THE ROLE OF UK GOVERNMENT IN EMPLOYMENT RELATIONS
Table of Contents
I. Introduction
II. The Government as an Actor in the Employee Relations System
III. The Importance of the Government’s Influence on Employee Relations
IV. Implications of Policies and Strategies on Economic and Social Environment
V. Government’s Approach to Employee Relations
VI. Government Activities in the Labour Market
A. Dealing with Unemployment
B. Dealing with Labour Flexibility
VII. Individual Employment Protection Legislation
VIII. Conclusion
IX. References
I. Introduction
Traditional theories on social science have highlighted the role of government in any civilised society. The presence of a governing body establishes the ability to take on the subtle changes and faint alterations that could make or break the established systems in the state. In this paper, the discussions will focus on the role of the government in the context of employment relationship. The discussions will hold on to the assumption that the government takes on several roles in maintaining order in the existing system of employee relations in the labour sector. Specifically, this paper will be discussing the specific roles of the government as an actor in the employee relations system. Moreover, an analysis of the way the power of the government is used in the process will be given. In the same way, policies and the strategies that affect the labour sector directly will be examined. Specifically, the recent developments in the labour sector in UK will be taken into consideration. In doing so, a clear definition of the approach of the government on the general employee relationship is established. Along with this, issues like unemployment and labour flexibility will also be taken into account, including the courses of action that the government is taking to mitigate the implications of such issues. Furthermore, the protection system installed by the government for the employees will also be discussed. In this manner, a comprehensive account of the role of the UK government on employee relations is presented. The observations and arguments that are made in the following parts of the paper are to be supported by academic articles and scholarly journals that deal directly with the topic of employee relations, human resource management, and industrial relations.
II. The Government as an Actor in the Employee Relations System
The government plays an active role in the employee relations system. This paper claims that there are three areas on which the state is required to act and wield its influence in the labour sector. These areas include the economics involved in maintaining the labour market; the ratification of laws that protects both the employer and employees; and maintaining order in the labour sector.
In the context of economics, the state is required to act as a manager to address the factors that directly influences the labour sector. Specifically, the government has to balance out the economic implications of factors like inflation in the employment conditions of the public. Studies have indicated that unemployment tends to control the inflation rate of an economy. (Chase 1992, 23; Debelle and Vickery 1998, 384) Basically, the state is required to look into controlling the economic conditions of the state to determine the appropriate level of wage that employers could provide and how much union members could demand without compromising the financial standing of companies. (Kurz and Salvadori 1998, 129) This is reflected in the classical economic theory of David Ricardo. In the same manner, the state has to similarly take into consideration the possibility of intervening in the market economy as seen in the theory of Maynard Keynes. In a nutshell, the theory maintains that the state have to closely take into consideration the macro-level trends in the economy as it effortlessly influence the micro-level behaviour of people. In this regard, close consideration on these areas could establish stability in the labour market and consequentially with the employee relations system in the country.
Consistent with the theory of Keynes, the government thus have the responsibility to create laws that will provide a stable environment for employment. More specifically, the state has to create a viable tool to keep employers from the possibility of abuse of power over the employees. As Arestis and Bain (1995, 161) indicated, the government have to take “public control over private agents in the economy” by ratifying laws consistent with the economic theories. In this regard, employee relations with special reference to the labour market are managed. More specifically, the issues of the legal levels allowed for wages, salaries and benefits along with the limits and restrictions are thus established as the state adheres to the duty of creating the legal framework for this area. (Lettau and Buchmueler 1999, 122)
Along with the fact that the government has complete power to implement these ratified laws, they have the capability to alter it as they see fit. For instance, the parliament has the power to initiate any amendment on any law that could be deemed obsolete or have acquired a different interpretation from the courts of UK. In the same manner, the state is also capable of triggering change in the business environment for private companies. For instance, the state has the capacity to take varying stands on the regard of trading and operations of private firms. Control over the government departments and competition with the government-controlled corporations gives the state the ability to alter the environment which the private entities operate.
III. The Importance of the Government’s Influence on Employee Relations
In order to provide a clear picture of the importance of the government’s influence of employee relations, this part of the paper will discuss the existing conditions in the workforce of UK and the model at which UK employs in its employee relations scheme. Right before the turn of the century, UK along with the rest of Europe have been undergoing chronic unemployment. (World Economic Outlook, 1999, 88) In the past decade, changes have been seen as reflected in the ongoing studies in the working environment of the region. For instance, issues of diversity in the employee relations and retention in UK have contradicted the existing presumption of discrimination against ethnic minorities in the UK workforce. (Thomas 1998, 189) The said study has established that employers exercise fair judgment in hiring employees specifically based on merits and qualifications. However, there has also been an indication that there is an existing discrepancy of employment in terms of the geographical locations in UK. Issues of geographical mobility, regional unemployment, and disregard of local governments have triggered what has been noted as the “north-south” divide in UK. (Wilkinson 1992, 88) However, all these issues are in fact readily remedied by an improvement in the policies created by the state. In a study of Howell (1998, 293) he mentioned that the intervention of the UK government in these sectors of labour is always a sign of good governance. The recognition of the rights of unions as well as the restrictions on strikes all falls under the intention of the government to strike a balance on the economic implications of the conditions in the labour, both in public and private sectors.
IV. Implications of Policies and Strategies on Economic and Social Environment
The role of the government in the creation of policies that affect the employee relations in organisations is seen in the study of Howell. (1998, 293) In the case of UK, the regard of the parliament on entities like trade unions tend to reflect the policies made. For instance, the Thatcher regime in the later part of the 1970s regarded these trade unions as entities that possess unwarranted power over organisations. The study pointed out that the conservative party’s view triggered a progressive breakdown of this unwarranted power of the unions. For instance, the state implemented this initiative on public sector, specifically the government-controlled corporations which share similar characteristics as their private counterparts. Basically, the state has installed reforms that sought to improve the employee relations system in both private and public organisations. One such reform is seen in the pay policy of the government which creates the Pay Review Bodies (PRBs) to create an established set of criteria that will determine the wages and salaries of employees. (Howell 1998, 295)
In the same period, collective bargaining has been discouraged as the 1983 of the Fair Wages Resolution and 1972 Industrial Relations Code of Practice was rescinded. This takes away the legal foundation of trade union recognition and encouragement of collective bargaining. However, this does not mean that the said practice is outlawed. Employees are still allowed to carry out such industrial relation initiatives, for instance, collective bargaining is still being used by unions to establish the basic pay and conditions of employment. At some point, this seems rather effective as the frequency of strikes and work stoppage has decreased significantly in the 1990s and early 2000s. (Howell 1998, 295)
V. Government’s Approach to Employee Relations
As indicated in the earlier part of this paper, the approach of the government could be based on the theories of Ricardo (laissez-faire) or of Keynes (interventionist). Based on the previous discussion, it is more likely that that the UK government’s stands on employee relations is highly comparable to the theory of Keynes. As seen in the discussions of the changes in the policies above, it is apparent that the UK government is adhering to the assumptions held by the Keynesian theory. Specifically, while seeing its in an economic sense, the government sees the market economy on which industries’ operations are based on tend to be unsteady and rely highly on the caprices of investors and stakeholders. These characters tend to reflect relationship of the employers and the union and employees of organisations. This thus has a huge effect on the employee relations in organisations. For instance, the power of the trade unions over the organisations tends to hamper the productivity of both public and private entities once a disagreement emerges. At some point, one must recognise that these disagreements tend to be unproductive and even detrimental to the market environment and essentially to the employees. In the end, the intervention of the state has significantly levelled the playing field between the employers and employees.
VI. Government Activities in the Labour Market A. Dealing with Unemployment
A quite topical study has quoted a daringly claimed declaration from the Financial Times that the UK economy is becoming extremely better in providing employment to its labour force. (Fleetwood, 2001, 45) However, the arguments above maintained that a mere reduction in the unemployment rate is not a straightforward suggestion as to whether the trouble of unemployment has essentially been resolved. The said study even indicated that the matter of unemployment is simply being “transposed” to an issue of employment. This study therefore manifests that the subject is not as uncomplicated as sheer indication or assessment as to whether the labour force of UK is employed or not. There are other factors to be taken into account like whether the jobs are really given to workers trained and qualified for the position. This denotes that balance should be acquired as well on the subject of the skills of the employees and the job descriptions and requirements necessary for their employment positions. At any rate, the study still pointed out that unemployment in UK is distant from being completely solved.
In the same regard, the earlier account of the “north-south” divide in UK manifests structural unemployment. Structural unemployment determines the labour market imperfection of having a disparity of skills and location of the existing group of applicant of an economy. (Parker 1992, 101) This is likewise accurate in the creation of the process of retraining of these workers as among the results of the interindustry alterations came upon by the employee. (Parker 1992, 101) This essentially establishes that there is definitely a divergence in the skill level of workers in the economy of UK.
B. Dealing with Labour Flexibility
Other studies interpret labour imperfections like unemployment in a different light. There are studies that stated that unemployment tends to be helpful for an economy for the reason that it offers the labour market with an adequate quantity of potential workers in the job applicant pool. (Phelps 1990, 13) This denotes that for an economy, it is significantly necessary to have some level of unemployment so as to provide to the demands of labour. Nevertheless, it is similarly noted that the level of unemployment should be controllable such that it would not descend to a category which could be organized as a crisis for any financial system. Moreover, this feature of the labour market is perceived in the case of UK where businesses have to offer training for their worker pool in order to maximise their profits on their labour costs. This shows that the labour market could be flexible as indicated above as the workforce in UK engage in training practices even after they have been placed in a position for their company. In the same regard, initiative of the state to reduce the power of the unions significantly improved the labour flexibility as the possibility of union conflicts has significantly been reduced. (Uzzi and Barsness 1998, 975)
VII. Individual Employment Protection Legislation
The legal system has provided ample protection for the common worker. Aside from statutes, the common employee has the regard of common laws and previous decisions establish their rights and entitlements. Thus, employees have the protection of both the law and the courts in their side. Protection from unfair dismissal and wrongful dismissal are established in the laws of UK. Other protections are indicated in the context of redundancy, discrimination, and government sanctioned leaves and other benefits and incentives given by both public and private entities.
Other legal protection that shields the employee from abuse is seen in the following statutes:
Equal Pay Act 1970
Sex Discrimination Act 1975
Race Relations Act 1976
Disability Discrimination Act 1995
Protection from Harassment Act 1997
Public Interest Disclosure Act 1998
Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, SI 2000/1551
Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002, SI 2002/2034
Employment Equality (Religion or Belief) Regulations 2003 SI 2003/1660 (in effect from 2 December 2003)
Employment Equality (Sexual Orientation) Regulations 2003 SI 2003/1661 (in effect from 1 December 2003)
Employment Equality (Age) Regulations 2006, SI 2006/1031
VIII. Conclusion
The discussions above have presented a clear manifestation of the role of the UK government on protecting their employees. This is done through the analysis of the existing regard of the government with employee relations in UK. Based on the discussions above, it appears that the government regards the welfare of the common employee at the highest degree as seen in their approach towards employee relations. Though it has been indicated that the power of the labour unions have significantly diminished, this does not show that the government has lessen their regard on the welfare of the common employee. Furthermore, protections have been manifested in the form of statutes and legal precedent that could only stand for the level of concern of the UK government on their roles in employee relations.
IX. References
Arestis, P. and Bain, K. (1995)” The Independence of Central Banks: A Nonconventional Perspective.” Journal of Economic Issues. 29(1), 161.
Chase, E. III (1992) “The Wasteland Economics of High Unemployment.” Challenge. 35(1), 23.
Debelle, G. and Vickery, J. (1998) “Is the Phillips Curve a Curve? Some Evidence and Implications for Australia.” Economic Record. 74(227), 384.
Fleetwood, S. (2001) “Conceptualizing Unemployment in a Period of Atypical Employment: A Critical Realist Perspective.” Review of Social Economy. 59(1), 45.
Howell, C. (1998) “Restructuring British Public Sector Industrial Relations: State Policies and Trade Union Responses.” Policy Studies Journal. 26(2), 293.
Kurz, H. and Salvadori, N. (1998) Understanding “Classical” Economics: Studies in Long-Period Theory. London: Routledge.
Lettau, M., Buchmueller, T. (1999) “Comparing Benefit Costs for Full- and Part-Time Workers.” Monthly Labor Review. 122(3), 30.
Parker, J. (1992) “Structural Unemployment in the United States: The Effects of Interindustry and Interregional Dispersion.” Economic Inquiry. 30(1), 101.
Phelps, E. (1990) Seven Schools of Macroeconomic Thought: The Arne Ryde Memorial Lectures. Oxford: Clarendon Press.
Thomans, J. (1998) “Job Aspiration and Ethnic Minority Unemployment in the UK: Is There a Connection?.” Journal of Ethnic and Migration Studies. 24(1), 189.
Uzzi, B. and Barsness, Z. (1998) “Contingent Employment in British Establishments: Organizational Determinants of the Use of Fixed-Term Hires and Part-Time Workers.” Social Forces. 76(3), 975.
Wilkinson, D. (1992) “Has the North-South Divide Come to an End? – Prospects for Regional Unemployment.” National Institute Economic Review. 142, pp 88.
World Economic Outlook. (1999) “Chronic Unemployment in the Euro Area: Causes and Cures.” World Economic Outlook. pp. 88.
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