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Globalization refers to the free movement of goods, capital, services, people, technology and
information. It is the action or procedure of international integration of countries arising from
the convergence of world views, products, ideas, and other aspects of culture.
This is the integration of economies, industries, markets, cultures and policy-making around
the world.
Globalisation describes a process by which national and regional economies, societies, and
cultures have become integrated through the global network of trade, communication,
immigration and transportation.
the process of globalization not only includes opening up of world trade, development of
advanced means of communication, internationalization of financial markets, growing
importance of MNCs, population migrations and more generally increased mobility of
persons, goods, capital, data and ideas but also infections, diseases and pollution.
In context to India, this implies opening up the economy to foreign direct investment by
providing facilities to foreign companies to invest in different fields of economic activity in
India, removing constraints and obstacles to the entry of MNCs in India, allowing Indian
companies to enter into foreign collaborations and also encouraging them to set up joint
ventures abroad; carrying out massive import liberalization programs by switching over from
quantitative restrictions to tariffs and import duties, therefore globalization has been
identified with the policy reforms in India.

Globalisation is inevitable trend with the development of technologies in transportation,

communication, and information etc. Globalisation has its impacts on many fields including
politics, economics, and cultures around the world. With respect to impact on the economy,
the impact of globalisation on the firm's performance has been studied for a long time by
scholars. Industrial relations are one important aspect in organization and it highly affects the
performance of one firm
The term Industrial Relations comprises of two terms: Industry and Relations.
Industry refers to any productive activity in which an individual (or a group of
individuals) is (are) engaged.
By relations we mean the relationships that exist within the industry between the
employer and his workmen.
The term industrial relations explains the relationship between employees and
management which stems directly or indirectly from union-employer relationship.
Industrial relations are the relationships between employees and employers within the
organizational settings. The field of industrial relations looks at the relationship
between management and workers, particularly groups of workers represented by a
union. Industrial relations are basically the interactions between employers, employees
and the government, and the institutions and associations through which such
interactions are mediated.
Industrial relations was broadly defined to include the relationships and interactions
between employers and employees. From this perspective, industrial relations covers
all aspects of the employment relationship, including human resource management,
employee relations, and union-management (or labor) relations.

Need of Industrial Relation

Need of Industrial Relation has arisen to defend the interest of workers for adjusting
the reasonable salary or wages.
It also helps the workers to seek perfect working condition for producing maximum
output. Workers/employees are concerned with social security measures through this.
Industrial Relations is also needed for achieving the democracy by allowing worker to
take part in management, which helps to protect human rights of individual
Industrial relations affect not merely the interests of the two participants- labor and
management, but also the economic and social goals to which the State addresses itself.
To regulate these relations in socially desirable channels is a function, which the State
is in the best position to perform In fact, industrial relation encompasses all such factors
that influence behaviour of people at work.

1. To safeguard the interest of labor and management by securing the highest level of
mutual understanding and good-will among all those sections in the industry which
participate in the process of production.
2. To avoid industrial conflict or strife and develop harmonious relations,.
3. To raise productivity to a higher level in an aera of full employment by lessening the
tendency to high turnover and frequency absenteeism.
4. To improve the economic conditions of workers in the existing state of industrial
managements and political government
5. To Protect management and labor interests by securing mutual relations between the
two groups.
6. To Avoid disputes between management and labor, and create a harmonizing
relationship between the groups so productivity can be increased.
7. Ensure full employment and reduce absenteeism, hence, increasing productivity and
8. To Provide better wages and living conditions to labor, so misunderstandings between
management and labor are reduced to a minimum.
9. To bring about government control over plants where losses are running high, or
where products are produced in the public interest.

Scopes of industrial relation

1. Labour relations, i.e., relations between labour union and management.

2. Employer-employee relations i.e. relations between management and employees.

3. The role of various parties viz., employers, employees, and state in maintaining industrial

4. The mechanism of handling conflicts between employers and employees, in case conflicts
Globalization and industrial relations
Companies are now required to innovate and provide the right products, right on time and
with the right price. These requirements have demanded that companies and the employers
have to develop and implement strategies and processes. This means that there is an
increasingly strategic role for industrial relations within the organization. This is due to the
fact that what has to be done entails a paradigm shift from the traditional practices.
The resultant is that the nature of industrial relations is changing in many of these
organizations and hence a new approach has emerged that relies on a broader concept of
employment relations.
The new approaches are based on a wide range of industrial relations that are directed to
improving the flexibility and skills of the workers in that particular enterprise. The enterprise
has to emphasize on cooperation, communication and trust among them including the
workers and their representatives.

Impact of globalization on industrial relation

The various beneficial effects of globalization in Indian Industry are that it brought in huge
amounts of foreign investments into the industry especially in the BPO, pharmaceutical,
petroleum, and manufacturing industries. As huge amounts of foreign direct investments
were coming to the Indian Industry, they boosted the Indian economy quite significantly.
The benefits of the effects of globalization in the Indian Industry are that many foreign
companies set up industries in India, especially in the pharmaceutical, BPO, petroleum,
manufacturing, and chemical sectors and this helped to provide employment to many people
in the country.
This helped reduce the level of unemployment and poverty in the country many countries
through exchange of labour between nations. Also the benefit of the Effects of Globalization
on Indian Industry are that the foreign companies brought in highly advanced technology
with them and this helped to make the Indian Industry more technologically advanced.
Globalization means the dismantling of trade barriers between nations and the integration of
the nations. Economies through financial flow, trade in goods and services, and corporate
investments between industries across the nation.
Impact of globalisation on industrial relations in USA
Under the globalization environment, Western developed countries such as United States of
America has experienced new problems and very much challenge in its industrial relations.
Industrial relations in USA were dominated by Labor Union and Political parties. Although
historically two of the American political parties did not highly emphasize on the benefits of
labor class, traditionally compared with Republican Party, Democratic Party treated Labor
Union more friendlily not only from legislation view or national policies.
Since the development of globalization especially in 1990s, the competition between
enterprises is intensified, America was forming a situation where Labor Unions were
weakened while Enterprise owners were strengthened.
Non-labor union in organization was popular and it resulted in dissatisfaction over the
retirement pension, medical insurance, unemployment insurance etc. from labor force when
comparing with the European labor.
The difference in incomes between labor and employers has become the most important
feature in American industrial relations
In the first place, employee's profession in American firms is not secured. American Labor
force market applies free employment system. Once the economy of one firm declines, there
will be a large number of employees to be laid off. The relationship between workers and the
management level is conflicting, or to be said as the true sense of employed and employing.
Therefore, American employees have the reasons to not be loyal to a firm and the conflict or
relations between employers and employees are representing in strikes or layoffs forms. In
America, capital is the determining factor for the production.
Secondly, globalization has led to more flexible and polarization in labor force market. In the
process of globalization, labor market in America has a tendency of non-management and
government loosens even removes the control of the labor market. Non-regulatory
employment such as part-time workers, temporary workers, home workers with low wages
are rapidly increasing. This change in industrial relations in USA has intensified the conflicts
between capitalists and labor. In addition, with the day by day decreasing in Labor Unions
power, labor in America feels extremely unprotected. And the labor bargaining power also
decreases in this way. Therefore, in USA, every employee will have to take more serious
attitude toward the labor contract than in other countries and every detail things relevant will
be clearly stated in the contract.
Thirdly, globalization leads to the diversity in managing the labor force in firms. Due to the
globalization of sharing resources, technologies, even labor resources worldwide,
multinational enterprises are increasingly developed and established branches in different
courtiers and regions around the world. All of these MNEs have to face its diversity in
managing labor in different cultural contexts. Globalization makes the labor force to transfer
internationally more and more frequently with larger and larger scale. Globalization enables
people from different countries with different cultures to work in an organization. In this way,
the industrial relations will have to change to adopt the local regulations or environments.
Impact of globalisation on industrial relations in Japan
Like Germany, Japan is also a Coordinated Market Economy (CME). CME represents
another kind of varieties of capitalism and it resolves coordination problems not only through
hierarchies and markets but also through formal non-market institutions in firms
With the development of globalisation, international cooperation is urgently in need. Many
Japanese companies started to establish sub-companies in overseas markets, and sell their
products in foreign marketplaces.
Globalisation accelerates the changing structure industrial relations in foreign markets. Under
CME, Japan has maintained its type of industrial relations in domestic firms very well and
very mature; however, whenever speaking to managing the workforce in other countries such
as in China, the firms have to design industrial relations which are suitable for the local
cultural context.
So when Japanese firms operate factories in China, they have to combine the Asian Market
Economy to design new industrial relations. Under such circumstance, industrial relations in
Japanese firms will experience great challenge to change the traditional model of
employment practices.
As the involvement of employees and unions in enterprise governance varies considerably
between countries, Japan has to find a way to properly maintain this relationship. However, it
cannot be said that unions are not making efforts in maintaining the industrial relations, the
unions are still functioning in maintaining the relationship between employer and employees
in Japan.
Japanese firms also emphasize the consultation between employers and the workers. Under
the globalisation trend, there are many unknown competition forces coming from the
markets, industrial relations is extremely emphasized by Japanese firms as a sustainable
resources to be competitive in the global market.
The overall relevance of globalization to IR
Increasing international economic interdependence has disturbed traditional IR arrangements
in several broad ways.
Firstly, such arrangements have normally been confined to the circumstances created by
national markets; but globalization has fundamentally changed, and considerably expanded,
the boundaries of the market place.
In this respect, the extent of information flows made possible by new technology is building
inter-enterprise networks around the world, is calling into question the traditional boundaries
of the enterprise and is eroding current IR arrangements.
Secondly, globalization has disturbed the status quo between capital and labour in each
country, in the sense that capital is significantly more mobile in an open international
environment, while labour remains relatively immobile
This can place labour at a relative disadvantage, in that capital can now employ labour in
different countries, at lower cost and on a basis which can prejudice the continuing
employment of workers in the originating country.
Thirdly, globalization is having a contradictory impact on IR. It is accelerating economic
interdependence between countries on an intra- and inter-regional basis and encouraging
similarities in approach by individual enterprises in competitive markets.
This may lead to some convergence in industrial relations arrangements around the world. At
the same time, there is clear evidence of resistance towards convergence, based on particular
national and regional circumstances (e.g., in Europe and Asia). This aspect will be considered
later in the paper, in relation to Asia and the Pacific.
The impact of globalization is requiring IR systems in Asia and the Pacific to adapt to ensure
improved economic competitiveness, flexibility and overall efficiency to respond to changing
international market circumstances.
Individual enterprises, whether domestically or internationally-based and organized, are in
the frontline of these changes. Employers and their organizations therefore have the most
important role in generating the responses needed to take advantage of these new and
emerging circumstances. But while globalization is a significant factor, it is not the only
factor, driving IR changes in the region.
Factors internal to each country - some of traditional IR concern, others instigated or
exacerbated by liberalization - are prompting similar changes. In addition to helping to
achieve the improved efficiency and productivity which is driving enterprises in responding
to a more competitive business and trading environment, the changes required to IR
arrangements must provide stability in relations between managers and workers and ensure
equitable participation by workers in the benefits of increased enterprise development and
That is, the essential challenge for each country is how to achieve a stable and flexible IR
system which balances efficiency with equity.
The diverse IR situations across the region make it unrealistic to predict, with any degree of
certainty, the future course of IR in the region.
While globalization emphasises convergence between economic and related systems, and this
is occurring to some extent in Asia and the Pacific, IR are ultimately determined by a
complex range of factors within individual countries, reflecting particular national, cultural
and institutional circumstances.