HRMT20029 : International Employment Relation

role of state in employment relations
Assessment 2
Khushi Vasireddy
12106615
HRMT20029

12106615 CQUniversity HRMT20029
TABLE OF CONTENT
Executive summary………………………………………………...…
2
Introduction…………………………………………………………………...…3
Historical Context……………………………………………….…...………….3
Role of State…………………………….……………………….………………4
 IR Legislation…………………………………………………………….5
Employment relations in Germany………………………………………………
5
 Collective bargaining………………..……………………………………5
 Work council and
unions………………………………………………….6
Employment Relations in Japan…………………………………………………
6
 Trade unions in japan…………………….
……………………………….6
 Joint Labour-Management
Consultation………………………………….7
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12106615 CQUniversity HRMT20029
Atypical employment in Germany and Japan……………………………………
7
Conclusion………………………………………………………………………9
Reference………………………………………………………………………10
Executive summary
For this assessment I have compared the role of state for Germany and Japan. Although
being on different continents they have developed into coordinated market economies.
Typically, Asian countries like China, South Korea or India have liberal market economies
where the Labour laws are left for the market to be regulated. Japan is an exception to that.
Similarly, countries like US, UK or France in the western developer are also liberal market
economies, whereas Germany is not. I have done showed the impact of trade unions and
work councils for Germany followed by the unions and Labour management consultation for
Japan which are the basic ways the state plays a role in these countries. As the rise of
atypical employment has impacted both these traditionally coordinated countries, these have
been shown using graphs. Finally, the similarities and dissimilarities are explored followed
by the conclusion.
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12106615 CQUniversity HRMT20029
Introduction
All industrialised countries are generally either Coordinated Market Economies (CMEs) or
Liberal Market Economies (LMEs). The political preferences of large businesses and
strategic options that generate domestic produce are driven by the different types of
workforce skills. CME's generally have workforce which has specific skills. The employers
tend to give training in intensive programmes. The workforce and employers have extensive
negotiations regarding the issues relating to employee development. They usually produce
blue collar work skills sets (Wilkinson, Wood and Deeg, 2018). In countries that have the
liberal market economies the issue of coordination between the firm and its employees and
also its other stakeholders are resolved through market mechanisms. In essence these are free
market economies (liberal market economy, 2020).
Germany is a coordinated market economy, which has companies that are focused on a fixed
set of high-quality products, adequate and sufficient skilled workforce pool. They have very
strong and developed long term relationship between company and employees, with great
opportunity for debate and negotiations to achieve greater benefit to the economy (Germany:
rebalancing the coordinated market economy in times of disruptive technologies — Policy
Network, 2020).
Japan, similarly, is also a Coordinated Market Economy, whereby most of the workforce is
getting trained at the beginning of their work life or career. The state plays a role in ensuring
the workforce is coordinated with the employers by setting principles that are beneficial to
encourage collective bargaining.
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12106615 CQUniversity HRMT20029
Historical Context
Germany and Japan both suffered defeat after WWII. Germany after the war had a different
situation compared to Japan. In Germany, the country was divided into East Germany which
was dominated by the Soviet bloc and West Germany which was controlled by the western
allies like US and UK. During these time, West Germany was making progress in terms of its
industrial relations and the Labour market was getting established and developed into a
coordinated fashion. The work councils and trade unions were being established during these
times as well. It took several decades until the beginning of the end of Cold War when the
Berlin Wall was taken down, that the whole German country was being uniform in terms of
Labour laws.
In contrast Japan already had a very strong work culture among the Labour force. Straight
after the war, with the persuasion of the US government which occupied Japan at the time,
the union movement had been established.
Both these countries have strong Labour - Management ties, However the role of state has
deferred. German government intervention has been strong while Japanese government has
gradually liberalised, but still being a very coordinated market economy.
Role of State
The role of state can be similar and different in the case of industrial countries like Japan and
Germany. While comparing countries like Japan and Germany we tend to find many
similarities like, the state is acting as the role of employer to the employer who employs civil
servants. That is the traditional role of the state in most of the countries by providing a legal
framework to regulate the bond between the industries that the employers and the employee.
As the state passes ER and IR legislation in terms of regulating the relationship between the
employer and the employee. According to (Chand, 2017) The state of Japan has passed
Public Order Act in 1900 has this act states that workers who are not allowed to work in any
company are allowed to form trade unions while in Germany state passes a law of world
council act in 1952 this law states that the representation of employee must be accepted by
the company board.
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12106615 CQUniversity HRMT20029
As we see the contrary the role of state in between Germany and Japan, Germany plays more
active role within the employment relations that is the state of Germany help both employee
and the employer actively by maintaining peaceful industrial relations environment (Chand,
2017). While the state of Japan placed less involvement in state and trade unions having no
close relationship this support to the employee an employer only exists through Social
Democratic Party to trade union. This demonstrates that the real main difference in the role of
state in Japan and Germany, moreover in the history it was said Japan always maintained
peaceful relations within the employee an employer then any industrial country even
compared to Germany. As this country are called mother of industrial relations trying to
maintain friendly environment. Which is obvious that both the states when compare have
similarities and differences while we look upon some areas.
IR Legislations:
IR legislations are one of the most essential aspect of employment relations in industrial
companies that is it is mainly provided by the state in regulating the relationship within an
industrial employment basis. There are various kind of IR legislation followed by Japan and
Germany in the case of employment process.
Japan and Germany have major similarities in IR legislation that is the state place main role
of enforcing and passing IR legislation in both the countries. According to (Chand, 2017)
states that the one main type of legislation being passed by this state in Japan and Germany
such as Public Order Act 1900 in Japan. In Germany the legislation passed by the state is co-
determination act 1951. As competitively it been observed that the both the countries are
expanding the legislation act and making it more convenient to the employee and the
employers in the recent years.
Conversely, in the case of Germany the legislation that states the directors in company board
are only allowed to become the employee representative where in Japan most of the
legislation encourage the right to individual workers. This is a major difference observed in
both the countries in terms of higher legislation.
Employment Relations in Germany
Collective Bargaining
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12106615 CQUniversity HRMT20029
In Germany they have a system of industry wide collective bargaining. Almost half of all
German enterprises adhere to collective bargaining and more that three fourths of all
employees are part of the collective bargaining. This system has two main benefits, on one
hand, this system strengthens the solidarity among employees of different firms and also
different industries. On the other hand, the industry as a whole can homogenize the quality of
output from these firms by setting the standards of product and the efficiency of procedure.
Firms that are lagging in these standards will be forced to better the quality of work and
standards for their employees. As can be deduced that having the high standards of efficiency
and quality of output, the costs of employment are maintained at a high level as well (Moore,
2004).
Work Council and Unions
The German system of Employment relations has two ways in which an employee of the firm
is can connect with their employer to raise any issue, these are through Work Council or
through Unions. Work Councils are regulated by the Work constitution Act (WCA) which
was established in 1952 and then revised in 1972 and 1989. These work councils are elected
out of the whole work force of the firm, whereby five or six permanent employees make up
the council. These councils have veto rights in a broad range of decisions made for the
employees by the firm. These include introduction of new payment methods, allocating
number of working hours, how the employee performance is monitored, amount of penalty
rates and obtaining information regarding financial and economic matters of the firm (Hubler
and Jirjahn, 2003).
The Federal Constitution of Germany upholds Freedom of Association, which means that all
employees have a right to join unions, although it is voluntary. The collective bargaining of
the employees is the domain of the Trade Unions. Most of the time, the members of the work
council are also members of the union. There three major competing trade unions in Germany
covering 7.8 million workers in 2018. The trade union are the only ones entitled to negotiate
collective not the work council. The work council is tasked with implementing the agreed
policies (Behrens and Dribbusch, 2018).
Employment Relations in Japan
Trade Unions in Japan
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Historically, the Japanese trade union movement only started after the end of the WWII when
the US occupation, encouraged workers to demand better conditions and better wages. Due to
this in the beginning the trade unions were large in number as each firm had a union for itself,
sometimes, there different unions in different section or plants of the same company.
Gradually over time, these union numbers decreased as the union got organised along the
craft lines, like automotive union or retail union etc. However, since the 1980’s all these
union get merged and organised into two unions: Japanese Trade Union Confederation
(JTUC – Rengo) and National Confederation of Trade Unions(Zenrōren) (Japan - Trade,
2020).
Joint Labour-Management Consultation
In many countries the consultations or negotiations between the labour force and the
management of the companies needs to be regulated by the state machinery. Most enterprises
in these countries do not have voluntary acceptance of these consultation groups. The state or
the government has to intervene legally to make sure there are constructive improvements,
however, in Japan no such legal intervention was required. After the WWII, there were major
disputes between the workforce and the management. So, in 1955, the Ministry of
International Trade and Industry (MITI) promoted the Productivity Increase Movement and
established the Japan Productivity Centre. The centre has been the mainstay of Joint Labour
Management consultation, which essentially ensures that a) if productivity increases, the
redundant employees cannot be laid off, they should be trained to do alternative tasks, b)
Labour management consultant must be appointed and c) Fair distribution of the benefits
gained due to the increased productivity among the workforce and the management (Araki,
2020).
Atypical employment in Japan and Germany
As atypical forms of employment are encouraged by the state in mostly in the industrial
countries like Japan and Germany be growing in part time jobs, fixed term contracts, part
time contracts will be flexible for the company and the employee. At same time as state rate
it this type of employment riskier and with minimum job security for both employer and
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employee. State Social Security systems are usually depending on the full time and in
uninterrupted employment (Seifert, 2011).
Similarities in Japan and Germany in terms of atypical employment.
 Both the countries face similar challenges in the mind of supply on Labour markets
 Japan and Germany are industrially strong and mainly depend on export when
compared to other industrial countries (Seifert, 2011).
 As both are export dependent they have high wage economics and largely depend on
quality-based performance at the same time these countries are highly dependent on
global markets hence they are export dependent and flexible supply chain.
 When it comes to Territory sector Japan is bitless exposed to international
competition when compared to Germany. Has Germany is in European continent the
regulations of free movement of Labour in the European Labour market has coming
into foam in 2011 which increase the Labour cost competition.
As we see the above atypical employment graph in Japan and Germany they both have all
most same similar result. When, Germany has 37% of atypical employees and Japan has
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12106615 CQUniversity HRMT20029
34% of atypical employees in both countries. Most atypical employees take place in part
time working as it is also developing recently (Seifert, 2011).
Has we see the above comparative graph we discovered that the Germany has more or less
constant development of fixed term employment that is only 8.9% in 2007 survey, where did
Japan has more fixed term employees by 14% which is increased since the mid-1990s
(Seifert, 2011).
Conclusion
Employment relations are always evolving to the needs of the management and the
workforce. It is a balancing act. Sometimes these conflicts cannot be resolved by the
enterprise or the firm, hence, there is always a need for the state to intervene to make laws
and regulations to ensure there is minimum discord between the management and the Labour
force. All countries have these regulations. Some countries have deeply penetrating laws
which encompass all aspects of Labour management. Whereas some have generalised
regulations and leave the micromanagement to the industry, enterprise or the firm. In case of
Germany and Japan I found that there are several similarities like incentive based on
longevity and loyalty are very strong. However, the influence of the unions is very different
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in both these countries. The work councils in Germany are enforced and necessary however
in Japan the Labour management consultant are voluntary but widely prevalent.
Reference
Behrens, M. and Dribbusch, H., 2018. Employer Resistance to Works Councils: Evidence
from Surveys amongst Trade Unions. German Politics, 29(3), pp.422-440.
Chand, A., 2017. MG316:Comparative Employment and Industrial Relations: Study Guide.
Suva: University of the South Pacific.
Hubler, O. and Jirjahn, U., 2003. Works Councils and Collective Bargaining in Germany:
The Impact on Productivity and Wages. Scottish Journal of Political Economy, 50(4),
pp.471-491.
Moore, F., 2004. Book Review: The Changing Contours of German Industrial
Relations. Work, Employment and Society, 18(4), pp.823-825.
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2006-jurgens_et_al-changing_work_and_employment_relations.pdf> [Accessed 8 October
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