Industrial Relations

INDUSTRIAL RELATIONS IN GERMANY, UK & INDIA

AYESHA CHAHAL

INDUSTRIAL RELATIONS IN GERMANY 

The German industrial relations system has been called "social partnership model" because of the cooperative style and the strong consensus orientation. The German industrial relations system can be characterized by the following elements:

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For the majority of employees, collective bargaining takes place in autonomous negotiations between industrial unions and employers' federation on the level of an industry or on a branch level. Such negotiations produce collective bargaining agreements which are applicable for all companies in the region which are affiliated to the employers' federation and where workers are affiliated to the respective union.

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At firms with more than four workers, works councils at the plant level form an important part of a system of co-determination.

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In large companies with more than 500 employees a second and additional form of co-determination comes into play: the representation of workers representatives at the supervisory board.

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Unions and employers' federations are playing an important role in the design and revision of labor laws and in labor jurisdiction.

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More recently the government has started high-level talks with trade unions and employers' federations under the umbrella of an "Alliance for Jobs and Qualification" in order to reestablish a basis of trust and consensus for creating job opportunities and for reducing structural unemployment.

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The efforts are towards having recourse to judicial regulations not only as a general frame of reference for negotiations but also as a guide for day-to-day decisions.

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The trade unions are mostly organized at industry level.

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The most of the trade unions in the Federal Republic of Germany are no longer organized as occupational associations but represent all employees within an industrial branch.

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Certain rights have been established enabling every employee to participate through his elected representatives at plant level in some areas of management activity.

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The trade unions institutionally are not present within the undertaking. Their influence is indirect; operating mainly through personal link between Works Council members and union members on account of the fact that many Works Council members hold union office.

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Management has to report to the Works Council about the economic situation of the undertaking every three months. The Works Council remains the main institution for shaping workers activities towards greater participation at the plant level.

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Work Council influence management’s decisions while management’s decisions making power is not affected.

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Works Councils have the right for instance to demand dismissal in case of anti-social and unlawful behavior on the part of an employee.

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Works Council has the right to appeal to the Labour Court in the event that the management does not take into account its objections to a planned regrouping or transfer of employees.

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Works Council has the right to obtain a hearing from management in the case of every dismissal.

Trade Unions 

The existence of industry federations means that workers’ associations are organised around specific industries regardless of the nature of work.

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12 such industrial unions belong to the German Confederation of Trade Unions (Deutscher Gewerkschaftsbund - DGB).

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The member unions of the DGB consider themselves to be ”unitary unions” and claim to have no partisan or ideological attachments.

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The DGB plays more a co-ordinating role than a negotiating role.

Employers’ Associations 

The BDA (Bundesvereinigung der Deutschen Arbeitgeberverbnde) is composed of 65 federations.

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Approximately 1,000 employers’ associations in Germany are affiliate members through the 65 federations.

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The BDA represents some 80% of all private enterprises in Germany. With its subdivisions the BDA controls a wide network of regional and local offices and institutions.

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The main function of the BDA is to represent employers’ interests in the area of social policy.

Active participation of unions and employers' federations in legal affairs 

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Unions and employers' federation are an integral part of the norm setting machinery through active participation in formulating new laws. They are regular contributors to parliamentary hearings on labor law reforms. They contribute through participation in working groups in ministries and governmental agencies. They have developed powerful machineries to influence the public debate. They are as well active participants in the labor law jurisdiction. They have an important role in the implementation of the labor law jurisdiction by nominating persons for being honorary judges in the labor courts. Furthermore, they play an important role in the running of the unemployment benefit scheme, and they have established roles in the various pillars of social security. Consensus seeking is therefore taking place at all these levels on a permanent basis. On top of that the "Alliance for Job Creation and Qualification" has opened another informal but effective channel for the social partners to participate in financial, economic and social policy making.

Collective Bargaining 

Collective bargaining between employer’s and worker’s association occupies an important place in the social and economic life of the country because the wide degree of autonomy in negotiation allows these associations a relatively free hand.

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In Germany, under the Collective Agreements Act, the validity of a collective agreement is not conditional upon government approval. The German statute law has nothing to say regarding the actual process of collective bargaining or settlement of dispute arising in that connection. Rules in this respect have largely been worked out in the past twentyfive years by court decisions mainly by the Federal Labour Court and Federal Constitutional Court.

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The another way by which the central organizations have been playing role is through top level meetings at which representatives of both sides come together, interact and exchange views on issues of common concern.

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For the majority of employees in German companies, collective bargaining takes place between trade unions, which are organized on an industrial or sectoral level, and employers' federations which are organized in a similar manner.

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The autonomy of employers' federations and trade unions in the conclusion of collective agreements is constitutionally guaranteed, and especially excludes the state from intervening in the bargaining process.

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Collective agreements include wage and salary agreements, general agreements and skeleton agreements. The agreements are applicable to all companies of the respective industry or branch in the respective region affiliated to the employers' federation and where workers are represented by the respective trade union which signed the collective bargaining agreement. In practice, agreements apply not only to those workers belonging to the union but to non-union members as well. Currently there are more than 30.000 collective agreements in place, every year more than 9.000 collective agreements are negotiated.

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Collective agreement (Flaechentarifvertrag)

Labour Participation in Management – The West German Model 

German management operates within the confines of the most structured schemes of worker participation in management currently operating in any western industrialized country.

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Legislation prescribes a system of works councils with strongly defined rights and responsibilities in social, personnel and economic areas. Works Councils and workers representation on supervisory boards were introduced after the First World War under the new Weimar Republic.

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From the very beginning co-determination has been a political issue. Workers participation in management was the declared objective of the German labour movement during the early 1920’s. In the intermediate post-war years, the iron and steel industry, because of the role it had played during the war, was placed under special trustee administration, and parity between workers and shareholders representative on the supervisory board was introduced.

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The position now is that all companies in the coal, iron and steel industries with over 1000 employees are subject to co-determination law of 1951. All other companies with 500 to 2000 employees are subject to the Works Constitution Act of 1952, and those with over 2000 employees (except coal, iron and steel) must adhere to the codetermination Act of 1976.

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General Features of Co-Determination The system is based on three main institutions: (i) Works Council - A Works council must be set up in every establishment with five or more employees. It is a body of workers representatives only elected by the entire work force whether union members or not. Its size varies according to the number of employees in the establishment. The following rights of the works council are considered: a.) the right to co-determination, b.) the right to consultation and participation, c.) the right to information.

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(ii) Workers representatives on the supervisory boards; - This is a statutory body under company law, situated somewhere between the shareholders assembly and the management board. Its membership is not a full-time job. It deals only with broad economic and financial issues. This board appoints the members of the management board, overseas its activities and approves decisions of major importance as provided by the laws of the company concerned. Normally, supervisory board meets four times a year. Worker’s representatives have been on supervisory boards in Germany for over 50 years.

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(iii) Labour directors on the management boards - It is appointed by the supervisory board and comprises three directors, representing technical, commercial, and personnel functions. One of the three directors should be a nominee of the workers. In coal, iron and steel industries, the appointment or dismissal of the workers director should have the consent of the workers representatives on the supervisory board. The Act, which extended codetermination to all companies with more than 20,000 employees, also provides for the position of a worker director but puts him on the same footing as the other members of the management board, that is, he is appointed by the majority of the supervisory board.

Central aspects of the on-going modernization of the industrial relations systems are: 

The introduction of more flexible elements into the collective bargaining system.

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The strengthening and adaptation of mechanisms of co-determination at the plant level.

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The reestablishment of consensus building mechanisms at the national level through the formation of a so-called "alliance for job-creation and qualification" which brings together government representatives with trade union leaders and representatives of the employers' federations.

INDUSTRIAL RELATIONS IN UNITED KINGDOM 

Industrial Relations system in UK occupies a unique place in the onward of World Industrial Relations.

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Its development is associated with the rise and growth of trade unionism.

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Since eighteenth century the system rests on voluntary arrangements for negotiation and consultation agreed by the parties.

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However the autonomy which characterized the Industrial Relations system in UK has suffered severe stresses and strains. The factors which contributed to the assault on the autonomy of the system includes changes in technology, growth in the scale of industrial organization, emergence of small number of large and powerful unions, growing wealth and increased Government intervention in economic affairs.

Three distinctive characteristics of British industrial relations are: 

The tradition of voluntarism;

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The representation of workmen through trade union officers at workplaces in the form of shop-stewards; and

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The organisation of trade union membership along occupational rather than industrial lines.

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In Britain, industrial relations have come to mean the long-established and well-tried system of bargaining between employers' organisations and trade unions The rates of pay and other terms and conditions of employment of a majority of employees are determined by collective agreements, voluntarily entered into between trade unions and employers or their representatives,

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Despite the general effectiveness of the voluntary machinery which has been established in nearly all branches of industry, differences are bound to arise in cases of failure in reaching settlements. The state helps in preventing and settling such diffe-rences. This help is rendered .by the Ministry of Labour under statutory powers derived from different enactment. The normal method by which assistance is given is:

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Conciliation,

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Arbitration and Investigation or formal inquiry.

Employer’s Associations 

In the historical perspective the employees association gear up as a means of combating the growing strength of trade unions. These organizations have been recognized as legal bodies under the Trade Union and Labour Relations Act, 1974 and can obtain registration Certificate from the certification officer.

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These have been formed on trade basis. A few are purely local in character or deal with a section of an industry, others are national in scope and are concerned with the whole of a particular industry.

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The principal function of the employers association is to negotiate collective agreement with trade unions on an industry wise basis. Most of the national federations are affiliated to a central federation called the confederation of British Industry. This organization deals with all matters including labour relations and represents them nationally to the Government and the public.

Trade Unions 

The Trade Union movement in UK has grown from strength to strength over last 225 years. Trade Union members mainly consist of manual workers in larger firms in the main industries including transport and also include large number of workmen and clerical, supervisory staff.

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Trade Unions of manual workers fall into three types namely craft, general and industrial. There are also white collar unions. There is no single pattern which is followed for the purpose of organization of workers. However, there is a strong bias towards organization on an occupational basis and negotiations are conducted on an industrial basis. At the national level Trade Union Congress constitutes the national apex body organization of British trade union movement.

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These trade unions are independent, voluntary association of employees and are financed and run by their members primarily in order to protect their interests as employees. This is done mainly by negotiating wages and other terms of employment and also by promoting and influencing legislation and official action.

Role of Government 

Due to pursuit of Laissez faire policy in economic affairs in the past and faith in promoting autonomy in industrial management, the state in UK has traditionally followed a policy of non-intervention in the sphere of industrial relations.

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However, with the assumption of the role of a welfare state the Government has increasingly assumed powers to regulate employment relations between labour and management without jeopardizing their autonomy in collective bargaining. The State in UK has been guided by the following four principles in the sphere of industrial relations:

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The principles of collective bargaining freely conducted with due regard to the general interests of the community.

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The principle of developing and maintaining orderly procedures in industry for the peaceful and expeditious settlement of disputes by negotiation, conciliation and arbitration with due regard to the general interests of the community.

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The principle of free association of workers in independent trade unions, and of employers in employers’ associations, so organized as to be representative, responsible and effective bodies for regulating relations between employers and workers.

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The principle of freedom and security for workers, protected by adequate safeguard against unfair industrial practices whether on the part of the employees or others.

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On the basis of above principles, the Government has passed legislation to provide a minimum legal framework to develop industrial relations between industry and labour under conditions of free collective bargaining.

Joint Consultation and Worker’s Participation in management 

Voluntary joint consultation at the plant level between the employers and the employed has long been a characteristic of the industrial relations system in UK. The practice of joint consultation is generally traced back to the Whitley Committee of 1916, which recommended the establishment of: - joint industrial councils in well-organised industries - works committees representative of the management and the workers in individual establishments

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Joint consultation today is quite common in UK. These committees are advisory in character, and their functions include consideration and discussion of changes in methods of production, safety and welfare of employees, training and education, work rules and personnel problems, etc. except wages and other issues falling within the sphere of Collective Bargaining.

COMPARISON IN INDIAN CONTEXT

Worker’s Participation The objectives of worker’s participation differ from country to country. 

In UK participation is practiced in the form of Joint Consultation. These committees are advisory in character, and their functions include consideration and discussion of changes in methods of production, safety and welfare of employees, training and education, work rules and personnel problems, etc. except wages and other issues falling within the sphere of Collective Bargaining.

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On the contrary workers’ participation has nothing to do with productivity in Germany. The underlying idea of co-determination is to provide a rational means of handling and settling disputes at the enterprise level.

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The objectives of worker’s participation in India are yet to be clearly specified. They differ from the point of view of Government, managements, and workers’ unions. While workers wish to achieve security of employment, better wages, etc. Trade union leader’s ego satisfaction, and so on, employers set objectives like maximizing productivity, profit, discipline of workers, etc. on the other hand, Government is inclined to establish its control and influence on the industrial arena on one hand and to gain industrial peace and harmony on the other. Thus workers’ participation has a wide range of objectives in India.

Labour Courts 

In Germany the Federal Labour Court "has become at least as important as the legislator as far as regulations in the field of labour are concerned." In that country the courts have been responsible for formulating many of the rules relating to strikes. In India and UK a labour court system, coupled with the pronouncements of appellate courts, have had a significant impact on the formulation of the rules applicable to the relations between employers and workers. In those two countries thousands of court decisions have enunciated the rules regarding such issues as the grounds on which termination of employment may be considered fair or unfair; the principles of wage fixation; when trade union action may be considered legal or illegal, justified or unjustified; and even what forms of trade union action are permissible or not permissible.

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The main difference between the labour force of India and that of Germany is that the latter has highly skilled labour force in comparison to India. Moreover the work force is more committed towards their organization.

System of Recognition of Trade Unions 

UK is a major proponent of voluntarism. The British system of industrial relations has traditionally accorded a priority to voluntary over compulsory rules for collective bargaining. Yet now there is a move towards regulation of the relationship by government through various rules and regulations.

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India is very much influenced by British voluntarism and experiences a high degree of multi-unionism and an extremely strong inter-union rivalry. In 1958, the Code of Discipline in Industry was adopted by all employers’ associations and trade unions at the Indian National Labour Conference and represented a tripartite advisory venture for improvement of industrial relations. Criteria for the recognition of unions are contained in this code and employers are required to recognize unions on this basis.

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Germany has introduced legislation which has made the recognition of trade unions mandatory under certain conditions.

Collective Bargaining 

Collective bargaining between employer’s and worker’s associations occupies an important place in the social and economic life of Germany because the wide degree of autonomy in negotiation allows these associations a relatively free hand.

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In UK, collective bargaining is an important element in unionmanagement relationship and trade unions have been able to gain important considerations for their members.

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In India, collective agreements have not made much headway. An important prerequisite of it is the encouragement to strong and powerful trade unions and satisfactory arrangement for union recognition by statutes as also the creation of conditions in which such arrangement has a chance to succeed. All this is missing in India.