There are 2 main dimensions in the Context of Industrial Relations, namely internal and external context. The Industrial Relations are conducted within the external context of the national political-economic, the international influence and the internal context of the organization.
The Political Context
The Political Context of Industrial Relations is formed by the government of the day. Some governments will want to curb the power of the trade unions through legislation and will succeed to some degree. Some will be committed to some changes in the area of trade union recognition but can say that it does not intend to make any other major changes to existing trade unions legislation.
The Economic Context
The Economic Context affects employment with fluctuation and workforce downsizing mostly in the manufacturing sector. This sector has experienced capital intensive technology rather than labour intensity. This has weakened power of the unions and their ability to bargain economically.
The Regional Grouping Context of Industrial Relations
The conduct of employee relations in EU countries and COMESA Employees’ relations concerning works councils, free movement of labour, working hours, and many countries are affected by the regional treaty and Programme of action regulations and initiatives of these same groupings .
The Intra-Organizational Context
The need to take ‘costs out of the business’ has meant that employers have focused on cost of labour usually the highest and most difficult cost to reduce. Hence, the ‘lean organization’ movement and large scale redundancies, especially in manufacturing sector.
There has been pressure for greater flexibility and increased management control of operations. This situation has had a direct impact on employee relations’ policies and union agreements.
The widespread introduction of new technology and information technology has aimed to increase productivity by achieving higher levels of efficiency and reducing labour costs. Organizations are relying more on a core of key full-time staff, leaving the peripheral work to be done by subcontractors and the increasing numbers of part-timers of women and men. This has reduced the number of employees who wish to join unions or remain trade union members.