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Role of the State in Employment Relations

The extent to which a state intervention should be allowed in different areas of social life remains a critical issue in today’s world. The problem is because of the varied views that have emerged regarding the needs and limitations of the procedure. State can be defined as the government that is currently in power together with the bodies and agencies that execute and implement its laws and policies. Therefore, through laws and the power vested in the law-making the process, the state can achieve a great impact in the employees and employers interaction process. The legal intervention has contributed to the massive intervention in employment relations based on the legislation policies in the economy of a particular state. For instance, the intervention extent of the European states is different from that in the United States of America and Middle East countries. Intervention extents are different because of the varied requirements of the economic structure and culture of various nations. On the other hand, this process is beneficial to most business entities since the state interventions ensure social justice, financial support, and introduction of workable free-market laws among other advantages (Kalleberg, 2009). Hence, this paper argues that the state should play an active role in employment relations due to its independent and distinct policy-making, legislative, and financial impacts in the field.


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The first reason in support of the formulated argument is because of the state’s independent governing role that is distinct from other stakeholders. In fact, there are three vital agents in the employment area, such as employers, employees, and the state. However, the state is not a single actor since it can be represented through different agencies and unions, to name a few. All these bodies have their functions based on the economic, political and judicial roles in the state. This factor makes the state a collection of systems performing independent roles in the economy. Consequently, it is responsible for the setting of the rules that influence the relationship amongst employees, employers, and unions in the interaction process. The state can also engage in the employment relations in varied ways. This involvement has impacts on the behavioral traits of both employees and employers. For example, through the legislation, the state can define the economic terrain that the employers and the employees follow (Kersley et al., 2013).

Moreover, the state is the main decision maker since its legislative body formulates the laws which govern the economy of a nation. In essence, it is the sole decision maker, though it involve other actors in the legislation process through corporatism. To illustrate, in the UK, the state does not make a decision solely, it involves both managers and employees fostering a competitive enterprise culture. The judicial branch tends to enact laws that will directly influence employment relations because it forms part of the state policies (Riordman, 2011). At the same time, the employment tribunals perform the extended role of the state in employment relations. The state can work together with these agencies to define the way that the employers and employees relate. For instance, the consequences of the Second World War necessitated the state interventions in the UK employment relations. This procedure occurred in the 1960s as most companies and business entities were unable to regain their initial position after the war, and the UK unemployment rates were the highest among post-war states (Bamber, Lansbury & Wailes, 2009). The managers and employees, who were the only actors at that time, failed. This issue negatively affected the employee and management trends not only in the country but also in Europe, the US, and Australia. Thus, the post-war effects on the economy made the state’s intervention in employment relations necessary (Balnave et al., 2009).

Apart from that, the state plays a role of an employer where it can set standards to manage the employment trends in the economy. In this case, the state provides principles that govern the employees’, managers’ and trade unions’ activities in both private and public sectors. This strategy harmonizes the activities of these actors in order to enhance employment relations. Through this approach, the state can ensure that workforce in both public and private have similar opportunities that stimulate the economic growth of a nation as a whole (Yost, 2007). The state is involved in employment relations as an income regulator. This component was steered by the international effects of the World War II and the global financial crisis in 2008. The several states, such as Romania and the United Arab Emirates, have greatly involved their state in making reforms to develop stable economy for their nations. However, conservative states, for instance, the UK, rejected the approach of market controls while preferring the strategies to manipulate the operation of the market to favor the state economy (Almond & Ferner, 2008).

In addition, the state is an economic manager that cannot be achieved by ordinary organizational managers. In particular, the state legislation has macroeconomic policies that influence the essential actors in the employment relations. In this approach, it facilitates equal labor mobility and fiscal regulations. Subsequently, the state acts as a labor de-commodification factor. In this process, the state funds employees’ welfare to reduce their over-dependence on their managers’ governance. This strategy has worked in the Middle-East nations during the recession in the economy and in the process of eliminating the unemployment issues. As a protector, the state sets standards to avoid discrimination in public and private entities. The state is a policy maker to the economic laws and regulations that aim at fostering the successful economic growth. The state promotes social citizenship which creates the environments for facilitating employment relations. This factor promotes social responsibility and ethical practices in the business entities. The state achieves these practices through bargained corporatism approaches in most nations, such as Jamaica (Halliday, 2010).

Counter Argument

While the state intervention is important, it should still provide room for adjustments and free involvement of the other two main actors to ensure successful and homogeneous economic growth. In historical perspective, the state has productively intervened to enhance employment relations and improve the economic well-being of the nation. Other actors are usually limited when it comes to crisis management process. This role is one of the most fundamental traits of every state. For instance, considering the financial crisis in 2008, some states have introduced the laws that will mitigate its re-occurrence, such as the US Dodd-Frank Act (2010) aimed at harsher control over the financial sectors of the economy and employment relations accordingly. Therefore, for the state to manage its economy, it has to intervene in the economic activities. Moreover, its involvement becomes vital to ensure the high levels of employment, price stability, the balance of payment and exchange rates in its economy. These objectives can be varied based on the political ideologies of a particular state to influence its societal and economic outlook. In particular, the political ideologies in the Middle East countries are different from those in Europe and the US along with the societal disparities in the culture involved (Jacoby, 2007).


Despite the counter argument, the state has an opportunity for flexibility of involvement in employment relations that define the extent of its intervention in light of the multiple circumstances. These characteristic aspects include corporatism, market individualism, liberal collectivism, and bargained corporatism (Yost, 2007). Corporatism refers to a centralized control of the economic activities with unstably formed unions in the state. It employs the use of totalitarianism in interventions, for instance in states that experience regime-based governance. In market individualism, the state becomes a victim due to the laseize faire leadership of the economy. The third aspect is the liberal collectivism where the state intervenes through a restrained law to aid a strong economy. However, bargained corporatism involves the formation of the tripartite partnership by the state to assist its economy. This framework advocates for a plurality that encourages collaboration amongst actors. Therefore, the state intervention discourages unitarianism in the private and public sectors. To illustrate, in Jamaica, the Industrial Dispute and Labor Relations Act governs employment relations to make sure that disputes in one economic sector will have no detrimental effects on the national economy at large (Woods, 2007).


Evidently, state intervention is vital. Primarily, it is one of the three actors involved in the employment relations. Hence, the term state can be defined differently with regard to different roles and functions it performs that position the state as an independent actor in employment relations. Although the state has various representatives across the sectors, it is the main decision maker amongst the three actors since it formulates the laws that govern the economy of a nation. The state intervention is important in every economy as long as it involves other actors in the collaboration. Based on the historical evidence, the state has productively intervened to enhance employment relations with an aim to improve the economy as a whole. For instance, considering the 2008 financial crisis, some states were forced to introduce the laws that will mitigate the cause of such crisis. Therefore, the state should employ various approaches in defining its scope of power as an employer, income regulator, economic manager, standard protector, policy marker, and advancer of social citizenship.

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