Industrial Conflict and the Nature of Labour Contracts
| DOI | https://doi.org/10.1108/eb055009 |
| Pages | 23-27 |
| Published date | 01 February 1983 |
| Date | 01 February 1983 |
| Author | Peter Enderwick |
| Subject Matter | HR & organizational behaviour |
Industrial Conflict
and the Nature of
Labour Contracts
by Peter Enderwick
Department of Economics,
The Queen's University of Belfast
Introduction
Whilst the analysis of industrial conflict continues to at-
tract a great deal of interest[1], this attention is highly
selective in its focus. The majority of studies concentrate
on describing and analysing aggregate trends and pat-
terns[2] or the examination of specific disputes on a case
study basis[3]. Such contributions form an important ele-
ment in furthering our understanding of industrial conflict
but, unfortunately, serve to discourage examination of the
fundamental concepts underpinning such understanding.
An acceptable theory of industrial action should be
capable of subsuming and explaining at least the following
three critical aspects of conflict. The first concerns the
sources of conflict. More specifically, the extent to which
conflict should be seen as an endemic or a latent feature of
the employment relationship. The second concerns the
form in which grievances are expressed. We need to
con-
sider whether the various modes, e.g. go-slows, output
restrictions, quitting, strikes, etc., represent alternative or
complementary forms. In addition, there is the problem of
clearly delineating the probable effectiveness and costs of
alternative expressive forms under various conditions.
Thirdly, there is a need to address the alleged problem of
explaining the "rationality" of acts of industrial protest
where costs exceed apparent gains[4].
The intention of this article is to contribute to our
understanding of the process of industrial conflict by re-
examining these fundamental tenets. The next section
presents a model of conflict founded on the incomplete
nature of labour contracts. Such a model is shown to be
capable of overcoming the rationality charge as well as
isolating the probable forms assumed. Some implications
for theory and policy are highlighted in the conclusion.
The Sources of Conflict in the
Employment Relationship
Nature of the Labour Contract
The labour contract is notable for both its scope and im-
precision.
Typically, the contract covers not only the price
and utilisation of labour but also the rights of both the in-
dividual concerned and the position of relevant parties to
the agreement such as unions and management. Addi-
tional terms may specify institutional arrangements for ad-
ministration, interpretation and enforcement of the agree-
ment. The sources of incompleteness in the contract
follow from the need to incorporate flexibility into the
agreement. Because of uncertainty and the nature of un-
foreseeable change, considerable flexibility is required,
particularly in the definition of responsibilities, work
assignment and labour utilisation.
There are a number of alternative contractual ar-
rangements which may be invoked to provide such flex-
ibility[5].
The first is a simple sales contract in which the
parties contract for a predefined performance at a future
date.
The second is a contingent claims contract in which
the agreement provides for a future performance,
con-
tingent on the occurrence of some previously defined
event. Thirdly, contracts can be sequentially re-negotiated
as events materialise. Finally, one party may contract to
allow the other to define the desired performance required
from within a previously determined and agreed range.
This represents what Simon[6] terms the authority rela-
tionship.
The rigidity of simple sales contracts limits their usefulness
in areas where complexity and uncertainty are pervasive,
as in the case with the labour relationship. The sheer com-
plexity of devising contingent claims contracts is a major
constraint on their use. Further problems arise in defining
ex ante the appropriate adaptation in the light of a given
change and agreeing on the state of the world that comes
to pass. There are also difficulties and high costs incurred
in the use of sequential contracting. Such an arrangement
ignores worker heterogeneity and the desire of employers
to retain certain types of labour. Sequential contracting ig-
nores the emergence of arrangements designed to reduce
labour turnover. The final institutional arrangement to be
considered is the authority relationship which, whilst wide-
ly adopted, appears similarly flawed. Such an arrangement
provides stability of income and tenure in exchange for
discretion in selecting a performance level from within
some mutually agreed range. Flexibility is introduced at the
price of vagueness. Problems of re-negotiation and adjust-
ment exist when events compel the selection of a perfor-
mance level from outside the implicit (or explicit) range
previously agreed.
An acceptable theory of conflict must recognise that
disagreement may occur not only in the determination of
agreements, but also in their application and interpreta-
tion.
Furthermore, the preference for collective negotia-
tion,
often accompanied by union organisation, increases
ER 5,2 • 1983 23
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