Industrial relations is the study of the interactions among industry, its employees and the governments that oversee them. It is also the study of the various institutions and organizations that are formed as a result of these interactions, such as labor unions and business unions. Many problems lie central to the study of industrial relations. Learning about these problems is a good place to start gaining a better understanding of how the modern world's economic interrelations function.

Achieving Competitiveness

Increasingly, one of the central problems of industrial relations in the modern world is how to achieve competitiveness. The modern globalized economy requires more than ever that each individual achieve his maximum level of competitiveness. In general, the primary problem is how companies manage to achieve the levels of innovation and flexibility required by the global economy.

Employer Flexibility

Employer flexibility is another problem faced in modern industrial relations, especially in developing countries. In order for companies to achieve their maximum potential in the modern market, employers must learn how to marry traditional cultural values such as respect for authority with a greater amount of openness and respect in how employers deal with their workers. In general, the requirements of modern business include more flexible management and work organization, focusing on creating a smarter and more motivated work force and culturally sensitive management techniques.

Role of Government and Unions

The global economy also means a different sort of role for government and labor unions in the management of industrial relations. Governments are faced with the task of deciding how to best encourage foreign involvement in their economies that will benefit their own nations but still be attractive to the foreign companies. Labor unions are faced with the need to work more collaboratively and less antagonistically with employers.

Ethical Theory

Ethical theory is another extremely important area of industrial relations, and presents some of the field most pressing and demanding problems. The Western world is steeped within the libertarian and utilitarian view of industrial relations, while Asia, India and the Middle East are all working from the ethical institutions that are primary to their culture. The collisions and relationships between these different systems of thought are very important to modern industrial relations.


The presence of technology in the workplace can create ethical quandaries in industrial relations, such as the loss of privacy and the replacement of jobs by machinery. Industrial relations takes on the task of figuring out how to balance technical innovation with fairness to the humans affected by it.