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Briefly describe how co-determination works in Germany.

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What are some of the factors that make it difficult for unions to coordinate their efforts across national borders?

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What are some of the challenges unions face when bargaining with multinationals?

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The Labor Relations Process TENTH EDITION G A WILLIAM H. HOLLEY, Jr. T E Auburn University S KENNETH M. JENNINGS , ROGER S. WOLTERS D Auburn University E A N D R A 1 1 2 3 T S Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. G A T E S This is an electronic version of the print textbook. Due to electronic rights restrictions, , Editorial review has deemed that any suppressed some third party content may be suppressed. content does not materially affect the overall learning experience. The publisher reserves the right to remove content from this title at any time if subsequent rights restrictions require it. For valuable information on pricing, previous D editions, changes to current editions, and alternate formats, please visit www.cengage.com/highered to search by ISBN#, author, title, or keyword for E materials in your areas of interest. A N D R A 1 1 2 3 T S 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. The Labor Relations Process, 10th Edition William H. Holley, Jr., Kenneth M. Jennings, Roger S. Wolters Vice President of Editorial, Business: Jack W. Calhoun Publisher: Erin Joyner Senior Acquisitions Editor: Michele Rhoades Associate Developmental Editor: Conor Allen © 2012, 2009, 2005 South-Western, Cengage Learning ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored, or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher. For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706 For permission to use material from this text or product, submit all requests online at www.cengage.com/permissions Further permissions questions can be emailed to permissionrequest@cengage.com Senior Editorial Assistant: Ruth Belanger Marketing Manager: Gretchen Swann Content Project Management: PreMediaGlobal Manufacturing Planner: Ron Montgomery Senior Marketing Communications Manager: Jim Overly Production Service: PreMediaGlobal Rights Acquisitions Specialist (Text, Image): Sam Marshall Senior Art Director: Tippy McIntosh G A ExamView® is a registered trademark of eInstruction Corp. Windows isTa registered trademark of the Microsoft Corporation used herein under license. Macintosh and Power Macintosh are registered E trademarks of Apple Computer, Inc. used herein under license. S2012 Cengage Learning. All Rights Reserved. © , Library of Congress Control Number: 2011936297 Cover and Internal Designer: Lisa M. Langhoff ISBN-13: 978-0-538-48198-4 Cover Image: ©Noel Hendrickson/Digital Vision, Getty Images ISBN-10: 0-538-48198-6 D E A South-Western 5191 Natorp Boulevard N Mason, OH 45040 USA D R Cengage Learning products are represented in Canada by A Education, Ltd. Nelson For your course and learning solutions, visit www.cengage.com 1 1 2 3 T S Purchase any of our products at your local college store or at our preferred online store www.cengagebrain.com Printed in the United States of America 1 2 3 4 5 6 7 15 14 13 12 11 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. PART 4 Part 4 presents the opportunity to apply the previous chapters’ discussions of the labor relations process to various labor relations G situations. Collective bargaining in the pubA lic T sector at all governmental levels is discussed, and a discussion of foreign labor E relations systems is presented for comparS ison , purposes. D E A N D R A 1 1 2 3 T S 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. Applying the Labor Relations Process to Different Labor Relations Systems G A T E S , D E Chapter 13 A Labor Relations N in the Public Sector D Chapter 14 R Labor Relations in Multinational Corporations and in Other Countries A 1 1 2 3 T S 573 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 Labor Relations in Multinational Corporations and in Other Countries G IN PREPARING FOR your first job after graduation, you need to go shopping and buy some clothes to wear to work. Nearly all A of your T clothes now are fine for attending to class, but they don’t Elook very professional. Since you have accumulated a fairly S sizable student loan debt, you have to be careful with your spending and you are looking very hard for bargains, but , all of the best prices for clothes are those which are manufactured in places like China, Thailand, Viet Nam, and D Guatemala. InE your studies, you have learned about the low wages, long hours,Aand unfavorable working conditions for workers in those N and don’t want to support these types of conditions countries D of employment. You also want to support American workers and manufacturers by keeping your money in America, but R you will A end up paying more for your clothes. Questions 1 shall you do? 1. What 1 you buy these imported goods, are you actually 2. When 2 supporting the foreign workers or the companies? 3. Are3you supporting the low wages, long hours, and unfavorable working conditions in those countries? T S 629 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 630 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems ith the development of a global economy, movement in Eastern Europe and China toward greater political democracy and market-oriented economies, and the reduction of trade and travel restrictions within Europe and North and South American countries, the study of labor relations within multinational corporations (MNCs) and foreign countries becomes imperative to today’s student. This chapter begins with a general discussion of the operations of MNCs in a global economy and unions’ approaches and problems in dealing with MNCs. Concerns about globalization and free trade are addressed and principal characteristics of the labor relations systems of the major trading partners of the United States are also presented. W Multinational Corporations and Transnational Collective Bargaining The growing interdependency among nations and the activities of multinational corporations (MNCs) have become important facets of economic life. Although multinaG tional corporations have existed for more than 150 years, their numbers and share of A their importance and visibility in recent years. world output have expanded Multinational corporations T in the United States are enormous in size. For example, the annual sales revenue of Wal-Mart in 2010 ($408.21 billion) was greater than the E gross national product of each of the following countries: Argentina, Austria, Greece, Iran, Israel, and Norway. S The annual revenues of ExxonMobil ($275.56 billion) were greater than the gross national product of Chile, Finland, and New Zealand. In fact, the , home offices of 14 of the largest MNCs are located in the United States, and over half are heavily unionized (AT&T, Chevron, ConocoPhillips, ExxonMobile, Ford, General Electric, McKesson, and Verizon). Four are in banking and diversified financials and D the others are Hewlett-Packard and Wal-Mart.1 E (MNCs) in the United States rank among the largest U.S. Multinational corporations firms in 2010. When U.S. A parent companies and their foreign affiliates are compared by size of employment, 40 percent of the more than 2,000 U.S. parent companies employ N parent companies accounted for about 41 percent of total more than 2,500 persons. U.S. U.S. manufacturing activity. D Total employment among U.S. parent companies was 23.9 million; employment among foreign affiliates was 10.0 million.2 Spending by U.S. firms or U.S. direct investmentsR abroad in 2009 was $269 billion. The cumulative amount of book value is $3.5 trillion.A Europe accounts for over half of all U.S. direct investments.3 Investments in the Netherlands and the United Kingdom were the largest (each with 13 percent) followed by Canada (7 percent) and Bermuda (7 percent).4 Value added by foreign 1 affiliates totaled $670 billion in 2008. Affiliates of the seven largest countries are Canada, France, Germany, the Netherlands, Switzerland, the United 1 Kingdom, and Japan. The United Kingdom (16 percent) was the largest investing country, followed by Japan (13 2percent) and Germany (12 percent).5 Because of their size, MNCs appear intimidating to smaller countries. For example, 3 foreign firms account for almost half of Ireland’s employment and two-thirds of its outT concern has been raised about the economic influence of put. In some larger countries, MNCs. In Australia, each of S the ten largest industrial MNCs has annual sales larger than the government’s tax revenue. Still, on average, MNCs employ two-thirds of the workforce in their home country and produce two-thirds of their output at home. In addition, MNCs usually pay better wages than their domestic counterparts and create jobs faster. For example, in poorer countries such as Turkey, wages paid by foreign firms are 124 percent above average, and their workforces have expanded by 11.5 percent per year, compared with 0.6 percent by local firms.6 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 631 Exchange rates have a great deal to do with the trade between countries and production within a specific country. The importance of fluctuating exchange rates is reflected in Exhibit 14.1, which shows the indexes of hourly compensation costs for production workers in manufacturing for 29 countries during periods from 1980 to 2009. In 2009, hourly compensation costs for manufacturing production workers in Belgium, Germany, Denmark, Norway, and Switzerland were 32 to 61 percent higher than those in the United States. Compensation costs were 92 percent of the U.S. figure in the United Kingdom, 103 percent in Australia, 83 percent in Spain, 42 percent in Korea, 23 percent in Taiwan, and 16 percent in Mexico. In 1980 Japan’s hourly compensation cost (hourly pay plus benefits) was 57 percent of that of the United States; however, it increased to 87 percent by 1990 and then to 91 percent by 2009. In Germany in 1980, the cost was 25 percent higher than the United States; but by 1998 it had risen to 44 percent higher than U.S. compensation costs and then fell to 34 percent higher by 2009. G Operating in different countries creates opportunities for MNCs to bypass protective tariffs by making parts in one country and assembling the final product in another. For A example, the European Union accused Ricoh, a maker of photocopiers, of making 90 percent of its parts inTJapan, doing the assembly work in the United States, and shipping products from the E United States as U.S. exports. With Japanese automakers locating in the United States, such issues provide challenges in trade between countries.7 S Multinational corporations in the United States prefer to locate production facilities in foreign countries, that have a decentralized bargaining structure, like that in the United States. Labor relations features like union density and strike intensity do not appear to be nearly as important. The most important reason behind decisions related to locating production facilities isD the national resources of the particular country.8 Multinational corporations have the capacity to force concessions from unions by E threatening to shift production to another country and essentially pit one group of A employees against another. One automaker that operates a plant in Ohio sought to introduce new technology; the union resisted because the membership would lose jobs. The N company then took a number of the union leaders to a new plant in Juarez, Mexico— D from El Paso—showed them the technologies used in the plant, just across the border and said: “It is yourRchoice. Either you concede what we are asking in terms of bargaining or the work that you do in Ohio will be transferred to Juarez. If you think this is an A plant. This is the production process.”9 idle threat, this is the Multinational corporations do not deploy consistent employee relations policies in the various countries in which they operate. In 2011, Wal-Mart purchased 51 percent 1 retail chain store Massmart. Massmart which operates about 290 of the South African stores in 14 African1countries. Upon announcement, South African labor groups claimed that Wal-Mart was anti-union in the United States. In response, Wal-Mart said it will 2 contracts and is committed to working with South African respect present labor 10 unions. 3 The American Rights at Work Education Fund has alleged that T-Mobile USA* and T its parent company German telecommunications giant Deuthsche Telekom operate under two standards: S (1) respect workers’ rights in Germany and (2) interfere with employees’ rights to organize and bargain in the United States.11 Some MNCs pursue policies of “divide and rule.” For example, they inform workers in one country that they cannot have the improved employment conditions they seek *In 2011, T-Mobile USA was purchased by AT&T, which has a labor relations reputation that is highly regarded. 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems 632 Exhibit 14.1 Indexes of Hourly Compensation Costs for Production Workers in Manufacturing for 31 Countries or Areas, 1980–2009 Index (United States = 100) Percentage of Workforce in Unions 1980 1990 2005 2009 Compensation Costs in 2009 U.S. Dollars United States 11.9 100 100 100 100 33.53 Canada 27.1 92 107 101 88 29.60 Brazil 35.4 14 17 17 25 8.32 Mexico 20.0 30 12 11 16 5.38 Australia 18.6 82 88 105 103 34.62 Israel 56.0 39 57 53 55 18.39 Japan 18.2 57 87 92 91 30.36 Korea 10.3 0 28 57 42 14.20 New Zealand 20.8 54 56 63 52 17.44 Singapore 14.5 15 22 32 52 17.50 Taiwan 34.9 10 Austria 28.9 87 Czech Republic 20.2 — — Belgium 51.9 134 127 Denmark 67.6 111 126 Finland 67.5 84 139 Country or Area France G A T E S , D E A N D R A 27 27 23 7.76 114 124 143 48.04 26 33 11.21 130 147 49.40 150 148 49.56 135 131 43.77 103 104 120 40.08 144 140 139 46.52 7.7 91 Germany 19.1 125 Ireland 32.3 60 Italy 33.4 81 Netherlands 18.9 123 Norway 53.3 119 Poland 15.6 — — 19 22 7.50 Portugal 20.4 21 24 31 36 11.95 Spain 14.3 61 79 96 116 39.02 119 89 104 34.97 125 135 130 43.50 147 166 161 13.89 1 78 75 83 23.74 1 141 Sweden 68.3 127 121 119 39.87 Switzerland 18.3 113 2 139 129 132 44.29 United Kingdom 27.1 76 3 84 109 92 30.78 T Note: Dash indicates data not available. SOURCE: “International Labor Comparisons of Hourly Compensation Costs for SProduction Workers in Manufacturing,” March 8, 2011; U.S. Department of Labor, Bureau of International Labor Affairs, http://www.bls.gov/fls; http://www.stats.org/. 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 633 because they are less productive than its employees in another country. Other MNCs embrace the accepted employee relations philosophy and approach of their own country but apply totally opposite policies in another country. Unions respond by exchanging information about employment practices in their country with employees of the same MNCs which operate in other countries. International links between trade unions are not new. One international organization, the Global Union Federation (previously known as the International Trade Secretariats), has operated for almost 100 years. There are currently 11 autonomous Global Union Federations of which Union Network International with 15 million members in 900 unions on every continent is the largest. Other Global Union Federations include the Education International, the International Transport Workers Federation, the Public Services International, and the International Metal Workers Federation. Currently, none of the federations have authority to enforce their instructions against affiliated unions; they can only seek to persuade them to behave in a certain way.12 G has been critical of the effect of U.S. MNCs on employment and Organized labor labor relations for A the following reasons: ■ ■ ■ ■ Their foreign investments deplete capital resources needed for domestic investment T and undermine economic growth and new job creation at home. They export U.S.Etechnology to exploit low-cost foreign labor, depriving American employees of their S rightful share of the rewards of technology. They substitute imports from their affiliates in low-wage countries for American, undermining the American wage standard, depressing economic made goods, thereby conditions at home, and decreasing employment and payrolls. They displace U.S. exports with foreign-produced goods from their foreign affiliates, D thereby adversely affecting the U.S. trade balance.13 E Foreign MNCs have grown rapidly and installed facilities in the United States. Unions have often viewed A these MNCs with suspicion, but the management and employment practices tend to be more similar to those of home-based firms. The labor relations activN ities and decisions tend to be locally determined and highly decentralized. American unions have found D that organizing foreign-based MNCs has been just as difficult as organizing U.S.-based R companies. In addition, the management of the various plants of foreign-based MNCs uses essentially the same tactics to keep unions out of the plant. A use of lawyers and management consultants, positive human These tactics include resources management, consultation with employees on decisions, delays allowed under National Labor Relations Board (NLRB) procedures, and local politicians making state1 company. Unions use the same organizing tactics, with the addiments to support the tion of negative publicity directed toward the foreign owners and appeals to American 1 patriotism. With these counteractive tactics, the results of elections have not been signif2 other NLRB elections—approximately 50 percent wins for the icantly different from unions. Whenever 3 American unions have contact with foreign-based unions, these contacts are generally of the information-sharing nature.14 T Unions in particular have difficulty dealing with MNCs for the following reasons: S 1. If a strike occurs, the union cannot shut down the flow of financial resources to the struck plant. Operations of the MNCs in other countries continue to function and generate profits, which may relieve management of much pressure in negotiations and reduce the costs of the strike. 2. MNCs have an internal source of products from facilities in several countries and use this position as leverage to bargain down wages, benefits, and other conditions of 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 634 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems employment (called whipsawing the union). If a strike occurs at one facility, the MNCs increase production at other units, destroying the potency of the strike. Many specific examples of whipsawing can be identified. General Motors (GM) was able to expand the work week from 37.5 hours to 40 hours by convincing the union in Germany that it had to increase hours to retain competitiveness. GM has considered increasing its auto production in Brazil and Mexico as part of its wage concession demands, and when Canadian unions resisted wage concessions, GM considered shifting production back to the United States. 3. MNCs with complex tiers of management do not delegate authority to local management to make labor relations decisions, thereby complicating the negotiation process because unions do not know who is in charge.15 Empirical evidence indicates that most unions have not encountered different behavior between domestic and foreign-owned MNCs, but there seems to be a wider variation in behavior among the MNCs than among single-nation corporations in terms of grievance settlement G of local autonomy in negotiations, and difficulty in negobefore arbitration, amount 16 tiating the first agreement. A However, because budget and investment decisions are made at the home office, local negotiations are certainly affected. 4. MNCs shift profits to T different facilities, manipulate prices on internal transactions, and change marketingEemphasis, confusing the unions in negotiations when they seek the facts necessary to address and resolve collective bargaining issues. S Because U.S. unions are accustomed to bargaining on ability to pay and are entitled , to wage and financial information that allows them to conduct informed negotiations, they are frustrated when MNCs furnish only information that is required by law. Information about MNCs locating plants in foreign countries and operating data on these D plants may be refused by the MNCs with the approval of the NLRB.17 E A Union Approaches to Multinational Bargaining N and Employer Reactions D A primary motivator for American and foreign-based unions to seek transnational bargaining and to standardizeRlabor conditions among the MNCs is to lessen competition from lower-wage areas and A to protect their own standards—in other words, to take wages out of competition. To combat the power of the MNCs and to seek objectives that are mutually beneficial to the unions and their members, union leaders have tried two main approaches: (1)1collective bargaining and (2) legislative enactment. Through collective bargaining, unions have either attempted to bargain directly with the MNCs 1 activities with unions in other countries by sharing inforor coordinate their bargaining mation and supporting one 2 another’s activities. Various groups, such as the International Labor Organization (ILO), Organization of 3 Development (OECD), and the United Nations, have estabEconomic Cooperation and lished codes of conduct for T MNCs (see the Labor Relations in Action feature on page 635). However, labor standards remain predominately under national laws. To be effective, these labor standardsS need to be incorporated into national laws. The fact remains that countries are empowered to find violations of labor laws only within their own jurisdiction and consequently have no influence on the decisions made by MNCs when they operate in another country. Without legislation, compliance often depends on public campaigns against the MNCs for alleged violations of human and labor rights at their overseas subsidiaries. One successful campaign caused Nike to improve the working conditions at their foreign subsidiaries.18 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. LABOR RELATIONS IN ACTION Core Labor Standards The core labor standards are fundamental principles that protect basic human rights in the workforce. The international community, largely through the International Labour Organization (ILO)—a United Nations agency bringing together representatives of governments, employers, and workers—has developed a consensus with respect to the definition of the core labor standards. As stated in the ILO Declaration on Fundamental Principles and Rights at Work (1998) the core labor standards aim to: (1) eliminate all forms of forced or compulsory labor, (2) effectively abolish child labor, (3) eliminate discrimination in respect of employment and occupation, and (4) ensure the freedom of association and the G right to collective bargaining. Specific definitions of these principles are A spelled out in eight ILO core labor standard conventions, also T known as the fundamental human rights conventions. These are: ■ ■ E (ConElimination of forced and compulsory labor ventions 29 and 105). Where forced labor S is “all work or service which is exacted from any person under the menace of any penalty and for, which the said person has not offered himself voluntarily.” Abolition of child labor (Conventions 138 and D human 182). Aside from violating children’s basic rights, sending children to work rather than to E school perpetuates poverty and compromises economic growth. Each signatory, regardless A of level ■ ■ of economic development, agrees to design and implement a course of action, effectively monitor implementation and apply appropriate sanctions. Elimination of discrimination in respect of employment and occupation (Conventions 100 and 111) is central to achieving greater social justice while also promoting development through a more efficient allocation of resources. Discrimination includes “any distinction, exclusion or preference” made “on the basis of race, colour, sex, religion, political opinion, national extraction or social origin, which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation…” Freedom of association and collective bargaining (Conventions 87 and 98). The right for workers and employers to freely create and participate in organizations to promote and protect their interests is a fundamental principle behind the ILO’s work. Signatories must give workers and employees the right freely to establish and join organizations of their choice, without any type of prior authorization. Signatories further agree to establish mechanisms to ensure the right to organize and to encourage the practice of negotiating between employers and workers’ organizations. SOURCE: http://www.oecd.org/document N D Recognizing that R colleges and universities spend $5 billion a year on logo clothing, student groups, consumer groups, and unions have pressured copyright logo owners to A require that their brand name products only be produced and sold by firms that adhere to the ILO conventions. Another mechanism for securing workers’ rights has been the International Frame1 work Agreements (IFAs). These IFAs are agreements on minimum labor standards nego1 Union Federations and multinational corporations. These tiated between Global agreements usually2include freedom of association, the right to collective bargaining, a formalized procedure for union representation, and a procedure for monitoring compli3 ance with the agreement. By 2005, at least 30 IFAs had been negotiated. Although most of these agreementsThave been negotiated in Europe, one noteworthy IFA (with Chiquita Brands International to cover Latin America banana operations) has been negotiated in the United States.19S Unions, as well as some governments, have asserted that collective bargaining on a national basis has considerable limitations in facing MNCs. This assertion is based on the belief that MNCs have adopted global strategies, so a union acting alone within one nation cannot effectively respond. Likewise, some governments are uneasy about the fact that MNCs cannot easily be made accountable to any one country’s economic and social policies. Moreover, there has been persistent fear that if a union or government in one 635 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 636 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems country acted without the support of unions or governments in other countries, it would risk transfer of operations by the MNC to a more hospitable nation.20 The creation of the European Union has led to a resurgence of interests in prospects of transnational collective bargaining. However, initiatives have primarily taken the form of joint consultation and adherence to labor rights principles at a transnational level rather than true collective bargaining. The aim of European trade unions is to achieve European-level collective bargaining. Despite the long-recognized hurdles, there have been positive steps toward this end. First, the European Trade Union Confederation (ETUC) has become an effective voice for trade unions in the political arena and has the potential to become the spokesperson for European trade unions in collective bargaining. Second, new agreements between trade unions in two countries have been signed. These agreements grant reciprocal memberships to members in both unions and provide for cooperation between these unions in exchanging information, developing closer coordination with respect to European G of pay demands, and training. Third, cross-national works councils, harmonization coordination of collective-bargaining strategies is taking place. Trade unions are agreeing A on a common bargaining strategy and exchange of information. Trade unions in GerT and Luxembourg agreed to make pay demands reflect inflamany, Netherlands, Belgium, tion and productivity gains Eand agreed to bargain on reducing the hours of work. The ETUC has established bargaining committees comprised of officials from Europeanlevel federations who are S responsible for collective bargaining. The intent is to achieve some consistency in collective , bargaining across national boundaries.21 In the past few years, the number of global agreements signed by MNCs has increased. These agreements between MNCs and international trade union organizations commit the companies to observing standards and principles throughout their worldwide D operations. These principles generally relate to various aspects of worker rights, employE ment, and other areas of corporate social responsibility. There are 30 global agreements A is small, the companies involved include some of the in place. Although the number world’s largest, most high-profile and “internationalized” MNCs. For example, DaimlerN Chrysler employs 370,000 worldwide; Volkswagen employs 320,000; French retailer CarD Danish business services organization ISS employs 250,000. refour employs 300,000; and In total, the 30 companiesR including General Motors Europe that have signed the global agreements employ around 2.5 million people.22 One of the promisingA development for transnational collective bargaining is occurring in Europe under the European Company Statute under the European Union (EU). Under this legislation, companies that operate in more than one EU member country 1 of a single legal framework, thereby reducing the internal can work under the umbrella costs of operating in several 1 countries. Not only is this an attempt to develop an appropriate corporate governance but to develop well-developed and well-functioning industrial relations, which gives2workers a significant influence over company decisions.23 Most MNCs generally3consider transnational labor relations a distant prospect and one that will not be lightly entertained by management. Part of management’s opposition T stems from the unions’ potential for shutting down production internationally. Furthermore, transnational bargaining S would introduce a tri-level structure of bargaining that would include multinational negotiations, followed by national, and then local. This additional level would increase the complexity of negotiations, as well as companies’ vulnerability to strikes at the international level without a comparable reduction in vulnerability at the national and local levels. In some cases, countries themselves are not encouraging investments by MNCs by using taxation policies, building limitations, requirements for local partners, the 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 637 possibility of nationalization and expropriation of facilities, and the risks of political uncertainties to deter MNC investments. Less-developed countries seek additional investments by MNCs for economic stimulus to the countries’ development, income, employment programs, and so on. MNCs find these countries attractive because of the low wage structure, tax incentives, and political guarantees. Such advantages are particularly appealing to the MNC that must operate in a very competitive product market. However, when unions press via transnational bargaining for improved wages, benefits, and working conditions—all socially desirable goals for the populace—they become a force running counter to the short-run national economic goals of the country. The economic boost MNCs can give a developing nation will not occur if firms fail to locate there. MNCs might well decide to avoid countries with the high wages and benefits that transnational bargaining has instituted.24 Obstacles for Unions in Bargaining G with Multinational Corporations A unions face formidable tasks in their efforts to arrange transnaAmerican and foreign tional bargaining because they must be successful in mediating and balancing the conT flicting interests of different groups encompassed by the MNCs’ employees, labor leaders, companies,Eand governments. In fact, unions themselves provide some of the more important obstacles to transnational bargaining; however, these obstacles are not S insurmountable. Only when these obstacles are overcome can attention be turned to , external factors. Differences in Labor Relations Laws D Legal systems for labor relations vary widely among countries. There are different methods for determining E union representation, different union jurisdictions and structure, and differences in the scope of bargaining.25 A Absence of a Central Authority N Unions lack strong, centralized decision-making authority on transnational affairs, and D most national union leaders are reluctant to allow a transnational body to make deciR unions and members. sions that affect their A Cultural Differences Among complicating factors are the differences in ideological and religious beliefs among, for example, 1 free trade unions and socialist- or communist-linked unions. Such differences have made joint undertakings between unions in the free world and else1 where almost impossible. 2 Lack of Coordination of Activities 3 very successful in coordinating their transnational bargaining, Unions have not been boycott, and strikeTactivities. An excellent example occurred in the last major rubber strike of Goodyear, Uniroyal, B. F. Goodrich, and Firestone. Each had extensive overseas operations. SupportSfor the U.S. strikes came from the International Federation of Chemical, Energy, Mining, and General Workers Unions (ICEM), which has affiliates in Europe, North America, and Japan. The ICEM Rubber Division approved a ban on overtime by employees of nonstruck companies and a system of monitoring and preventing shipments to the United States. At the end of the strike—the longest rubber strike in U.S. history—the ICEM claimed that its efforts had had a significant effect on the bargaining outcome; however, the facts seemed to contradict this claim. Researchers could not 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 638 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems identify a single instance of interference with tire shipments from Europe, Japan, or North America during the U.S. rubber workers’ strike. In fact, they found that imports jumped substantially in anticipation of the strike and never fell below the prestrike level. Furthermore, even Canadian imports were significantly increased during the strike, reversing what had occurred several years before, when U.S. rubber workers refused to support a strike by Canadian rubber workers.26 Differing National Priorities The economic, social, legal, and political differences among countries serve as yet another obstacle to transnational bargaining. Few, if any, countries would subvert their national needs to the interest of developing an international system of labor relations. Employer Resistance Employer resistance is less obvious than other obstacles at this time, mostly because of the inability of the unionsG to overcome the other hurdles that they face. Once the initial hurdles are overcome, employers’ opinions and attitudes concerning transnational collecA tive bargaining will no doubt emerge, but in the meantime, MNCs may sit idly by until T the initial hurdles. the unions are able to eliminate E S Research has indicated that unions have had little direct effect on investment and production allocation policies, of MNCs in European countries. However, a recent study Effects of Unions on Multinational Corporations reported evidence that industrial relations systems affected the foreign direct investments by private companies in New Zealand and Great Britain. When the industrial relations D became less restrictive, the foreign direct investments systems of those two countries were greater than in neighboring countries. The MNCs tend to be somewhat sensitive E to the industrial relations climate and prefer to invest where management has a greater A labor and reducing employee voice at work.27 amount of leeway in allocating MNCs rarely have been N able to afford to switch production to other countries as a bargaining or union intimidation tactic because of the costs involved. MNCs no doubt D would shift production to another country in cases where a labor dispute stops production and the move is economically and practically possible. However, such decisions are R considerably limited because companies must have the necessary excess production A capacity available, and management must expect the labor dispute to last sufficiently long enough to justify a shift in production before it would be feasible. Overall, little evidence1exists of substantial negative effects of MNCs on labor relations in countries in which they operate. MNCs usually offer prevailing or superior wage 1 standards and provide comparable working conditions for several reasons. The strengths of unions in the respective2countries, the highly integrated and institutionalized nature of labor relations systems, and the socioeconomic and political climates of the countries 3 potential for direct adverse effect.28 have clearly constrained the T Conclusions and Predictions on Transnational Bargaining S Systematic investigations of transnational collective bargaining reveal that it does not yet exist broadly in any realistic form and is not likely to occur in the immediate future. MNCs are generally opposed to it, and trade unions are not of a single mind on its desirability. Although there have been several cases of information exchange between multinational unions and a few instances of union–management consultation, only in the unique U.S.–Canadian and European Union environments do many transnational activities occur. 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 639 There has been no identifiable trend toward transnational collective bargaining by companies and unions in the United States, Europe, or Japan. Some believe that no effective transnational collective bargaining will occur in the near future. However, others believe that such collective bargaining is inevitable. It will probably develop first either in the European Union, North America, or Central America and deal initially with general topics such as employment protection, investment policies, and codes of fair practices, before broadening into other bargaining topics. Globalization and Concerns about Free Trade The net effect of free trade—globalization—has been gains to consumers in lower prices, greater efficiency in the overall economy, and reduced poverty in developing nations. However, the distribution of the net benefits of free trade and globalization has been uneven. American G jobs have been lost in major industries, such as the automobile, steel, textile, footwear, and consumer electronics, whereas jobs in the aircraft, computers, entertainment, andA finance industries have increased. There is concern T in the United States, the European Union, and Australia that Ireland, South Africa, Russia, and India (where there are two million college graduates per E year and 80 percent of the college graduates in India speak English) may do for the service sector what China S has already done for manufacturing. (Japan has similar concerns about northern China, where Japanese is spoken.) In the near future, competition will , come from Malaysia and the Philippines, where there are 300,000 college graduates each year who speak English. Also, any product can be manufactured in China less expensively than inDthe richer, high-wage countries. Now, it is just a matter of time before any service that can be electronically transmitted will be produced in India more E cheaply. Cheaper communications allow companies to move back-office tasks such as data entry, call centers, and payroll processing to poorer countries, such as India, which A has three huge advantages for companies: a large pool of well-educated young workers, low wages, and theN use of the English language.29 One of the freeDtrade agreements signed by the United States is the North American Free Trade Agreement (NAFTA), an agreement between Canada, Mexico, and the United States that R removed most barriers to trade and investments between these three countries. Many ofA the tariffs were eliminated immediately, and the others were phased out. NAFTA was approved by Congress in 1993, signed by President Clinton in 1993, and took effect on January 1, 1994. Under NAFTA, three countries became a single, giant, integrated market 1 of over 450 million people with $11.4 trillion worth of goods and services traded annually. 1 The United States has signed other free trade agreements, with countries such as 2 the Dominican Republic/Central America. These agreements are Australia, Korea, and similar to NAFTA whereby tariffs on trade with the United States are eliminated. In 3 addition, discussions began on a Free Trade Area of the Americas that would cover 34 North, Central, andTSouth America countries, extend trade agreements similar to those under NAFTA, andScover a population of over 800 million.30 The promises of NAFTA included creation of new and better jobs, rising incomes, and economic growth acceleration to underdeveloped countries in Central America. Whereas there would be environmental challenges, extra resources would be made available to address those challenges. Economists have attempted to identify the effects of NAFTA on the economies of the United States, Canada, and Mexico. There has been expansion in trade and foreign investment; in fact, U.S. exports to and imports from 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 640 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems Canada and Mexico now account for about one-third of U.S. trade (up from one-fourth in 1990). However, there has been a contraction in manufacturing employment in the United States and economic stagnation in Mexico. In fact, Mexico wages remain low relative to U.S. manufacturing wages (see Exhibit 14.1). In Mexico, productivity rates have improved; however, real wages have risen only slightly. In several areas of the agricultural sector, there has been a near disaster for most farmers, who have to compete with America’s government-subsidized products, such as corn. Up to 90 percent of the heads of families in some communities now spend at least six months per year working in the United States and Canada where they earn in four months the amount they would earn in Mexico in an entire year. Mexican producers of horticultural products, fresh vegetables, and fresh fruits have nearly doubled their exports to the United States. Sadly, successive Mexican governments have failed to deal with structural problems of corruption, poor education, red tape, crumbling infrastructure, lack of credit, and an inadequate tax base.31 G Since the 1990s, over 600,000 Mexican farm jobs have been lost due to lower import barriers for beans, apples, grapes, and other crops. In 2010, tariffs on imported corn were A eliminated, and loss of jobs increased. These job losses in agriculture have fueled migraT 80 percent of the population now resides. Migration to the tion into urban areas, where cities is much faster thanEthe rate of new job creation. Investments encouraged by NAFTA have produced 300,000 jobs, mostly in the northern cities. However, since a milS force each year in Mexico, there is an annual deficit of lion people enter the labor 700,000 jobs. As a result, ,40 percent of the labor force—about 12 million workers—do not have stable employment. Most of them work in the informal sector as street vendors, maids, and short-term workers—jobs that provide no social security protections. As a result, the loss of rural jobs Din Mexico has swelled the ranks of undocumented Mexican workers in the United States. E While the value of exports was ten times greater than in 1990, the total compensaA tion of these workers in Mexico is 16 percent of what similar workers in the United States earn. Factories continue to use outdated equipment and inefficient work systems, N and technological improvements have been concentrated in the export-oriented plants D particularly in the electronics and automobile industries. owned by global corporations, Managers realize that theyR must adapt to new work arrangements and improve the skills of their employees; however, only a few companies, usually foreign-owned, have introA and workplace systems that promote efficiency or provide duced quality control methods formal training for employees. Until changes are implemented, Mexican workers will see few gains from free trade.32 Along the border with1the United States, the number of maquiladoras plants (assembly plants for export using 1 imported parts and components) rose 67 percent to 3,655 during the first seven years after NAFTA was enacted in 1993. However since 2000, more than 850 have shut 2 down, and employment is down more than 20 percent from its peak of 1.3 million. Companies like Delphi are courted by China with tax incentives, 3 low wages (assembly workers earn $0.57 per hour), worker training, and access to the T latest technology.33 One disputed study estimated that 110,000 jobs per year have been lost in the S United States due to NAFTA; however, the United States usually generates an average of about two million jobs per year, and a great majority of these new jobs pay above the median wage. In Canada, there were initial concerns about the flight of low-skilled manufacturing jobs to Mexico and a depressing effect on the Canadian tax base. The end result is that NAFTA did not achieve as much as the politicians promised, nor as much negative effect as the critics claimed.34 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 641 North American Agreement on Labor Cooperation (NAALC) The North American Free Trade Agreement provided several side agreements that were designed to protect employees and the environment. The North American Agreement on Labor Cooperation (NAALC), one of the two side agreements, commits the United States, Canada, and Mexico to implement, enforce, and improve labor principles through national legislation and institutions. Its objectives are to be furthered by intergovernmental cooperation and by a procedure established to resolve complaints based on a monitoring system and a series of steps to resolve unsettled disputes (up to arbitration). Two dozen complaints (7 against the United States; 2 against Canada; 15 against Mexico) have been submitted. These complaints included infringements on the right to freedom of association, charges of employment discrimination, and occupational health and safety violations. Thus far, the NAALC has failed because the three countries disagree on its aims. Canada and Mexico consider the NAALC a way to achieve greater intergovernmental cooperation; the United States focuses on the dispute-resolution mechanisms. G success has been achieved on either front because the parties As a result, limited seldom engage in A active cooperation and are reluctant to use the conflict-resolution mechanisms.35 T Thus far, the NAALC has fallen far short of the expectations of Canadian and U.S. labor organizations.EFirst, it does not offer remedies to workers whose legal rights have been violated. Second, it is procedurally difficult to sanction NAFTA governments that S fail to enforce their own labor laws and violate the NAALC’s 11 labor principles (see , Exhibit 14.2). Whereas arbitration offers sanctions, the procedures are cumbersome, and only occupational safety and health, child labor, and minimum wage issues may be arbitrated. Core labor rights of freedom of association, bargaining collectively, and striking are not subjectsDfor arbitration. So far, no arbitration panel has been called into service. Although theENAALC has not met expectations, it has provided an important education and research role. Trade unions have publicized abuses for all to see and A cross-border coalitions among unions that would have otherwise have brought together not been formed. Of Nthe 24 union submissions of alleged violations, four were brought to an equitable resolution after widespread negative publicity or threat of negative publicity. The conclusion of D one study is: The labor law R side agreement is withering as an effective labor law enforcement and MNC compliance A strategy. To sustain as an institution designed in part to motivate Exhibit 14.2 Eleven Principles of the North American Agreement on Labor Cooperation 1 1. Freedom of 1 association and protection of the right to organize 2. Right to bargain 2 collectively 3. Right to strike 3forced labor 4. Prohibition of 5. Labor protection for children and young persons T 6. Minimum employment standards, such as minimum wages and overtime pay 7. Elimination of Semployment discrimination 8. 9. 10. 11. Equal pay for women and men Prevention of occupational injuries and illnesses Compensation in cases of occupational injuries and illnesses Protection of migrant workers SOURCE: http://www.mac.doc.gov/nafta/3006.htm (December 15, 2003). 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 642 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems labor law enforcement and business compliance with labor policy, the remedy and penalty aspects of the NAALC will need to be revisited.36 Jon Hiatt of the AFL-CIO concluded that the case history of NAALC has indicated that even “when workers win, they still lose.” He concluded that no workers have been reinstated in any NAALC cases, there have been no concrete remedies ordered, and no financial sanctions imposed. In fact, he concluded that corporate or government behavior has changed very little as a result of any cases brought under the NAALC. Hiatt recommends several specific actions: ■ ■ ■ ■ ■ The NAALC, instead of being a side agreement, should be made a part of NAFTA, which does not address worker rights. All 11 principles of worker rights covered by NAALC (see Exhibit 14.2) should be subject to final and binding dispute resolution and to possible sanctions. The NAALC should address the need to raise a country’s labor standards where inadequate, not just theG obligation to adhere to a country’s existing laws. The time frame for dispute A resolution should be shortened. Where a dispute involves an allegation that a company has violated the law, that T to participate in the hearing.37 company should be required E the NAALC found five general trends. First, most of the Another assessment of alleged violations of the NAALC side agreements have involved lack of or improper S enforcement of labor laws in Mexico. Second, labor unions and human rights groups in , are more likely to file the complaint in their own country one of the NAFTA countries against another country. Third, most of the complaints allege violations of workers’ rights to organize labor unions in Mexico, where independent unions have tried to orgaD nize workers. Fourth, the submission process has resulted only in conferences, seminars, and public reports. WhileEthese are not effective remedies, employers’ desire to avoid public attention has facilitated resolution in those cases where the submissions were volA untarily withdrawn. Fifth, the dispute resolution procedure has provided a platform for N raise concerns about the enforcement procedures in the those parties who want to 38 NAFTA member countries. D Unions in Other Countries R A With the growing interdependency among nations, major improvements in communication and travel between countries, and the increasing role of MNCs, learning more about 1 labor relations systems in other parts of the world is imperative. Books have been written about many of the specific 1 topics in this chapter, so no attempt is made to present detailed descriptions or analyses of labor relations systems in the countries mentioned. 2 This section presents unique and interesting features of a variety of countries with the 3 to pursue more thorough investigation further. The chaphope of encouraging readers ter’s coverage ranges fromTthe developing countries of Central and South America to the countries nearest our borders—Mexico and Canada—to the major trading partners of the United States such S as Australia, China, Japan, and the Western European countries. The extent of discussion of each country’s labor relations system is determined by its proximity to the United States; its trade, economic, and political relationships with the United States; and its uniqueness among the world’s labor relations systems. Many U.S. residents tend to view the rest of the world in terms of their own patterns of living. The fact is that virtually no country has a labor relations system like ours. One example of the differences between countries is the degree of employee protection against 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 643 Exhibit 14.3 Percentage of the Labor Force That Is Protected against Termination without Cause 100 80 60 es at St na Un ite d Ca do Un ite d Ki ng str Au da m a ali ain Sp ly Ita y an an rm Ge Be lg iu m 0 G A T E S , Fr 20 ce 40 D E A N Dcause. In the United States, only 20 percent of employees have such termination without protection. In other R words, the majority of American employees can be terminated from their employment without any justification unless termination is a violation of a conA tractual agreement, such as a collective bargaining agreement or a law. As shown in Exhibit SOURCE: Hoyt N. Wheeler and Jaques Rojot, “General Comments,” in Workplace Justice: Employment Obligation in International Perspective (Columbia, SC: University of South Carolina Press, 1992), pp. 368–369. See also Anthony Forsyth, “Protection Against Economic Dismissals: Australian Law Compared with Five Other CEOD Countries,” Journal of Industrial Relations, 51 (2009), pp. 723–730. 14.3, 50 percent of Canadian employees are protected, and 90 percent of employees in Australia and the United Kingdom are protected. In Belgium, France, Germany, Italy, and 1 Spain, 100 percent of employees are protected against termination without cause. As dis1 there are basic principles for terminating employees for cause.39 cussed in Chapter 12, Canada has several 2 major departures from typical U.S. labor relations practices. Unions of Europe have much closer ties to political parties; Japanese unions are orga3 level; and Central American unions are split along ideological nized on the enterprise lines. By contrast, T the U.S. labor relations system is based on majority rule, exclusive representation for bargaining agents, and political independence. Exhibit 14.4 presents S an overview of distinguishing features of foreign labor relations systems; the following discussion briefly explains these systems. Another distinguishing feature between labor relations in the United States and that of other countries of the world is the percentage of employees who are union members. Exhibit 14.5 shows that the United States is listed among the least unionized countries, such as France and Spain. Denmark, Finland, and Sweden are among the most unionized countries, with 60 percent or more of the workforce being unionized. 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 644 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems Exhibit 14.4 Overview of Distinguishing Features of U.S. and Foreign Labor Relations Systems United States Exclusive bargaining representation Majority rule Political independence Canada Influence by unions and companies from United States Two major linguistic and cultural groups Decentralized and fragmented collective bargaining Legal influence within provinces Central and South America Wide variation in the degree of Grelations sophistication in labor systems A Close connection between trade unions and political parties T Voluminous labor codes and government regulations thatEcover wages and terms of employment S Negotiations predominantly at plant , level only Western Europe Exclusive bargaining representation nonexistent Much negotiation between employer association and union confederation with individual bargaining under the resulting agreement Many fringe benefits established by law Worker participation mandated in many countries Japan Labor–management consultation/ teamwork Lifetime employment in large firms Enterprise unions Wage system with much weight on seniority Higher status of human resource department Australia Decentralized bargaining Nonunion bargaining Unfair dismissal law Eastern Europe D Little collective bargaining No labor agreements E A N Canada D United States and Canada is probably the closest and most The relationship between the extensive of any in the world. R The staggering volume of trade is $1.5 billion a day in goods and services, and about 300,000 U.S. and Canadian citizens cross the border A every day. Since the North America Free Trade Agreement, trade has increased over 250 percent.40 Canada’s labor relations system is affected by a number of variables: foreign influ1 ences, climate, natural resources, and two major linguistic and cultural groups. Its economy is subject to cyclical1fluctuations resulting from harsh winters, seasonality of its industries, and foreign influences (mostly the United States). In addition, Canada’s geo2 graphical spread, labor laws within the provinces, and regional concentration of 3 led to decentralized and fragmented collective bargaining. resources and production have The penetration of U.S. corporations into Canada have had a significant effect on CanaT dian labor relations because many major corporate decisions still are made in the United S States. The French- and English-speaking divisions of Canada have produced two distinct labor movements. When management is primarily English-speaking, and the workforce is predominantly French-speaking, the relationships are challenging.41 Of the four largest labor unions in Canada, three are in the public sector. Half of the largest 16 unions have their headquarters in the United States. The Canadian Autoworkers and the Canadian Paperworkers are two of the largest unions and were formerly affiliated with U.S.-based unions. 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 645 Exhibit 14.5 Comparison of Worldwide Union Density: 2000–2010 Sweden 68.3 Denmark 67.6 Finland 67.5 53.3 Norway 51.9 Belgium 33.4 Italy 32.3 Ireland 28.9 Austria Canada G 27.1 United Kingdom A 27.1 24.0 Greece T New Zealand E 20.8 Portugal S 20.4 Mexico , 20.0 Germany 19.1 Netherlands D 18.9 E Australia 18.6 A Switzerland 18.3 N Japan 18.2 D Spain 14.3 R United States 11.9 A France 7.7 0 20 40 60 80 100 Union density 2000–2010 (percent) 1 SOURCE: “International Labor 1 Comparisons of Hourly Compensation Costs for Production Workers in Manufacturing,” 2009, U.S. Department of Labor, Foreign Labor Trends (Washington, D.C.: U.S. Department of Labor, Bureau of International Labor Affairs) http://www.bls.gov/fls. 2 3 T Although the S public-sector unions continue to represent 75 percent of public employees, private-sector unions have begun to recruit members outside their traditional jurisdictions to offset their decline in membership. The Steelworkers now represent many hotel and restaurant employees, and the Canadian Autoworkers represent fishermen on the East Coast of Canada. In addition, some significant mergers have taken place, such as the Canadian Retail, Wholesale Union (formerly part of a U.S. union) with the Canadian Autoworkers.42 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 646 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems In 1956, union membership in Canada and the United States was about one-third of the labor force. Union membership in Canada has remained at about the same strength, whereas the United States has faced serious membership erosion. The union density of 27.1 percent is about two and one-half times the union membership percentage in the United States. The differences between the membership success of Canadian unions and U.S. unions can be attributed to several interrelated factors: favorable Canadian labor laws and court decisions, more aggressive union organizing, less employer opposition, and supportive public policy. Favorable labor laws contribute to union organizing and success. Canadian legal restrictions on employer opposition to unions also contribute to a higher union density. The union certification procedures vary among the provinces in Canada. In Newfoundland, Nova Scotia, and Ontario, mandatory elections (“quick votes”) are held within 5 business days of the application date (“as soon as possible” in Alberta). In ManG the card check procedure is required (since 2002 in British itoba and British Columbia, Columbia; since 2000 in Manitoba). Mandatory certification elections reduced the union A certification success rates by about 9 percent. In British Columbia, when mandatory elections were in effect prior toT2002, the union certification success rate declined by 20 percent in the private sector, E but there was no difference between mandatory elections and the card check procedure in the public sector.43 Two decisions of the S Supreme Court of Canada reflect Canadian’s recognition of international standards in ,interpreting the freedom of association provisions in the Charter of Rights and Freedoms enshrined in the Canadian constitution. First, the high court held that the exclusion of agricultural workers from coverage under the Ontario Labor Relations Act contravenedDthe constitutional guarantee of freedom of association. Second, the Court invalidated a law passed in British Columbia pertaining to health care, E which would have overridden provisions in collective bargaining agreement concerning AThe Court ruled that this law to eliminate important provilayoffs and bumping rights. sions in collective bargaining agreements without engaging in good faith bargaining and N consultation interfered with freedom of association.44 D Other factors that contribute to greater Canadian union density are: ■ ■ ■ ■ ■ ■ ■ R Canadian unions have exhibited greater activity in recruiting new members and have assigned a higher priority to organizing than in the United States. A Greater job protection for striking workers, and the use of replacement workers during strikes and lockouts is restricted in some provinces. Some Canadian labor boards 1 in the provinces have greater remedial powers; for example, to certify the union without a vote or to order a first collective bargaining 1 agreement. In some provinces, there 2 is arbitration available for the first contract. Employer campaigning activities during union representation attempts are more restrictive; for example,3more restrictions on the content of employer captive audience speeches. T There is no such thing as a right-to-work law in Canada; in fact, 7 of 11 provinces in S Canada have made the agency shop (see Chapter 4) the statutory minimum.45 The scope of bargaining is greater because the distinction between mandatory and voluntary subjects for collective bargaining has never been adopted in Canada. Therefore, all subjects except those which are illegal may be negotiated. With regard to labor/employment arbitration, there are commonalities (arbitration proceedings, court deference to the arbitrator’s decision, arbitrators selected by the 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 647 parties) with the manner in which arbitration is conducted in the United States and Canada; however, there are significant differences. 1. In the United States, arbitration is considered a matter of private contract between the parties; in Canada, arbitration is considered as having both public and private elements. 2. In the United States, individuals other than the parties may attend the hearing only with permission of the parties; in Canada, the issue of whether the hearings are conducted publicly is decided by the arbitrators. 3. In the United States, the arbitrator’s decision will not be published without the consent of the parties; in Canada, arbitration decisions are required by law to be filed with the government, to be accessible to the public, and to be reported to law publishers. 4. In Canada, arbitrators have exclusive jurisdiction to decide matters relating to employment-related G legislation such as discrimination issues; in the United States, employees who alleged legal violations, such as race, gender, age, disabilities, etc., A through the administrative and court system. still may proceed 5. In Canada, arbitrators can consider and apply external statues in the deliberations; in T the United States, arbitrators as a general rule do not consider external statutes unless there is E a clear direction from the parties or the contract.46 S In 1991 the Supreme Court of Canada rendered a ruling opposite to the Beck decision in the United ,States (see Chapter 4). Unions can use membership dues for activities not directly related to collective bargaining, including political contributions. If the decision had gone the other way, unions would have seen their political activities thwarted by lack of funds D and a restriction on their support for the New Democratic Party (NDP).47 E These differences in labor relations between the United States and Canada can be A of causes: attributed to a variety 1. Labor relationsNin Canada are mainly a responsibility of the governments within each province; D only 10 percent of the workforce is under federal jurisdiction. 2. The Canadian public is generally more receptive to regulatory intervention by the government. R 3. The U.S. Bill of ARights has no independent guarantee of freedom of association; in Canada, respect for group or collective rights are included in the Charter of Rights and Freedoms. 4. The government 1 in Canada is a parliamentary democracy where the executive and legislative functions are mingled. Such structure enhances the capacity of the government to change1laws rapidly. 5. There has been2a greater willingness in Canada than in the United States to adhere to international labor standards.48 3 T America, and South America Mexico, Central Collective bargaining Sin Central and South America is less extensive and sophisticated than corresponding activities in the United States; however, the number of labor agreements has been increasing. About one-fifth of the employees are covered by labor agreements in Mexico, Venezuela, and Argentina—much more than in the United States. This amount reflects more of a government extension of contract terms than actual industry-wide 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 648 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems bargaining patterns. The extent of development of collective bargaining may be illustrated in three categories: 1. The advanced group, as exemplified in parts of Mexico and Argentina. 2. A much larger middle group in which bargaining ranges from advanced collective bargaining with larger firms to very simple or no bargaining in smaller firms, as in Chile and Brazil. 3. A large third group in which collective bargaining is not widespread, as in Costa Rica, Ecuador, and Nicaragua. Mexico is the second largest trading partner of the United States and has the twelfth largest economy in the world. Mexico has paid a high price for its stability in terms of corruption and lack of democratic processes due to decades of one-party rule by the Institutional Revolutionary Party (PRI). However, Mexico is a model of stability when compared to many Latin American countries. Union membership in Mexico declined from over 30 percent in 1984 toG 20 percent in 2010. However, because of the variety of unions in Mexico, sometimes it is A difficult to determine whether a worker is really a union member. Confounding the determination of the number of union members is the presence of “company unions” (ghost T unions) which negotiate protection contracts with employers, whereby the union collectsEdues from workers but protects the company from organizational campaigns by other unions. By allowing the less intrusive ghost unions to organize, the company is not subjectSto organizing campaigns from legitimate unions. Most unions are in confederations that have traditionally been in alliance with the , PRI. The largest is the Confederation of Mexican Workers (CTM), which claims 5.5 million members. The Revolutionary Workers and Peasants Confederation claims between two and four million. Teachers D are the most heavily unionized at 65 percent, and the dominant teachers union is the National Union of Education Workers, which is affiliated E with the independent Democratic Federation of Unions of Public Servants.49 A central bodies have long sacrificed freedom of action to The traditional labor union gain political influence and position. However, the importance of political influence to N workers has declined as the economy has decentralized and privatized. Today, unions D through enterprise collective bargaining and less through must obtain more for workers influence with the government. Faced with NAFTA and international competition, R unions and employers are finding it increasingly necessary to work together to improve A and quality if companies and jobs are to survive and profproductivity, competitiveness, its and wages are to increase. Mexico has undergone profound changes over the last 20 years. It has changed from 1 economy to become part of the open market economy. It a closed, import-substitution has joined the Organization 1 for Economic Cooperation and Development (OECD) and entered into the North American Free Trade Agreement (NAFTA) in 1994. Mexico is 2 experiencing a dramatic political change from a system dominated by the Institutional Revolutionary Party (PRI)3for more than 70 years with strong worker and peasant sectors and featuring leftist, nationalist, and often anti-American rhetoric, to a more multiT party, democratic system with a closer relationship with the United States. Of the over 40 millionSin the economically active population, about 39 percent are employed in the formal sector. These jobs are covered by social security and related programs funded through employer and smaller worker contributions (medical care, small pensions, IRA-like compulsory retirement savings plan, and a housing loan fund). The formal sector workers also receive profit sharing. Another 20 percent of the economically active population works in tiny enterprises in the semiformal sector, where few are 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 649 covered by social security. The remaining 40-plus percent are marginally underemployed or self-employed in the informal sector. Mexico has comprehensive, progressive labor laws; however, there are major enforcement deficiencies. Its constitution and laws provide extensive rights and protections for labor and favor union organization. Mexico has ratified 78 International Labor Organization (ILO) Conventions, and 68 are currently in force. The legal protections for union organization also can unintentionally protect and facilitate racketeering, sweetheart protection contracts, and undemocratic practices in many unions. These practices have been fairly widespread, but not universal. The CTM has recognized the need to address corrupt practices and has agreed to promote changes that would lead to the elimination of protection contracts. Nevertheless, such contracts are with respected businesses, and more than 50 percent of all labor contracts contain sweetheart protection clauses.50 One of the most important developments in the past decade has been the Mexican Supreme Court’s decision on May 11, 1999, which recognized the legitimacy of independent unions that were notGaffiliated with the CTM. This decision allows employee groups of 20 or more the right to form A unions on their own. To obtain protection under the law and to conduct collective bargaining, the unions are required to register with the Secretary of Labor and T the government has been willing to deny some new union registraSocial Welfare. However, tions, and this denial Ehas become a weapon to be used to prevent the more activist independent unions from representing workers. In addition, labor laws in Mexico permit exclusion clauses, which allowSfor restrictions on hiring (essentially a closed shop [see Chapter 4] that requires potential employees to become union members before they can be employed.51 , The Mexican Constitution and the Federal Labor Law guarantee the right to strike; however, a six to ten days’ notice is required, followed by government mediation. If a strike is ruled nonexistent or illicit, employees must remain at work, return to work D within 24 hours, or face dismissal. If the strike is ruled legal, the company must shut E down totally, management may not enter the premises until the strike is over and striker A be hired. In the administration of these laws, unions have accused replacements may not government authorities of stretching the legal requirements to rule that strikes are nonN existent or illicit so that they can prevent potentially damaging strikes. Under MexicanDlaw, closed shops are allowed in collective bargaining agreements, as are exclusion clauses, R which allow union leaders to veto new hires and force the firing of anyone the union expels. Under Mexican law, several mandatory benefits and protections are provided.AWork shifts are eight hours for the day shift, seven hours for the night shift, and seven and one-half hours for a mixed shift. The work week is 48 hours with a full day of rest. Workers are paid double for overtime and triple for more than 1 is voluntary and often refused. A Christmas bonus equal to at nine hours. Overtime least two weeks’ wages 1 must be paid to employees in December of each year. Mexican workers are guaranteed seven holidays per year and are paid double time for work on 2 are entitled to six working days of paid vacation after one year of holidays. Employees service, with more days 3 added as the years of service increase. Employees are entitled to a vacation bonus equal to 25 percent of the weekly salary. Employees are also entitled to severT ance pay when termination is without “just cause”; however, this money is usually paid any way rather than theS employer trying to prove just cause to the labor board.52 The Conciliation and Arbitration (JCA) boards help workers and employers resolve labor disputes. If an employer violates a worker’s rights, the worker can file a claim with the local or federal JCA. Also, if the employer fails to comply with the collective bargaining agreement, the union can file a claim with the local JCA.53 Under Mexico’s constitution, workers are entitled to participate in the profits of the enterprise. Employees participate in the profits at a percentage rate fixed by the National 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 650 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems Committee for Workers’ Profit-sharing in Enterprises. This committee is required to consider the general condition of the Mexican economy, the promotion of industrial development, the right to obtain reasonable interest on capital, and the necessity of reinvestment of capital. Fifty percent of the profit shared is distributed equally among employees in accordance with the number of days worked during the year. The remaining 50 percent is distributed among eligible workers in proportion to the earnings for the year.54 The opening of the Mexican markets to NAFTA and international trade, the devaluation of the peso, plant closings, and corporate downsizing to become more competitive have created an economic challenge for the entire country. Free collective bargaining in the last few years has been limited voluntarily and replaced by annual national pacts negotiated by the government, the major trade unions, and employers with the major goal of controlling inflation. Many efforts have been made by employers, unions, and the government to create greater flexibility and labor–management cooperation to G and employee renumeration.55 improve productivity, quality, Since NAFTA was enacted, there have been numerous alliances and exchanges A between Mexican, U.S., and Canadian unions. AFL-CIO officials have agreed to exchange visits of union T officials and labor lawyers. The United Auto Workers and Canadian Auto Workers have E conducted safety and health training in Mexico. The Steelworkers have provided financial assistance to Mexican unions to assist their organizing S efforts. There have been worker-to-worker exchanges which help to erase stereotypes of both U.S. and Mexican workers by providing workers on both sides with opportunities , to cross the borders and tour plants, attend union meetings, work on organizing drives, and walk picket lines. As an example, union organizers from Mexico went to Milwaukee to meet with Mexican workers D to speak of their own experience in telling them that the U.S.-based United Electrical Workers was a democratic union, unlike some unions E (ghost unions) in Mexico.56 Beginning in the later A 1980s, most countries in Central and South America reformed their regulations of labor relations. In 1988, after two decades of military dictatorship, N the Brazilian government reinstated collective labor rights and expanded unionization D Four countries—Chile, El Salvador, Nicaragua, and rights to public employees. Panama—reduced the number R of workers required to form a union. On average, 20 workers are needed to form a union in the region. Countries eased their strike regulaA Nicaragua, and Peru now require a simple majority of tions. The Dominican Republic, workers in a work center to call a strike. Argentina and Peru gave unions the legal right to obtain financial information from the employer to facilitate collective bargaining. Guatemala simplified the 1 procedures for forming unions and increased employer fines for violating labor laws. 1 Although laws have been passed to enable union organizing, the number of union members has declined. As2 well, although requirements for calling strikes have eased, fewer strikes have occurred 3 throughout Central and South America. In some countries, strikes are rare. For example, in Costa Rica, there have been only two legal strikes in the T last 50 years. Another problem is the lack of adequate enforcement and the failure to fund the enforcement agencies. S For example, in Bolivia, there are only 18 workplace inspectors in La Paz, a city with over one million people. In Brazil, three million worker complaints lingered in the labor courts in 2003, and some cases took five to ten years to resolve.57 With the outsourcing of manufacturing jobs to Central America, primarily from the United States, it is theorized that manufacturing workers would achieve greater economic benefits through higher wages and improved working conditions and this economic 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 651 growth would enhance union-organizing power. To the contrary, MNCs have restructured their operations by increasing their outsourcing or subcontracting of parts of the production process to independent rival firms located in developing regions, thereby forcing small firms to compete for a limited number of contracts and putting pressure to lower costs and remain non-union.58 Negotiations between unions and employers in Central and South America take place primarily at the plant level. Only Argentina, Venezuela, and Mexico have widespread industry-wide bargaining. The principal reason for this arrangement is that legislation in the various countries typically does not require employers to bargain except at the plant level. In the more industrialized countries of the world, people interpret labor–management relations to mean the wide range of relationships between employers and employees. However, people of Central American countries tend to define labor relations in terms of the voluminous labor codes and government regulations. Labor relationsGvary widely among the countries in Central America, but they have one common feature: A a close connection between trade unions and political parties. For example, in Mexico, unions constitute a large section of a political party and therefore T of candidates on the party’s ticket for office. Thus, unions have are assigned a quota some assurance of E having a voice in the party’s program and on its council. Some unions have been very effective in gaining relatively high wages for members. For example, the electrical workers S in Mexico earn two to three times more than the urban working have been criticized because they have made gains for their class.59 Likewise, unions , own members while neglecting the interests of the great mass of people, including the peasants, who are terribly poor. Labor agreements D vary in content both within countries and among countries. In Argentina, labor agreements include provisions that set forth in some detail the employE ment conditions and establish a highly developed shop steward system to administer A that employers abide by the agreements. In Chile, labor agreegrievances and ensure ments are more general, but they do establish certain minimum rules and include a N grievance mechanism to enforce the agreement. In Brazil, where unions have struggled since 1945 to haveDa greater say in determining employment rules and conditions for their members, they Rhave achieved more through labor legislation than by engaging in collective bargaining. A countries, political parties maintain close ties with unions for In Central American their support, votes, and influence. Likewise, trade unions depend on the politicians for laws to protect their members, to legalize their organizations, and to regulate their relations with employers. On1the other hand, political parties have appealed to organized labor to favor their own policies, 1 and in some cases, they have accommodated organized labor in hopes that it will remain satisfied and continue to support the existing economic and polit2 ical system.60 The United States 3 has signed a free trade agreement, the Dominican Republic–Central America Free Trade Agreement (DR-CAFTA), with the countries of Costa Rica, El T Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. Eighty percent of U.S. exports of consumer and industrial goods from Central America and the DominS ican Republic will become duty free immediately with the remaining tariffs phased out over ten years. U.S. exports that will benefit are information technology, agriculture, construction equipment, paper, pharmaceuticals, and medical and scientific equipment. Tariffs on U.S. autos and auto parts will be phased out within five years. DR-CAFTA addresses worker rights protections with a three-part strategy intended to ensure effective enforcement of domestic laws, establish a cooperative program to improve labor 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 652 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems laws and enforcement, and build the capacity of Central America and the Dominican Republic to monitor and enforce labor rights.61 Cuba Although not a major trading partner of the United States, Cuba, which is the largest island nation in the Caribbean Sea, is on the brink of social, economic, and political change. With the Helms-Burton Law designed to discourage foreign investments and the demise of the Soviet Union (Cuba’s major source of economic subsidies), Cuba has been struggling to survive, and its future direction is not entirely clear. As with the former Soviet bloc countries in Eastern Europe, an option for change is toward economic privatization and political democracy. If this occurs, the developing relationships between government, business, and labor will need to be examined. Before the 1959 revolution, Cuba had more organized workers than any other Central American country except Mexico, Brazil, and Argentina. In the 1960s, labor unions G were replaced by the Advanced Workers’ Movement, which comprised between 10 and A The role of labor unions was curtailed, and unions were not 15 percent of the workforce. deeply involved in defending T workers’ rights and had little input on employment-related matters. As labor became dormant, Cuba attempted to transition to a “planned” market E success. With failures in agriculture in the 1970s, Cuba economy, which had limited began to reactivate the role S of labor unions by encouraging worker input into decision making, defending workers’ rights, and informing managers of current and impending , process. problems in the production Trade unions in Cuba must become part of the system and contribute to it. There are no independent and autonomous trade unions. In fact, independent trade unions are prohibited by law, and theD law does not provide for the right to form unions, the right of collective bargaining, or the Eright to strike. Five Cubans are currently serving prison sentences for having tried to organize independent trade unions. A In 2011, Cuban Premier Raul Castro (who replaced Fidel Castro in 2008) announced a plan to gradually cut as many N as one million jobs from the public sector, 20 percent of Cuba’s workforce. Some experts view this move as a step toward transformation of D Cuba’s communist economic model to a more market-oriented one. It is predicted that R hundred thousand workers will move from the public to over the next five years, several the private sector. This government plan has failed to provoke any protest or criticism A from the Cuban Workers Federation (CTC), the state-run union and the only officially recognized trade union in Cuba. To the contrary, the CTC will help implement the cuts, which will generate widespread 1 insecurity and anxiety. Salvador Valdes Mesa, the CTC’s chief, was appointed by the ruling Communist party rather than being selected by union 1 independent unions. The laid-off workers can seek compenmembers as is the norm for 62 sation for one month’s salary 2 for every ten years on the job. As countries in Eastern Europe have moved toward more democratic and pluralistic economies, so shall Cuba 3 in time. The future choices will then be the various forms of labor participation programs, T such as work councils, employee collectives, and greater reliance on collective bargaining at the enterprise level. Unions have become the primary S represented. Unions represent a broader segment than their means by which workers are membership; they represent retired pensioners, the unemployed, and so on. Unions in Eastern Europe have become political partners within the framework of tripartite arrangements (government, labor, and management). Whether these approaches are suitable for Cuba’s transition is open for debate. What is certain is that the economic globalization trend will continue, posing the question as to what extent Cuba will participate in that process. 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 653 Western Europe In Western Europe, union density is significantly greater than in the United States, with the exception of France and Spain. Of the largest countries, the range is from less than 10 percent in France to over 60 percent in Denmark, Finland, and Sweden. Unions have been able to use this membership strength to accumulate political influence at the national level. Furthermore, they have been able to coordinate their efforts with large, well-established labor parties in government to achieve their goals. As in the United States, union membership in Western Europe has declined. Nationwide and industry-wide bargaining is less frequent, and employers are winning more concessions for efficient work rules and wages. Also, as in the United States, unions are trying to sign up new members in growing industries, such as leisure and finance, where technological change has fueled worries about job security.63 Unions have achieved significantly greater worker participation in the operation of the firm— many times through legislative mandate and sometimes through management reaction G worker dissatisfaction. In addition, public opinion in these counto wildcat strikes and tries strongly supports A the idea that worker participation enhances production, fosters harmony, and enriches the workers personally. T The labor relations system in Western Europe can be contrasted with that of the United States in a E number of ways.64 S unions are selected by the majority of the appropriate bargain1. In the United States, ing unit and certified as the exclusive bargaining representative, whereas in Western , Europe, exclusive representation is not a common concept. 2. In the United States, the exclusive bargaining representative has a monopoly over all employee bargaining, D and the employer is required to bargain only with the legally certified union. In Western Europe, the employer often bargains with a number of E to worker councils elected by the employees. unions in addition 3. In Western Europe, A negotiations take place between representatives of employer associations and those representing a confederation of unions; in the United States, N arrangement is adopted in only a few industries, primarily this bargaining construction. D 4. In North America, the focus of union–management interaction is the shop floor, R bargaining at national levels is the major focus of most unions.65 whereas in Europe, 5. More fringe benefits A are established by law in Western Europe than in the United States; therefore, trade unions have found that they can obtain benefits more quickly through the political process and have tied themselves more closely to political parties. 1 countries have a greater commitment to employee training. For 6. Western European example, German firms spend twice as much on this activity as U.S. firms, or nearly 1 17 times as much per apprentice. About 65 percent of each class of middle school 2 graduates in Germany enter apprenticeship training. In contrast, 57 percent of high school graduates in the United States enroll in postsecondary education, and the 3 majority drop out before graduation. T One major reason for the disparity in support for employee training between GerS States is the role of unions and employer associations. German many and the United companies band together in employer associations to negotiate with unions over wages and other personnel matters, such as training. Because unions are stronger in Germany, the labor agreements require investments in training, and collective bargaining provides the mechanism for collecting union dues and fees. This approach is similar to the highquality apprenticeship programs financed by contracts between craft unions and employer associations in the U.S. construction industry.66 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. 654 PART 4 • Applying the Labor Relations Process to Different Labor Relations Systems European Union (EU) By 1992 the economies of 12 countries in Western Europe (Belgium, Denmark, Germany, Greece, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom) were joined together as the European Union (EU) (see Exhibit 14.6). In 1995, Austria, Finland, and Sweden joined the EU. By 2007, the EU had a membership of 27 countries with a combined population of over 1.5 billion and an economy of over $16 trillion, the largest in the world (see Exhibit 14.6). The EU’s goal is the gradual elimination of economic barriers among member countries and removal of restrictions on the movement of goods, capital, and labor across Exhibit 14.6 The European Union G A T E S , Iceland Joined in 1995 Original Members Sweden Members in 2004 Norway Admitted in 2007 D E A Denmark N Netherlands Belgium D R Germany A N. Ireland Ireland Great Britain France Portugal Spain Estonia Latvia Kalingrad Lithuania Russia Belarus Poland Czech Rep. Luxembourg 1 1 Switzerland 2 Slovenia 3 T S Finland Austria Slovakia Hungary Romania Croatia Italy Ukraine Moldovia Serbia Bulgaria Montenegro BosniaHerzegovena Turkey Albania Macedonia Greece Malta Cyprus 9781285982953, The Labor Relations Process, Tenth Edition, Holley/Jennings/Wolters - © Cengage Learning. All rights reserved. No distribution allowed without express authorization. CHAPTER 14 • Labor Relations in Multinational Corporations and in Other Countries 655 Exhibit 14.7 Employment-Related Elements of the Charter of Fundamental Rights Prohibition of slavery and forced labor Protection of personal data Freedom of assembly and association, including trade union matters Freedom to choose an occupation and the right to engage in work Equality in employment matters including prohibition against employment discrimination based on sex, race, color, ethnic or social origin, nationality, genetic features, language, religion, disability, age, or sexual orientation Information and consultation Right of collective bargaining and action Right of access to placement services Unjustified dismissal Fair and just working conditions, including health, safety, and dignity G A Family and professional life, including protection against dismissal connected to maternity andTthe right to paid maternity leave and parental leave following birth or adoption of a child E assistance in cases such as maternity, illn...
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Explanation & Answer

Attached.

Running head: EMPLOYEE MANAGEMENT AND LABOR UNIONS

Employee Management and Labor Unions
Name
Institution

1

EMPLOYEE MANAGEMENT AND LABOR UNIONS

2

Employees work under different conditions with a critical focus on the need to outline
essential concepts that define their wellbeing. Human resource management integrates different
concepts where it is possible to describe key measures that positive influence employee
performance. However, dealing with individual employees is a challenge considering that a lot of
time is wasted when every employee presents that their needs and challenges. In situations where
employees are viewed as inferior, it is easy to victimize their actions and make a greater
determination regarding crucial elements that define essential processes that determine a
successful development and discussion on the underlying measures. The incorporation of labor
unions within different workplaces is a strategic move that is aimed at improving organizational
commitment and the ability to implement positive change.
Labor organizations play a crucial role in defining the label of interaction within a
workplace as well as taking into consideration the occupational health and safety of all
employees. These measures are evaluated to ensure that employees remained committed and
motivated to work since the management cannot victimize a single employee when a labor union
is advancing specific concepts that are aimed at improving their ability to perform their functions
effectively. Different countries have different guidelines which define the level of engagement
under which labor organizations are formed and function. Therefore, there is a need to
understand the different situations under which labor organizations are effective in managing the
needs of employees across different settings.
Briefly describe how co-determination works in Germany.
Co-determination is an essential aspect within organizational management which takes
into consideration the input of employees in decision making. Codetermination is a principle that
is deeply rooted in German corporate governance thus provide a critical focus on the underlying

EMPLOYEE MANAGEMENT AND LABOR UNIONS

3

measures which give a more significant influence on the social environment. The basis of codetermination is improving the level of interaction within a global context where it is possible to
integrate key measures that define a highly successful operational setting. Decision making
within a workplace environment requires the integration of essential elements which provide a
higher evaluation of crucial elements which define positive measures that represent a highly
successful development concept (Bain & Co, 2016).
Therefore, ensuring that the needs of employees are integrated into every decision
making is essential and help outline strategic concepts under which it is possible to embrace the
change process. The objective of co-determination is to make the investments in human capital
profitable and rewarding based on employee loyalty and ability to integrate positive concepts
which define a beneficial workplace setting. Worker representation within a workplace
environment outline specific elements which help in creating a profoundly transformed setting
where it would be possible to achieve the desired objectives. When employees participate in
important organizational concepts, they can understand their value which is essential in creating
a highly diversified engagement (Whittall, 20...


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