The Recession and Employment Relations Strategies

Competition in the Skies

A big question for industrial relations practitioners is what impact the recession will have on employment relations strategies in the short and longer terms. Already we can see from Industrial Relations News that bargaining agendas in both the private and public sectors have changed substantially. The focus has shifted dramatically from union claims for improvements to employer claims for freezes and reductions in pay and conditions. While there are some arguments as to the precise extent of freezes and reductions, ‘concession’ or ‘give back’ bargaining is now a reality in very many workplaces. Frequent plant closures and threats of ‘off shoring’ jobs, together with widespread layoffs, have undoubtedly shifted the balance of power in the private sector away from trade unions towards employers.

Tougher Employer Tactics: there is also evidence that employers are adopting tougher bargaining tactics. While the evidence is still largely anecdotal, there are examples of the imposition of tight timescales for reaching agreements, of impatience with the use of third parties, and of unilateral imposition of changes. This ‘forcing’ approach to organisational change is usually aimed at quick achievement of cost savings.  Employers appear willing to accept that such an approach may bring collateral damage to workplace relationships but seem prepared to endure this in order to achieve their immediate goals. To date, private sector unions have responded pragmatically to recession-driven changes by emphasising the importance of consultation, due process and protecting jobs through temporary sacrifices in pay and conditions. SIPTU’s Gerry McCormack reflected the union position clearly at this year’s IRN conference.

Industrial Relations Fragmentation: for several years now, UCD’s Professor Bill Roche has argued that the adversarial industrial relations model of trade union recognition, orderly collective bargaining, use of state agencies to resolve disputes and so on, has been fragmenting into a number of competing models. Alternative models available to employers include the adversarial model, a new non-union human resource management model, a partnership type model that embraces elements of the adversarial model and elements of human resource management, and a non-union model that rejects human resource management policy and practice. He has argued that each of these alternative models could sustain a significant presence across Irish workplaces and that it was unlikely that any single model would come to dominate the landscape.

Experience to date suggests that both the traditional model and the partnership model can be stretched without breaking by accommodating ‘forcing’ strategies from employers in situations where unions can see economic justification for cutbacks and where they have some confidence in future recovery. It will be interesting, then, to see how the recession will impact on the nature and incidence of these alternative employment relations approaches.

Aer Lingus versus Ryanair: one headline case where different employment relations strategies are being used in the common drive for competitiveness is the battle between Aer Lingus and Ryanair.  Aer Lingus, once the site of formal partnership arrangements, has been a battlefield in industrial relations terms in recent years. Notwithstanding threats to the contrary, the company has stuck with the key elements of the traditional model, i.e. union recognition, change through collective bargaining, and use of state agencies to resolve disputes. Ryanair, on the other hand, has maintained a stoutly anti-union stance.

Are Lingus and Ryanair are featured as examples of different employment relations strategies in the airline industry in a 2009 book called ‘Up in the Air: How Airlines Can Improve Performance by Engaging Their Employees’. Written by Greg Bamber, Jody Hoffer Gittell, Thomas Kochan, and Andrew Von Nordenflycht, the book is published by ILR Press. The authors cite three broad employment relations strategies: ‘avoid’ which is a ‘union suppression’ model they associate with Ryanair, among others; ‘accommodate’ which is what we might call the traditional adversarial model associated with Aer Lingus and many other companies; and ‘partner with unions’ where employers establish a deeper and broader relationship with unions than is associated with the traditional adversarial model.

Big Issues: employer choice of employment relations strategies is not simply a ‘private’ matter without public policy implications. As the authors of ‘Up in the Air‘ point out, shareholders, customers and employees all have a stake in company outcomes and, therefore, have an interest in what competitive and employment relations strategies companies might pursue. Given the central importance of many industries, including airlines but also many others, for national competitiveness and quality of life, governments also have a stake in competitive and employment relations strategies.

There has been considerable government attention in recent times to employment creation strategies, including the ‘knowledge economy’, but less attention to what is happening or to what the government might desire to see happening, in regard to employment relations policy. Needless to say, the government has been heavily preoccupied with its own role as employer in the handling of ongoing disputes and negotiations about public sector pay. In these circumstances and in light of the collapse of social partnership at national level, the government is clearly less concerned right now with the emerging shape of employment relations in Ireland. This is an issue to which we will return in later posts.