Evolution Of The US Liberal Market Economy Model And Employee Protection Policies Towards Economic Growth

Evolution of the US Economy and Employee Protection Policies

Discuss about the Contemporary HRM and Employment Relations.

The United States is one of the six Anglo-Saxon countries. The other members include United Kingdom, Canada, Ireland, New Zealand, and Australia. All the members of Anglo-Saxon have adopted the capitalist economy (Atkinson & Leigh, 2013, pp. 32). In the early 1980s, the six member countries embraced the Liberal Market Economies (LMEs) which is one form of capitalism economy approach. Liberal markets economies are characterised by insecure employment, relatively weak employer organisations and unions, poor employee’s relations with top management possessing unilateral control of the firm, and decentralised wage setting. However, United States is ranked the largest economy in the world and the main among the Anglo-Saxon countries. According to IMF’s World Economic Outlook Database, April 2017, US rated the biggest economy in the world with a nominal GDP of $19.42 trillion which accounts for 25% of the gross world product (International monetary fund, 2017, pp. 11).

The United States has the largest economy in the world and also the biggest among the Anglo-Saxon countries (Atkinson & Leigh, 2013, pp. 33). The US adopted Liberal Market Economy model which did favour employee welfare and protection since there were no institutions to deal with job regulations. Liberal Market Economy model did not allow the establishment of job regulation institutions like trade unions. Therefore, it is essential to understand that in the 1980s, US had an economic model that failed to favour employee relationship and protection (Barr, 2012, pp. 12).

The Liberal Market Economy model was prone to slow economic growth because the model ignored employee relations (ER) and human resource management (HRM) despite the fact that ER and HRM have a strategic and international aspect of growth for organisations globally (Dickmann et al., 2016, pp. 8). Hence, it was necessary to use the US in this study to understand its evolution from the anti-employee protection state to a superpower economy with various institutions and legislation to protect employees working in multiple sectors of the economy (Barr, 2012, pp. 14). The growth was as a result of globalisation making the working environment in numerous sectors of the economy comfortable for employees. Therefore, growth in the US economy was as a result of the introduction of various employee protection policies and legislation. Once the employees feel protected, there is good ER which motivates them to work efficiently to deliver high productivity leading to the country’s economic growth (Barr, 2012, pp. 15).

Employee Protection Challenges Faced by the US

In the 1980s, the issue of employee protection took center stage in the study of ER and HRM. Many scholars started placing concern on the international employment relations (Cunningham, 2012, pp. 33). In the process, the issue of employee protection dominated their various academic works. Hence, they discovered that many countries had established a functioning employee protection policy and others did not. For instance, the LME model embraced by the US undermined the issue of employee protection with various features such as inequality, job security, lack of employee relations and unfair dismissal. Inequality at the workplace was dominant at this time. Inequality refers to the discrimination of employees by the employer by gender, race, age, disability or any other feature protected by the law (Klarsfeld et al., 2014, pp. 8). The issue of gender inequality was witnessed in the US before the era of globalisation especially in the payment of salaries. Women were treated with the exception by being paid less income contributing to a higher gender gap in the public sector (Omi & Winant, 2014, pp. 21). Low payment among females also brought slow economic growth due to the women being less productive as a result of low motivation rate. However, the introduction of Fair Work Act (FWC) was seen as the first significant advancement made in the achievement of equality in payment of salaries among workers (Klarsfeld et al., 2014, pp. 10). The Fair Work Act 2009 also helped to improve the situation of women in the job market through equal remuneration (Dickmann et al., 2016, pp. 13).

Unfair dismissal and job security was another problem witnessed in the US before the globalisation. According to the Liberal Market Economy model adopted by the US in the early days of the 1980s, employees were not assured of their job security, and they could be dismissed anytime (Barr, 2012, pp. 17). At that period, the employees felt so insecure, and they could not perform adequately. However, with the introduction of trade unions and employee protection legislation, employees working in the US started feeling secure, thus, motivating them to work harder.

Lack of employee relation was also a factor for the lack of employee protection in the US before globalization. The employer-employee relationship is an indication of better performance and productivity among employees (Noon et al., 2013, pp. 42). The failure by the CME model adopted by the US to provide consumer protection led to lack of morale to work towards the organisational goals. Thus, low input by the employees meant that there was slow growth of companies and consequently slowed economic growth. Hence, there was the introduction of a consensus policy allowing the employees to relate to the employer and participate in the decision-making process (Noon et al., 2013, pp. 52).

Strategies Employed by the US to Adapt to the Changing Economy

With globalisation witnessed in the early 1990s, many economies became increasingly interconnected (Barr, 2012, pp. 12). Though there had been differences in employee relations from one country to another, the globalisation brought an increased competition from various economies in the world. Thus, U.S was forced to compare its employee protection policies with other developed countries like Germany and Japan and adopt some aspects. Thus, U.S was forced to reshape its employee protection policy purposely to ensure that employees working in various sectors of the economy were efficiently managed. US had noticed that employee protection in countries with CME model was well covered. Moreover, US discovered that employees in various sectors of the economy are more productive in other countries (International monetary fund, 2017, pp. 15). Competition became stiff and US knew that it would soon be overtaken by countries embracing CME model and thus, it was time to change and borrow ideas linked to employee protection, ER and HRM (Horwitz & Budhwar, 2015, pp.53).

Due to the pressure brought by globalisation, U.S was forced to adopt ER system practised by countries like Germany, Japan and other nations which embraced Coordinated Market Economy (Kaufman, 2014, pp. 30). The CME model was very industrious and productive. Some characteristics of the CME include consensus decision-making process involving employees and management, long-term employment which was relatively secure, organised trade unions and cross-shareholdings (Smith & Smith, 2013, pp. 73). The US strived to ensure that it remains ahead of countries Germany and Japan economically. However, Germany and Japan embraced an economic model which was favourable for sustainable economic growth and development. In the early 1980s and there before, countries like the US had witnessed an erosion of employment protections with labour market institutions and trade unions being downplayed(International monetary fund, 2017, pp. 19). The whole approach slowed the country’s economic growth, and the US was striving to eradicate the system and adopt new models from the rival developed countries to keep up with changing and competitive international economy. Hence, there was a need to take an order that put more emphasis on employee protection which forms the basis for a good ER and HRM and consequently high industrial productivity leading to tremendous economic growth (Dickmann et al., 2016, pp. 18).

The most recent debate on the international comparative ER approach is anchored on the two theories of convergence pattern and divergence pattern. Converging theory tries to establish whether national ER patterns are becoming more similar while the divergence theory attempts to establish whether these patterns are becoming more different and complex.

The Role of Employee Protection Policies in Economic Growth

Though some countries continued to adopt some best ER practices from other developed countries, US did not fully bring in a new ER models from other countries in a process referred to as partial convergence. Therefore, it is vital to note that as global ER ideas continued to take over the international economy, US borrowed some the ER ideas from other developed economies like Germany whose ER systems and practices were favorable to the employees. The overall result of this was the convergence of US ER systems to some of the ER systems from foreign countries.

Due to the fact that there was increased convergence in ER systems between many countries, US strived to borrow some ER aspects from other countries. Therefore, US was able to change its employee protection policy by introducing organized trade unions and other job regulation legislations.

Therefore, it is important to note that due to globalization, there was a lot of economic pressures in a convergence of policies and practices which resulted to government loss of sovereignty in policy making and thus leading to deregulation and decentralization of labor markets. Finally, the significance and role of international workers unions such as multi-national enterprises cannot be undermined. By operating across the borders, U.S was forced to discard their previous regulations and models and adopt the new one being practiced by other countries.

Employees remain as the most critical aspect of any organisation. Employees’ performance and productivity will help any organisation in the world to achieve and maintain a competitive advantage in the local and global market (Truss et al., 2013, pp. 47). Therefore, employees within an organisation must be guided and managed efficiently for the organisation to realise tremendous success. Managing and guiding the employees can be done through various activities like recruitment and selection, training and salary payment. However, employees need to be controlled by ensuring proper and effective communication, maintaining equality, involving in a decision-making process, allowing registering with a specific trade union and also rewarding their efforts through salaries and bonuses (Dickmann et al., 2016, pp. 21). By doing so, the organisational management ensures that it establishes and maintains healthy and long-lasting employer-employee relationship.

With globalisation and competition in international markets setting in, countries like the US whose economy model did not favour such employer-employee relationship and proper human resource management had to change and adopt an economic model which embraces an excellent employer-employee relationship (Barr, 2012, pp. 19). A unique and healthy relationship between employees and management form the basis for a successful organisation. Though the US did not converge fully to new models, they borrowed some aspects of CME to allow employees to be productive thus growing their economy to compete internationally (International monetary fund, 2017, pp. 31). Some of the elements borrowed are established rules authorising the establishment of workers unions, and job security equality.

Conclusion

In any organisational setting, it is essential to ensure that your employees are contented. By doing so, the employees will be better focused; concentrate on their work and less time is spent on conflicts hence increased productivity (Rees & Smith, 2017, pp.13). Healthy employee relations and efficient human resource management help in bringing positivity at the workplace (Lewin & Gollan, 2018, pp. 8). Therefore, an efficient and effective ER/HRM practices and policies have the following vital implications (Horwitz & Budhwar, 2015, pp.55).

With a useful ER/HRM, there is sharing of work among all employees making it easier to perform (Horwitz & Budhwar, 2015, pp.57). An organisation with healthy employee relation, the workload becomes simple and thus increases the productivity. No single person can play all the tasks within an organisation hence division of labour among employees. Employers having good relation with employees help in working as a team.

Good employee relation makes the working environment conducive. Being in such a situation makes the employee feel relaxed and stress-free. Thus, workers remain focused and concentrate on working efficiently. Therefore, it is vital to ensure that your employees are free to work in the friendly environment under minimal supervision, as a result delivering the highest quality of work.

Employees who feel being in an environment where there is trust among colleagues will feel motivated to work and deliver the best since he/she feels secure. Hence, the sense of confidence among your employees is essential in the delivery of quality work for the organisation (Shields et al., 2015, pp. 40). As an employer, one should make staff feel trusted to be productive.

Healthy employee relationship will increase the personnel’s morale to report to the place of in time and without failure. Once there is a good relationship between the employee and the management, people will be dedicated to report to work and work relentlessly in achieving the organisational goals. A good relationship also reduces the chances of complaints from the employees (Warhurst et al., 2012, pp.15).

Maintaining a good relationship with the employees eradicates conflicts and misunderstandings among workers. Therefore, employees will always correct each other in a better way. People will strive to perform more by concentrating more on the work and avoiding the time wasted in meaningless disputes. Consequently, the employees create a good relationship and are motivated to work as a team to achieve the set goals and objectives of a company (Warhurst et al., 2012, pp.21).

Conclusion

It was until the 1990s that the United States started to adopt the convergence theory to try and borrow some aspects of employee protection from the developed economies to try and shape the employee relations. The country allowed trade unions and employee protection laws to be formulated to protect the interests of employees within its public and private sector. There was also the introduction of laws and rules to guide the employer-employee relationship to improve the productivity and economic growth. Globalization and development of international market led to an evolution in ER and HRM. The establishment of national employment relations institutions such as trade unions played a vital role in producing various results in the US (Cunningham, 2012, pp. 35). The significance and role of internal workers unions such as multi-national enterprises cannot be undermined. By operating across the borders, the country was forced to discard the previous regulations and models and adopt the new one being practised by other nations.

In the US, employees are very vital in business and the aspect of managing workers efficiently through human resource management dictates the success of various sectors of the economy. Globalization brought competition and sharing of ideas through an economic performance. Many countries like the US had the opportunity to drop policies that did not support the productivity of the employees in the industries and adopt the ideas and aspect of other countries favouring the welfare of the employees to increase the productivity.

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