Week 6:

PLURALIST THEORY-INDUSTRIAL RELATIONS (PT)

(Also known as ‘Liberal Collectivism’ or ‘Collective

Bargaining’ theories- See reading by Gospel and Palmer in
Reader).

Main Assumptions of Pluralist Theory

1. PT is borrowed from field of Political Science.

 In Political Science, the PT argues that in a society there
are multiple ethnic groups (eg Fiji, iTaukei, Indo- Fijians,
Chinese, part-Europeans, etc) & they have different
interests/ aims, etc.

2. PT- argues similarly, there are various multiple interests

groups in a firm & industry. These are:

(i) Employers/Business people

(ii) Workers
(iii) Trade Unions
(iv) Suppliers
(v) Customers

3. Unitary theory says is there is only Management’s interest,

but PT says there are various multiple interests.

4. PT-argues a firm has a number of sources of authority (UT

said that there is management authority).
5. PT-accept that conflict is exists in firms
 Conflict is natural/ normal (UT say conflict is abnormal,
deviant). PT accepts conflict as part of work place
(unlike Unitary theorists).
 Conflict is inevitable (not avoidable)
 Conflict is part of capitalist economic system/structure.

6. PT believe in legitimate right of worker and right to form

Trade Union (UT said TU are intruders in a firm).

7. PT believe in bi-lateral-decision making. They want

negotiation between managers and workers/trade unions.

8. PT believe that conflict can be resolved. It can be resolved

via Collective Bargaining (CB). CB is a negotiation process
between mangers and trade unions & occurs at the
organisation level.

 PT believe through CB conflict can be brought into open

and solved.

 PT that CB the most fairest and efficient method of

institutionalising & resolving conflict at work and
generating employment rules.

9. PT prefer managers & employees (trade unions) to solve their

conflicts & want less government intervention (i.e less use of
IR Government IR machinery/legislations).
10. PT wants a reduced government role in IR.
 PT is based on classical economics/neo-classical
economic theory which argues less govt intervention in
business.

Table 1.2 shows the main features of the Pluralist theory.

Main Features of a Pluralist Perspective

Aspect Pluralist Perspective
General 1. An enterprise contains people with a variety of
Philosophy different interests, aims and aspirations.
2. Power is diffused among the main bargaining groups
in such a way that no party dominates the others.
Role of the 1. Regarded as the impartial guardian of the ‘public
state interest’
2. Govts role is to protect the weak (workers) and
restrain the power of the strong (employers ).
Role of 1. Should not expect blind obedience or suppress any
management ideas or aims that conflict with their own.
2. The aim is to reconcile conflicting opinions and keep
the conflict within acceptable bounds so that it does
not destroy the enterprise.
Unions 1. Trade Unions are viewed as the legitimate
representatives of employee interest at work with the
right to challenge management.
Industrial 2. Conflict is an inevitable and legitimate consequences
Conflict of the variety of interest in the workplace.
Source: Bray, Deery, Walsh and Waring (2005)
VERSIONS OF PLURALIST THEORY
VERSION A: Dunlop System Model of ER/IR.

John Dunlop (Book -1954)- American Academic

Who was John Dunlop?

 Major author of Pluralist Theory
 He was born on 5 July 1914 and died on 2 October, 2003 at
the age of 89
 Dunlop was American economist and he wrote a lot on
industrial relations.

1. In 1958, Dunlop developed the System Model of ER/IR. He

looked at what was going on in employment and industrial
relations in the USA. He wrote a book -Industrial Relations
Systems (1958).

2. Dunlop was influenced by Talcott Parsons- right wing

American sociologists (structural functionalists).
3. Dunlop argued that ER/IR is a sub-system of the society. This
sub-system is runs parallel to the economic sub-system and
political sub-system.

4. Dunlop’s Systems Model has 4 interrelated elements:

(a) Actors (employers, TU, and state)

(b) Context – IR operates in the context of wider socio-

economic environment

 type of economy a country has,

 level of economic development (developed vs third
world countries),
 level of industrialization,
 level technological development, market forces,
govt budget, etc.

(c) Ideology- What are the opinion or ideas of the three

actors-Employers, TU, and the State. Are they similar or
different? Right wing ideas vs left wing ideas
 Employers- pro-business
 TU- pro-worker
 State- Neutral. (Class Question-Is state neutral?)

Dunlop says if the ideas of the three actors are similar

then the IR system will be stable. If not it will be
unstable.
 (c) Rules: Dunlop views the industrial relations system as a
system of rules & attempts to explain why particular
workplace rules are established & why they change.

 According to Dunlop IR is about ‘making rules of work,

implementing the rules, collective bargaining processes
and rules about solving industrial disputes via IR
Machinery.

 Rules that regulate the employment relations

Type of Examples
rule
Formal Eg Awards (in UK, NZ and Australia)
Rules
Informal Eg Shared understandings btw
Rules employees and managers over
appropriate behaviours.

Substantive Eg working hours

Rules
Procedural Eg Rules specifying when to solve
Rules grievance/disputes

Allan Flanders & Hugh Clegg (UK authors)

1. 1960s- In UK, Allan Flanders & Hugh Clegg-British IR

Writers (Oxford University).
2. They adopted Dunlop’s ‘Systems Model’ of IR. They
supported ‘Systems Model of IR’.

3. They argued that IR system had 4 elements- actors

(employers, TU, and state), contexts, a binding ideology, a
set of rules and regulations.

 Actors. Employers (including managers) and their

organizations, non-managerial employees and their
representatives (trade unions), and the State (the
elected government).

 Contexts. Technology, the labour and product market

conditions, and the distribution of power in society as
a whole.

 Ideology. A shared set of beliefs about the role and

legitimacy of each actor in the industrial relations
systems, enhancing the stability of the system.

 Web of rules. The outcome of the system in the ‘web

of rules’ governing industrial relations.

‘Substantive rules’= relate as wages and conditions

of employment, employment security, production
targets and job satisfaction.
‘Procedural rules’= refer to the processes used to
decide these issues (e.g. collective or individual
bargaining, arbitration, unilateral management
decision).
Thursday 21 Aug 2015

Criticisms of Dunlop Systems Model of IR (by radical

theorists eg Richard Hyman- UK Professor).

1. Hyman said Dunlop does not discuss about the issue of

‘power’ within and outside the organization. Employers
have more power than employees.

2. Hyman say Dunlop failed to deal with conflict. Dunlop’s

idea that the actors are bound together by a ‘shared
ideology’ is not true. Management and Workers have
different aims and goals.

3. Hyman say Dunlop model is too concerned about in

maintaining stability and order in firms & capitalist society
(eg USA). Dunlop adopts a functionalist theory (same as
the Unitary theory).

Dunlop is concerned about how to bring about stability

once there is conflict in the IR system. (Eg This is similar
to letting the stream of rice cooker).

4. Hyman & Kochan says Dunlop’s systems model cannot

explain he dynamic aspects of IR. Kochan says the model’s
is unable to cope with change.

PLURALIST THEORY
VERSION B: ‘Institutionalist’ theory of IR. (Reading 2, by
Bray et al)
 ‘Institutionalist’ theory of IR basically looks at the various
IR Institutions in Society.

Class Question? What is an institution?

The 3 main IR Institutions are:

(1) First institution -Firm/organisation

 Every firm has its own ‘rules of employment’ (eg Factory
rules).
 Rules on absenteeism, worker dismissal policies etc.
 Internal IR dispute handling machinery (procedures &
process).
 2. Second institution – Trade Unions

What Trade Unions? = are Collective ‘Institution of workers’.

They are organisation for workers. It also has rules.

i. Rules of who can join a TU? (Craft Unions- only skilled

workers).
ii. Level of workers who can join TU? (blue collar vs white
collar worker).

iii. Strike rules- refusing to go on strike, picketing, not

allowing ‘Scab labour’. ‘Wildcat strike’
4. State
Every State provides the IR institutions, legislation and helps
solve industrial disputes. The Ministry of Labour performs all
these functions.

Employment’/legislations
 Employment Act (Fiji- ERP- 2007).
 ENI 2011
 Trade Union Act (to control the activities of TU).
 Trade Disputes Act
 OHS Act
 Workman’s Compensation Act.
 Industrial dispute handling machinery (eg
conciliation, mediation, Arbitration, Labour Court).
Bray et al (2005) talks about 2 types ‘Institutionalist’ theory of
IR.

(a) Old ‘institutionalist’ of PT (1890-1940).

Authors like Sydney & Beatrice Webb (1894- UK) and John
Commons (1913- USA).

Criticisms- by the Radical Theory.

1. They provided a narrow and descriptive (not
analytical) account of IR.

2. They do not provide a theoretical analysis of IR (ie

how these IR rules affects & has impact on working
relationship between workers & managers).
 (b) Neo- ‘Institutionalist’ of PT (1970- present)
Authors like Alan Fox (1971- UK), Child (1981-UK), Edwards
(1986-UK), Blyton & Turnbull (1998-UK)

1. They provide a theoretical analysis of IR. They

show how these IR rules affects & has impact on
working relationship between workers &
managers.

2. They provided a not just a descriptive but

analytical account of TU & CB by using tools of
‘rules’ & ‘regulate’.

Eg Alan Fox said they mgt should not blame TU

for introducing conflict at workplace- but TU as a
way of organising conflicts, rather than workers
complaining individually.

3. They provided a broader account of Firms, TU

and State & locate them in Broader ‘IR’
Environment)
PLURALIST THEORY
Version 3. CORPORATIST THEORY (See Reading by
Gospel & Palmer in MG315 Reader)

General point-
Debate on whether the govt should intervene in running of
business. Three schools of Thought/Theory:

1. Laissez-faire School of thought (also known as free- market

theory/ capitalist theory). (Right wing economic theory)

Laissez-faire argument says govts (state) should not interfere in

the running of business in society. No govt intervention- let the
markets forces to operate on its own.

Eg. No minimum wage-Let the employer decide how much

to pay worker.

Eg No Labour (ER) legislation to dictate the maximum

hours of work.

Eg No OHS legislation to dictate the conditions of work.

Class Question? Do you think this is good or bad?

2. Liberal School of thought. (Liberal economic theory)

Little govt intervention in the running of business in society.
They say that markets forces are not perfect and create problems
– so govt can provide help to operate eg avoid monopoly
companies eg Vodaphone).

Eg. Government to make little rules on minimum wage.

Eg. Less labour (ER) legislation to dictate total hours of

work.

Eg Little -OHS legislation to protect workers.

3. More govt (state) intervention in the running of business.

(CORPORATIST THEORY).

 Corporatist theory says more state involvement in business

activities. They oppose total “free-market economy”
(capitalism).

 Govt should tell business what it can do and what it cannot

do (slightly left-wing economic theory).

 Corporatist theory says Increased role of the State passing

and enforcing IR legislations. Employment rules/ laws,
minimum wages, overtime rules, leave, OHS,

Why?
(a) Because they believe there are unequal power
between employers and workers (TU).eg garment
workers.
(b) State believe Employers have more power & are big
pressure groups not to be left alone because wrong
decisions by employers can affect the national
economy. Eg between 1970-1980 – 11 strikes took
place at Nadi airport.
Solution offered by Corporatist Theory.

Corporatist Theory Solution is Tripartism (three-party

negotiation between state, managers and Trade Unions).

Not only Collective Bargaining as was suggested by Dunlop and

Institutionalist theories. Collective Bargaining is not enough.
Govt should provide IR framework that is more than Collective
Bargaining.

Types of Tripartitism

(1)Voluntary Tripartism-not required by law eg in UK & USA.

(2)Compulsory Tripartism- required by law eg Sweden and

Germany (eg ‘Co-determination Act’ and ‘Work
Council’ laws require employers, workers & state.
 3 levels of Corporatism within a country

A. Macro level- Tripartism at National/Society level.

Eg Tripartism inSingapore- PM. Lee

Eg Tripartism-Fiji model 1976- 1984.

Introduced in 1976 by the Ratu Mara govt. Annual Tripartite
Forum were held in Suva- 2-3 days meeting between govt,
employers & TU.

1984-removed by the Ratu Mara govt after recommendation

by World Bank and IMF. Annual Tripartite Forum meeting
not held. Current system is the ERAB (Employment
Relations Advisory Board at Min of Labour).

B. Meso/Mesa level- Tripartism at Industry/Sector level-UK (eg

Australia – 1980s -Wage setting was done by Accord and
Awards)
Accord = was a agreement between Labour govt,
employers and TU to negotiate wages annual meetings.
Award = Wages in Australia determined by a Head of ER
Tribunal – eg 2 parties present their submission & Tribunal
decides the wage rate annually for different industries.
eg Germany and Sweden have ‘Co-Determination Acts’ and
work councils for to discuss employment issues.

C. Micro level- Consultation at Organisation/Enterprise/ Factory

level
eg Japan- negotiation at the Enterprise level.
Tripartism at Global Level- ILO.

Tripartism at International Labour Organisation (ILO)

level.
1.0 1919- ILO formed as part of the Treaty of Versailles
after World War I

2.0 Pacific Island Countries who are members- Fiji, Samoa,

Solomon Is, Vanuatu, Tuvalu.

3.0 ILO consists of 3 IR representatives (Employers Reps,

Trade Union Reps, State reps.

4.0 ILO promotes Tripartite ideas- dialogue between 3 IR

parties (not unilateral).

5.0 Tripartite structure - gives an equal voice to workers

(TU), employers and governments to ensure that the
views of the 3 IR parties. Also all views are reflected in
labour standards & in shaping policies & programmes.
 6.0 The main aims of ILO are to promote worker’s rights at
work, encourage ‘decent’ work opportunities, enhance
social protection & social welfare & strengthen dialogue
between mgt & TU on work-related issues.

7.0 Base on the belief that global & lasting peace can be
accomplished only if it is based on social justice. 3 IR
parties are called ‘social partners’/social partnership.
8.0 Passes Fundamental Conventions:
i. Freedom of Association and Protection of the Right to
Organise Convention, 1948 (No. 87)
ii. Right to Organise and Collective Bargaining Convention,
1949 (No. 98)
iii. Convention against Forced Labour, 1930 (No. 29)
iv. Worst Forms of Child Labour Convention, 1999 (No. 182)
v. Minimum Age Convention, 1973 (No. 138)
vi. Equal Pay Convention, 1951 (No. 100)
vii. Discrimination (Employment and Occupation) Convention,
1958 (No. 111).

8.0 Promotes International labour standards

Govt & TU (together with ICFTU + ILO) are pushing

for better labour standards (decent work) in developing
countries.
 ILO wants World Trade Organisation Agreement
(WTO). to attach ‘labour standards clause’ in WTO.
But this is opposed by poor developing countries. Why?

2.0 Tripartism -Singapore model- PM. -Lee

3.0 Tripartism-Fiji model 1976- 1984
4.0 SPOCTU- South Pacific Oceania Council of
Trade Unions (Brisbane)

Most countries are not too keen on Tripartism changed (Eg

UK, USA, Fiji, etc).
CT-They want a more interfering state. ILO-‘Social
dialogue’ and ‘social partnership’ (Ramaswamy)-
very strong in Europe- Denmark, Sweden, Norway,
Holland and Germany (Works council and co-
determination) but not in USA.
Japan has its own blend of social dialogue (via
Quality Control circle and TQM)-Total Quality
Management.

Corporatism supported by people on -Moral and

pragmatic grounds- something that is right, fair to
both employers and workers. Ie poor people must be
defended in society.