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There are 2 main dimensions in the Context of Industrial Relations, namely internal and external context. TheIndustrial Relationsare 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 andCOMESAEmployees’ 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.

Perhaps the main cause or source of poor industrial relations resulting in inefficiency and labour unrest is mental laziness on the part of both management and labour. Management is not sufficiently concerned to ascertain the causes of inefficiency and unrest following thelaissez-fairepolicy until it is faced with strikes and more serious unrest.

Even with regard to methods of work, management does not bother to devise the best method but leaves it mainly to the subordinates to work it out for themselves. Contempt on the part of the employers towards the workers is another major cause.

However, the following are briefly the causes of poorindustrial relations:

1. Mental inertia on the part of management and labour;

2. An intolerant attitude of contempt towards the workers on the part of management.

3. Inadequate fixation of wage or wage structure;

4. Unhealthy working conditions;

5. Indiscipline;

6. Lack of human relations skills on the part of supervisors and other managers;

7. Desire on the part of the workers for higher bonus or DA and the corresponding desire of the employers to give as little as possible;

8. Inappropriate introduction of automation without providing the right climate;

9. Unduly heavy workloads;

10. Inadequate welfare facilities;

11. Dispute on sharing the gains of productivity;

12. Unfair labour practices, like victimization and undue dismissal;

13. Retrenchment, dismissals and lock-outs on the part of management and strikes on the part of the workers;

14. Inter-union rivalries; and

15. General economic and political environment, such as rising prices, strikes by others, and general indiscipline having their effect on the employees’ attitudes.

There are generally three main actors in the industrial relations,which are directly involved, namely, employees, employer and government or society:

Employersas Actors in the Industrial Relations

Employers possess certain rights vis-à-vis labors. They have the right to hire and fire them. Management can also affect workers’ interests by exercising their right to relocate, close or merge the factory or to introducetechnological changes.

Employees

Workers seek to improve the terms and conditions of their employment. They exchange views with management and voice their grievances. They also want to share decision making powers of management. Workers generally unite to form unions against the management and get support from these unions.

Government

The central and state government influences and regulatesindustrial relationsthrough laws, rules, agreements, awards of court and the like. It also includes third parties and labor and tribunal courts. The diagram below depicts the industrial relations system. Industrialconflictsare the results of several socio-economic, psychological and political factors.

Various lines of thoughts have been expressed and approaches used to explain his complex phenomenon. One observer has stated, “An economist tries to interpret industrial conflict in terms of impersonal markets forces and laws of supply demand.

• To a politician, industrial conflict is a war of different ideologies, perhaps a class-war.
• To a psychologist, industrial conflict means the conflicting interests, aspirations, goals, motives and perceptions of different groups of individuals, operating within and reacting to a given socio-economic and political environment”.

In summary all the 3 actors interact the way illustrated in this picture:

Growth pole is the concentration of technically advanced industries that stimulate economic development in associated businesses and industries. These concentrations of industries often affect the economies of geographical areas outside their immediate regions.

A third, but less knownmodel of growthwas worked out in the 1950s by the Frenchman, Fancois Perroux. Perroux divided industry as a whole into two types of sub-sector: the dynamic sub-sectors, so called ‘propellant’ industries: and the non-dynamic, ‘impelled’ industrial sectors, which had to be driven forward by the dynamic sectors. This division also had a spatial aspect in that there was a tendency to concentrate the dynamic sub-sectors in small geographical enclaves, while the others were spread out in backward regions, whose growth and development totally depended on their linkages with the growth poles.

With this emphasis on both the sector wise and the spatial concentration of growth, Perroux came to act as a kind of forerunner for the many empirical analyses that have

since been undertaken of such tendencies. It is today a conventional widespread conception that the countries in the Third World, with a few exceptions such as Singapore, Hong Kong, South Korea and Taiwan — are all characterised by concentrations of growth in certain sectors and certain geographical enclaves.

It is of great benefit to mention here that this strategy of the growth pole was one of the earliest development initiatives that Zambia implemented in its search to bring about balanced development. The specific programme under which this was implemented was known as the ‘Intensive Development Zones’. Under this programme certain areas of potential growth were identified. The idea was to pump a lot of investment in those areas so that the effects of growth from them could have spill-over effects over a certain period of time. In the long run, the entire country would come to benefit from this approach.

In contrast to Perroux’s and Hirschman’s recommendation; the concentration has rarely been optimal as seen from the perspective of the theories of unbalanced growth.

The concentrations observed in the third world do not, generally reflect strategic imbalances in Hirschman’s conception, or development-promoting growth rate poles in Perroux’s terminology. Rather, they represent isolated growth spots which may be interlinked and integrated into global networks but which, at the same time, have not induced growth in non-dynamic sectors of the surrounding backward areas.

Neo-Marxism theories of underdevelopment and dependency appeared during the 1950s, partly as a reaction against the growth and modernization theories, partly as the outcome of a long-standing debate concerning the impact of imperialism. The early Neo-Marxist theories were primary known as dependency theories., They were to a large extent influenced by the Latin American structuralists and their analyses of the trade relations between the economically backward countries and the highly industrialised countries.

With respect to the theoretical heritage from the debate on imperiali5rn, it may be of interest to note that Marx had concerned himself with this issue as early as the 1850s. In articles in publications such as the New York Tribute, Marx tried to assess what would be the long-term impact on the European colonization of South Asia.

In this context, he arrived at the including local small-scale manufacturing, and set in motion a significant exploitation of the colonial areas; but on the other hand, he believed that the European penetration would at the same time remove basic obstacles to British intervention as directly promoting economic transformation. This applied especially to the building and expansion of material infrastructure, the introduction of the plantation economy monetization of commodity exchange, and the initial establishment of modern industry with its commutant wage labour (cf. Marx and Engels, 1972).

In other words, British rule implied destruction and exploitation in the short-term perspective, but construction and creation and creation of essential material preconditions for the colonial areas’ later transformation to capitalism – and thus, according to Marx, genuine societal development. It may be added that. Mar later toned down the constructive aspects of British rule in South Asia. He further asserted that the British colonization of Ireland had only destructive effects.

The interesting point in the present context is to note the wide span in Marx’s own conceptions, because this span has paved the way for very different interpretations within the Marxist research tradition. One of the theorists who has championed the view that imperialism has promoted development in the Third World is Bill Warreo.

We shall look at his main argument later in this chapter. But first we shall deal with the Neo-Marxist mainstream and focus on some of the several theorists who have vehemently rejected this interpretation and instead asserted that imperialism has actively underdeveloped the peripheral societies, or a very least obstructed their development.

These theories , most of whom may be regarded as proponents of dependency theory in one form or another, have further claimed that not only imperialism and colonialism of the past, but also contemporary forms of economic imperialism have impeded progress throughout the Third World.

They argue that economic domination, as exerted by the high industrialised countries, is a much more important development, impeding factor than all the internal conditions in the backward countries that feature so prominently in the growth and modernization theories.

A fourth distinguish characteristics of developing countries is that their trade tends to be dominated by the export of primary commodities and the import of manufactured goods.

This has consequences for the terms of trade of developing countries, the distribution of the giants from trade between developed and developing countries, and the balance of payments situation, all of which may adversely affect real income per head. The trade of Africa, the Middle East, Latin America and the Caribbean is still dominated by primary commodities. Only Asia and the Pacific have made headway in reducing dependence on commodity exports.

The barter terms of trade measure the ratio of export price to import prices. There has been a historical tendency for the terms of trade of primary goods relative to manufactured goods to deteriorate over the last 100 years or so by about 0.5 per cent per annum on average. This tendency is known in the literature as the Prebisch-Singer thesis. The falling price of exports relative to imports reduces the real income of a country because more exports have to be exchanged to obtain a given quantity of imports.

A second point to note is that the income elasticity of demand for primary commodities in world trade is less than unity, while the income elasticity of demand for manufactured goods is greater than unity. This means that as world income grows, the demand for primary commodities grows at a lower rate, but if developing countries grow at the same rate as the world economy their demand for manufactured imports grows at a faster rate.

As a consequence, developing countries specializing in the production of primary commodities suffer acute balance of payments difficulties. Often, the only means available to developing countries to adjust the balance of payments is to slow down their economies in order to reduce the growth of imports.

The prices of primary commodities are also more cyclically volatile than the price of manufactured goods. This can also cause havoc to a country’s balance of payments and its government’s tax revenue if it relies heavily on trade taxes. The resulting instability makes planning difficult and may deter private domestic investment and investment from overseas.

For all those reasons, the structure of trade poses severe problems for many developing countries and may keep countries poor than they would be if they were able to produce and export more industrial goods. It is not possible to understand the growth and development process — and the perpetuation of divisions in the world economy —without reference to the unequal trading between rich and poor countries and the balance of payments consequences of specializing in primary commodities.

In general, it seems to be the case that the more natural resources a country has, the poorer it performs. This phenomenon is referred to in the literature as the ‘curse of natural resources’ (Sachs and Warner, 2001; Gylfason, 2001). There is a very strong negative relationship and the regression coefficient of -0.0871 indicates that a country with a primary sector share 11 percentage points above the average has experienced a growth of per capita income of one percent below the average (controlling for the initial level of per capita income). This represents a substantial loss of welfare.

The same negative pattern emerges when the growth of per capita income is regressed against the export of natural resources as a share of GDP; and the negative relation persists even when controlling for other variables such as differences in the level of investment between countries, and for climate and geography.

Most countries that have grown rapidly in recent decades started as resource poor, not resource rich. There are exceptions to this general rule — countries such as Malaysia, Thailand, Indonesia, Botswana, for example — but most of these exceptional countries have grown fast not through the exploitation of natural resources but through diversification into manufacturing industry.

Curse of natural resource

What lies behind this‘curse of natural resource’?A number of factors fan be mentioned, which interrelate with each other, that seem to affect adversely may of the important determinants of development. Glyfason shows a negative relation across countries between the share of the primary sector in the labour force and export performance, domestic and foreign investment and education, and a positive relation with the size of external debt, the level of protection, corruption and income inequality.

We have already seen why primary production can lead to poor export performance because many natural resources are income inelastic and suffer terms of trade deterioration, by why should natural resources abundant countries neglect investment and education, and be more corrupt? There are two major explanations.

Firstly, natural resource abundance may ‘crowd-out’ other activities ‘through two mechanisms:

(1) higher wages or earnings in the natural resources sector impairing entrepreneurial activity and innovation in other sectors, and

(2) revenues from natural resources exports keeping the exchange rate artificially high which makes the rest of the economy uncompetitive.

This is known as the Dutch Disease, so named because of the effect that the discovery of natural gas in Holland in the 1960s had on the exchange rate and other sectors of the economy. Sachs and Warner (2001) test this ‘crowding out’ hypothesis across 99 countries and find a positive correlation between natural resource abundance and the domestic price level. The higher relative price level is then found to impede the export growth of manufactured goods. It could also be that a country rich in natural resources simply neglects to develop other sectors of the economy.

A second major explanation why natural resource abundance may lead to poor performance is that the rents from natural resources may be misused by politicians and bureaucrats. Democracy and the rule of law seem to be inversely related to natural resource abundance, and Gylfason (2001) shows corruption to be more widespread in natural resource abundant countries.

This is not surprising since limiting access to a resource provides a rent, and where the state owns the resource, bureaucrats^,will take bribes in return for exploitation rights. Tent earners may not be interested in schooling and education, having lined their own pockets, and those of their children, without acquiring an education. Thus, rent seeking leads to low levels of expenditure on education and school enrolment. it is also the case that the primary sector of an economy does not have the same educational needs as a more diversified economy.

Economies cannot function in an institutional vacuum; otherwise there is economic (and political) chaos. At the very minimum there has to be the rule or law; the protection of property rights and constraints on power and corruption if private individuals are to be entrepreneurial, to take risks and invest.

In many developing countries, the rule of law and the protection of property rights is still rudimentary, and politicians (and bureaucrats abuse their powers. Many economists have recently argued that it is weak institutional structures that are the fundamental causes of underdevelopment because the character of institutions is the determinant of all the proximate causes of progress such as investment, education, trade and so on.

Three main ones are highlighted: the extent oflegal protectionof private property; the quality if governance (including the strength of the rule of law) and the limit placed on political leaders. Attempts have been made to distinguish economically the relative importance of institutions compared with other factors (including geography) in explaining different levels ofper capita incomeacross the world, with interesting, but controversial results.

Rodrick et al (2002) take a large sample of developed and developing countries, measuring the quality of institutions mainly by a composite indicator or a number of elements that, capture protection afforded by property rights, and conclude ‘our results indicate that the quality of institutions overrides everything else.

Controlling for institutions, geography has, at least weak direct effects on income …similarly trade has no direct positive effect on income,” Easterly and Lavine (2002) also test the influence of institutions compared with geography and policy variables across 75 rich and poor countries and find that institutions seem to matter most as the determinant of per capita income. Even countries with ‘bad policies’ do well with good institutions.

Defining and Measuring Institutions

What do we mean by institutions?

The term institution has been defined in different ways. Douglass North (1990) describes institutions very broadly, as the formal and informal rules governing human interactions. There are also narrow (and easier to grasp) definitions of institutions that focus on specific organizational entities, procedural devices and regulatory framework.

At a more intermediate level, institutions are defined in terms of the degree of property rights protection, the degree to which laws and regulations are fairly applied, and the extent of corruption. It is narrower than North’s definition, which includes all of the norms governing human interactions. Much of the recent research into determinants of economic development has adopted the intermediate definition.

How is institutional quality measured?

Recent empirical analyses have typically considered three relatively broad measures of institutions, the quality of governance, including the degree of corruption, political rights, public sector efficiency, and regulatory burdens; the extent of legal protection of private property and how well such laws are enforced; and the limits placed on political leaders.

The measures themselves are not objective but, rather, the subjective perceptions and assessment of country experts or the assessment; made by residents responding to surveys carried out by international organizations and non-governmental organizations.

The first of these measures, i.e, the aggregate governance index, is the average of the six measures of institutions developed in a 1999 study by Daniel Kaufman, Art Kraay and Pablo Zoido-Lobaton. These measures include

(1) voice and accountability the extent to which citizens can choose their government and have political rights, civil liberties and an independence press;

(2) political stability and absence of violence – the likelihood that the government will not be overthrown by unconstitutional or violent means

(3) government effectiveness – the quality of public service delivery and competence and political independence of the civil service

(4) regulatory burden – the relative absence of government controls on goods markets, banking systems, and international trade;

(5) rule of law – the protection of persons and’ property against violence and theft, independence and effective judges, and contract enforcement; and

(6) freedom from graft – public power is not abused for private gain or corruption.

A second measure focuses on property rights. This measure indicates the protection that private property receives. Yet another measure, constraints on the executive, reflects institutional and other limits placed on presidents and other political leaders. In a society with appropriate constraints on elites and politicians, there is less fighting between various groups for control of the state, and policies are more sustainable.

It is recognized, however, that the correlation found between institutions and economic development could reflect reverse causality, or omitted factors. We need to find a source of exogenous variation in institutions where institutions differ or change independently of other factors.

Acemoglu et el (2001) argue that the different experience of colonization is one exogenous source where at one extreme colonizers set up exclusively extractive institutions (to exploit minerals and other primary products) such as slavery and forced labour, which neither gave property rights to inhabitants nor constraints the power of elites.

This was the experience in Africa and Latin America, At the other extreme, colonizers created settler societies, replicating the European form of institutions protecting private property and controlling elites and politicians in countries such as Australia, New Zealand and North America.

Weak institutional Structures

What determines why some countries were settled and others not? Acemoglu et al argued that the major determinant was the mortality rate faced by the early settlers, and that there is both a negative correlation between past mortality rates and current institutional quality (because institutions persisted) and between past mortality and the current levels of per capita income.

In fact, over 50 per cent of the variations In per capita income across the 75 countries is associated with variation in one particular index of institutional quality whichmeasures ‘protection against expropriation.’ The authors conclude ‘There is 3 high correlation between mortality rates faced by soldiers, bishops and sailors in the colonies and European settlements; between European settlements and early measures of institutions, and between early institutions and institutions today.

We estimate large effects of institutions on income per capita using this source of variation.’ They say that this relationship is not driven by outliers, and is robust controlling for latitude, climate, current disease environment, religion, natural resources, soil quality, ethyl linguistic fragmentation, and current racial composition’. But this is where the controversy starts because presumably his mortality rates of the early settlers, which affected the nature of institutions, was strongly influenced by geography as it affects disease. in the same vein Sachs (2003) argues that the findings of Acemoglu et al.

Concerning the negative relation between mortality rates 200 years ago and per capita income today is simply licking up the pernicious effects of malaria (which stir persists), not institutions. Development is not simply about good government and institutions. institutions might make anti-poverty policies more effective, but that is all.

Poor countries need resources to fight disease; to provide education and infrastructure, and all the other resource prerequisites of development. Sachs classified three types of countries combining institutions and geography, which is a sensible approach:

• Countries where institutions, policies and geography are all reasonably favourable, e.g. the coastal regions of East Asia
• Countries with favourable geography, but weak institutions, e.g. many of the transition economies of Eastern Europe.

Countries impoverished by a combination of unfavourable geography, such as landlocked countries and those plagued with disease and poor governance, e.g. many of the countries of sub-Saharan Africa.

It is important to mention from the start that developing countries are characterized by a number and varied features. Moreover, we should remind that developing countries are homogenous and as such do not exhibit similar features in their totality. However, what we intend to do in this unit is to focus on a number of features that are more or Tess common to developing countries.

As a way of recasting our thoughts on the current topic reference is made to Thirwall (2006) who maintains that there cannot be an increase in living standards and the eradication of poverty without an increase in output per head of the working population,oran increase in labour productivity. ForThirwall, this is asince qua nonof development. He goes on to argue that rich developed countries have high levels of labour productivity; while poor developing countries have low levels of labour productivity.

The questions that naturally arise are: what are the major causes of productivity, and what are the primary sources of productivity growth? In this article, therefore, we outline some of the distinguishing characteristics of developing countries that contribute to the low levels of labour productivity and poor economic performance. The following are some of such features:

• The dominance of agriculture and petty services
• Low level of capital accumulation
• Rapid population growth
• Exports dominated by primary commodities
• The curse of natural resources
• Weak institutional structures

The Dominance of Agriculture and Petty Services

One of the major distinguishing characteristics of poor countries is the fact that their economies are dominated by agriculture and petty service activities. There is very little by way of manufacturing industry. This therefore means that most of the population in developing countries finds employment in the agricultural sector. Available statistics (Thirwall 2006) indicate that 65 per cent of the labour force still relies on agriculture to make a living. This compares with just under30 per cent in the middle income countries and 5 per cent in the high-income countries.

Furthermore, most of the people employed in agricultural production in third world countries either operate at a subsistence level, or they are tenant farmers, or landless labourers. However, this is not to say that there is a lack of commercial farming or commercial agriculture. Commercial agriculture does exist, but it is only a tiny fraction of the entire agricultural sector. This being the case then, it is important to mention that the dominance of agriculture has certain implications. What are these? They include the following:

• Agriculture is adiminishing returnsactivity
• On the demand side, the demand for most agricultural products (and other

primary products derived from the land) isIncome elastic.

Low level of Capital Accumulation

A second major distinguish characteristic of developing countries is their low level of capital accumulation — both physical and human. Physical capital refers to the plant, machinery and equipment used in the production of output. Human capital refers to the skills and expertise embodied in the labour force through education and training. (The role of education in the development process will be discussed later in the unit).

Low levels of capital accumulation are a cause of low productivity and poverty, but are also a function of poverty, because capital accumulation requires investment and saving and it is not easy for poor societies to save. The process of development can be described as a generalized process of capital accumulation, but the levels and rates of capital accumulation in poor countries are low.

The amount of physical capital that labour has to work with in a typical developing country is no more than one-twentieth of the level in Europe and North America. This reflects the cumulative effect over time or much higher savings and investment ratios in the rich countries.

Domestic investment can differ from domestic saving owing to investment from abroad. The figures for low-income countries are distorted by China, which is 2002 saved over 40 per cent of its national income. If we exclude China the savings ratio of the low-income countries is less than half that of the middle- and high-income countries, although their investment ratio is still relatively high because of capital inflows from abroad. These are not always stable, however.

The distinguish development economist, Sir Arthur Lewis, once described development as the process of transforming a country from a net 5 per cent saver and investor to a 12 per cent saver and investor. Rostow, in his famous book The stages of Economic Growth (1960), defines the take-off stage of self- sustaining growth in terms of critical ratio of savings and investment to national income of 10-12 per cent.

What is the significance of this ratio? It has to do with a very simple growth formula, which originally came from the growth model of the famous British economist (Sir) Roy Harrod. The formula is the growth of output is the savings ratio (S/Y) and is the incremental capital – output ratio – that is, how much investment needs to take place in order to increase the flow of output by one unit. Substituting these definitions of s and c into (3.1) shows that in an accounting sense the formulation is an identity since in the national accounts.

Now, for the level of per capita income to rise, output growth must exceed population growth. If population growth is 2 per cent per annum, output growth must exceed 2 per cent per annum. It can be seen that how much saving and investment as a proposition of national income is required for growth depends on the value of the incremental capital, output ratio. It 4 units of capital investment are required to produce a unit flow of output year by year over the life of the investment, then c = 4, so s must be at least 8 per cent for the growth of output to exceed 2 per cent.

A net rate of saving and investment to national income of at least 8 percent or more is therefore necessary if there is to be sustained growth of per capita income. In most developing countries, the net savings and investment ratio is above this critical magnitude, but the fact remains that a major cause of low productivity and poverty in developing countries in the low level of capital that, labour has to work with. In case example 3.1 the difference in the savings and investment climate between India and China is highlighted and discussed.

Rapid Population Growth

A third distinguish feature of most developing countries is that they have a much faster rate of population growth than developed countries, and faster than at any time in the world’s history (see Chapter 8 for a full discussion). This can confer advantages but it also imposes acute problems.

Population growth in the low-income countries as a whole average 1.8 percent per annum, resulting from a birth rate of 29 per 1,000 population (or 2.9 per cent) and a death rate of 11 per 1,000 population (or 1.1 per cent). The rapid acceleration of population growth compared with its historical trend is the result of a dramatic fall in the death rate without a commensurate fail in the birth rate. Population growth in developed countries averages no more than 0.7 per cent per annum.

It takes 10 permits to start a business in India against six in China, while the median time it takes is 90 days in India against 30 days in China. A typical foreign power project requires 43 clearances at central government level and another 57 at a state level. These obstacles are far smaller in China.

In restriction on the hiring and firing of workers, India ranked 73^rdout of 75 countries in the Global Competitiveness Report for 2001. China ranked 23^rd. Bankruptcy is almost impossible for large business. Sixty per cent of liquidation processes before the Indian High Court have continued for more than 10 years. Public administration is also poor. It takes an average of 10.6 days to clear goods at customs into India, against 7.8 into China.

As important as regulatory barriers to competition is India’s poor infrastructure. Paved roads are only 56 percent of the total, against over 80 per cent in China. Shipping a container of textiles to the US costs 35 per cent more than from China. Because of power shortages, 69 percent of Indian companies have their own generator, compared with just 33 per cent in China.

These comparisons are bad news for India in one way, but good news in another. If India can sustain growth of 6 per cent a year when so much does not work very well, imagine what could be achieved if it did.

Rapid population growth, like low capital accumulation, may be considered as both a cause of poverty and a consequence. High birth rates are themselves a function of poverty because child mortality is high in poor societies and parents wish to have large families to provide insurance in old age. High rates also go hand in hand with poor education, lack of employment opportunities for women and ignorance of birth control techniques. Population growth in turn helps to perpetuate poverty if it reduces saving, dilutes capital per head and reduces the marginal product oflabour in agriculture.

The pressure of numbers may also put a strain on government expenditure, lead to congestion and overcrowding, impair the environment and put pressure on food supplies, all of which retard the development process, at least in the short run. In the longer run, population growth may stimulate investment and technical progress, and may not pose such a problem if there are complementary resources and factors of production available, but the short run costs may outweigh the advantages for a considerable time.

Introduction

Andrea Gunder Frank, like Baran, was interested in identifying the causes of underdevelopment, but unlike his predecessor he did not lay great emphasis on the social classes and their control over the economic surplus. Rather, Frank argued that the crucial mechanism for extraction of the surplus was trade and other kinds of exchange of goods and services, not only international trade, but also exchange internally in the peripheral societies.

Frank rejected the dualist conception according to which the underdeveloped countries comprised two separate economies, one modern and capitalist and another traditional and non-capitalist. On the contrary, he claimed that capitalism permeated the whole of the periphery to such an extent that the Latin American and other peripheral societies had become integrated parts of a one-world capitalist system after the first penetration by metropolitan merchant capital. This had established capitalist exchange relations and networks that linked the poorest agricultural labourers in the periphery with the executive directors of the large corporations in the USA.

The exchange relations and the network were described by Frank as a pyramidal structure with metropoles and satellites. The agriculture,’ labourers and the small farmers in the rural regions of the periphery were satellites at the bottom. They were kinked, mainly through trade, to the landowners and local centres of capital accumulation that is local metropoles.

There is turn, were satellites in terms of regional economic elites and centres of surplus extraction. in this way the structure grew, through several links, until it reached the ruling classes and world centres of capitalism in the USA. Throughout this pyramidal structure surplus was appropriated by the centres which, in turn, were subject to the surplus extraction activities of higher level centres.

According to Frank, empirical evidence showed that the economic surplus generated in Latin America was drained away. Instead of being used for investment in the countries of origin, most of the surplus was transferred to the affluent capitalist countries, especially the USA. Frank’s basic point was that the satellites would be developed only to the extent and in the respects which were compatible with the interests of their metropoles.

And here experience showed, according to him, that neither the USA nor the other industrialized countries had any interest in genuine development of the Latin American countries. Much indicated in fact that precisely those countries and regions which had the closest links to the industrialized countries were the proportionally least developed. Therefore, the explanation of under development lay primarily in the metropole, satellite relations, which not only blocked economic progress, but also often actively underdeveloped the backward areas further (this being a process and not a state).

Frank derived from this the much debated conclusion that all countries in Latin America as well as other Third World countries, would be better off if they disassociated themselves from, or totally broke the links to, the USA and the thee industrialised countries. De-linking from the world market was the best development strategy. This presupposed the introduction of some form of socialism in the peripheral countries, because the ruling classes, the landowners and the comprador capitalists could not be expected to bring about such a de-linking and thus remove the foundation for their own surplus generation.

Frank’s conclusions, according to both contemporary and later critics, were often drawn further than the analyses warranted. However, this did not prevent his fundamental views and conceptions from winning wide dissemination and achieving considerable impact upon the development debate throughout most of the 1970s.

Frank’s position in this regard came to resemble that of Rostov in the sense that they both, for more than a decade, functioned as major reference points in the debates on dependency and economic grow respectively. Like Rostov, whose position was gradually superseded by more nuanced and empirically better substantiated theories within his research tradition, Frank eventually was replaced by more complex and differentia” attempts at explaining the reasons for underdevelopment and its dynamics. One of the earliest attempts in this direction came from Sarnir Amin.

Amin was one of the first economists from the Third World who acquired a prominent international position in the development debates, including the debates in Western Europe and North America. Two of this academic works, in particular, contributed to this prominence: Accumulation on a World Scale, and unequal development.

While Frank chiefly concerned with the conditions and relations of production. Based on thorough historical analysis of how Europe had under developed large parts of Africa in the colonial era, Amin worked out two idea-type societal models with the main emphasis on the structuring of production processes. One model described as auto-centric centre economy; the other a dependent peripheral economy.

The model of auto centric economy has features similar to those included in Rostow’s description of the industrialised countries in the epoch of high mass consumption. The auto centric reproduction structure is characterized by the manufacturing of both means of production and goods for mass consumption, Furthermore, the two sectors are interlinked so that they mutually support each other’s growth. Similarly, there is a close link between industry and agriculture. The auto centric economy is general characterised by being self-reliant.

This does not imply self-sufficiency. On the contrary, a highly developed capitalist economy typically engages in extensive foreign trade and other international exchange relations. Bur the economy is auto centric in the sense that the intra-societal linkages between the main sectors predominate and shape the basic reproduction processes. It is the internal production relations hat primarily determine the society’s development possibilities arid dynamics.

It is quite a different matter with the peripheral economy. According to Amin, this type of economy is dominated by an ‘over-developed’ export sector and a sector that produces goods for luxury consumption. There is no capital goods industry, and only a small sector manufacturing goods for mass consumption. There are no development-promoting links between agriculture and industry. The peripheral economy is not self-reliant, but heavily dependent on the world market and the links to production and centres of capital accumulation in the centre countries.

It is further part of the picture of the peripheral economy that it is composed of various modes of production. Capitalism has only penetrated limited parts of the production processes while other parts, and quantitatively greater ones, are structured by non-capitalist modes of production.

On this point, Amen’s conception is more in line with Baran’s mode of reasoning and hence, in opposition to Frank’s definition of capitalism, in terms of exchange relations. Amin endorsed the thesis that capitalist dominates the periphery within the sphere of circulation, but he asserted at the same time that pre-capitalist modes of production continue to exist and that they exert considerable influence on the total structure of reproduction.

The distorted production structure in the peripheral countries and their dependence is a result of the dominance of the centre countries. It is the centre countries who, by extracting resources and exploiting cheap labour, have inflicted on the peripheral economies the ‘over-developed’ export sector. At the same time, the centre countries have prevented the establishment of national capital goods industries and the manufacturing of goods for mass consumption. in these areas the rich countries continue to have a vital interest in selling their goods in the peripheral markets.

If the less developed countries operating under the circumstances are to initiate a development process than can lead them in the direction of an auto centric economy – if they are to achieve growth with at least a minimum of equity in social and spatial terms – then they must break their asymmetrical relationship with the centre countries. In its place they must expand regional cooperation and internally pursue a socialist development strategy.

This is a mutual ‘give and take’ transactional relationship between representatives of two institutions that is workers on one side and the employing organization on the other to the mutual benefit of both. In the unionized organization, the collective bargaining process can be thought of as a complex flow of events that occur in the determination of wages and fringe benefits and other working conditions. Union bargaining is used in a broad sense to include those in professional organizations that bargain with employees over variety of matters that are the most important aspect of the collective bargaining process.

PURPOSE OF COLLECTIVE BARGAINING

1. To reduceIndustrial conflictas it providesunderstandingof each other;
2. It facilitates flow ofcommerce and operations;
3. It increasesproductivityandmotivation;
4. It increasesresponsibilityandloyaltyof workers.

ASPECTS OF THE COLLECTIVE BARGAINING PROCESS

These include formation of unions;

• Pre-negotiations’ strategies and facts on ages, working hours and conditions of service.
• The Collective Bargaining process itself;
• Process administering of the agreement.

TYPES OF BARGAINING RELATIONSHIPS

Selekman’s Categories of bargaining Relationships

Counter Aggression (Confrontational)

This type is characterized by union aggressively trying to extend its voice in the company’s operations, with management trying hard to keep unions in check.

Conflict Relationship(more confrontation)

This is characterized by employers who acceptunionand attempt to get rid of the union at every opportunity.

Power Relationship

This type of bargaining is characterized by both parties attempting to gain any possible advantage from the situation depending on the economic conditions.

Deal Relationship

This relationship feature secret relationship and understanding been union leader and top management with minimum involvement of rank and file workers.

Collusion Relationship

This has much less desirable constraints than the deal bargaining relationship and it involves manoeuvers to gain or maintain mutual advantage over the public or competitors by controlling the market price or raw materials e.g. Kitwe Council and Market levies.

Accommodation Relationship

This type is characterized bytoleranceandcompromiseon the part of both parties but not forgetting the respective rights of their constituencies.

Mutual Relationship

This relationship between the workers and employing organization is characterized by mutual concern over matters above and beyond ages, hours and working conditions such as matters of efficiency and technological change. Both accommodation and mutual relationship are characterized by an avoidance of extreme display of power.

TYPES OF BARGAINING

The AuthorsWalton & McKenzieargued that there are 4 types of bargaining:

1. Distributive bargainingrefers to the situation in which the goals of the two parties are in conflict and which is assumed that the total values to be bargained are fixed so that someone’s gain is another’s loss.
2. Integrative bargainingrefers to situations in which goals are not perceived as conflicting but in which there is a problem of concern to all parties e.g. production, safety and quality.
3. Attitudinal structuring bargainingwhich is part of either distributive or integrative bargaining. It refers to the activities in and surrounding negotiations that serve to change attitude of relations.
4. Intra-organizational bargainrefers to activities that take place within the union or within company management, to bring the expected principles into alignment with those of chief negotiators. In short, there is a good deal of bargaining that goes on within unions and company management about the position to be taken by the chief negotiators of the two sides in actual collective bargaining sessions.

DISTRIBUTIVE BARGAINING

1. Pre-negotiation proposals from members of union and present proposals to management.
2. Management goes through the proposals rejecting some and accepting others. Management also offers a list of their demands – counter proposals.
3. Initial discussion takes place;
4. Management presents agreements;
5. Parties proceed to hard bargaining starting with the non-economic demands with provision, management concedes to certain items provided the union drops certain others or provided union agrees to certain management desired contract changes.
6. Negotiating the costs – items, monetary wages and fringe benefits in particular tedious with the company’s starting from the position that the wage structure is already satisfactory and that the union is asking a high increase. Both sides face the problem the other to move in the direction of the demand and trying to make the opponent reach the final position without itself giving away its final position.
7. The procedure continues until the company has revealed the maximum amount it will grant including both wages and fringe benefits, and the union has essentially revealed the minimum it will accept if the difference is small the two parties can split into two and sign the agreement. If the difference is big and no compromise is in sight the following may take place:
8. a) a dispute will be raised
9. b)you must agree to have a reconciliatory
10. c)if this is not possible, the union must seek a strike authorization by way of secret vote from the general membership.
11. If the union resolves to go on a strike, the contest becomes one of economic pressure and willing to make a sacrifice. One or both parties may by this time advertise its position and supporting arguments.
12. When agreement is finally reached, usually after concurrence by the union members both parties may switch from belligerent to a more shaking hands, joking and making statements about the contract being fair and just to employees and stakeholders.

INTEGRATIVE BARGAINING

This type is far less prevalent than distributive. The integrative bargaining requires a change in attitude on both sides, i.e. management and union from an offensive-defensive position to genuine interest in and concern for joint exploration of problems, fact gathering and problem solving. It becomes a way of life for the two parties.

Examples may be seen through:

a.Quality of work life (QWL)

Quality of work life is a systematic effort to create work situations that enhance employees’ motivation and commitment, the factors that contribute to high levels of organizational performance. QWL results (benefits) are increased output, quality products and worker participation. These improve affecting the organization.

For QWL to succeed, the work place must be more democratic. Committees are set up with representatives from both the workers and management to determine what work has to be done. This is called worker participation. The QWL programs support highly democratic treatment of employees at all levels and encourage their participation in decision-making

The process of changing the way jobs are done by rest maturing to make them more interesting to workers. This is done in two ways:-

i).Job enlargement (increasing the jobs). Employees have more responsibilities and use broader skills as well as perform a wide variety of different tasks at the same level.

ii).Job enrichment (vertical). This design of jobs increases addition of fast employees levels responsibility and control.

iii).Quality circles.These are small groups of volunteers usually around ten (10) who meet regularly to identify and solve problems related to the quality of work they perform and the conditions under which people do their jobs. Organizations may have so many quality circles dealing with specific areas. These groups are trained in problem solving.

Issues discussed and solved include:-

1. Reduction of vandalism or scrap or waste.
2. How to create safer working environment, developing employee skills, improving morale and leadership.
3. How to improve product quality.

Quality circles are good and effective at bringing short-term improvements in quality of work life but less effective in creating more permanent changes.

Once the short-term problems are solved quality circles are disbanded. Quality circles have been an innovation of the Japanese industry.

Benefits of Quality Circles

1) Increased job satisfaction, organization commitment, and hence reduces turnover among workforce.

2) Increased productivity as a result of reduction in cost and avoid defects.

3) Increased organizational effectiveness e.g. profitability and goal attainment.

4) Opportunities are provided to develop problem-solving abilities and increase job skills.

5) Co-operative attitude and a spirit of teamwork exist between management and employees.

The requirement of successful QWL is both management and labour must co-operate in designing the program. None of the two should take the advantage of the other. Once agreed by all concerned, programmes must be implemented. It is the responsibility of all employees from the highest-ranking management officer to the lowest level of employee to follow.