LABOUR LAWS AND FUNDAMENTALS OF INDUSTRIAL RELATIONS

UNIT 1 SECTION
INDUSTRIAL 1
RELATIONS Unit 1, section 1: Fundamentals of industrial relations

This section covers the meaning, functions and levels of industrial relations.
It also traces the history of industrial relations practice. Industrial relations
practice is regulated by law. The law creates the legal framework necessary
for employers, employees and their organizations to function effectively in
the industrial relations system.

By successfully following a learning programme of this section, the student

is expected to able to describe the concept of industrial relations, define its
primary functions, explain the major levels of practice of industrial relations
in Ghana, and trace the history of industrial relations practice.
Consequently, the student can be examined in each of these areas after
completing the unit.

Meaning of industrial relations

The term industrial relations have a broad as well as narrow outlook. In its
simplest form, industrial relations directly or indirectly explain the
relationships between employees and management. In the broader sense, it
describes how organized groups and employers’ associations make
decisions which tend to shape employment relations within organizational
settings. It also involves the processes of collective bargaining, negotiation
and consultation. Industrial relations has been described as an area of study
and practice that pertains to collective bargaining, trade unionism, and
labour-management relations, including the national labour policy and
labour law within which they are embedded. It is defined in this text as “the
study of the relationships between employer and employee in paid
employment, the ways in which employees are rewarded, motivated, trained
and disciplined, together with the influence on these processes of the major
institutions involved, namely, employers, employees and the state”.

Functions of industrial relations

Industrial relations has three main functions: (i) the science building
function, (ii) the problem solving function, and (iii) the ethical function. In
the science building perspective, industrial relations is part of the social
sciences that seeks to understand the employment relationship and its
institutions through high-quality, rigorous research. In the problem solving
function, industrial relations balances the conflicting desires of the employer
and employee, and provides the legislative framework within which they
each can operate and the machinery for assisting both parties in dispute
settlements. The ethical phase focuses on shaping employment relations
between management and labour. The three functions are collectively
performed by workers, managers, government and various labour policies.

Levels of industrial relations practice

The practice of industrial relations has been categorized into three: (i) the
national level industrial relations practice, (ii) the industry level industrial
relations practice, and (iii) the organizational level industrial relations

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practice. At the national level, industrial relations practice is mainly

concerned with the design and implementation of various labour policies
during the tripartite process, involving the government, employers and
employees or their representative organizations. The aim of industrial
relations practice at the national level is to put in place an improved
framework for the conduct of industrial relations and the resolution of trade
disputes so as to maintain a stable and harmonious industrial relations
climate.

At the industrial level, industrial relations practice involves collective

bargaining between employers and employees. Collective bargaining is a
negotiating process, involving employees and employers in regard to terms
and conditions of employment such as wage scales, hours of work, health
and safety or overtime and grievance. When the collective bargaining
process has led to an agreement, for example pay increases, it is termed the
collective bargaining agreement. The aim of industrial relations at the level
of the industry is to mediate the relationship between employers and
employees in order to ensure that the differences in opinions between the
two conflicting parties do not turn into conflict.

At the organizational level, industrial relations practice involves the

continuous interaction between employees and management which stems
directly or indirectly from union-employer relationship. The relationships
that often arise at the organizational level generally include the relationships
between individual workers, the relationships between workers and their
employer, the relationships between employees and management, the
relationships employers and workers have with the organizations formed to
promote their respective interests, and the relations between those
organizations, at all levels. Thus, industrial relations practice at the
organizational level takes the form of processes through which these
relationships are expressed such as, collective bargaining, workers’
participation in decision-making, and grievance and dispute settlement, and
the management of conflict between employers, workers and trade unions,
when it arises.

Historical development of industrial relations

Industrial relations has its roots in the industrial revolution which created
the modern employment relationship by spawning free labor markets and
large-scale industrial organizations with thousands of wage workers. As
society wrestled with these massive economic and social changes, labor
problems arose. Low wages, long working hours, monotonous and
dangerous work, and abusive supervisory practices led to high employee
turnover, violent strikes, and the threat of social instability.

Intellectually, the field and practice of industrial relations began in the early
years of the twentieth century and evolved in numerous ways in reaction to
a host of far-reaching changes in the economic, political, and social realm. It

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began with a broad emphasis on the employment relationship and the labor
problems that grew out of this relationship. As a result of the rise of mass
unionism between 1935 and 1955, the field became identified in the
academic and practitioner worlds with, first and foremost, the study and
practice of collective bargaining and labor-management relations. Since
then the unionized sector of most economies shrunk considerably. Thus the
term "industrial relations" is increasingly associated with the unionized
sector of the labor market. But a minority of participants continues to view
industrial relations as pertaining to the entire world of work and, in
particular, the three solutions to labor problems: personnel/human resource
management, trade unionism and collective bargaining, and government
legislation.

Institutionally, industrial relations was founded by John R. Commons when

he created the first academic industrial relations program at the University
of Wisconsin in 1920. Early financial support for the field came from John
D. Rockefeller, Jr. who supported progressive labor-management relations
in the aftermath of the bloody strike at a Rockefeller-owned coal mine in
Colorado. In Britain, another progressive industrialist, Montague Burton,
endowed chairs in industrial relations at Leeds, Cardiff and Cambridge in
1930, and the discipline was formalized in the 1950s with the formation of
the Oxford School by Allan Flanders and Huge Clegg.

Industrial relations was formed with a strong problem-solving orientation

that rejected both the classical economists' laissez faire solutions to labor
problems and the Marxist solution of class revolution. It is this approach
that underlies the New Deal legislation in most countries today.

The fundamental premise of industrial relations is that labour markets are

not perfectly competitive. In other words the employment relationship
always swings to the side of one party where employers typically have
greater bargaining power than employees. This situation is often explained
from the point of view of the inherent conflicts of interest between
employers and employees (for example, higher wages versus higher profits).
As a result, there is always the need to put in place structures, systems and
mechanisms for balancing the contrasting stands of the two main parties in
the industrial relations practice.

Self-assessment questions
1. What is industrial relations, and how important is it in shaping the
employment relationship?
2. Explain industrial relations practice at the following levels of operation:
i) The national level
ii) The industry level, and
iii) The organizational
3. Explain the statement that industrial relations has its roots from the
industrial revolution.

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