Industrial relations seek to understand the employment relationship and its institutions through high value, precise research (Kaufman, 2004). Industrial relations assume that there are not perfectly and equally competitive power between employers and employees. Moreover, some inherent conflicts of interest will be occurring between employers and employees, such as high wages versus high profits. When labor market as seen as unequally, conflicts occur in the employment relationship, managers or employers cannot always serve workers' interest to prevent worker exploitation in extremely cases. Therefore, industrial relations had transformed into employment relations that always protect workers' right with key institution, like government, trade union and employers' organizations. Besides that the help and support of key institutions, employment contracts play an important role inside employment relationship too. It's made employees got significant and bargaining power to fight for their rights against employers in this modern world. Kaufman (2004) claimed that industrial revolution created the modern employment relationship by spawning large-scale industrial organization with thousands of wage workers because of the roots of industrial relations.
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Employment relationship is the delicate communication between employers and employees working in exchange of pay. Kahn-Freund (1997) states human rights are restricted from command and obey when employment contract is established between employee and employer. The dimensions of employment relationship primarily revolve around power and control (Spooner & Haidar, 2006). The context within which intricate interactions between employees, who may be unionized, and employers are conducted, both collectively and individually symbolize employment relationship (Blyton & Turnbull, 1998).
Besides that, an employment contract is the agreement by employers and employees such as the employees agree to work in the return of salaries and wages. An employment contract is known as relational contract, an informal setting the terms of the agreement by employers and employees (Baker, et al., 2002). The contract contains legal obligations between employers and employees that are either directly written or implied when read (Flanders, 1957). Simon (1951) claimed that imprecision and imbalanced bargaining power of the contract causes complications and misunderstanding.
Furthermore, the employment relationship is regulated by three key institutions including employers' organizations, trade unions and the government. Firstly, employers' organizations too have developed significantly, not only in market economy countries but also in those with a mixed economy. In market economy countries, some sectors have unquestionably influenced the evolution of employers' organizations which are the increased power of the trade unions, the growth of the public sector, the extension of collective bargaining, and the affirmation of the macroeconomic role of the social partners (Ghebali, et al., 1989). Plowman (1989) verified that employers' organization take a variety of task like lobbying politicians, collection of information and data, publishing trade journals, monitoring industry developments, operation trade conferences, and conducting publicity campaigns. But, some organizations influence to employers' relationship like lobby governments to changes in business practices deep-seated for working of employees. Employer organizations like FMLA, COBRA, ADA, ADEA influencing the employment relationship like small organizations loses their tax-exemption from federal and state employment laws. The employers' organizations get the benefits, not the company, as the employees are hired by the organizations.
Secondly, Trade union work as a continuous association of wage earners for the purpose of maintaining or improving the conditions of employees' working live (Webb & Webb, 1920). One of Trade union's main functions is to characterize their members' interest. The issue of imbalance of power between employers and employee had also cause the involvement of politics. It seems like the desire of the employee are less important compare to the desire of the employer (Colling & Terry, 2010). The power imbalance, the right of workers to join trade unions is a general response which accepted by democratic.
Last but not least, government plays an important role in employment relationship as well. On the basis of law, the criterion of wages and salary is fixed by the government sectors and labors have the rights to receive certain minimum amount of pay. William and Smith (2006) indicates the government will serve the employers and trade unions when conflicts arise, which means employers are authorized to resolve the dispute with corresponding solution. Besides, the condition of government has a notable impact on employment relations. In modern society, 'soft regulation' is applied to maintain the cooperation between employers and employees (Stuart, et al., 2011).
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Employment relationship is related three major perspective, theories and view that must be distinguish importantly. These are the unitary perspective, the pluralist perspective and the Marxist perspective. Each particular should pay attention to how each perspective views the workplace that related employees' conflict and harmony, employer privilege and the role of trade unions (Lewis, 2008).
The unitary perspective views the organization as a harmonious environment in which management and employees share common goals. Conflict is seen as unnatural and trade unions are seen as unnecessary because there are accepted leaders and a single focus for effort (Loosemore, et al., 2003). In proper management system, conflicts are assumed to be at a very minimal level. Punishment can be curbed for the conflicts that caused by acts of deviance and ignorance. Resultantly idea will help to frame and constrain from the unitary view of the employment relationship that conflict and dissidence are unnecessary deviant behavior (Nickson, 2007). In unitary perspective, managers just like a head in household in a family and employees just like family members and live as a 'Happy Family'. Moreover, employees are encourage to get involve decision making part to stimulate improvement, creativeness and troubleshooting skills. Employees will become more committed and successful when more involved in the decision making process (Likert, 1961). Critics claim that unitary perspective is practically unrealistic especially in bigger firms, it is just appeal theoretically. It is unsuitable for all employees and employers to synchronize their interest and values. It is a deemed a myth if conflict is avoidable in the assumption.
By the way, the pluralist perspective views organizations as combination of separate groups take charge of top management which serves the long-term needs of the organization (Fox, 1966). The pluralist perspective is also being more congruent and conflict unavoidable with developments in modern society (Rose, 2009). Conflicts are unavoidable and come from different role of management and employee groups. Farnham (1993) claimed that conflicts may even become beneficial in pluralist perspective. The pluralists' response to conflict will not be to try to suppress it, but to try to find a method of handling disputes that will produce the most desired results (Gospel & Palmer, 1993). Managers in this border of position would use a variety of mechanisms, such as trade unions for involving workers in decision making on issues affecting their working lives or those aimed at improving the productivity of the organization (Lewis, 2008).
Karl Marx, the father of communism pioneered the Marxist perspective. The 'Surplus Value' which suggested by Marx (1999) could maximizes profit for capitalists with the exploitation of labor. Trade unions therefore perform a protective function that involves insulating workers from uncertainty, the insecurity and differentials that are characteristic of capitalism. Workers are restrained with labor works build up the greater of the capitalist and ownerships. In Marxist perspective, because of the governments' supports, capitalists' dominance is further strengthened. Conflicts are always occurring and it is common in this Marxist perspective. There is a huge distance of power between capitalists and employees. Trade unions therefore perform a protective function that involves insulation workers from uncertainty, but is it weak for trade unions to defend the employees against exploitation by the powerful employers (Lewis, 2008). Pluralists that believe in personal meritocracy had criticized the perspective of Marxist. Capitalists use Marxist perspective to tackle the employment relationship effectively. As a result, this perspective had constantly being challenged by those with ethical sentiments, because of the unfairness between employers and employees.
As a conclusion, the imbalance power in the employment relationship is uncontrollable although the employment contract, the key institutions and the three perspective were generated the inequality power between employers and employees. The employment contract contains both direct and implied rules of work make matters worse as different employees have a tendency to have different understanding. Each of the key institutions has the potential to settle the conflicts when misunderstanding between employers and employees occurred. These perspectives have its unique approach with the power of managing to achieve the goals. Employers may solve the conflicts by applied the perspectives to balance the power in employment relationship.