Globalization and liberalization has substantially influenced the nature of industrial relations (IR) policies being followed by employers. This has reduced the power of trade unions. Some social scientists caution that severe social tensions will result from acute economic inequality that will result from these policies in the next few decades (Towers, 1997; Szell, 2001). They see a severe weakening of countervailing power in society as well. The frameworks of IR of different organisations in the new environment are being oriented to new business exigencies. Strategic shifts in management's approach to manage IR are noticeable at covert as well as overt levels (Venkata Ratnam, 2001; Saini, 2003). These are resulting in new types of negotiated settlements, which reflect a greater degree of employee cooperation (Venkata Ratnam, 2003).

Higher competitiveness and the corporate model

Competitiveness for business enterprises facing fierce international competition, and it proposes a “competitiveness model compatible with social progress”. Corporations ar seeking to exploit low-wage workers employed on short-term contracts. Such companies readily dismiss employees and transfer their operations from one place to another, seeking the least expensive location. This is the “low-road approach” leading to lower wages and lower productivity. This direction emphasizes shareholders' interests, looks at return on equity as the sole criterion for successful management, and disregards job security and the social aspects of corporate activities. Managers often try to undermine the effectiveness of government policy, evade public responsibilities, or deny trade unions benefits of industrial democracy, including labour/management consultation. All these elements provide flexibility for an industry or business enterprise.

Better corporate-employee relationship

Corporate are engaging their human resource in the firms decision making process. Corporate are redefining employees’ social system and the market system, and aims to achieve the optimal balance between economic success and social welfare. This is a kind of macro-socioeconomic model that makes the best use of market forces within a framework of the development of human abilities and welfare as a social foundation, participatory democracy and guidance in macroeconomic policies. This way, the employees see n need of subscribing to trade unions.


Specific countries, especially countries run by Communist parties, while still having unions in name, do not allow for independent trade unions, just as they rarely allow for independent businesses. These state-run trade unions do not function in the same way as independent trade unions and generally do not hold any kind of collective bargaining power, acting to ensure the smooth running of Government industry. Attempts to reduce the effects of trade unions may include union busting activities by private companies or state action including governments of authoritarian regimes

Courts and past precedents

Trade unions have been said to still have ineffective policies on racism and sexism in the present day, such that a union is justified in not supporting a member taking action against another member. This was demonstrated by the 1987 judgement in the Weaver vs NATFEH case in the UK - in which a black Muslim woman brought a complaint of workplace racist harassment against a co-trade unionist. The finding was that in the event of the union offering assistance to the complainant it would be in violation of the union’s duty to protect the tenure of the accused member and the judgment still sets the precedent for cases of this kind that union members who make complaints to the employer of racist or sexist harassment against member(s) of the same union cannot obtain union advice or assistance; this applies irrespective of the merit of the complaint.


As per Milton Friedman there is evidence that unionization frequently produces higher wages at the expense of fewer jobs, and that, if some industries are unionized while others are not, wages will decline in non-unionized industries.  By raising the price of labour, the wage rate, above the equilibrium price, unemployment rises. This is because it is no longer worthwhile for businesses to employ those laborers whose work is worth less than the minimum wage rate set by the unions. As such, Governments may seek to reduce union powers in order to reduce unemployment.

Emerging new Human resource development/management (HRD/HRM)

The new way of managing collective labour power through implementing the philosophy of human resource management. Organisations are busy on working on policies that dilute union efficacy or result in wiping them out altogether, and thus are making strategic shifts in their HRM policies. Many academics have argued that the new philosophy of HRM is wolf in sheep's clothing, or iron fist with velvet gloves, or sugar coated pills that lead workers to a state of illusion about happiness and well being. Most such arguments are rooted in HRM's supposedly debilitating role in promoting trade unionism. HRM also puts a covert pressure on workers to endorse their consent to the employer's new authoritarianism. Here, HRM leaves real issues affecting working class unattended. Job and income insecurities, fear of substitution, pressure to maintain existing life style, and the employers' efforts towards individualization of employment contract prevent workers from standing up to challenge the new workplace order. All these are symptoms of weak labour power.


Other factors would include:

  1. Declining interest of the state in labour justice and its primacy on considerations of productivity and efficiency;

  1. Employers' shifting tendency from adversarial to cooperative IR leading to individualization of IR;

  1. Emergence of larger number of service organisations including information technology (IT) and information-technology-enabled service (ITES) organisations where it is comparatively difficult to organise the workforce;

  1. Emergence of gold-collared and knowledge workers who are less interested in unionization;

  1. Employers' greater tendency to employ contract and casual labour rather than core workforce leading to decline in organised sector employment;

  1. Increasing tendency of employers to employ labour law consultants to commit unfair labour practices by giving them a gloss of legality (Saini, 2003).

  1. Lack of coherent national policy on employment.

  1. Lack of genuine political will and commitment on the part of the government.

  1. Obsolete labour laws and inadequate regulations in place, which do not conform to international labour standards and therefore cannot, meet the present employment challenges.

  1. Lack of credible legal systems, weak enforcement of laws and ineffective labour inspections.

The above-mentioned factors have also led to the adoption of new HRM strategy by most organisations in their efforts to gain competitive advantage through people. Interestingly, HRM strategy is being seen as a critical reason for decline of collective labour power.


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