Asian L12 Lecture Notes

OFFICIAL (CLOSED) \ NON-SENSITIVE
School of Management and Communication
Diploma in Human Resources Management

with Psychology (DHRMP)
B335 Asian Industrial Relations Environment
Learning Package 4
Regulating Industrial Actions;
Trends, Challenges and Prospects for the
Development of Industrial Relations in Asia
Lesson 12:
Comparative Analysis of
Industrial Relations Systems in Asia
Learning Outcomes
At the end of the lesson, students will be able to:

 Explain the challenges to international and
comparative study of Industrial Relations
 Analyse the distinction between Asian and
Western Industrial Relations systems, in regard to
their development models and strategies
 Analyse the distinction among the Asian Industrial
Relations systems, in regard to their development
model and strategies
2
Unit 1
Review of
the Asian and Western
Industrial Relations Systems
Western Industrial Relations

 Western industrial relations (IR) systems are
rooted in the following values:
• Democracy
• Freedom of speech and association
• Tolerant of a workplace made up of various groups with
different values and needs
• Egalitarianism*
• A legal employer-employee relationship
• Minimal government intervention, thus a Bipartite approach
to collective bargaining
*Note: Egalitarianism emphasises equality and equal treatment across race, ethnicity, gender, religion,
economic status and political beliefs. 4
Adapted from Investopedia (2018) Egalitarianism. Retrieved Dec 13, 2020 from
https://www.investopedia.com/terms/e/egalitarianism.asp
Activity 1: Power to the workers!
Watch the video titled ‘Unions, Make it Possible!’ at:

https://www.youtube.com/watch?v=FQg5rLNFo7c
7
Center for People’s Media. (2017) Unions, Make it Possible! [Video file]. Retrieved Dec 13, 2020 from https://www.youtube.com/watch?v=FQg5rLNFo7c
Activity 1: Power to the workers!

Answer the following questions:
a) Identify the list of demands by the Western unionists.
b) Identify the issues that are not covered within the

scope of Asian Industrial Relations.
7
Asian Industrial Relations
 Although many Asian economies inherited their IR

systems from the former colonial ‘masters’, they are
hugely different because of the differences in their:
• political systems
• level/ stage of economic/industrial development
• culture
Quiz
The British, the Dutch, the French, the American, and the Portuguese
were the colonial ‘master’ of many Asian states.
Can you name those states that were once ruled by these colonialists?
7

 In Asia, the governments:
• implemented and steered their industrialisation
process and strategies
- e.g., Malaysia’s ISI-EOI shift in 1973-1984 (Refer to
Lesson 6 and 8)
• established and steered their IR systems
- e.g., To keep industrial peace and stability in the labour
market
In contrast to Western systems, there has been a high

extent of government intervention in Asian IR systems
8
 Characteristics of Asian IR:

• Apart from the Government, Unions and the
Employers also play a strong role in the IR system
• Legislative measures are used to maintain
industrial peace and labour market stability
• Enterprise level negotiation is preferred
• Conflicts and disputes are prevented through
compulsory conciliation and arbitration
• Asians view joint consultation or conflict avoidance
more culturally-appropriate ie, high collectivism 9

 Characteristics of Asian IR (cont’d)
• Relatively more workers are involved in low-
waged, unskilled production jobs
• Migrant workers (from rural areas) form a large
proportion of the workforce mainly in:
-the agricultural employment
-the informal employment
-the unorganised employment
• Union membership is small and is declining*
*Note
Leading to further problems:
• Difficulty in nurturing new union leaders
• Less capability to bargain with employers on equal terms, hence 10
compromising during negotiations
Activity 2: Challenging times ahead

Watch the video titled ‘Challenges for Trade Unions in
Asia’ at: https://www.youtube.com/watch?v=UYYI9XIBdjs
Duration: 7:30 min [stop viewing at 5:38 at protected employment]
From this video, identify the three main challenges that

Trade Unions in Asia face today. 13
Friedrich-Ebert-Stiftung. (2018) Challenges for Trade Unions in Asia. [Video file]. Retrieved Dec 13, 2020 from https://www.youtube.com/watch?v=UYYI9XIBdjs
Challenges to Comparative Studies
 The comparative study of IR between the

Western and Asian economies is difficult due
to these factors:
• Cultural, social and political diversity in Asia
• Industrialisation at different times/ levels and

economic development at different extents/ stages
• Differences in terminology and function eg.

- labour courts vs. tribunals
- collective agreement in Singapore vs collective contract
in the US 12
Unit 2
Trade Unions in Asia
IR Actor – Trade Unions
 The comparison of trade unions is commonly

based on the following criteria
• Strength of union influence

• Degree of decentralisation
• Fragmentation of trade unions
14
UNION MEMBERSHIP AND STRENGTH OF

INFLUENCE
High membership and Strong influence

Case: Singapore
High membership but Weak influence

Cases: China & Vietnam
15
High Membership and Strong Influence

Case: Singapore
• With relatively high union membership and political support, unions
in Singapore strongly influence IR policies which are formulated
through tripartite consultation and decision-making
• Even then, there is criticism that the unions’ workplace influence is
limited as the management’s prerogatives are excluded from
collective bargaining
16

High Membership but Weak Influence
Cases: China and Vietnam

• A majority of the workers are represented by the respective
national federation unions
• All China Federation of Trade Unions (ACFTU)
• Vietnam General Confederation of Labour (VGCL)
• These federation unions are linked to the Communist Party
• In the state-owned enterprises (SOEs), unions are controlled by
the Communist Party officials
• Protection of workers’ rights remains inadequate:
• Leading to a rising number of labour disputes and strikes
• The union’s influence remains low as the government views
strong influence as hurting industrial peace
17
DECENTRALISATION AND FRAGMENTATION OF

TRADE UNIONS
High degree of decentralisation and high

degree in fragmentation of trade unions
Case: Indonesia
High degree of decentralisation but low

degree in fragmentation of trade unions
Case: Japan 18

High degree of decentralisation and high fragmentation of unions
Case: Indonesia
• Democratic reforms following the Asian Financial Crisis allowed for
unions to grow
• With Act No. 21 (2000) on Trade Unions allowing trade unions to be set
up with a minimum of 10 members, multiple unions have formed within
an enterprise
• This fragmentation of enterprise unions allows employers to decline
collective bargaining requests due to a lack of representativeness
• Additionally, the in-fighting among the unions undermines their already
weak influence
19

High degree of decentralisation but low degree in fragmentation of
unions
Case: Japan
• Japanese trade unions are highly decentralised with over 95% of
the unions being enterprise-based
• The enterprise unions directly negotiate with their management,
without the influence of national level federation unions,
government or political parties
• There is hardly any occurrence of multiple unions i.e.,
fragmentation, within an enterprise
20
Activity 3: Federation unions in Asia
Identify the features of the federation unions, based on

their structure and level of government intervention in
the following Asian countries:
a) Singapore
b) China
c) Japan
d) Korea
21
Unit 3
Employers’ Associations
in Asia
IR Actor – Employers’ Associations

 Most Asian employers’ associations exist at the
national level, and are not directly involved in
collective bargaining or negotiation with trade unions
 However, they adopt different approaches to
influence policy making
Examples:
• Representation of businesses in the policy consultation
processes
• Participation in tripartite initiatives
• Provision of services and advice to the corporate members
Quiz
Explain why most Asian employers’ associations do not play a key role in
collective bargaining or negotiation with trade unions? 23

 Comparison of employers’ associations are based on
their approaches to influence the policy-making
authorities.
Case: Singapore
Case: Japan
Case: Korea
Case: China
Case: Vietnam
24

Employers’ associations approaches to influence IR decision
making authorities
Case: Singapore
• The Singapore National Employers Federation (SNEF) is the

national level employer association
• SNEF plays a crucial role by participating in tripartite workgroups

such as National Wage Council and Tripartite Alliance Limited
25
IR Actor – Employer’s Associations

making authorities
Case: Japan
• Nippon Keidanren (Japan Business Federation) is the
employers’ association at the national level
• It offers guidelines and recommendations for employers to
undertake collective bargaining in their own enterprise unions
• They do not directly participate in the collective bargaining
process in an enterprise
26

making authorities
Case: Korea
• While the Korea Employers Federation (KEF) is not involved in

enterprise level collective bargaining, it influences the process through
consultation with its member companies
• It coordinates with employers on employment-related policy issues at
the national level, and represents them in various tripartite initiatives:
• Economic and Social Development Commission (ESDC, formerly
Korea Tripartite Commission)
• National Labour Relations Commission
• Minimum Wage Council
• Some employers in the banking, hospital and metal sectors have set up
sectoral employers’ associations in response to sectoral disputes
27

making authorities
Case: China
• The national level employers’ association is the China Enterprise Confederation
(CEC), established by the State Trade and Economic Commission (STEC) and
acts as the representative of all enterprises in IR matters
• Due to China’s vast size, the CEC faces the challenge of ensuring coverage of
the whole country
• As collective bargaining and negotiation often takes place at the regional/
sectoral/ enterprise levels, local business associations are gradually developing
their IR capacities and are more well received by employers
• Gongshanglian (All China Federation of Industry and Commerce) is a member of
the CEC
• It is increasingly active and is more accepted by local private businesses
28

making authorities
Case: Vietnam
• The government recognizes the following employers’
associations:
• Vietnam Chamber of Commerce and Industry (VCCI)
representing the private sector
• Vietnam Cooperatives Association (VCA) representing the
SOEs
• Vietnam’s IR policies are still at the infant stage.
• VCCI and VCA try to exert influence on IR matters by
participating in policy and law making by MOLISA (which you
read about in Lessons 6 and 9)
29
Unit 4
Collective Bargaining Process
in Asia
Collective Bargaining –
Enterprise-based Bargaining
 In Asia, decentralised enterprise-based bargaining has
become the dominant form of collective bargaining:
• The employers have widely accepted this approach
e.g., Japan, Korea, Singapore, Malaysia
• Governments are also promoting enterprise-based
bargaining e.g., Singapore, Malaysia
31
 Using enterprise-based bargaining as a

benchmark, collective bargaining comparison
can be done
Cases: Singapore & Malaysia
Case: Indonesia
32
Enterprise-based bargaining
Cases: Singapore and Malaysia
• The governments play a key role in shaping the enterprise-
based collective bargaining, structure and/or process
• To prevent disturbances in the workplace and the economy, the
governments have imposed some measures:
• Removal of managerial prerogatives from collective
bargaining process
• Legislative and administrative interventions
• Highly-regulated procedures for legal strike actions
33
Enterprise-based bargaining
Case: Indonesia
• High union fragmentation leads to multiple (and competing)
unions in an enterprise
• This restricts unions from carrying out effective collective

bargaining
• A rule has been imposed to tackle this problem – any union

representing more than 50% of workers of an enterprise is given
exclusive collective bargaining rights (majority representation
formal recognition given to trade unions)
• The trade unions which have less than 50% representation
rate of an enterprise would not be seen as credible as it
does not have majority representation of the workers 34
Activity 4:
Enterprise-based collective bargaining
Identify the features of enterprise-based collective

bargaining in the following Asian countries:
a) Japan
b) Korea
35
Unit 5
Tripartite Initiatives
 Some economies have experimented with tripartite
dialogue or bargaining mechanisms
 Before the 2000s, economies such as Korea and
Indonesia did not have a tripartite body
 However, the Asian financial crisis and economic
recessions exerted the pressure for these
governments to begin the tripartite ‘experiment’
 Unlike Singapore, these tripartite bodies mainly
functioned as consultation mechanisms for resolving
conflicting interests
37
 Using Tripartite-based bargaining as a

benchmark, collective bargaining comparison
can be done
Case: Singapore
Case: Japan
Case: Korea
Case: China
38
Tripartite-based bargaining
Case: Singapore
• Singapore stands out as a champion of tripartism in Asia
• The IR actors continue to be actively involved in tripartite
dialogue as a joint-decision and joint-implementation mechanism
to deal with a wide range of policy issues:
Examples:
• National Wages Council (NWC)
• Tripartite Alliance for Fair and Progressive Employment
Practices (TAFEP)
• Tripartite Alliance for Dispute Management (TADM)
• Singapore Tripartism Forum (STF)
• Various tripartite workgroups
39
Case: Japan
• There is no active national tripartite dialogue mechanism for
dealing with labour issues as government intervention is low
• However, there are some tripartite efforts:
• Social Security Council
• Labour Policy Council
• Central Minimum Wage Council
• Joint governance bodies for social insurance system
• In these tripartite councils, the government only facilitates
between the participants and the public (e.g., academics) are
often involved with workers’ and employers’ representatives
40
Case: Korea
• The Korea Tripartite Commission (now known as ESDC) was set
up during the Asian Financial Crisis to:
• identify ways to overcome the economic crisis
• build a consensus on labour market and IR reforms
• The 3 IR actors signed an agreement in 1998 to reform the IR
framework:
• legalising teachers’ unions
• abolishing the ban on third party intervention
• expanding the unemployment benefit scheme
• In return, the regulations on layoffs and flexibility were relaxed
• However, after the financial crisis, the tripartite dialogue lost
momentum as the unions withdrew their support 41
Case: China
• National Tripartite Consultation Conference (NTCC)) was held in 2001
as an experiment to promote tripartite-style collective bargaining in the
workplace
• These was a response to the increase in labour disputes since the late
1990s, which threatened labour relations and social stability
• The following parties participated:
• the All China Federation of Trade Unions (ACFTU)
• the China Enterprise Confederation (CEC)
• the Ministry of Labour and Social Security (MOLSS) (supported by
the ruling Communist party)
• This experiment was later spread to the provincial, city and district
levels, where Tripartite Consultation Committees (TCC) were set up
42
Activity 5: Take a stand
Trade unions in the developing and emerging Asian

countries have influenced government policy to be more
pro-workers, rather than more pro-employers.
State if you agree or disagree with the statement above

and support your position with relevant example(s) from
the developing and emerging Asian countries.
Note: You cannot stay neutral!
43
Conclusion
Conclusion
 The Industrial Relations landscape in Asia has

undergone considerable adjustments and
transformation in the last three decades under the
influence of:
• political democratisation
• economic globalisation
• the transition towards market economies
 The traditional IR systems have faced pressure to
change due to
• pursuit for competitive cost
• greater need for employment flexibility
• changes in employment practices and legislation 45
Conclusion
 In Asia (e.g., China, Indonesia, Malaysia, Vietnam),
collective bargaining frameworks are still evolving
 Decentralised enterprise-based bargaining continues
to be the dominant form of collective bargaining
 However, enterprise unionism has flaws e.g.,
 Fragmentation of trade unions in Indonesia
 Management’s influence on their own enterprise
unions.
 Due to these flaws, some economies have witnessed
the collective bargaining process shifting from the
enterprise to the regional/ industrial level; e.g., Korea
46
Conclusion
 To understand the different types of IR systems in
Asia, it is important to consider the political factors.
• Some countries like Korea and Indonesia have
begun to experiment with tripartite consultation in
the midst of democratisation
• Communist ideology is also prevalent in the IR
systems of China and Vietnam
47
Concept Diagram
This model presents the possible aspects for IR systems to be compared
Market
Emplo Techno
Past yment logy Future
Economic
National
Organis
Industry
ational Parties
Education
Industrial Relations Gover

Legal
Class Wealth nment
Adapted from: Social Political 48
Salamon, M. (2000). Industrial Relations: Theory and Practice. 4th ed. Edinburg Gate, Prentice Hall, p.41.
References
Book Resources
• Benson, J. and Zhu, Y. (2008). Trade Unions in Asia. An Economic and Sociological
analysis. 1st edn. Routledge.
• Kurvilla, S. and Erickson, C.L. (2002) Change and Transformation in Asian Industrial
Relations. 1st edn. Cornell University, ILR School & Blackwell Publishing.
• Kuruvilla, S. and Venkataratnam, C.S. (1996) Economic development and industrial
relations: the case of South and Southeast Asia, Industrial Relations Journal, 27:1
• Silva, S.R. de (2015) Elements in the Shaping of Asian Industrial Relations. 1st edn.
International Labour Office & ACT/EMP Publications.
• Salamon, M. (2000). Industrial Relations: Theory and Practice. 4th ed. Edinburg Gate,
Prentice Hall.
• Bingham, C. (2016) Employment Relations. SAGE Publication.
49
References
YouTube Resources
• Center for People’s Media. (2017) Unions, Make it Possible! [Video file].
Retrieved Dec 13, 2020 from https://www.youtube.com/watch?v=FQg5rLNFo7c
• Friedrich-Ebert-Stiftung. (2018) Challenges for Trade Unions in Asia. [Video
file]. Retrieved Dec 13, 2020 from
https://www.youtube.com/watch?v=UYYI9XIBdjs
50

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OFFICIAL (CLOSED) \ NON-SENSITIVE

School of Management and Communication

Diploma in Human Resources Management

At the end of the lesson, students will be able to:

Western Industrial Relations

Activity 1: Power to the workers!

Watch the video titled ‘Unions, Make it Possible!’ at:

Activity 1: Power to the workers!

a) Identify the list of demands by the Western unionists.

b) Identify the issues that are not covered within the

Asian Industrial Relations

 Although many Asian economies inherited their IR

Asian Industrial Relations

In contrast to Western systems, there has been a high

Asian Industrial Relations

 Characteristics of Asian IR:

Asian Industrial Relations

Activity 2: Challenging times ahead

From this video, identify the three main challenges that

Challenges to Comparative Studies

 The comparative study of IR between the

• Industrialisation at different times/ levels and

• Differences in terminology and function eg.

IR Actor – Trade Unions

 The comparison of trade unions is commonly

• Strength of union influence

IR Actor – Trade Unions

UNION MEMBERSHIP AND STRENGTH OF

High membership and Strong influence

High membership but Weak influence

IR Actor – Trade Unions

High Membership and Strong Influence

IR Actor – Trade Unions

Cases: China and Vietnam

IR Actor – Trade Unions

DECENTRALISATION AND FRAGMENTATION OF

High degree of decentralisation and high

High degree of decentralisation but low

IR Actor – Trade Unions

IR Actor – Trade Unions

Activity 3: Federation unions in Asia

Identify the features of the federation unions, based on

IR Actor – Employers’ Associations

IR Actor – Employers’ Associations

IR Actor – Employers’ Associations

• The Singapore National Employers Federation (SNEF) is the

• SNEF plays a crucial role by participating in tripartite workgroups

IR Actor – Employer’s Associations

Employers’ associations approaches to influence IR decision

IR Actor – Employer’s Associations

• While the Korea Employers Federation (KEF) is not involved in

IR Actor – Employers’ Associations

IR Actor – Employer’s Associations

 Using enterprise-based bargaining as a

Cases: Singapore & Malaysia

• This restricts unions from carrying out effective collective

• A rule has been imposed to tackle this problem – any union

Identify the features of enterprise-based collective

 Using Tripartite-based bargaining as a

Activity 5: Take a stand

Trade unions in the developing and emerging Asian

State if you agree or disagree with the statement above

Note: You cannot stay neutral!