Trade Unions & Industrial Relations

Over the last 20 years, there has been considerable debate about the impact of trade unions on productivity, and the implications of different types of labor-market arrangements for economic performance. The most effective way of improving competitiveness is to weaken trade unions and remove the regulatory structures and rules that constrain managerial decision making. On the other hand, the proponents of regulation point to the importance of institutional rigidities in blocking low-wage, labor-intensive routes to profitability. Others believe that there is little substance to the claims that the deregulation of pay and conditions produces higher productivity growth, and that those making such claims are simply relying on rhetoric rather than on substantial evidence. Some feel that the high-road approach to management with its emphasis on high-performance work systems is far more likely to generate greater discretionary effort and higher productivity levels. This research has reviewed a number of influential studies that have a bearing on these issues. As far as the union-productivity link is concerned, there is considerable evidence from the US, Britain and Australia to indicate that trade unions can have positive collective voice effects on labor turnover, job tenure and the level and growth rate of productivity. A key point to emerge is the importance of the industrial relations climate in improving organizational performance. A positive and cooperative labor management relationship, with extensive joint decision making, appears to be conducive to greater organizational efficiency.