Government plays an important role in shaping industrial relations. According to Salamon (2001), one of the government's responsibilities is to settle the high unemployment level. Hence, government always protects the right of employees through the rules and regulations. By enacting the law, it provides alternative to the employees to from a union for collective bargaining and 'permit unfair dismissal claims by those dismissed for participating in lawful industrial action' (Gennard, 1997) in order to reduce the unemployment rate.
Gennard (1997) also emphasized that government encourages the employees to be represented by a union as this is their democratic right and not for the employers to deny it. Therefore, it should be a legal obligation for employers to recognize a union for collective bargaining on the issues of pay, work hours, vacations and training. Management is also an important factor in shaping industrial relations. Maslow (1954) stated that job security has long been understood in motivational theory as an employee motivator.
Jiman Lee and Deog-Ro Lee (2008) also found that management's efforts to provide job security are positively related with the company's performance and industrial relations quality. Therefore, there is a need for management to provide job security in order to maximize the productivity and uplifts the industrial relations quality. The best alternative to maintain industrial relations is through two ways communication as it 'reduces task uncertainty and increases the trustworthiness and reliability of management'.
(Schweiger and DeNisi, 1991; cited by Jiman Lee and Deog-Ro Lee, 2008) The management could take this opportunity to collect feedbacks and suggestions from its employees and fulfill their requirement rationally. Management could practice two ways communication to tighten the relations with its employees as well as to increase the employees' loyalty towards company. In addition, 'information sharing through communication is considered a key factor in facilitating organizational learning, with the subsequent effect of an increased competitive advantage.
' (Jiman Lee and Deog-Ro Lee, 2008) It benefits management in many ways. The way management shape industrial relations There are several issues concerning management's staffing process. For instance, the economic, political and social issues affect management significantly in staffing process. The economic issue The economic condition has the biggest effect on management staffing policy. For instance, during economic recession, the sales volume dropped sharply as the demand for goods has decreased.
The profit for most of the companies has also dropped due to the deteriorating sales volume. Some companies that are lack of financial reserve however, are encountering difficulties in paying the employees' wages. As a result, the management has no choice, but to reduce the employee's pay. At the same time, according to Salamon (2001), the management would prefer short term profit maximization rather than looking for investment in new machinery and ideas. The management would like its employees to work overtime in order to keep the business survive.
This is the point where the conflict occurs. 'Money has the power to motivate people as well as generate anxiety and unhappiness in those who do not have it'. (Furnham, 1996; cited by Lee and Lim, 2001) Once the employees' pays have been reduced, they will definitely refuse the management's requirement to work overtime as they are lack of motivation. The management will need to look for the best alternatives to solve this issue in order to keep the business survive. However, the management in public sector and private sector solve this issue with different styles and strategies.
In public sector, management will most commonly seek for the help of government. These corporate are normally schools, airports and hospitals. Due to its important functions and contributions to the citizens, the government would have to keep these corporate survive in order to protect the benefits of its citizens. In this case, the government will subsidize these corporate by paying a part of the employee's salary. This is the way for management in public sector resolves the economic issue concerning pay.
Conversely, in private sector, the management could only seek for the bank loans and pay the salary to its employees in order to recover their motivation and run its day-to-day operations fluently. However, some companies fail to get loan because of its size. Hence, the way they resolve this issue is to dismiss some of the workers according to the evaluation of work performance. To sum up, the job security in public sector is more than the private sector during economic recession period. This is due to the support and subsidization form government.