the spread of collective bargaining. Evaluation is much less common in other countries, although it is attracting greater interest abroad and its application is increasing. The most extensive development is in the Netherlands, where through union endorsement it has been utilized in a program to rationalize the wage structure of the entire country.
The compensation of individual employees, when paid by the hour, has tended in the United States to move in the direction of less discrimination between individuals. Many job evaluation plans, and other wage structures, pay all employees working on a particular job the identical wage rate. Probably more than half of the evaluation plans, however, establish a wage-rate range for each labor grade, within which individual employees are compensated. Some managements desire to compensate individuals within the rate range in accordance with merit and ability, but under union pressure seniority tends to govern; workers get automatic or nearly automatic increases in pay at fixed points in time and in this way progress along a pay scale to the maximum rate for the job.
Whereas the issues of job compensation and individual compensation by the hour have been to a great extent resolved, piece-rate and wage-incentive compensation frequently involve controversy. Similarly, there can be controversy over production standards and manning requirements under systems of hourly compensation that have been coupled with employee efficiency requirements. In other words, there has been only limited agreement between managements and unions about the application of industrial engineering principles to the determination of production standards. In recent years acute conflict has sometimes developed when management has attempted to increase the general level of employee efficiency and effort.
The level of effort, manning requirements, and various so-called restrictive work rules, although not usually thought of as part of the plant compensation structure, are crucial determinants of labor cost. Under the reduced competitive pressures of World War II and the high levels of demand that prevailed in the early postwar years, efficiency declined in many companies as employees sought and achieved looser production standards. In the later postwar years, as competition intensified and excess capacity developed, management endeavored to reduce cost by improving employee efficiency. This competitive drive intensified union-management conflict in a significant number of situations.
Hours of work; vacation and holiday pay
A long-standing traditional goal of unions has been to reduce the hours in the standard workday and work week. But in the years since World War II there has been very little change in the standard 40-hour week and 8-hour day. In the earlier years of this period there were significant, but not numerous, instances in which hours in excess of this standard were reduced to it. There have also been a few instances in which weekly hours have been reduced to levels below 40, but there has been no general drive to achieve such a reduction.
The goal of increased leisure has been achieved during this period by the introduction of paid vacations and paid holidays. There has been a steady, progressive liberalization of vacation and holiday provisions. A three-week vacation for employees with 10 or 15 years of service is now common, and numerous labor agreements provide for four weeks of vacation for those with 25 (or, in some instances, fewer) years of service. Seven or eight paid holidays during the year are now quite common.
An interesting question for the near future is whether there will be a strong demand for a shorter work week without reduction in the weekly wage. The recent relatively high unemployment rates stimulated interest in increasing employment by this device. On the other hand, the most recent novel negotiation has been in the steel industry, where an optional savings, retirement, and extended vacation plan has been introduced. In the related metal container industry, a sabbatical-leave type of vacation plan has been negotiated. These plans continue the trend toward reduced hours of work per year rather than per week.
Overtime payment has been negotiated for work on paid holidays and for hours beyond the standard day and week. In many labor agreements these provisions are quite complex. The original purpose of penalty overtime rates of pay was to discourage excess hours of work. While the rates continue to serve this purpose, liberal payment has tended to make such work attractive for many employees. Liberalization of overtime payment arrangements has been sought largely to increase take-home pay.
Unemployment benefits and severance pay
Privately financed and trusteed supplementary unemployment benefit plans were negotiated in 1955 in the automobile industry. The plan that became the basis for agreement was developed by the Ford Motor Company as a counterproposal to the demand of the United Automobile Workers union for a guaranteed annual wage. The union’s demand for a guaranteed annual wage was perhaps the most controversial benefit issue in the postwar years. Although the unemployment plan as negotiated did not fully satisfy the union’s demands, the employer’s objections to it were considerably reduced because it was integrated with public unemployment benefits and because the employer could achieve limited liability through trust-fund financing.
In subsequent years the automobile plan, or a variation of it, has been negotiated by larger employers in many industries. The benefit amount has been liberalized, and the maximum duration of benefits has been extended in many instances from 26 to 52 weeks. Various provisions for short-workweek benefits have also been introduced. Liberalizations bring the plans closer to the original objective of the unions, and the extension of maximum benefits to 52 weeks, plus other administrative modifications, has diminished somewhat the integration of private plans with public unemployment benefit systems. Less common than the automobile industry plan, but nevertheless important, are negotiated savings-fund plans, from which employees may draw in emergencies, including unemployment.
A severance-pay plan was added to the automobile industry supplementary unemployment benefit plan in 1958. Severance-pay plans have also been negotiated in other industries, and since 1960 have been spreading rapidly. The amount of such pay varies with seniority and is logically related to, and payable for, permanent severance.
Job security and subcontracting
The entire subject of job security has been a major issue in collective bargaining in recent years. Its increased importance in negotiation may be attributed to higher levels of unemployment associated with some sluggishness in the rate of economic growth and to widespread fear of the disemployment effect of automation and a quickened pace of technological change. Although supplementary unemployment benefits, severance pay, and early retirement have been the primary manifestations of emphasis on job security, there also has been (1) limited experimentation with “automation funds,” which have given employers the right to make certain work-rule and technological changes in return for contributions on their part to trust funds providing specialized employee benefits, (2) some broadening of seniority units governing layoff and recall, and some growth of retraining provisions, and (3) an intensification of the issue of subcontracting.
Subcontracting is controversial in principle. Employers regard freedom to subcontract work as a fundamental business right. Any form of restriction of this right is resisted. In addition to the controversy this causes between unions and management, subcontracting causes conflict among unions. In order to maintain or enlarge employment opportunities for their members, industrial unions wish to limit subcontracting. The employment of craft-union construction employees, however, depends in part on the freedom of industrial employers to subcontract construction work. Industrial union-craft union rivalry is intensified by this conflict of interest in employment opportunities with respect to construction and maintenance work. Unemployment intensifies all aspects of the subcontracting issue.
Pension and medical benefits
Unions did not initiate private hospitalization, surgical, and medical group-benefit plans. Nor did they initiate private pension plans. Group life insurance, sickness and accident compensation, hospital and surgical and medical plans, and pension plans were pioneered by employers as an important part of their developing personnel policies and programs. In the postwar years, however, unions sought these benefits through negotiation and gave added impetus to expanding their coverage. Unions achieved more liberal plans not only by increasing benefit amounts but also by adding to the kinds of medical services provided and by the extension of coverage to employees’ dependents and, more recently, to retired employees. The entire private welfare structure has been considerably extended, although pension plans cover fewer employees than do hospitalization and medical plans.
Employers typically have not disagreed about the desirability of most benefit plans. On this issue employers cannot be cast in the role of the employees’ antagonists. The issue in negotiation has essentially been the degree and cost of particular liberalizations of those benefit plans. It is also not very probable that great conflict will develop in the future.
There is, however, a growing potential issue in the medical field between the direct provision of hospital and medical services and the now more common insurance approach to such benefits. Some unions have, usually through a joint union-management trustee mechanism, established various kinds of clinical, diagnostic, medical, and hospitalization services. The United Mine Workers union, for example, through its trusteed welfare fund, operates 18 memorial hospitals. Direct-service medical plans tend to be opposed by the professional medical associations and to arouse the hostility of various opponents of “socialized medicine.” Some of the large industrial unions are becoming more and more interested in the direct-service approach to medical care. Employers tend to favor continuation of insured or similarly financed programs. The method of providing medical services to the entire community is likely to become an increasingly active political issue in the United States, and this issue will involve elements of union-management controversy. [SeeMedical care, article oneconomic aspects.]
Another potential problem involves the investment policy to be followed with respect to pension reserves. Private pension reserves are today quite large and within the next ten years will increase to enormous size. The investment of such reserves, except with respect to plans utilizing the joint union-management trustee device, has been under the control of the employer or a trustee selected by him. The large industrial unions are questioning this unilateral control. Some such unions see opportunities to further various social projects by the investment of such funds. As pension reserves become larger, investment control and policy may become increasingly controversial [seePension funds].
It can be argued with conviction, although it cannot be proved, that unions have stimulated the quite rapid growth of private benefit plans. It is also clear that in the United States the importance of private plans (relative to that of public plans providing similar benefits) is greater than in most, if not all, other countries. Although public provision of medical benefits may become an increasingly important political issue in the United States, a combined private and public approach to welfare benefits, with public plans providing only minimum benefits of all types, appears firmly established.
Recognition and union security
The United States is one of the few countries with a tradition and practice of the exclusive representation of employees in a bargaining unit by a single union. This tradition became a legal principle of representation with the passage of the Wagner Act in 1935. In most countries various unions have members among the employees of a particular employer.
Unions in the United States, going beyond the concept of exclusive representation, have also sought, and in about three-fourths of union contracts have achieved, compulsory union membership for all employees in the bargaining unit. The most prevalent form of compulsory membership, and the strongest form now compatible with federal law, is a union-shop labor agreement provision requiring membership in the union within 30 days after employment. There are, however, 18 states that prohibit by right-to-work laws any form of compulsory union membership. There is also a qualification in federal law limiting the compulsory discharge of an employee under a union-shop clause to refusal to pay union dues and regularly required initiation fees.
Union-shop and other union security provisions in labor agreements are not common in most coun-tries and are not usually sought by unions, no doubt because such provisions are not consistent with the tradition of multiple-union membership and representation (no attempt is made here to analyze differences in such underlying traditions).
In all countries a most severe controversy between management and unions has historically been the direct issue of recognition. It appears that the struggle over recognition was more severe in the United States than in many other countries, although this is open to debate. What is clear is that this issue has become less important as unions have achieved greater social and political status. In the United States, and in some other countries, recognition is a legal right. In the United States, the issue of recognition now hinges on the ability of a union to win a majority vote among the employees in an appropriate bargaining unit as determined by the National Labor Relations Board.
The issue of the union shop is still a controversial one, although much less so than in the recent past. Compulsory union membership is important to unions today perhaps as much for symbolic as for other reasons. Management likewise objects to compulsory membership on principle, as being contrary to democratic traditions.
There are other provisions in labor agreements relating to union status that at times become serious issues. Union representatives may be given special protection against layoff and may have other special rights and responsibilities relating to their duties as representatives. The number of representatives may itself be an issue. In general, however, minor union-status rights and regulations have been fairly well resolved.
Other labor agreement provisions
No attempt will be made to discuss in detail labor agreement provisions other than those discussed above. Most labor agreements contain a management-rights clause, and all agreements contain termination and renewal provisions. Agreements have in the past been of one-year duration, but recently two-year and three-year agreements have been typical.
The major point to note is that agreement pro-visions vary by industry and in accordance with the attitudes and problems of the negotiating parties. Variations in technology and in economic conditions give rise to variations in the content of agreements. Some examples can serve to indicate some of these differences. In the casual-employment trades, such as construction, seniority provisions are rare. Hiring is usually done through the union in a manner designed to equalize employment opportunities for those actively working at the trade. Craft-union agreements, while not containing seniority provisions, do contain detailed provisions relating to work jurisdiction. In the transportation industries there are usually detailed provisions relating to the composition of crews and to the scheduling of work. In any hazardous industry there are likely to be special provisions relating to safety.
Thus, it is clear that the particular economic and technological conditions in an industry influence the subjects of negotiation and the content of agreements. The problems and attitudes of the parties in negotiation are even more important sources of variation in agreements. Some agreements are much longer and more detailed than other agreements. Agreements grow in scope and content depending upon the problems encountered and the desire of the parties to operate with detailed agreement provisions.
Changing issues
As we have mentioned, issues in collective bargaining in the United States have not remained static but have gone through an evolutionary process. Labor agreements have been greatly expanded, hostility has declined, and union-management relationships are more orderly. In 1937, the first agreement between the United States Steel Corporation and the Steel Workers Organizing Committee was three typed pages long. Today the basic agreement is some sixty printed pages long, with various lengthy supplementary agreements and many binding arbitration precedents. This expansion has been typical in the history of labor agreements.
The expansion of labor agreements has greatly limited management’s right to act unilaterally. Collective bargaining has created a system of constitutionalism or of industrial jurisprudence. Employees have the right of protest through grievances and through negotiation. Employers have been forced to develop industrial relations policies. Autocratic capitalism has been greatly modified by collective bargaining, including its indirect influence upon nonunionized employers, which has thereby contributed to the continued acceptance of private property and private enterprise.
Labor agreements in the United States are today quite fully developed in their noneconomic or administrative aspects. The frequency and extent of change in these provisions of the agreement have been greatly reduced. In the years since the Korean War, in the more competitive economic environment that has existed, conflict has related primarily to the endeavor of management to restore efficiency where costly practices were felt to exist, to the endeavor of unions to enhance job security, and to the amount of economic adjustment that was felt to be appropriate.
Unions in the United States have not, in principle, accepted the concept of wage restraint. Competitive unionism, with strong independent national unions negotiating with many employers on a decentralized basis, is not conducive to the acceptance of such restraint. Conflict, however, has been most prevalent in the more important pattern-setting negotiations, namely, the key negotiations with one or more large employers in the major industries.
Strikes continue to be, therefore, an integral aspect of collective bargaining even though they have declined in frequency during the postwar years. Strikes are also much less violent than in earlier periods. Employers rarely attempt to operate plants during strikes, picketing is largely sym bolic, and deep-seated employee hostility is rarely involved. But at the same time there appears to be less public tolerance of strikes. Union aspirations do not elicit the degree of public sympathy and support they formerly aroused. Although free collective bargaining cannot operate without the right to strike or to take a strike, and although strikes are their own best deterrent by forcing more responsible future behavior, the pressure of public opinion is encouraging a reduction of militancy.
A reduction of militancy would be greatly facilitated in the United States by a higher degree of union-management consensus on appropriate limits to economic adjustments. The range and the degree of economic conflict are much broader in the United States than, for example, in Sweden (Johnston 1962). Reducing economic conflict is a major question for the future of collective bargaining in the United States, although its importance can be exaggerated. Pressures in this direction may lead to greater centralization in the bargaining structure and to more active governmental intervention in major disputes.
Issues in Europe
The parties to collective bargaining in Europe have, at least in some countries, consciously practiced wage restraint; it is hazardous, however, to predict their future course. Perhaps it is reasonable to expect that a consciously developed and applied wage policy will continue to be an integral part of the growing role of economic planning emerging in European countries.
Issues in collective bargaining in Europe appear at present to relate to the stronger development of collective bargaining on a local plant and company basis. Although employees in European countries have had representation through works councils and similar arrangements, which are frequently established by law, collective bargaining as known in the United States has been weak or nonexistent at the local plant level. Systems of collective bargaining have been highly centralized as compared to those in the United States.
In a study of collective bargaining in four European countries (France, Italy, West Germany, and England), Arthur M. Ross (1962a; 1962b; 1962c) found considerable evidence of the increased importance of decentralized collective bargaining in three of them. (It is presently of little significance only in France.) A major question is the extent to which future collective bargaining in Europe may shift to a more decentralized structure and, as one consequence, place greater emphasis upon company-level issues, which have long been important in the United States. It would be naive to expect collective bargaining not to retain significant differences among countries. Abstracting from differences within Europe, it may well be true that collective bargaining in Europe is contending with problems arising from growing decentralization, while in the United States the issues may relate largely to growing centralization [seelabor unions, article onlabor movements and collective bargaining in europe].
Issues in collective bargaining cannot be stereo-typed. They cannot be dissociated from their varied political, economic, and social environments and from the dynamic changes in these environments. And the process of collective bargaining is evolutionary, resolving some issues but facing new issues under constantly changing conditions. Al-though it is easy to be critical of the results, particularly some of the apparent economic consequences, on balance collective bargaining appears to have contributed to social progress.
E. Robert Livernash
BIBLIOGRAPHY
Alexander, Robert J. 1962 Labor Relations in Argentina, Brazil, and Chile. New York: McGraw-Hill. DUNLOP, JOHN T. 1958 Industrial Relations Systems. New York: Holt.
Galenson, Walter 1961 Trade Union Democracy in Western Europe. Berkeley and Los Angeles: Univ. of California Press.
Harbison, Frederick H.; and Myers, Charles A. 1959 Management in the Industrial World: An International Analysis. New York: McGraw-Hill.
Johnston, T. L. 1962 Collective Bargaining in Sweden: A Study of the Labour Market and Its Institutions. Cambridge, Mass.: Harvard Univ. Press.
Ross, Arthur M. 1962a The New Industrial Relations in Britain. Labor Law Journal 13:492–501.
Ross, Arthur M. 1962b Prosperity and Labor Relations in Europe: The Case of West Germany. Quarterly Journal of Economics 76:331–359.
Ross, Arthur M. 1962c Prosperity and Labor Relations in Western Europe: Italy and France. Industrial and Labor Relations Review 16:63–85.
Slighter, Sumner H.; Healy, James J.; and Livernash, E. Robert 1960 The Impact of Collective Bargaining on Management. Washington: Brookings Institution.
II. STRIKES
Strikes—collective stoppages of work, intended to influence those who depend on the sale or use of the products of that work—are almost as old as work itself. They can take various forms and are only one of many restrictive weapons in the armory of labor conflict; others are black lists, union labels and boycotts, bans on piecework or on overtime, going slow or working to rule, and other practices, including sabotage.
Most of these methods, and strikes in particular, are obviously available only to workers who have some social cohesion or tradition of common action. They are, therefore, by no means the only expressions of unrest among industrial workers; other recognized symptoms are a high rate of labor turnover, of sickness or accidents, of absenteeism—or, again, of workplace pilfering, since this may be inspired by resentment, rather than need. Alternatively, workers may take refuge individually in escapist amusements or they may feel goaded to collective political activity. Strikes alone, therefore, are a poor measure of industrial discontent. A decline in their number or severity may merely mean that discontent is finding expression in other ways or possibly not at all; the form it takes at any given time is determined by a little-understood combination of economic, technological, institutional, and psychological factors.
However, strikes are not only among the most obvious and dramatic symptoms of industrial unrest, they are also the best documented of these symptoms. Strike statistics are not based on limited inquiries but on more or less complete counts, and since they usually started as a branch of crime statistics, are available for most industrial countries over many years. Wherever a protest against working conditions has overtones of a protest against the prevailing regime, strikes are still tainted with criminality. (Indeed, one of the reasons totalitarianism is deplored is that it views strikes as subversive.) Elsewhere, strikes have outlived their criminal origins and have, in degree, become institutionalized as one of the acknowledged sanctions of collective bargaining. Political action apart, strikes are probably the most effective of the methods of pressure available to workers, although under full employment the threat to strike has been held to be more effective still.
This is not to say that they generally succeed or that their success—indeed, any of their consequences—can often be assessed convincingly (Chamberlain & Schilling 1954). Almost every attempt to quantify the various aspects of strikes— not only their effects but also their causes and even their number or severity—is beset with problems that reflect the elusiveness of the strike phenomenon. Apart from a very few case histories, some press reports, and a good deal of partisan literature, official figures provide the main source of information. It therefore seems best to summarize the shortcomings of this last-named source.
Classifying and measuring strikes
In the first place, it has proved impossible, when recording strikes, to separate them from lockouts (the analogous weapon of employers). Few disputes, it is true, appear nowadays to take the form of lockouts; but the dichotomy is blurred because both strikes and lockouts may be anticipations of or responses to the threat of the other. Labor statisticians are therefore faced with the same sort of dilemma in distinguishing them as are jurists in deciding between aggressive and defensive actions in international politics.
Again, the classification of strikes according to their main cause is questionable and often subjective. Not only are most strikes (like other human actions) determined by many things, the relative importance of which may change as time goes on, but the apparent main issue may turn out to be almost irrelevant. The precipitating cause may seem so slight in relation to the feeling engendered that one is driven to the conclusion that, as in other conflicts, the choice of a casus belli is often comparatively arbitrary.
The effects of strikes are even harder to pinpoint. Any classification of even the immediate results of strikes is dubious, for since the range of possible demands and concessions is wide and bluffing is common, the concepts of victory, defeat, and compromise can be extremely hazy. In any case, the immediate results of a strike may be little guide to its long-term effects, and few people can afford to wait until the long term is up before making an assessment. The analysis of strikes by their results has therefore been generally abandoned.
Another doubtful distinction is the distinction between those directly and indirectly involved. Normally the category “indirectly involved” has had to be limited to workers employed at the establishment where the strike occurs, which limitation is itself unrealistic; but the distinction is shakier than this, since, in order to find out who really favored the strike, a psychologist would presumably need to interview each worker—and, as people’s views change, the numbers directly and indirectly involved would change from one day to the next. (For a discussion of this and other problems of enumeration and classification, see International Labor Office 1926; Peterson 1938.) Nor is it practicable to distinguish between “economic” and “political” strikes or even between official (union-supported) and unofficial strikes. All these concepts are clear enough as abstractions but break down if they are made the basis of classification.
Strike statistics
There are, moreover, difficulties in sheer counting. Figures of “working days lost” or “man-days idle” can hardly be accurate if, as often happens in big strikes, men drift back day by day. Such figures are bound to be incomplete in any case, because no trustworthy assessment can be made of the effects of a strike in other industries or even factories. On the other side, no appropriate allowance can be made for working days that would have been lost anyway, through unemployment, accidents, sickness, or absenteeism. Nor can these figures be adjusted to show the self-compensating effects by which the losses caused by even the biggest strikes may be made up by extra overtime, improved morale, or even—if, say, pieceworkers strike because their supplies of material are inadequate—by improved efficiency.
Difficulties are inherent in even the simplest strike data. It is hard to interpret a change in the number of strikes when a one-day stoppage of a handful of workers and a shutdown involving hundreds of thousands for weeks or months each counts as one strike. For this reason, any average of the size or length of strikes over a period may be misleading. Again, not only is one strike unlike another, but one man-day idle is also unlike another. A total of 600 man-days idle might relate to a strike of 600 men for one day, to a strike of 100 men for six days, or to six one-day strikes of 100 men apiece, and so on. These are not the same thing, even if they happen in the same factory, and they are still less similar if they happen in different factories or in different branches of industry or are subject to the innumerable other circumstantial differences of industrial life—let alone differences in the general economic, social, and political climate.
Industrial strike patterns
Some generalizations, however, are possible, de-spite the complexity of the problem and the limitations of the evidence. There are, for instance, clues to the relative propensity of different groups of workers to strike. We cannot assess the propensity of workers to strike rather than, say, to remain absent or change their jobs; only a few, limited studies have been made of the connection of absenteeism with labor turnover and with strikes in particular industries at particular times, and some have found a long-term alternation between industrial and political action in certain countries.
Nevertheless, we can contrast the striking of particular groups of workers with their own performance at other times, as well as with that of groups of workers in different industries, regions, or countries. Some similarities have been noted in the industrial strike patterns of many countries; for instance, coal miners and dock workers strike most. While interpretation must remain speculative, the following socioeconomic explanations have been suggested (Kerr & Siegel 1954). The workers most prone to strike have traditionally lived in isolation from other groups of workers, retaining their own codes of behavior, doing much the same kind of work (work of low status in the eyes of outsiders), and often suffering severe unemployment with little hope of finding new jobs in other industries. On the other hand, the more “peaceful” workers have lived more as individuals integrated into a complex society, in places where industry has been more diversified and jobs more interchangeable and where the effects of economic depression have, therefore, been less catastrophic. Since industrial strike patterns can transcend national frontiers in this way, it is not surprising that, within countries, industrial influences on striking should appear stronger than regional influences (Knowles 1952, chapter 4 ).
Fluctuations in strike activity
However, long-term industrial strike patterns have little relevance to the marked fluctuations in strike activity, which are a feature of the experience of all countries. If we ask in what specific situations workers are most likely to strike, we have to distinguish between the immediate causes of strikes, the conditioning causes, and them underlying causes; the causation of any given strike will involve all three.
Immediate causes. The evidence on the immediate causes of strikes is, as we have seen, intrinsically dubious. The prevalence of particular issues varies not only between industries and countries but also over time, and any apparent trend has to be interpreted with caution. Thus, a relative decline in, say, strikes on wage issues may reflect the successful development of procedures by which these issues can be negotiated or it may merely reflect a political situation in which wage strikes are less acceptable, in which case they may masquerade as strikes on other issues. Thus, a corresponding relative increase in strikes about questions of discipline or working arrangements may or may not indicate good prospects for fuller joint consultation, improved factory welfare, or a more sophisticated industrial psychology. The interpretation of the evidence on immediate causes is, therefore, mainly a matter of making sense of it in the light of what we already know about the situation; in itself, it provides little illumination.
Economic cycles. We are on slightly stronger ground in inquiring into the conditioning causes of strikes. The chief of these, probably, is the economic cycle of boom and depression: the prospects for workers of forcing concessions seem better, and the penalties of failure less, when profits and employment are rising. But our available basic data—number of strikes, of workers involved, and of man-days idle and the average size and length of strike that derive from these—each have a different significance in a given context, and the series tend to move differently.
Thus, it is fluctuations in the number or frequency of strikes that, as many studies have shown, exhibit the best correspondence with cyclical economic fluctuations. In the past this reaction has been clearest in Britain, Germany, and Canada, but there have been traces of it in several other countries (Forchheimer 1948–1949). Despite the shortcomings mentioned, the number of strikes does give some indication of the number of separate points of friction, and it is not surprising that this series should be more responsive to economic events than the others. The numbers of man-days idle and of workers involved and the other indicators of duration and severity are more likely to be affected by noneconomic imponderables, such as the character of trade union leadership and policy. The limits of economic determinism in explaining strike movements must always have been fairly narrow; moreover, these movements are less spontaneous than they were, owing to institutional developments such as the growth in the power of unions to control strikes, the development of negotiating machinery and dispute procedures, and the advance of labor law in general. Nor are economic fluctuations themselves as violent or compulsive as they were before 1939.
Other conditioning causes. There is evidence that other conditioning causes—the seasonal working of some industries, the emergencies of war, the timing of vacations, the spread of trade union membership, and perhaps even the weather (although any effect of the latter is probably largely secondary, since the weather affects seasonal economic activity in the first place)—have had perceptible impacts on strikes. Moreover, strikes themselves can be infectious; at any rate, correspondences have been found between strikes in one industry and strikes in others. But one cannot isolate the effect of “infection” on particular industries from that of the trade cycle on all of them; that is, it is difficult to determine how far a correspondence between the strikes of, say, coal miners and metal workers is due to “strike fever” and how far the upswing of the trade cycle encourages each group of workers independently. The same sort of ambiguity obscures the association of strikes with the degree of trade union membership, for membership has also tended to fluctuate with the trade cycle. But even where a large proportion of strikes is unsupported by unions, the degree of union membership seems likely to affect striking, if only because the organized are better equipped to strike than the unorganized. The independent influence of political agitators on striking generally is hard to assess; a few noteworthy strikes apart, there are grounds for believing it to have been small in most countries at most times.
Underlying causes. Several studies of industrial relations have stressed the underlying causes of strikes, even though these usually have to be inferred because they seldom become explicit (see especially Great Britain 1917; Kornhauser et al. 1954, part 2; Griffin 1939, chapters 3 and 4). Bad living conditions, which are slow to change; the decline of craftsmanship; the growing size and impersonality of firms; new forms of industrial fatigue, due to the grueling monotony of repetitious work; the isolation of the trade union rank and file from their increasingly specialized officials; the remoteness and delay of centralized collective bargaining; the collaboration of union leaders with employers and government—all these may, it is suggested, promote unrest, quite apart from the evident conflicts of interest which some labor ideologies assume to be unresolvable. All these things emphasize the worker’s inferiority: his comparative propertylessness, his difficulty in changing his job, his ignorance of the value of his labor, his liability to dismissal, and his impotence to control the stresses of his work. The implication is that even improved social welfare may be inadequate to compensate for the worker’s growing social anonymity.
In this light, it is perhaps suggestive that, for instance, wage strikes—probably still the most common form of strike the world over—seldom indicate poverty below subsistence level, if only because the worst-paid workers usually lack the organization, resources, and energy for such a protest. Despite trade union argumentation, it seems doubtful whether real-wage considerations have played much part in strikes; at any rate, money-wage cuts have probably been resisted more vigorously, even when real wages were rising, than money-wage advances have been demanded to keep pace with a fall in real wages. Strikes for wages scaled to “what the trade can bear” or to the wages of other workers suggest a desire for social justice that reflects the worker’s sense of inferiority rather than his poverty; and industrial psychology has asserted that inferiority compensation finds its classic expression in striking (Viteles 1953, p. 68). An important and related aspect of strikes is that they represent a complete break with the restrictions of everyday routine. Thus, American strikers have called themselves “vacationists,” and Belgian miners have referred to striking as “pit holidaying” in Britain “playing” was a traditional euphemism for striking, and the Spanish word for strike also means leisure, recreation, or merrymaking. There are significant analogies in other languages.
It is true that generalizations about strikers’ feelings of frustration and inferiority, the symbolic aspect of their demands on occasion, their unconscious susceptibility to economic and political pressures, and so on, do not carry us far beyond the obvious. Those who stress the apparent irrationality of strikers tend to be skeptical of any attempt to analyze causes of strikes; although human behavior is seldom wholly rational, this does not preclude rationality in interpretation. What is needed is a far greater number of case studies than anyone has yet thought it worthwhile to undertake.
Strike-restricting legislation
It is often asked whether more could not be done to avoid, prevent, or suppress strikes by means of legislation; and there is no doubt that legal provisions in this field need regular overhaul, since out-of-date statutes can make for hard cases in the courts and may serve to bring the law into contempt. As has been said, striking used to be considered a form of crime, but strikes have gradually been legitimized in democratic countries by enactments conferring the freedom to strike. However, this freedom is hedged, and the weight of legal restriction, as well as its direction, varies a good deal in different countries (see Colloquium on Labour Relations and the Law 1965 for an international survey of the legal position regarding strikes). In some cases it is the means employed in strikes that are restricted; in some it is the ends sought; and in some it is both. Direct political strikes apart, any strikes likely to result in a serious interruption of vital services or in danger to life, valuable property, or public order are generally proscribed. But beyond this there is little international agreement on permissible methods or objectives. The emphasis of antistrike legislation relates sometimes to the infringement of established principles implied in such terms as “fair labor practices” or “social adequacy,” sometimes to specific offenses, such as the breach of contracts of employment or the contravention of legally enforceable collective agreements, and sometimes to activities associated with strikes, for example, picketing and such incidental abuses as intimidation and violence. In other cases procedural delays may be interposed or ballots insisted on, with penalties for nonobservance. On paper the United States approach appears the most legalistic and the British the least so.
Practical difficulties
However, the law can mean very much more (or very much less) than the paper it is written on, and what it means in practice is apt to vary with circumstances. In general, the greater reluctance to enforce legislation against strikers than against other lawbreakers is due to the obvious practical difficulty of imposing penalties on large bodies of men without causing greater dislocation than do the strikes themselves; the alternative of punishing the leaders or instigators alone may incur the same risk, by turning them into martyrs. For this reason, antistrike legislation has often appeared to be designed as a deterrent to striking rather than as a punitive response to strikes; a punitive expedition can be a costly confession of failure.
The lesson of wartime experience, as well as of experience since 1945, would seem to be that the viability of strike-restricting legislation depends upon the provision and willing acceptance of legally supported “alternatives” to striking, such as conciliation or arbitration. The comparative absence of legal restrictions in Britain has reflected the “maximum abstention” of the law in industrial relations generally, although a cause celebre, Rookes v.Barnard (1964, A.C. 1129), reopened in 1964 the question of further limiting the freedom to strike.
Collective bargaining in democracies
While strikes have, in effect, been domesticated to an important extent, and while the need to maintain the freedom of workers to protest by striking is widely acknowledged, strikes as a means of keeping up pressure are less acceptable than they were. Many European countries, at any rate, are living on narrower margins than they were before the two world wars, and their industries are therefore in some ways more interdependent. Hence, the potential dislocation of strikes has become of greater public concern: big strikes, and even small strikes of key workers, are more apt to have political repercussions, and the state therefore has an increasing interest in preserving or restoring industrial peace.
The question is, in fact, wider than this; for as the state increasingly concerns itself with economic matters—import and export policies, the determination of industrial priorities, and the like —it has a growing stake in the results of collective bargaining in general. Strikes apart, collective bargaining may result in settlements that infringe upon a government’s view of what is economically permissible; and several Western governments have felt constrained to try to implement a wages or incomes policy that involves interference with or even direct participation in industrial negotiation.
In some countries—notably in Germany, Scandinavia, and Holland—the whole system of collective bargaining had, in any case, to be recast after the disruption of World War II, and it was therefore possible to provide for the state’s concern with industrial bargains by making the appropriate institutional changes and thereby, incidentally, to create an atmosphere in which strikes were less acceptable and, in consequence, legal restriction less irksome. In those countries, however, where the wartime constraints were eventually removed and the earlier practices restored, the problem of accommodating the national interest has proved more difficult.
In any event, the problems posed by strikes are subordinate to the wider problems posed by the continuance, unmodified, of “free collective bargaining.” Strikes are, after all, a recognized sanction in the process of collective bargaining, and although they can undoubtedly embarrass the government on occasion, it does not seem practicable or desirable to try to legislate them away, so long as other bargaining practices remain unaffected. In democratic societies plain repression could bring worse evils than strikes as we know them— for instance, political instability or chronic industrial apathy.
Impact of strikes
The economic effect of strikes in practice, severe as this might be in theory, should not be exaggerated even now. If “working days lost” is taken as a crude indicator of lost output (although this is like estimating air raid damage by reference to the bomb tonnage dropped, irrespective of target, accuracy of bombing, or type of bomb), the reduction of such loss in most countries during the present century is marked. The loss of working days through strikes is usually very small when considered in relation to the size of the labor force concerned. Thus, for the ten years 1954–1963, the annual averages per worker of working days lost through strikes in mining, manufacturing, construction, and transport were as follows: United States, 1.05; Italy, .82; India, .70; Canada, .61; Belgium, .50; Japan, .41; Australia, .39; France, .33; United Kingdom, .30; Norway, .29; West Germany, .07; Netherlands, .05; Sweden, .01 (International Labour Organisation 1964). Only in the United States was the loss as great as one day per worker per year; in most cases it was no more than a few hours, and it may be significant that Sweden, Holland, and Germany (where there has been change and development in collective bargaining) were among those with the lowest averages.
At all times other causes of “loss,” such as unemployment, inefficiency at all levels, sickness, and absenteeism, would, on a similar reckoning, be far more telling. Of course, the unpredictable shock effect of strikes may, as is no doubt intended, be felt more severely than the “running-sore” type of loss, and some abnormally big strikes have perceptibly jolted whole economies before now. But in the past the economic effects (if not the social and political effects) of even the biggest strikes have been fairly short lived: stocks were high, and the time “lost” was in effect taken out of the time during which workers would have been idle in any case rather than out of production time. However, economic conditions have changed, and it would be frivolous to dismiss the effects that strikes might have under the conditions of fuller employment and lower stocks that have prevailed in European countries since World War II. It cannot be too much emphasized that the economic climate in which strikes occur provides the most significant weighting of any figures of time or output loss.
Changing patterns of bargaining
To sum up, strikes are a complex phenomenon whose character, causes, and effects are difficult to assess and whose incidence is hard to predict or control. They are no more than the visible tip of the iceberg of industrial unrest. Historically, they have been undertaken primarily as a means of bringing pressure to bear on an employer to redress particular grievances, although the impulse to strike springs from deeper roots. In practice, they are a challenge not only to the employer’s authority but sometimes also to that of a trade union leadership and increasingly, as the public has come to be more immediately involved in economic matters, to that of the state itself. In most industrial countries it has been possible to reduce the scale and duration of strikes in general, although big strikes still occur. Some groups of workers are traditionally prone to strike more than others; and strikes appear to have been more sensitive to economic fluctuations than to direct pressure, although institutional changes have undoubtedly contributed to reducing their severity. In democratic countries there are evident practical limits to the adoption of purely preventative or punitive measures, and freedom to strike is part of the accepted tradition of collective bargaining.
A modification of this tradition—in the direction, for instance, of tripartite bargaining, with the provision of alternative sanctions—might well, as the experience of some countries already suggests, be reflected in a further diminution of strikes. Apart from this, any widespread improvement in managerial techniques should have its effect, as also should certain wider social policies, such as the diversification of single-industry areas. It is nevertheless unlikely that strikes will be wholly obviated. Socially, they are still a kind of safety valve: they still have the function—in some ways an increasingly important function—of calling immediate attention to weaknesses in the working of the ever more complex machinery by which industry is regulated. If on balance they are an evil, they may still be one of the better of many possible evils.
K. G. J. C. Knowles
[See alsoIndustrial relations; Labor unions; Workers.]
BIBLIOGRAPHY
Chamberlain, Neil W.; and Schilling, Jane M. 1954 The Impact of Strikes: Their Social and Economic Costs. New York: Harper. → One of the more ambitious attempts to estimate the effects of strikes.
Colloquium on Labour Relations and the Law, Lodon, 1962 1965 Labour Relations and the Law: A Comparative Study. Edited and with an introduction by Otto Kahn-Freund. London: Stevens.
Forchheimer, K. 1948–1949 Some International Aspects of the Strike Movement. Oxford, University of, Institute of Statistics, Bulletin 10:9–24, 294–304; 11: 279–286.
Galenson, Walter (editor) 1952 Comparative Labor Movements. Englewood Cliffs, N.J.: Prentice-Hall.
Great Britain, Commission of Enquiry Into Industrial Unrest 1917 Report of the Commissioners for Wales, Including Monmouthshire. Papers by Command, Cd. 8668. London: H.M. Stationery Office.
Griffin, John I. 1939 Strikes: A Study in Quantitative Economics. New York: Columbia Univ. Press.
International Labor Office 1926 Report on Methods of Compiling Statistics of Industrial Disputes. Studies and Reports Series N: Statistics, No. 10. Geneva: The Office.
International Labour Organisation 1964 International Comparison of Days Lost Through Industrial Disputes. Great Britain, Ministry of Labour, Gazette 72:419 only.
Kerr, Clark; and Siegel, Abraham 1954 The Interindustry Propensity to Strike—An International Comparison. Pages 189–212 in Arthur W. Kornhauser, Robert Dubin, and Arthur M. Ross (editors), Industrial Conflict. New York: McGraw-Hill.
Knowles, K. G. J. C. 1952 Strikes: A Study in Industrial Conflict, With Special Reference to British Experience Between 1911 and 1947. Oxford, University of, Institute of Statistics, Monograph No. 3. Oxford: Blackwell; New York: Philosophical Library. → See especially pages 143–239 on “Conditions and Causes of Strike Activity.”
Kornhauser, Arthur W.; Dubin, Robert; and Ross, Arthur M. (editors) 1954 Industrial Conflict. New York: McGraw-Hill.
Peterson, Florence 1938 Strikes in the United States: 1880–1936. U.S. Bureau of Labor Statistics, Bulletin No. 651. Washington: Government Printing Office. → Discusses problems of enumeration and classification.
Ross, Arthur M.; and Hartman, Paul T. 1960 Changing Patterns of Industrial Conflict. New York: Wiley.
Tissembaum, Mariano R. et al. (editors) 1951 La huelga. 3 vols. Santa Fe (Argentina): Universidad Nacional del Literal, Facultad de Ciencias Juridicas y Sociales.
Viteles, Morris S. 1953 Motivation and Morale in Industry. New York: Norton.
III. SETTLEMENT OF INDUSTRIAL DISPUTES
All industrial disputes are eventually settled, either with or without recourse to strikes, lockouts, boycotts, and other forms of economic pressure. Generally it is in the interest of employers and workers to avoid or limit the loss of profits and wages resulting from industrial conflict. Likewise, it is in the interest of society as a whole to minimize the number of work stoppages and the duration of those which do occur. Consequently, more or less elaborate techniques of dispute settlement have been developed in every country where collective bargaining is practiced.
The nature of dispute-settling mechanisms varies with the historical background and political philosophy of the country, with the type of dispute, and with the magnitude of economic loss which is threatened or suffered.
In the mature industrial societies of North America and western Europe, freedom of economic action, including the right to strike, has always been valued highly. Public intervention in labor-management disputes is therefore relatively limited. There is a clear trend toward more frequent governmental involvement, however, motivated not only by the desire to avoid the direct economic loss resulting from work stoppages but also by increased concern over the terms of settlement and their potentially inflationary consequences. The tradition of free collective bargaining has always been weaker in South America and the Asian countries. As a result, there is more continuous and systematic surveillance over industrial disputes on the part of those governments. The new countries of Africa, which are undertaking to promote economic development under forced draft, have generally held a tight rein on labor-management relations in order to prevent interference with planning goals. In communist countries, the workers and the employing enterprises do not have freedom of action against each other, although individual and group grievances within a limited range are recognized.
A typology of industrial disputes relevant to the techniques of settlement is more easily formulated for mature industrial countries than for those in the early stages of development. Disputes are not always clearly confined and demarcated in the latter countries. Political and economic motives may be interwoven, as in the case of strikes against foreign enterprises during periods of anticolonial agitation. Controversies may spill over from one trade or industry to another without regard for organizational lines, as in the case of the shorter-hours movement in the United States during the nineteenth century. In mature industrial societies, however, disputes generally involve specifically defined issues between specific organizations of employers and workers. As the level of development rises, disputes become less emotional and ideological, and hence more businesslike and realistic.
There are three principal types of disputes in mature economies. First are problems of institutional status: attempts to organize in the face of employer hostility, demands for recognition and collective bargaining rights, and jurisdictional conflict between competing labor unions. Second are matters involving substantive terms of employment —usually set forth in collective agreements—such as wages, hours, paid holidays and vacations, protection against discharge and layoff, etc. Third are questions involving the obligations and entitlements of the parties under existing collective agreements. Practice in the United States illustrates how these types of disputes are often subject to different methods of settlement. Problems of institutional status are under the jurisdiction of the National Labor Relations Board; disputes over substantive terms of employment are referred to government mediators; and grievances over alleged violations of collective agreements generally go to private arbitration if the parties cannot resolve them through direct negotiation.
Finally, disputes of critical importance—those threatening to create a national emergency, those involving key sectors of the economy—are often handled differently from routine controversies. Extraordinary procedures may include investigation by a fact-finding board, referral to special commissions and mediation bodies, and legislative handling by the national parliament.
Settlement techniques
The principal techniques of dispute settlement include mediation, arbitration, investigation, and adjudication. These will be discussed in turn.
Mediation
Mediation is a diplomatic procedure which endeavors to settle a controversy by assisting the parties to reach a voluntary agreement. The ultimate decision is made by the parties themselves.
The mediator (sometimes called a conciliator) is generally a government official with prior experience in labor—management relations. Depending on the particular situation confronting him, he will draw from a battery of diplomatic techniques. He will furnish information to the parties that assists them in evaluating the probable consequences of alternative decisions; he will serve as a channel of communication when direct communication is unfeasible; he will offer a recommendation if he believes there is sufficient likelihood of its acceptance.
The mediator’s basic task is to find a solution acceptable to both parties rather than to determine the rights and wrongs of the problem. His recommendations are therefore based on his expectations of what arrangements will stabilize relations between the parties for the period immediately ahead. The parties may accept his recommendation, use it as the basis for some other settlement, or reject it altogether. Thus, mediation may not result in an adjustment of conflicting interests. On the other hand, parties often submit to mediation where they would be unwilling to empower an outsider to make a binding decision. Furthermore, since the final decision is left to the parties themselves, they cannot complain that their bargaining freedom has been impaired or that they have been forced into a settlement that is unacceptable to them.
To minimize the risk of complete failure, the laws of some countries empower the government to initiate arbitration or other mandatory proceedings if mediation breaks down, especially in the case of disputes substantially affecting the public interest. Traditionally, mediation has been a voluntary process initiated at the request, or at least with the consent, of the parties. In some countries, however, recent legislation requires that the parties submit to mediation proceedings before they can resort to a test of economic strength. If mediation fails, the next step may be compulsory investigation or compulsory arbitration; or the parties may be left to their own devices.
Arbitration
Arbitration is a judicial process under which one or more outsiders render a binding decision based on the merits of the dispute. Arbitration is generally distinguished from adjudication by labor courts or administrative tribunals, but the same type of dispute referrable to arbitration in one country may be sent to a labor court in another.
Voluntary arbitration is initiated by consent of the parties but leads to a final and binding decision. The prevailing view holds that an agreement to arbitrate implies a willingness to abide by the award, even though this is not expressly stated.
Voluntary arbitration is suited to any type of dispute, including those involving basic terms of employment, interpretation of existing agreements, and interunion controversies. The greatest use of voluntary arbitration in the United States is in handling grievances alleging the violation of collective agreements. Arbitration is seldom employed for this purpose in other countries but is often used to establish basic terms of employment when direct agreement between the parties cannot be secured.
Compulsory arbitration rests on the force of law rather than on advance acceptance by contract. Certain clauses of labor disputes, or all unresolved controversies, are referred to an arbitration board. Where compulsory arbitration applies, the parties are forbidden from resorting to strikes or lockouts. In some countries, compulsory arbitration in peace-time is quite exceptional. For example, the only recourse to this technique in the United States during recent years was the congressional enactment of 1963 requiring that the long-standing dispute over working rules in the railroad industry be submitted to a three-man board appointed by the presi-dent. At the other extreme, compulsory arbitration is routine under the statutes of Australia and New Zealand; and as already noted, South American and African countries make widespread use of this technique.
Compulsory arbitration laws commonly apply to controversies that threaten to interfere with economic and social stability or with the provision of vital community services, such as transportation, education, and medical care. It is difficult, however, to define precisely all the areas in which work stoppages would jeopardize the public interest. Under these circumstances the statutory definition of disputes that must be submitted to compulsory settlement is so vague and elastic in many countries that the government can prevent the exercise of the freedom to strike whenever it wishes. On the other hand, work stoppages have continued to occur in countries with compulsory settlement systems, even in the economic sectors covered by the legislation, because of either reluctance or inability to enforce the antistrike provisions. The duration of these stoppages is typically rather short, however.
Investigation
Investigation, or “fact-finding,” is a kind of halfway house between mediation and arbitration. The controversy is referred to a group of distinguished and impartial persons which inquires into the merits of the issues and makes recommendations for settlement. While the recommendations are not binding on the parties, they are intended to serve as the focus of public opinion and of pressure from government authorities, and thereby to pave the way to an agreement.
Compulsory investigation-statutes generally cover disputes in essential industries or otherwise affecting the public interest. In some countries a standing tribunal is used, while in others a different board is appointed for each case. It might be noted that for the type of dispute typically covered by these statutes, the term “fact-finding” is something of a misnomer. There are all too many facts in the situation—a welter of conflicting statistics on comparative wage rates, price trends, profit levels, productivity movements, etc. The task of the expert board is to select those facts which it considers most pertinent and call them compellingly to the attention of the public.
Investigation is generally used for the purpose of preventing damaging strikes, but in recent years expert groups have been established in the United Kingdom to advise whether important bargaining agreements will have an inflationary impact. While investigation is generally reserved for the most important cases, it is employed routinely in some countries, such as Canada and India.
Adjudication
Adjudication means a mandatory settlement of industrial disputes by courts of justice or administrative tribunals with specialized jurisdiction in the labor-management field. Adjudication is used either for ascertaining the legal rights of the parties under regulatory statutes or for interpreting and applying the terms of collective agreements. The former is exemplified by the National Labor Relations Board in the United States, which makes rulings regarding alleged un-fair practices under the Labor-Management Relations Act, and the latter by the “labor courts” which serve as an important element of dispute-settlement machinery in most of the European and Latin American countries.
The line between adjudication and arbitration is not always clear, especially in countries like Australia and New Zealand, where basic terms of employment are set by “courts of arbitration” using formal, legalistic procedures. The difference is that the “labor courts” are interpreting and applying a pre-existing text, such as a collective bargaining agreement or a statute governing minimum wages, while the courts of arbitration are establishing employment conditions to apply in the future and thus in effect are performing a legislative function. But when the same courts of arbitration are called upon to interpret their previous awards, or to settle disputes over the application of collective agreements which have been directly negotiated by the parties, then their functions are indistinguishable from those of a European or Latin American labor court.
Selected country and regional practices
The foregoing description of dispute-settling mechanisms is necessarily analytical. A review of the practices in a few countries and regions will show how the different techniques are combined into a more or less coherent system reflecting the influence of prevalent ideology, political structure, and industrial experience.
United States
In the United States, the principle of unfettered collective bargaining, including recourse to economic pressure, remains strong. The basic ground rules of allowable conduct are set forth in the Labor-Management Relations Act and are enforced by the National Labor Relations Board. But except for protecting unions and employers against unfair practices by the other side, the government leaves them substantial freedom of decision.
For most disputes over agreement provisions, government intervention is limited to the provision of mediation services. These are supplied by approximately three hundred mediators on the staff of the Federal Mediation and Conciliation Service; by numerous state mediation agencies, which tend to handle smaller and more localized situations; and by the National Mediation Board, which has jurisdiction in the railroad and airline industries.
To resolve disputes over the interpretation of collective agreements, the United States has a unique system of private arbitration. About 95 per cent of the agreements provide that grievances which cannot be settled by direct negotiations will be submitted to arbitrators. The binding effect of their decisions is enforced by law because of the previous consent of the parties to be bound. Most arbitrators are practicing attorneys or university professors, although a few dozen are engaged in full-time arbitration practice. Only in the railroad industry does the government supply arbitration services through the National Railroad Adjustment Board.
A limited group of emergency disputes are subject to compulsory investigation before economic pressure may be exercised. Under the Labor-Management Relations Act, a threatened or existing work stoppage which will “imperil the national health or safety” may be enjoined for 80 days. A board of inquiry is appointed by the president and makes a report at the beginning and at the end of the period. The board of inquiry is not permitted to make recommendations, however. This procedure was used in 24 cases between 1947 and 1966. The special procedure for the railroad and airline industries is similar, except that emergency boards do make recommendations for settlement. Finally, a number of state laws provide for compulsory investigation of disputes affecting essential services, such as hospitals and public utilities.
Canada
In Canada, dispute-settlement practices resemble those in the United States up to a point. Controversies over bargaining rights are dealt with by the Canadian Labour Relations Board. Collective agreements contain arbitration clauses providing for final arbitration of disputes over their interpretation or application; in fact, federal legislation so requires.
The Industrial Relations and Disputes Investigation Act of 1948, however, provides for much more pervasive intervention than is practiced in the United States. Strikes and lockouts are prohibited until the parties have exhausted the possibilities of mediation and have additionally submitted their case to a special “board of conciliation” appointed by federal authorities. The board of conciliation is actually an investigating body which makes a report and recommendations to the minister of labor. The parties are not permitted to begin a work stoppage until they have considered the report for seven days. This procedure, it should be noted, applies not only to emergency cases but also to the generality of labor disputes. It is widely believed by students of industrial relations that there is excessive government intervention in Canada and that labor and management should be encouraged to discharge their own responsibilities, and take their own risks, in the great majority of cases.
Sweden
Dispute-settlement procedures in Sweden represent the greatest reliance on private decision-making processes, and the least involvement of the government, to be found in any major country Bargaining rights are protected, and the range of allowable activities is defined, not by statute, but by arrangements between the central union and employer federations which date back to 1906.
Conflicts over the terms of collective agreements are unregulated by law, except that mediators may enter into bargaining situations on their own initiative. There is no legislation concerning arbitration and investigation of major disputes, and in fact there have been virtually no work stoppages of any substantial size during recent decades.
Sweden does have a labor court, which has jurisdiction to interpret collective agreements and to rule on alleged violations. Recourse to the labor court has never been very great, and the number of cases declined from 103 in 1945 to 39 in 1960.
Latin America
In terms of the degree of state intervention, Latin American countries are at the opposite end of the spectrum from the United States and Sweden. Labor organizations have been oriented principally toward political activity. The tradition of authoritarian management and the persistence of bitterness between social classes have also inhibited the development of stable bargaining relations. In fact, some conditions of work regulated by bargaining agreements in the United States and western Europe (such as paid vacations, holiday pay, and discharge and layoff of workers) are commonly the subject of legislation in Latin America.
In most Latin American countries, strikes and lockouts are prohibited until compulsory mediation procedures have been exhausted. In several countries—including Argentina, Brazil, Ecuador, and Peru—disputes are generally submitted to compulsory arbitration if mediation efforts are unsuccessful.
The resolution of disputes over the application of collective agreements is entrusted to labor courts throughout most of Latin America. In some coun-tries, employers and unions are prohibited from entering into agreements restricting the jurisdiction of the labor courts. In a minority of countries, however, industrial relations have attained a sufficient degree of maturity that the employers and unions have developed their own grievance procedures with the consent and encouragement of government.
Africa
Dispute-settlement procedures in the newly independent nations of Africa reflect a number of influences. One is the residue of institutions and practices established during the colonial period. This factor explains some of the differences between English-speaking and Frenchspeaking coun-tries. The British colonial governments endeavored to promote collective bargaining and voluntary mediation, while those of France emphasized more elaborate legal codes and compulsory mediation and arbitration. A second influence is the weakness of the unions and their dependence on the public authorities. Finally, African governments generally believe that the resource base for economic development is so slim that they cannot afford to permit prolonged and costly work stoppages. Under these circumstances, labor-management relations are subject to stringent regulation in most of the African countries.
Arthur M. Ross
BIBLIOGRAPHY
Braun, Kurt 1955 Labor Disputes and Their Settlement. Baltimore: Johns Hopkins Press.
Industrial Relations Research Association 1955 Emergency Disputes and National Policy. Edited by Irving Bernstein, Harold R. Enarson, and R. W. Fleming. New York: Harper.
International Labour Organisation 1964 Industrial Relations in Certain African Countries. Geneva: The Organisation.
Kornhauser, Arthur; Dubin, Robert; and Ross, Arthur M. (editors) 1954 Industrial Conflict. New York: McGraw-Hill.
Ross, Arthur M.; and Hartman, Paul T. 1960 Changing Patterns of Industrial Conflict. New York: Wiley.
Sturmthal, Adolf F. (editor) 1957 Contemporary Collective Bargaining in Seven Countries. Ithaca, N.Y.: Cornell Univ., Institute of International Industrial and Labor Relations.
IV. DEVELOPING COUNTRIES
One characteristic of newly developing regions is the wide diversity of forms of economic organization. Associated with these variations are many different ways of utilizing labor. Typically, labor is self-employed in family enterprises. But there are also various forms of work for others, ranging from primitive forms of group cooperation, through traditional forms of dependency, to wage relation-ships. Wage labor can be found in traditional agriculture, in handicraft and small workshop activi-ties, and in modern enterprises. These comments are intended to suggest that it is not easy to dis-entangle all the elements of what might properly be encompassed within the context of labor relations in developing countries.
In order to avoid an overly extended discussion, the present analysis is restricted to labor relations problems in the typically small modern sectors of the economies of the developing countries where enterprise is relatively large and where a substantial number of workers are employed by individual employers. Even with this limitation, the issue is complicated by social, cultural, geographic, and economic variations which distinguish one society from another. Discussion is further complicated by the rapidity of changes in the developing countries and the constant need to experiment with adjustments to the issues arising out of the novel relations between employers, employees, and the state. Enormous diversity and continuous change impose on this brief statement a high degree of abstraction and generalization.
However its productive activities are organized, a traditional society provides few, if any, of the characteristics on which modern types of enterprise depend. The transition to a developing economy with increasing numbers of large business units requires fundamental changes in the existing systems of work relationship. Labor must be recruited; it must be trained to new skills; it must develop responsiveness to new forms of work regulation and to more rigorous standards of performance. Furthermore, it must adjust to a much more structured and bureaucratized system, which is substantially more impersonal than was ever encountered in the traditional order. Typically, these adjustments have to be made in a relatively novel urban environment. Even in socialist economies the relationships are mediated through monetary-market institutions.
Detailed empirical research on this process has tended to be very limited until recently, and even now it is inadequate. Lacking solid evidence, observers tend to assume that because the differences between traditional and modern forms of work were quite great the process of transition from one to the other would be extremely difficult. A not untypical description assumes that labor moves into the modern sector reluctantly, that it is forced into large enterprises by economic and social disabilities in the traditional environment. It is argued that workers tend to retain emotional and social attachments to the traditional sector and view their employment in the modern enterprise as purely temporary. The initial stage of labor relations is seen, therefore, as possessed of specific difficulties because of the still unsevered links with the countryside. This interpretation goes on to suggest that once modernization proceeds to the point that a sizable permanent proletariat appears in the modern sector, labor relations will increasingly assume the typical characteristics which exist in already industrialized countries. Much discussion of employer-employee and employer-trade union relations in newly developing countries tends to evaluate developments according to the extent to which they do or do not move in the direction of already established forms, forms typically Anglo-Saxon in character. There is, in other words, a tendency to assume a unilinear theory of labor relations development not unlike that suggested in Marx’s comment in the preface to Capital that the “country that is more developed industrially only shows, to the less developed, the image of its own future.”
In recent years evidence has been accumulating which suggests that the actual task of creating a disciplined labor force capable of providing for the needs of modern enterprise is not as difficult as the statement of the logical requirements would imply. Difficulties which do arise seem to flow more from the lack of complementary institutions in the society, from the character and pace of development, and from the wage and employment policies of employers rather than from the tradition-bound psychology or social structure of the work force. At the same time, current research suggests that the emerging pattern of labor relations is not likely to follow the example of already developed regions. The industrial relations systems of newly developing countries are being shaped by their contemporary economic and political circumstances more than by the experience and influence of developed countries.
Labor supply
It is frequently suggested that modern economic development is retarded by the difficulty of obtaining labor from the traditional sector. Unfortunately, much of the discussion fails to distinguish between the supply of raw, inexperienced labor and the supply of skilled workers. Unquestionably, a society developing new occupations is bound to be short of skills which have never before existed. Lacking adequate or appropriate educational facilities, a newly developing economy will inevitably find it hard to get a satisfactory supply of highly skilled labor. Wages for such labor tend to be high either because labor must be brought in from developed countries or because the competition for the limited supply of indigenous talent is great. This is a major reason why industry in newly developing regions tends to organize activity in such a way as to minimize skill requirements.
On the other hand, there is little evidence that the expansion of modern economic activity has been retarded by the difficulty of recuiting raw labor. In many traditional societies—for example, Japan, China, and India—where economic life was sophisticated and trade and urban life fairly highly developed, a crude but reasonably effective labor market already existed, and thus it was possible from the beginning to generate a labor supply for the new enterprises. In parts of Africa, where even rudimentary market institutions did not exist, the indigenous population had first to be forced into the market via the imposition of taxes which had to be paid in cash. Once this commitment to the commercial sector had been established, the supply of raw labor ceased being a problem. Most evidence we now have suggests that labor supply responds fairly flexibly to monetary incentives in the market place when there are consumer goods on which money wages can be spent. Employer complaints, when carefully examined, typically refer to shortages of skilled labor or to the failure to obtain workers at wage rates lower than the going market rate.
Instability of the labor force
Many observers, recognizing that a raw labor force is easily available to new enterprises, still believe that absenteeism and labor turnover in newly developing regions are quite high relative to the situation in developed countries. They suggest that this indicates that the work force is only partially committed to employment in the modern sector. This is an issue for which little unambiguous evidence is available. Absenteeism and turnover data are notoriously imprecise in newly developing regions and tend to exaggerate the phenomena. Impoverished backgrounds, low wages, and the generally inadequate health and housing standards are likely to produce a very high rate of labor instability from medical causes alone. But even when allowance has been made for illness, relatively high absenteeism and turnover rates may still exist. Where economic growth is rapid and new enterprises are multiplying, high turnover rates may only reflect the demand for experienced workers. Apart from this, recent research suggests that high labor turnover is not so much the expression of the worker’s de-sire to return to a traditional way of life or his inability to adjust to modern employment requirements as it is a consequence of the way in which modern enterprises frequently function.
In newly developing regions the demand for the product of many enterprises tends to be quite unstable. Employers, using a very high proportion of unskilled labor, are not concerned with establishing a fixed, identifiable group of workers. Their only interest is that there be available to them an easily accessible pool of workers which can be drawn upon as need dictates. In other words, much of the labor requirement is quite casual. Under such circumstances the individual worker may be forced to sustain a link with the traditional sector wherever he can. Faced with only casual employment in the modern sector, he cannot afford to sever completely his connection with the limited bits of economic and social security he still possesses. It is this which produces the impression that labor has only a tenuous link with large enterprise.
This view is supported by correlations between industries in which employment tends to be unstable or casual and high rates of turnover and absenteeism. For example, in Indian enterprises where activity is reasonably constant and employment fluctuations limited—railways, the steel industry, and many commercial firms—absenteeism and turnover tend to be lower than in industries, such as coal mining and cotton textiles, where demand for labor has fluctuated sharply. In fact, government action which stabilized labor requirements in the Bombay cotton mills after 1947 seems to have been accompanied by marked falls in both turnover and absenteeism. However, even where employment is relatively stable, it may still be impractical for workers to sever their ties with the countryside because the typically desperate shortage of urban housing makes it difficult, if not impossible, for families to accompany them.
Where labor supply is easy and new recruits come into an environment about which they have few, if any, preconceptions, the employer is largely free, subject only to existing legal restraints, to establish the work regulations he deems necessary. The nature of the production processes and factor cost relationships will determine the general form of industrial discipline. In situations where capital per worker is relatively large and processes require considerable skill, regulation is likely to be quite precise and the amount and quality of supervision will be high. Supervisors may have to be foreign or, because they must be literate, will be drawn from higher social classes than those from which the labor force is itself drawn. In the more typical case, where the proportion of unskilled labor is very high, sophisticated and costly supervision is kept to a minimum. Much responsibility can be placed upon essentially illiterate, inexpensive foremen drawn from the same social strata as the work force. As a way of keeping administrative overhead to a minimum, it is not unusual to allow the foreman the effective authority to recruit and discharge workers as well as to supervise and discipline them. As a result, job tenure is even more insecure than it might otherwise be. There can be no effective provisions for leave or promotion, and the application of penalties for work-rule violations tends to be uncertain. The critical feature in such situations is not that regulation and discipline are harsh but that they are erratic and imprecise.
To the outside observer this type of work-force administration, so typical in newly developing regions, may seem irrational, and it frequently leads to charges of poor management. In fact, given the relative price of factors and the level of skills required, such organization makes good economic sense. But it does tend to generate attitudes and behavior patterns within the new work force which may have long-run effects on labor relations.
Collective action
Whatever the specific style of labor administration established in new enterprises, one notable fact is that collective action in the form of strikes manifests itself quite early. In many parts of the world strikes have been recorded within a few years after modern industry has been introduced. Many observers see strikes as symptoms of generalized protest by tradition-bound workers against the demands imposed by the modern sector. It would seem more probable, however, that generalized protest against the employment relationship would reveal itself in a flight from the system rather than by strikes within it. The notion that strikes are a protest against the system, a frequently stated but never tested proposition, carries with it the implication that strikes would be most frequent and extensive during the initial phases of development and would decline in number and scope as workers become habituated to modern requirements. The facts seem to indicate the reverse. Insofar as the society permits, strikes tend to become larger and more purposeful and disciplined as the labor force becomes effectively proletarianized.
The suddenness with which protest can manifest itself and the fierceness with which even modest changes are often resisted frequently lead observers to interpret these incidents as essentially irrational. What is ignored is the fact that in regions where underemployment is endemic any effort to modify initially established work relation-ships, however modest, tends to be seen as a threat to reduce the number of jobs available. Moreover, in the absence of organizational experience on the part of the workers and of familiarity with the formulation of demands, early protest will often take on an unpredictable, riotous character. Careful investigation seems to confirm the view that even the earliest strikes represent an objective commitment to the modern employment relationship in that they are attempts by the work force to share somehow in the decisions affecting it. The immediate causes tend to be the obvious ones—reductions in money wages, sharp rises in the costof-living, layoffs, or other changes in existing conditions of work.
As would be expected, the initial stoppages tend to affect a single department or firm. In the absence of formal organization, they also tend to be brief. But the strikes do seem to leave a residue of experience, a sense of capacity for wider collective action. Over time the occasional strike will take on multifirm characteristics, sometimes embracing an entire city or district. But even these incidents tend to be isolated, spontaneous expressions of immediate grievance. They do not arise out of any pre-existing formal or semiformal organization, nor do they necessarily establish the conditions for the development of permanent institutions for collective action.
Trade union development. The development of trade unions is a slow process for reasons inherent in the nature of newly emerging societies. The labor force is mainly unskilled, and employers can easily find substitutes for troublesome employees. If modern enterprise is growing rapidly, the work force is constantly being diluted with new recruits who have to develop the sense of common grievance and imbibe the tradition of common action. Where the work force is cosmopolitan, there are internal divisions of language, religion, and regional origin and tradition to be overcome. The traditional environment typically offers no experience with voluntary associations capable of coping with relationships of the modern sort. Moreover, workers usually lack the education that might make easier the task of developing appropriate formal organizations.
These features are not dissimilar to those which once tended to inhibit union development in the now industrialized countries. But workers in newly developing countries face at least one novel disability. Almost from the beginning the structure of enterprise generally requires the use of the industrial union form of organization.
During the early stage of development of the now developed countries, many of the then modern enterprises depended on the use of a relatively high proportion of skilled workers, craftsmen who found it relatively easy to create permanent unions. As large-scale industry based on greater proportions of semiskilled and unskilled labor developed, the craft unions were able to provide the experience and cadres of organizers on which to build industrial unions. Even so, the creation of unions of unskilled and semiskilled workers was not easy. Specific techniques of organization, union administration, tactics, and relations with employers still had to be worked out. The difficulty is illustrated by the fact that even in the United States and Great Britain successful industrial unions did not appear widely until about a century after craft organizations had made their appearance.
By contrast, in newly developing countries the modern sector from the beginning minimizes its use of skilled labor. The stress on the use of unsilled and semiskilled workers is encouraged by the tendencies of modern technology, by the relative costs of skilled and unskilled labor, and by specific advantages in international competition. As a consequence, there is no substantial basis for the development of craft unions. Worker organization logically must be of the industrial type. This simple fact imposes inordinate difficulties on the process of creating stable associations of workers. An industrial union must be larger and is faced by more sophisticated tasks than a craft organization. Its problems of administration as they affect the membership and relations with employers are far more complex. Yet the work force in these new regions, when compared with the early situation in the now developed countries, is far less well prepared to undertake the responsibilities involved. It has fewer potential leaders within its own ranks. Illiteracy is probably much more widespread. There is no indigenous craft union tradition on which to draw. Moreover, much of the skilled labor force that does exist is likely to be foreign. Such a group may have its own traditions of organization, but these are unlikely to be of use to the native work force. Foreign cadres are frequently in supervisory positions. Even where foreign workers are in laboring positions, they are not likely to find their positions and interests linked with those of the indigenous work force. More likely, the foreign group will be actively hostile to the development of a militant, organized native labor force.
Political elements in labor unrest
It is possible, of course, if the economic development proceeded and no other factors intervened, that over some very long period the work force might ultimately be able to generate permanent organizations by its own efforts. But in newly developing regions economic responses are not the only important ones. The politics of emergence are equally significant. Most underdeveloped areas have colonial backgrounds, and the struggle for independence is part of the context within which working-class unrest occurs.
Here the role of the “outsider”—typically middle-class professionals and intellectuals—is extremely significant in the development of labor organizations. Middle-class elements have certain obvious advantages when they become involved in this process. They are not employed in the sectors where they seek to organize workers and need not fear the threat of discharge. They can therefore take the risks of leadership. They are frequently well-educated and may have some ideas about the kind of organization that is needed. They typically come from higher social classes than the work force and are less likely to be intimidated by employers.
There are some countries in which significant economic change begins before a nationalist movement gets under way. In these circumstances middle-class humanitarians may engage in welfare activities among the working class and may occasionally intervene to attempt to resolve problems between workers and their employers. Their efforts sometimes lead them to organize small trade unions, but for all the reasons already suggested these usually prove abortive, having virtually no effect on the industrial relations between workers and employers.
The major impulse which brings middle-class elements into contact with the modern work force in most newly developing regions is the nationalist struggle. Whatever else is at stake, a nationalist movement typically incorporates a protest against the excessively slow pace at which economic development proceeds. The unsatisfactory condition of the work force in the modern sector becomes identified with the colonial and underdeveloped status of the society. If employers are foreign, the problem is directly associated with the evils of imperialist exploitation. Middle-class nationalists quickly identify the effort to organize workers with the more general process of economic improvement, and many of them commit themselves to organizational activity.
The middle-class nationalist sees the issue in a broader context. The workers not only represent a substantial group, but they also tend to be concentrated in urban areas and are frequently engaged in critical economic activities. By virtue of location they seem relatively easy to mobilize; by virtue of function their withdrawal from work can have profound effects on the entire economy. Worker organization offers concentrated political power of great promise.
Middle-class leadership tends to give strikes a wider political meaning, using the incidents as educational devices to sharpen the nationalist struggle in the society. Wage workers, typically frustrated by their limited coercive power at the workplace, tend to respond to these broader appeals. However, the incorporation of worker protest into wider nationalist objectives tends to make it even more difficult to establish any direct collective bargaining relations between employers and employees. Nationalist issues blur the immediate workplace objectives of the employees. Demands tend to be formulated in such ways as to make compromise at the workshop level difficult to attain. Moreover, the incorporation of worker discontent content into nationalist channels tends to limit leadership efforts to establish effective plant organization. Activity tends to be oriented toward the establishment of labor movements rather than toward the creation of trade unions narrowly conceived. In other words, middle-class leadership, emerging in the circumstances it does, sharpens labor protest without making it much more effective in any direct confrontation with individual employers.
Labor force restlessness and militance are sharpened if the nationalist movement is not unified but consists of groups with differing long-run sociopolitical objectives. These various groups see in the work force a political prize of great value and contend with one another for its loyalty. Each rivals the other in attempts to exploit the existing economic grievances, and each expands the demands which it encourages workers to make of their employers. Each seeks in this way to capture the political strength of the work force for use in shaping the economic and political character of the nationalist movement and, ultimately, the form of the forthcoming independent society.
Working-class protest in such a context tends to exhibit a profoundly disruptive character. To the existing government these developments inevitably seem to threaten the very fabric of society, particularly if among the contending groups Marxist elements are strong. Employers are unable to stem the tide of unrest. At the same time, because of the way in which developments have occurred, individual trade unions are too weak to impose effective collective bargaining relationships upon the employers. Faced by the failure of effective voluntary industrial relations systems to emerge, the state tends to intervene. The policies adopted will, of course, vary in different areas, depending on the character of the government and its specific objectives.
State role in employer-employee relations
Typically, governments are aware of the pattern of events in already developed societies. They are not only conscious of the fact that work-force discontent stems from the relatively weak bargaining position of labor in the employment relationship, but they also sense that such discontent cannot be suppressed entirely. The object of the state is to minimize unrest by providing some framework of formal relationships between employees and employers. If its ideological predisposition is hostile to the development of trade unions, its policy will seek to create a system of facilities—labor courts, wage tribunals, arbitration boards—which will serve to eliminate the need for an institution so capable of being subverted to political ends. If the government favors the ultimate emergence of stable, responsible (that is, nonrevolutionary) unions and a system of voluntary collective bargaining, its program will still attempt to shape and limit the forms of working-class collective action and organization which are permitted or favored.
Whatever the specific form of its policy, the government has as a major objective the creation in the minds of the workers of a sense of loyalty to the state. Given the persistent weakness of the work force in direct relations with employers, the state is gradually forced to do more than merely open formal channels of protest as a means of reducing dissatisfaction and limiting the violence of its expression. The state finds it necessary to intervene substantively, to provide to the work force the wage-welfare conditions which in Western countries traditionally have been obtained through unions bargaining collectively with employers. To achieve these objectives, state administrative organs gradually develop which interpose themselves between workers and employers. Even where this is not the long-run intention, state intervention tends to inhibit the growth of trade unions because it offers more powerful alternatives. And even where trade unions are encouraged by state policy, they are unable to achieve an independent status; rather they become an essentially dependent feature of a state-dominated and state-defined system of industrial relations.
One striking characteristic of this development is that it does not tend to change very much after independence is achieved. The new government, inheriting a weak trade union structure and a thinly developed pattern of voluntary collective bargaining relationships, like its predecessor is faced by the need to hold the loyalty of the work force. If the new state is to gain working-class support it must seek to expand the apparent contributions it makes to worker well-being. It tends to intervene in increasingly elaborate ways in the relations between employers and employees. Whether the new government is totalitarian or democratic, the tendency is the same. A totalitarian government cannot afford the luxury of independent protest; and in a democratic system the party in power, seeking to remain in power, tends to make use of new and existing administrative devices to tie the unions and the labor movement to itself so as to guarantee its own maintenance in office. The same phenomenon also manifests itself in those countries where a wage working class of the modern sort appears only after independence. In these circumstances the governing group frequently sets out consciously to organize the work force on its own terms and within a framework of its own making so that it can control from the beginning the political consequences of economic conflict.
But it is not only the political significance of a modern work force that leads to government intervention in newly developing regions. At least one other major factor strengthens the state’s effort to minimize the rough-and-tumble of independent collective bargaining. Almost invariably, the new state is committed to a program of economic development on a planned basis. The modern work force is located at strategic points in the national economy. In these circumstances the state feels unable to tolerate the luxury of sharp and extended conflicts between workers and employers. To permit these might prove disruptive to all hopes of rapid economic development. The state, therefore, intervenes to establish or extend a system of regulations which defines the process and content of industrial relations between employees and employers.
By way of summary the following conclusions can be suggested. In most newly developing regions trade unions are extremely weak and collective bargaining virtually nonexistent. For all the reasons suggested, the state intervenes in labor relations to channel and control working-class discon-tent before it gets out of hand. Where trade unions and a labor movement have not emerged before independence, the state will typically move to establish and direct them and their activities. Where working-class organizations have appeared at an earlier stage, the state will increasingly regulate their form and the content of relations with employers. In either case, the state will gradually create a system of rules and a structure of administrative bodies that define and to an increasing extent direct the permissible limits of behavior of workers and employers. The role of the state and its agencies will become so pervasive as to inhibit the growth of strong independent worker organizations and vital collective relations with employers.
This tendency is not a temporary one. It shapes the long-run character of all the labor relations institutions of a newly developing region. Consequently, we cannot envisage the ultimate emergence in the developing countries of private collective bargaining institutions of the sort familiar to the Anglo-Saxon world. What is more important is that we should not interpret this phenomenon as a distortion of some normal, unilinear evolutionary pattern. The problems generated by the emergence of a wage labor force are inevitable, but the form of the solution will vary in accord with historical circumstances. The Anglo-Saxon format of labor relations emerged in a special political, economic, and technical environment. Newly developing regions are modernizing their economies and creating a proletariat within a quite novel economic and political setting. The system of labor and industrial relations that is emerging in these areas must, therefore, inevitably exhibit systematically different features of the sort described above.
Morris David Morris
BIBLIOGRAPHY
The literature of any quality on trade unions, labor movements, and industrial relations in newly developing regions dates mainly from 1945. The amount of this literature is constantly increasing. Any attempt to provide detailed references would be quickly outdated. The best way to keep up with current facts and views is through the quite systematic bibliographies provided in the issues of the International Labour Review and the Industrial and Labor Relations Review.
Galenson, Walter (editor) 1959 Labor and Economic Development. New York: Wiley.
Galenson, Walter (editor) 1962 Labor in Developing Economies. Berkeley: Univ. of California Press.
Industrial and Labor Relations Review. → Published since 1947.
International Labour Review. → Published since 1921.
Kerr, Clark et al. 1960 Industrialism and Industrial Man: The Problems of Labor and Management in Economic Growth. Cambridge, Mass.: Harvard Univ. Press. → A second edition was published in paperback in 1964 by Oxford University Press.
Morris, Morris David 1965 The Emergence of an Industrial Labor Force in India: A Study of the Bombay Cotton Mills, 1854–1947. Berkeley and Los Angeles: Univ. of California Press.
Roberts, B. C. 1964 Labour in the Tropical Territories of the Commonwealth. Durham, N.C.: Duke Univ. Press.