CHAPTER TWO

EXTERNAL FACTORS AND THEIR IMPACT ON THE

EMPLOYMENT RELATIONSHIP

Objectives of this chapter• Explore how the external environment impacts on employment

relations• Outline the political impacts that can affect employee relations• Outline the economic impacts that can affect employee relations• Outline the social impacts that can affect employee relations• Outline the technological impacts that can affect employee relations• Outline the legal impacts that can affect employee relations• Outline the ethical/environmental impacts that can affect employee

relations

The external environment

• Stability

• Complexity

• Dispersion

External environment and employee relations

• Buffer departments

• Accountability

• Boundary-spanning roles

Political factors

• Development of legislation

• Winter of Discontent 1978/79

• Conservative government 1979–97

• Social Chapter

• Labour government 1997–date

Political manifestos

• Diversity

• Productivity

• Skills

Economic factors

• Employment

• Inflation

• Taxation and spending

• Interest and exchange rates

• Price stability

• Economic growth

• Balance of payments surplus

Fiscal policies

• Tax and spending

• 1970 – increase disposable income

• Or increase spending

• Or increase social benefits

Monetary policies

• Conservative government 1979–97

• Excessive demand for goods and services led to price inflation

• Manage demand by financial instruments rather than tax and spending

• Use of interest rates

Social factors

• Unemployment

• Immigration

• Emigration

• Family-related issues

Women in employment

• Stereotyped jobs

• Parents

• Flexibility

• Aptitude

• Discrimination

Technological factors

• Flexibility to learn how to use new technology

• Remote working

• Monitoring of performance

• Change in methods of communication

Legal factors

• Growth in employment legislation

• Impacts on individualism

• Alters the balance of power between the employer and employee

Ethical/environmental factors

• Corporate social responsibility

• Globalisation

• Moving operations overseas