Symposium on Asian Industrial Relations: Introduction

Abstract

It is increasingly apparent that models of industrial relations developed by the industrialised market economies in Europe and North America cannot be readily transferred to newly industrialising economies (NIEs) in other parts of the world. Certainly, the impact of US or European- based multinational enterprises (MNEs) have had a significant influence on the NIEs of Asia. Furthermore, the growing outward-orientation of economies in the Asian region means that they are likely to be increasingly influenced by aspects of western-based employment and industrial relations practices. It is important to emphasise that countries in the Asian region have not adopted a uniform approach to industrial relations or other firm- related policies and practices. This is clearly evident in the case for the three countries represented in this symposium. Yet many economies in the region have shared some similar characteristics which include: a high degree of investment in human capital, a welfare-oriented state, relatively weak (and historically repressed) industrial relations institutions, a high degree of economic coordination by government and the lack of an independent trade union movement. However, in many cases, increased economic development is facilitating greater democratisation and a higher degree of labour market institutionalisation as evidenced by the emergence of minimum wage laws, health and safety regulation and independent dispute settling mechanisms. Even trade unions appear to be gaining a greater level of autonomy and influence in some countries where they were hitherto illegal. A study of the changing nature of employment relations in newly industrialising countries of Asia, inspired by an MIT-initiated study led by Tom Kochan and coordinated by Anil Verma et al (1995), emphasised the linkage between economic development and industrial relations. A series of parallel studies were conducted in eight Asian NIEs which revealed a variety of approaches being used to adjust their economic development, labour and human resources strategies to a new global economic order. (1) However, all countries faced a similar question: what is the appropriate mix of industrial relations, human resource and economic policies for adjusting to a higher value added economy? Are new state policies, company practices and union strategies needed to move to a higher wage, higher productivity strategy for further economic development? The evidence from the research project suggests a link between the process of economic growth and policies in the area of human resources and employment relations. As shown in Figure 1, a less developed country begins the process of industrialisation by creating some initial conditions conducive to investment. In industrial relations terms, this may translate to low wages and possibly low unionisation. This situation may attract initial investments by firms which can take advantage of such labour market conditions. However, with increased investment, the initial labour market conditions inevitably change and there are pressures for higher wages and possibly unionisation. These may be called secondary conditions of the labour market because they follow the initial investment surge. However, this reduces the initial advantage which attracted the new investment in the first place, so other inducements are needed in order to retain attraction to external investors. This creates a critical juncture in the development process and places pressure on the existing industrial relations system. The secondary conditions provide the state with strategic choices. On the one hand, it can undertake a series of measures that will maintain the advantages of the initial conditions. These policies may include wage controls, as well as the suppression of unions and collective bargaining (as has occurred in countries such as Malaysia and Indonesia). Alternatively, the state may encourage employers to link wages to productivity and to upgrade skills by investing in training and education. …