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HRM501: INTRODUCTION
TO IR & HRM
TOPIC 3: THE STATE
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Learning Objectives
 Understand the role of the state in Industrial relations
 Discuss the traditional and changes to the current role of
the state with a focus on the state as employer and
legislator
 Identify the different patterns of State intervention in
Industrial Relations
 Explain the relationship between ‘state’ Regulation and
work –place industrial relations
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Introduction
 The State is referred to as the third party in industrial relations plays an important
role through its different intervention strategies using the instrumentality of
mediation, arbitration and conciliation besides promulgating the necessary
legislations for the protection of the economic interest of the country.
 The State plays an important role in regulating industrial relations but the extent
of its involvement in the process is determined by the level of social and
economic development while the mode of intervention gets patterned in
conformity with the political system obtaining in the country and the social and
cultural traditions of its people.
 In Fiji, the role played by the State is an important feature in the field of industrial
relations and State intervention in this area has assumed a more direct form. The
State has enacted procedural as well as substantive laws to regulate industrial
relations in the country
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What is state
 The ‘state’ can be defined as a country with its sovereign political
identity defined by its internationally recognised boundaries (Koirala,
2000).
 ‘The state is essentially the entire apparatus of formal roles and
public institutions that exercise political authority over populations
within a given territory’ (Bell and Head, 1994)
 A 3rd party that is involved in IR to create and maintain the framework
of Law (Green, 1994)
 The state consist of institutions that exercises authority over citizens
in a specific area or region. As such the state consists of agencies
and institutions that gather taxes, distribute welfare and other
assistance, enforce and apply law, and defend the country as well as
administer government policy more generally.
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Difference between ‘state’ & ‘Government’
 Government refers to a political or ruling administration of state
or territory or country
 A government is an institution that makes and enforces public
policies for and on a society.
 However, in order for a government to make and enforce its
public policies, it must have something we call power.
 Governments are the means through which state power is
employed.
 Every government has 3 kinds of power: Legislative Power,
Executive Power and Judicial Power
 It is common to use the term ‘state’ rather than ‘government’ to
describe the wide variety of institutions that regulate
employment relations.
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Three arms of the state
 The power and authority of the state is thus exercised through these
three institutions, and therefore, by necessity the state becomes
involved in the creation, administration and enforcement of various
laws relating to industrial/employment relations.
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Three arms of the state:
The legislature
 The legislature is a law –making body comprising
representatives elected by the people at periodic elections
according to rules usually embodied in a nation’s
constitution.
Example
The bicameral nature of the federal parliament means that the
legislature has two main houses: the House of
Representatives and the Senate. The House of
Representatives (the ‘lower house’) is where most legislation
originates, in the form of bills which are then reviewed and
either passed or returned for amendment to the House of
Representatives by the Senate (the ‘upper house’).
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Three arms of the state
The legislature

A bill that has passed both houses of parliament is not
made law until approved by the Head of the State.
 Laws created by the legislature are supreme, and can be
modified, amended or repealed only by the legislature.
 It enacts all laws, including IR laws that establish IR
responsibilities and rights of employers, employees and
trade unions and regulates the relations.
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Three arms of the state:
The Executive
 Comprises the elected government and the public
bureaucracy that;
 advises,
 administers and
 implements policy
 The executive is responsible to the legislature
 In countries such as Australia - separate federal, state and
territory executives
 Key decision-makers are the Prime Minister and cabinet
ministers
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Three arms of the state:
The Judiciary
 Has always played a key role in regulating IR in Fiji
 The Judiciary is the court system.
 Comprises the civil court system, the industrial tribunal and
labour courts that are responsible for interpreting and enforcing
the law in order to resolve disputes
 Civil courts divided into the Magistrates’ courts, the high court,
the court of appeal, and the supreme court.
 These courts hear industrial/employment disputes when they
are interpreted as breaches of civil law
 Normally, the industrial/employment tribunal/court deals with the
interpretation of employment laws and settlement of disputes
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Three arms of the state:
The Judiciary
 The function of the Judiciary is to enforce the laws enacted by
parliament.
 The court presided over by judges, interpret laws, and such
interpretations or judgments cannot be interfered with by either
Executive or the Legislature.
 However, if the Legislature feels that the courts have not
interpreted the Acts as intended, the Legislature can modify,
amend or repeal such Acts as the parliament is the supreme law
making authority.
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Reasons for Government Intervention
in Industrial Relations
1.
To maintain stability and regularity in the industrial organizations
through appropriate rules and regulations.
2.
To control the work relations to ensure industrial harmony
3.
To regulate legal relationship between employer and employee in the
form of contact.
4.
To exercise great influence in industrial relations through legislations
on remuneration, fringe benefits etc.
5.
To resolve industrial disputes through government legislation.
6.
To resolve lingering industrial disputes through appropriate institutions
to avert breakdown of law and order in the workplace.
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Reasons for Government Intervention
in Industrial Relations
7.
To set the guidelines for the determination of conditions of service and
welfare amenities for the workers.
8.
To encourage desired level of productivity in the economy.
9.
The government also intervenes due to the growing awareness
that relations between employers and employees could not be
left to the two parties alone; in order to protect public interest.
10. Government has the responsibility to protect the peace of the
nation, and therefore, the government takes concerted efforts
to make employers and the workers resolve their differences
through industrial court.
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Competing perspectives on the role of the
state:
Pluralist
 State/government is impartial in its decision making.
 It is the government ‘s role to maintain some kind of dynamic
equilibrium’ by defusing conflicts, assessing arguments and
making decisions in society’s best interest
Radical/Marxists:
 Argues that the State/Government acts to promote the interests
of business (i.e. Capital).
 State intervenes in capitalist economies in order to promote and
perpetuate the generation of investment and the accumulation
of profit based on three principles - ‘exclusion’, ‘maintenance’ and
‘dependency
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PERSPECTIVES ON THE ROLE
OF
THE STATE
Function
Role of the state
Accumulation of profit, based on three
principles:
1. Exclusion: decisions about investment,
production and allocation of resources
made by private enterprises
State does not intervene or seek to
control the private sector
2. Maintenance: protection for capitalist
production and commercial interests
State provides legal and judicial
bodies,
appropriate
financial,
monetary and tax systems, and
transport infrastructures
3. Dependency: dependency on private
enterprises for taxation and revenue
State needs to provide financial and
other infrastructure so that it itself
can operate
Legitimacy of the system
State formulates policies on
education, welfare, the law and
public order so as to reduce class
conflict
Role and function of the state
1.
Legislator – the state acts as a third party regulator promoting
a legal framework which establishes general ground rules for
union-management inter-action, particularly in the procedure
for collective bargaining.
2.
Labour – market regulator - the state establishes legal
minimum standards relating to wages, working hours, health &
safety condition that serve to regulate competition over the
remuneration & employment condition of employees.
3.
Conciliator, arbitrator & mediator – the state frequently
provides services that are intended to facilitate the resolution
of industrial disputes between employers & employees
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Role and function of the state
4. Employer of labour – state may use its role as a direct employer of a
large proportion of the labour force to regulate income & employment
within an economy.
5. Economic Manager - Government at both national & state level
manage the economy (full employment, economic growth, price
stability and balance of payment surplus) balancing revenues and
expenditures in a responsible manner, while introducing polices that
align with their political agenda.
6. Provider of collective or public goods - the state may provide public
goods such as health care, education, road , vocational training, etc
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THE STATE AS EMPLOYER
Traditional forms of state Intervention
 State introduced in the late 1890s and early 1900s, was compulsory
conciliation & arbitration which delegated the resolution of industrial
disputes to industrial tribunals.
 The tribunals not only came to formally determine most aspects of
wages, working conditions – through the regulatory instruments like
awards and the sanctioning of collective agreements- but they were
considered to have a deep effect on the structure & operations of other
parties such as trade unions, employer associations & the managers of
individual enterprises
 Beyond compulsory conciliation & arbitration, the state & its many
agencies were key participants in rule – making & enforcements in
specific areas of employment relationship, like Occupational Health &
Safety, anti – discrimination and Equal Employment opportunity and
Workers compensation
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THE STATE AS EMPLOYER
 A distinctive pattern of policy making referred to as ‘ corporatism’
which shaped through an agreement between the government & the
trade union.
 Neo – liberalism - state intervention moved more towards neo –
liberalism such includes ‘privatization’ of government owned
enterprises ,for e.g., Telecom (now Telstra) in Australia, privatization
of PNT to Telecom Fiji.
Latest developments
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Shrinking public employment.
Adoption and expansion of public-sector managerialism from 1983.
‘Marketization’ of the public sector has increased.
Decentralization of management control in the public sector.
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Managerialism / Marketisation
Approach
Definition
Managerialism Application of private-sector management
techniques, e.g., decentralization of decision
making, performance management, user pays
systems and delayering of management
Marketisation
Increasing the exposure of the public sector to
market competition and minimising political
directon & interventions, e.g., privatisation &
contracting – out or outsourcing of government
service
The state as employer (cont.)
Outsourcing Government Services
Marketing
Efficiency reasons
Political reasons
Cost reduction
Reduce public-sector size
Improved service delivery
Belief that public sector is inefficient
Difficulty in recruiting specialised staff
in public-sector pay context
Reduce public-sector unionism
Introduce contestability principles to
service provision
Discipline public-sector workers
Concentrate upon core business
operations
Shift difficult decisions (e.g. service
provision) with political implications to
the private sector
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THE STATE AS EMPLOYER
 The benefits of outsourcing are seen to lie in the provision
of public services at a lower costs to the government. This
view raises three issues:
1.
Quantifying the cost savings for organizations can be problematic –
organization are yet to include the full range of costs associated with
this form of management, including contracting & monitoring costs cost savings do not necessarily result in increased efficiencies.
2.
In the public sector it can be difficult to judge whether performance
has improved, given the problem in measuring public sector efficiency.
3.
Where cost savings have occurred, it stemmed largely from the
shedding of labour, the erosion of worker’s wages & work condition
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The state as employer (cont.)
 Negative consequences of outsourcing for employee
 1. Greater work intensification
 2. Increased job insecurity
 3. Lower wages & earnings
 4. Longer hours
 5. Less pleasant work environment
 6. Negative effects for unions – the shift of jobs to the
private sector can mean a loss of union coverage, as
employees are no longer eligible for membership or new
private sector employers avoid the union.
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The Legal System – IR Law
 ERP 2007 – Fiji
 major reform exercise wef 1996
 Partial/full implementation in 2007/2008
 integrated 6 legislation under one roof
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Wage Council Act ,
Employment Act ,
Trade Disputes Act, and
Trade Union (Recognition) Act
Trade Union Act
Public Holiday Act
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The Legal System – IR Law
 ERP 2007 – Fiji
 Important Provisions:
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PART 2 — FUNDAMENTAL PRINCIPLES AND RIGHTS AT WORK (5-6)
PART 3 — EMPLOYMENT RELATIONS ADVISORY BOARD (7-13)
PART 5 — CONTRACTS OF SERVICE (21-41)
PART 6 — PROTECTION OF WAGES - Division 2 — Wages Council (4256)
PART 7 — HOLIDAYS AND LEAVE
PART 8 — HOURS OF WORK
PART 9 — EQUAL EMPLOYMENT OPPORTUNITIES
PART 10 — CHILDREN
PART 11 — MATERNITY LEAVE
PART 12 — REDUNDANCY FOR ECONOMIC, TECHNOLOGICAL OR
STRUCTURAL REASONS
PART 13 — EMPLOYMENT GRIEVANCES (109-114)
PART 14 — REGISTRATION OF TRADE UNIONS (115-140)
PART 15 — RIGHTS AND LIABILITIES OF TRADE UNIONS (141-147)
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The Legal System – IR Law
ERP 2007 – Fiji
Important Provisions:
PART 16 — COLLECTIVE BARGAINING (148-166)
PART 17 — EMPLOYMENT DISPUTES (167-173)
PART 18 — STRIKES AND LOCKOUTS (174-184)
PART 20 — INSTITUTIONS (192-245)
- Division 1 — Mediation
Services
(193-201)
- Division 2 — Employment
Tribunal (202218)
- Division 3 — Employment
Court (219-225)
- Division 5 — Appeals
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Relations
Relations
(239-245)
Summary
 Role of the state in regulating IR is influenced by broader
economic and structural factors, such as:
– accumulation of profits
– maintenance of investment
 Two state functions are particularly important for employment
regulation:
1. provision of social insurance
2. labour legislation
 Australian state has historically been much more involved in ER
than in US or UK:
– e.g. compulsory arbitration and the wage-earners’ welfare
state
– except for the period of corporatist decision making (the
‘Accord’ between 1980 and early 1990s)
 Changing role of state as employer
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Summary
 State has a legislative base:
executive
– legislative
– judicial
state has played key role in ER:
– as an employer, and
– in determining wages and conditions
Role of state as employer changed from mid 1980s:
– adoption of managerialism
– adoption of marketisation
Legal system
State intervention
–
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–
–
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End of Lecture Three
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