Negotiating the new economy: The effect of ICT on industrial relations

Table 2: Union members, selected countries, 1990-1998

Source: From statistics collected by the ILO.

Table 3: Union members, selected countries, 1990-1998

Source: From statistics collected by the ILO.

Table 4: Union members, selected countries, 1990-1998

Source: From statistics collected by the ILO.⁵

Table 5: Likely work-related needs which a new breed of flexible worker could be expected to have

Source: Andrew Bibby.⁶

The vision of a shop steward replaced by a fee-charging adviser or consultant amounts to an effective privatisation of the whole process of labour relations and may be one which many people find uncomfortable. Nevertheless the needs of workers provide a ‘business opportunity’ which can be met in future in one of three ways:

• by traditional industrial relations organisations/labour unions
• by new forms of mutual association, co-operation or networking
• by the private sector

In taking this issue further, a key question to consider is to what extent workers’ needs will continue to be met primarily on a collective, rather than an individual, basis. It should be noted that ICT offers considerably more opportunities for employers to maintain very detailed data on each of their workers, and to build a closer personal relationship with each based on the analysis of those data. The situation is comparable to the techniques of data mining whereby companies attempt to build up detailed personal profiles of their customers.

This would enable a company if it so chose to relate directly to its individual workers without having that relationship mediated by workers’ representative organisations. Disintermediation (the disappearance of the role played by traditional intermediaries, agencies who engage in brokerage of various kinds) has been identified as a feature of the growth of the internet and e-commerce: for example, an airline passenger can choose to purchase a ticket direct from an online booking service rather than from a local travel agency; motor insurance can be purchased direct, avoiding the need to use an insurance broker. Is it possible to see a similar process of disintermediation also taking place in industrial relations?

Any assessment of trade unions’ ability to maintain their role would identify a number of potential weaknesses. One, perhaps, is their image. Another is their internal management structures. This point is addressed by Ulrich Klotz of IG Metall: "Owing to the origins of the unions, their internal organisation corresponds to that of a classical Taylorist factory for mass production: control is exercised from the top to the bottom of the power pyramid… As long as markets and membership structures remained stable and easy to manage, it was possible to operate successfully on this principle. Since then, however, the environment has changed radically. Unions are increasingly seen by (potential) members as service providers. But service providers require a completely different structure to succeed…"⁷

Another issue is the fragmented nature of the trade union movement and its relatively weak international links. At a time of globalisation, foreign direct investment and the spread internationally of multinational corporations, trade unions continue to be almost entirely based in nation states.⁸

On the other hand, history suggests that trade unions have in the past successfully adapted the role they perform, sometimes markedly. For example, there was a time when many unions controlled much more tightly than at present the process of access to employment, performing many functions now typically performed by private sector recruitment or employment agencies. Before the development of the welfare state model in the period after 1945, many trade unions occupied a more important role in social protection schemes and pensions. Going further back, to the craft unions and craft guilds, their role in establishing standards for new entrants to their craft was akin perhaps to that performed today by organisations setting vocational training standards and competencies.

The familiar model of collective bargaining between employers and workers organisations, where workers are employed on open-ended employment contracts, itself is primarily a product of the post-1945 years. Although now the majority of workers in OECD countries are engaged as employees on permanent contracts, this was not the case during an earlier period of industrialisation. As has been pointed out, the late nineteenth and early twentieth centuries saw various forms of labour sub-contracting widely used.⁹

The message therefore is that the development of industrial relations has always been a dynamic process, with the principal players to an extent redefining their roles through the years.

We have focused up to now on trade unions. What, however, of employers’ associations? They too face challenges at a time of rapid technological change.

Collective bargaining has been of advantage to employers as well as to workers. For example, nationally negotiated agreements establishing uniform levels of pay for a sector enable companies to compete on the quality of their products, on their productivity or efficiency, or on their ability to recognise new business opportunities, instead of by driving down labour costs. This offers a stability in employment relations which could otherwise be as damaging to employers as to workers.

However this approach works only if all companies are prepared, or obliged, to buy into the process. It may also mean that structural change, because it is subject to negotiation, can be slow to bring about. The post-1945 social contract on which much industrial relations has based may need to be renegotiated as new companies, and new sectors, emerge.

Even ignoring the very recent dotcom companies such as amazon.com and Yahoo!, it is may be appropriate to recall that many relatively recent start-up companies are now major international corporates. Both Intel and Microsoft, for example, were founded during the last quarter-century. One in three of the present top 25 companies in the US did not exist in 1960.

Employers’ association face an issue of legitimacy if they do not represent the interests of companies exploiting opportunities in the knowledge economy as much as those operating in the old economy. There is evidence that they are aware of this. For example, the Confederation of British Industries organised a meeting with executives of new economy companies in Britain in mid-2000. According to the CBI’s Director-General: "Eight years ago these people did not exist. We have got to address these new businesses and their new problems and provide services for them and learn from them". The CBI is investigating inserting a virtual forum into its policy-making framework.¹⁰

In Norway, Næringslivets Hovedorganisasjon (NHO), the Confederation of Norwegian Business and Industry, has created a private internet site for its members, in addition to its public web site. The aim is to allow members access to more information about the NHO’s activities, and to provide a mechanism for internal discussion groups and questionnaire evaluations.¹¹

In Italy, a new President of the employers’ confederation Confindustria, Antonio D’Amato, was appointed in May 2000. Mr D’Amato has called for an ‘alliance for modernisation’ and has proposed that Confindustria is transformed into an organisation able to adapt rapidly to market changes and globalisation. Mr D’Amato has also criticised some aspects of the traditional social partnership with Italian unions, criticising unions for resisting moves to more flexible working as well as changes to the welfare system.

Unusually for Confindusria, Mr D’Amato was appointed after an contested election, which saw him standing against a candidate supported by the major Italian industrial groups. Mr D’Amato’s background, by contrast, is from a small and medium-sized enterprise background.¹²