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1. CHAPTER 2 : THE ROLE OF STATE IN INDUSTRIAL RELATION The state is a critical actor in Industrial Relations It is common to use the term ‘state’ rather than ‘government’ to describe the wide variety of institutions that regulate Industrial Relations in most liberal - democratic countries.

2. Definition of the state The ‘State’ can be defined as an institutional system of political government, with a monopoly over tax and the legitimate use of force in a society. Our set of state institutions includes: The legislature (parliament) The executive (government ministers) -The judiciary (courts) -central administration (the civil service) have played an important role in industrial relation, esp. industrial disputes local government; and Specialist agencies such as in employment field, industrial tribunals, conciliation & arbitration services, equal opportunity, commisison & health & safety inspectors

3. Role and function of the state The ‘executive’, ‘judicial’ and ‘legislative’ functions of the state. Debate concerning wider roles and functions of the state Competing perspectives on the role of the state: pluralist view—state acts as a neutral arbitrator radical (Marxist) view—state acts to promote and protect commercial interests.

4. State institutions can establish substantive rules that affect procedural rules that shape the manner in which rules are made and disputes between employer & employees are conducted and resolved. The state is commonly considered to perform a variety of functions in Industrial relations as detailed below: 1. Legislatior – the state develops a framework of collective & individual labour law that establishes empoyers, trade union & employees employment and Industrial relation obligation rights

5. 2. Labour – market regulator - the state establishes legal minimum standards relating to wages, working hours, health & safety condition that serve to regulate competition over the remuneration & employment condition of employees. 3. Conciliator, arbitrator & mediator – the state frequently provides services that are intended to facilitate the resolution of industrial disputes between employers & employees 4. Employer of labour – the public sector is a large employer in many industrialized countries. The state may use its role as a direct employer of a large proportion of the labour force to regulate income & employment within an economy. Traditionally, employees in Australia have been employed by federal, state or local government but this proportion is now declining. 5. Provider of collective or public goods - the state may provide public goods such as health care and vocational training

6. The structure of the state A valuable taxonomy that can be used to describe the component parts of the state and their diverse activities distinguishes between the legislature, the executive and the judiciary. Under the doctrines of the ‘separation of powers’ , which is a key constitutional principle in western liberal democracies, keeping separate the functions performed by these three ‘arms’ of the state.

7. Three arms of the state The legislature The legislature is a law –making body comprising representatives elected by the people at periodic elections according to rules usually embodied in a nation’s constitution. Example The bicameral nature of the federal parliament means that the legislature has two main houses: the House of Representatives and the Senate. The House of Representatives (the ‘lower house’) is where most legislation originates, in the form of bills which are then reviewed and either passed or returned for amendment to the House of Representatives by the Senate (the ‘upper house’).

8. It enacts all laws, including IR laws that establish IR responsibilities and rights of employers, employees and trade unions and regulates the relations Five areas: - for recognition and regulation of trade unions & employer association - to establish procedures for collective bargaining - for the settlement of industrial disputes - to establish jurisdiction of various agencies dealing with IR to govern the protection and compensation of labour

9. 2. The Executive The executive comprises the elected government and the public bureaucracy that advises, administers and implements policy. The executive is responsible to the legislature Key decision-makers are the Prime Minister and cabinet ministers The Ministry of Labour & Employment Relations The Ministry of Labour & Employment Relations – CEO, Head office, Regional and Area offices The tripartite advisory boards like Employment Relations Advisory Board and Wages Councils 3. The Judiciary The judiciary comprises the court system, its judges and the supporting infrastructure, is responsible for interpreting & enforcing the law in order to resolve disputes.

10. Has always played a key role in regulating IR in Fiji Civil courts divided into the Magistrates’ courts, the high court, the court of appeal, and the supreme court. These courts hear industrial disputes when they are interpreted as breaches of civil law Normally, the industrial tribunal deals with the interpretation of employment laws and settlement of disputes

11. Claus Offe (1975) has argued that the state performs two general functions in capitalist societies – It facilitates the ‘accumulation’ of profit ensures the overall ‘legitimacy’ of the system. Accumulation is considered to be based on three principles - ‘exclusion’, ‘maintenance’ and ‘dependency’.

12. Exclusion indicates that decisions regarding investment, production and the allocation of resources are generally not taken by the state, but by private enterprises. Unless there is an exceptionally severe economic crisis, the state does not directly control, or seek to intervene in, the private sector of the economy. Maintenance implies that the state actively protects capitalist production and commercial interests so that the economy can continue to function and operate.

13. It accomplishes this task through the provision of legal and judicial bodies, the protection of private property rights; the establishment of appropriate financial, monetary and tax systems; and investment in infrastructure, such as transport system. Such activities also guarantee that the state itself can operate , as it is directly dependent on the generation of profit for taxation and revenues.

14. The state has a role in ensuring that the capitalist economic system is widely viewed as ‘legitimate’, often through the formulation of policies on education, welfare, the law and public order. Such interventions, according to Bell and Head (1994), are designed to reduce the level and intensity of class conflict.

16. THE STATE AS EMPLOYER In order to carry out its many roles, the state has traditionally been a large employer. The commitments of the state as an employer, in recent years, have sometimes been seen to be in conflict with its other responsibilities , esp. That of economic manager.

17. Traditional forms of state Intervention The specific involvement of the state in Australian employment reflects a general tradition of strong state intervention in the economy. The influence of the state on employment relations, including the judiciary as well as the legislature & the executive remained strong for most of the nineteenth century, despite the growth of ‘free’ labour market

18. The core of the traditional form of state intervention, which was introduced in the late 1890s and early 1900s, was compulsory conciliation & arbitration. This meant that governments were delegating the resolution of industrial disputes to industrial tribunals. As the influence of these tribunals grew, they became central to the regulation of many aspects of the employment relationship

19. The tribunals not only came to formally determine most aspects of wages, working conditions – through the regulatory instruments like awards and the sanctioning of collective agreements- but they were considered to have a deep effect on the structure & operations of other parties such as trade unions, employer associations & the managers of individual enterprises

20. Beyond compulsory conciliation & arbitratrion, the state & its many agencies were key participants in rule – making & enforcements in specific areas of employment relationship, like Occupational Health & Safety, anti – discrimination and Equal Employment opportunity and Workers compensation Despite this wide – ranging state intervention, there were some areas of employment relations where the state refused to tread. In summary, the state was traditionally very active in most of the economies and society in general, and specifically in employment relations.

21. A distinctive pattern of policy making referred to as ‘ corporatism’ which took shape through the operation of an agreement between the government & the trade union movement. This agreement was known as the Accord in Australian context. Under traditional models of policy making, where the ‘state’ operates independently & separately from ‘private’ interests group such as trade unions & employer associations, corporatism sees the state ‘incorporating these private interest groups into the making & enforcement of public policy.

22. Neo – liberalism The substance of state intervention moved more emphatically towards neo – liberalism such includes ‘privatisation’ of government owned enterprises ,for e.g., Telecom (now Telstra) in Australia, privatisation of PNT to Telecom Fiji. State governments towards the ‘marketisation’ or contracting out of public services.

23. In employment relations, the neo-liberal agenda largely withdraws the state from ‘interference’ in the making & enforcement of employment relation rules thereby allowing other parties (employers, individual employees, to a much lesser degree, collective representation of employees) to determine these rules themselves.

24. The state as employer In order to carry out its many roles, the state has traditionally been a large employer Latest developments Shrinking public employment. Adoption and expansion of public-sector managerialism from 1983. ‘Marketisation’ of the public sector has increased. Devolution of management control in the public sector.

25. Shrinking public employment What is the public sector? Federal, state and local governments government funded bodies, such as the ABC and universities formerly: Telstra, Qantas, Commonwealth Bank etc. The size and cost of the public-sector . workforce has made public-sector management an ongoing political issue. Traditionally, the public sector has been a large employer: -1960: 25.5% of all Australian employees -2002: 19.1% of all Australian employees.

26. The ‘rolling back’ of the Australian state, in terms of both its employment and its activities, has occurred through two significant process. Managerialism- this involved the importation of models of private sector management into the public sector, for e.g., financial responsibilities, managerial control and hierarchy Marketisation of public sector – this has involved the privatization and commercialization of public sector function

27. Managerialism / Marketisation

28. Negative consequences of decentralization Fragmentation of public sector condition of service, thus generating inconsistencies in wages, working condition & labour mobility problem. Marketisation as a major wave of reform of the public sector emphasized the need for maximum exposure to market completion & the minimum of political direction & intervention. This translation into large – scale privatisation of government utilities & services - this included most nationalized industries & public utilities such as telephone, gas, water, electricity, railways

29. Privatisation comprises three main forms: The partial or complete sale of equity in a public enterprise to private investors or companies The contracting out of services, formely performed within the public sector, to the private sector The approval of privately built & operated public infrastructures projects – for e.g., prisons, hospitals

30. Support for privatisation is based on a view that:- private ownership is inherently more efficient and, therefore, a total of economic management Exposure to the profit – maximising objectives of private owners Improve organizational performances

31. 4. The transfer of ownership to the private sector leads to clear organizational objectives. Public sector organization, on the other hand, tend to pursue multiple, and often conflicting objectives

32. Why outsource government services

33. The benefits of outsourcing are seen to lie in the provision of public services at a lower costs to the government. This view raises three issues: Quantifying the cost savings for organizations can be problematic – organization are yet to include the full range of costs associated with this form of management, including contracting & monitoring costs

34. 2. In the public sector it can be difficult to judge whether performance has improved, given the problem in measuring public sector efficiency. 3. Where cost savings have occurred, it stemmed largely from the shedding of labour, the erosion of worker’s wages & work condition Negative consequences of outsourcing for employee 1. Greater work intensification 2. Increased job insecurity

35. 3. Lower wages & earnings 4. Longer hours 5. Less pleasant work environment 6. Negative effects for unions – the shift of jobs to the private sector can mean a loss of union coverage, as employees are no longer eligible for membership or new private sector employers avoid the union.

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