Human Resource Management Research

p-ISSN: 2169-9607    e-ISSN: 2169-9666

2017;  7(1): 43-53

doi:10.5923/j.hrmr.20170701.06

 

The Effect of Soft Skills on Gen Y’s Industrial Relations in Malaysian SME’s

Selvarajah Krishnan, Maliki Bin Ab Wahab

International University of Malaya-Wales, Kuala Lumpur, Malaysia

Correspondence to: Selvarajah Krishnan, International University of Malaya-Wales, Kuala Lumpur, Malaysia.

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Copyright © 2017 Scientific & Academic Publishing. All Rights Reserved.

This work is licensed under the Creative Commons Attribution International License (CC BY).
http://creativecommons.org/licenses/by/4.0/

Abstract

In Malaysian companies, industrial relation is an issue that constant state of unrest and the problems encountered seems to be failure in managing industrial relation which relies on labour legislation, tripartite system, collective bargaining, conciliation and arbitration. The study sought to establish the psychological effect such as soft skills in industrial relation system to ensure of sustainability of the system. The study also focussed on the Gen Y leaders and employees, since soft skills are acknowledged as an emerging issue in organizations. In response to this, the Malaysian Ministry of Higher Education implemented the Graduate Employability Blueprint Plan 2012-2017 and Technical Vocational Education and Training had includes soft skill elements in their education system The research respondents and informants were randomly selected from the Registrar of Trade Union and Registrar of Companies’ list. Simple random sampling technique will be adopting and utilising the self-administered questionnaires for respondents. The data was later analysed using SPSS. A correlation analysis was employed to determine the effect of soft skills toward labour legislation, tripartite system, collective bargaining, conciliation and arbitration in achieving sustainability of industrial relation.

Keywords: Industrial Relation, Soft Skills, Gen Y

Cite this paper: Selvarajah Krishnan, Maliki Bin Ab Wahab, The Effect of Soft Skills on Gen Y’s Industrial Relations in Malaysian SME’s, Human Resource Management Research, Vol. 7 No. 1, 2017, pp. 43-53. doi: 10.5923/j.hrmr.20170701.06.

1. Introduction

Industrial Relation refers to the relationship between employer and employee within their organisation (Selvarajah & Noriah, 2016). The integrity level of relationships in every Malaysian organisation differs depending on how well it is managed by the organization, truly overviewing such condition, the dimension and harmonious state of industry are practically and ordinarily measured by observing on the component of trade dispute in one’s organization. However, is commonly seen to be uncontrollable by one’s own trade dispute management. Industrial relation is the study of the regulation of the employment relationship between employer and employee, both collectively and individually, and the determination of substantive and procedural issues at industrial, organisational and workplace levels (Rose, 2008). According to Kaufman (2010), industrial relations is viewed as the process of rulemaking for the workplace (Dunlop, 1958); job regulation (Flanders, 1965); social regulation of production.
Prior to solving such phenomenon, some can be practiced, respectively. Having a mutual agreement between employers and trade union or representative of employees such as Collective bargaining is central to any industrial relations system since it is a tool through which regulated flexibility is achieved (Godfrey et al., 2007). A number of studies shown that where workers had their terms and conditions of employment determined through collective bargaining and where management supported unions, there was an improved industrial relations environment (Edwards, 2002; Beardwell et al., 2004). Adewole et al. (2010) asserted that frequent eruption of industrial conflicts between employers and employees in general can be effectively managed through. This is done when collaborating with one another in terms of tackling conflicting issues within one’s organisation. Meanwhile, second initiative non-unionize employee is subjected to solving such problems by referring to the organization’s policies and procedures when one does not practice collaborative agreement when fronting the ‘critical area’.
Industrial Relation Act 1967 under Section 18 Reference to manages disputes for conciliation. Besides that, Employment Act 1955 Section 69 Director General has the power to inquire on complaints made and Code of Conduct Industrial Harmony (COCIH) 1975 had laying down vibrant principles and emphasised guidelines to employers and employees.
The failures of parties to honour the consensus of COCIH 1975 will lead to the dispute between the parties and either party may make a reference to Director of Industrial Relation for conciliation process then will bring forward the case to courts where picket will probably transpire and for some extreme cases, may lead to ‘strike’ or ‘lock-out’ occurrences. Today, Malaysia has moved into the third stage of economic development Government Transformation Programme (GTP) inclusive to six (6) National Key Result Areas (NKRAs), with growing emphasis on manufacturing’s and services sectors.
The industrial relations in all economic sectors are important, as it is closely linked to employee’s productivity and company’s sustainability; especially the labour intensive ones, such as the manufacturing and services sectors, which showed the highest manpower consumption. As stated by Humphrey (1991), if we take industrial relation as an important factor affecting productivity, we will see that trade dispute does not only affect productivity through labour loss alone because with the incessant work stoppages, machines and other fixed and variable capitals are not fully utilized, there will be a reduction in the level of output and an increase in average cost. This is the reason why organizations must establish, or at least, adopt, a comprehensive industrial relation system. Empirical studies have confirmed some of the factors affecting employer-union and employer-employee cooperation in larger Australian businesses, noting that more cooperative relations were often considered to be conducive to higher productivity (Webster and Loundes, 2002).
There are several current industrial relation issues which are a continuation of previous issues, particularly with wages dominating industrial relation issue. Besides that, the other issues include the security of employment, unionise, and labour legislation. The evolution of industrial relation issues are aligned with the economy, socio economy, and even influenced by international labour movement.
The purpose of this research study to explore the effect of soft skills on Gen Y’s industrial relations in Malaysian SME’s. This study is useful and beneficial to be adopted in Malaysia so that industrial relation can be managed and administered as it will improve the productivity and reputation of the company and stakeholders. Short term and long term plan can be put in place objectively and effectively.
Since industrial relation is dominated by human interface, every disagreement, misunderstanding, different perception and trade dispute must be handled promptly and with caution, as any delay or harsh action will soon lead to industrial dispute such as strike and lock-out which may disrupt the productivity and tarnish the company’s reputation and the country in general.

2. Literature

Industrial Relation
Industrial Relations (IR) is a permissively multidisciplinary field which encompasses studies related to mutual aspects in an employment relationship. It is progressively labelled as employment relations (ER) due to the significant value contained in the non-industrial employment relationships. Indeed, industrial relations have its own fundamental concern with social justice through employment practices and decent work. However, most people think that industrial relations mainly pertains to labour relations and unionised employment situations, but practically is more than just its basic definition. Industrial relations primarily comprises such issues concerning to managers and employees at workplace like workplace bargaining, management strategy, employee representation and participation, union-management co-operation, workplace reform, job design, new technology and skill development. An industrial relations expert will usually have to work more for a trade union in representing the employees’ interests.
Industrial/organisational harmony can feasibly be segmented into four broad areas of cooperation namely responsibilities, employment policy, collective bargaining and communication and consultation. In fact, industrial/ organisation harmony boosts labour productivity and consecutively improves performance in such aspects like education sector, economic growth and living standards and quality of life. Laden (2012) opines that such improvisation in those aspects create “a peaceful working environment which is conducive to tolerance, dialogue and other alternative (to strike) means of resolving industrial/labour disputes in Nigeria (such as negotiation, mediation, arbitration, conciliation and litigation or court adjudication)”. Therefore, industrial relations itself is broad in definition and it can simply begin from an employment opportunity until the exiting employment process besides considering other influencing external factors which is totally beyond the grasp of industrial relations like the world economic trending and also the socio-economy which stances for threat to the industrial harmony.
Legislation
Black's Law Dictionary (1990). Laws can be made by legislatures through legislation (resulting in statutes), the executive through decrees and regulations, or judges through binding precedents (normally in common law jurisdictions). All employment and labour relations are regulated by law to safeguard the interests, rights and responsibilities of employers and employees in addition to providing a legal framework for the orderly conduct of industrial relations
In this study, legislation refers to employment-related legislation and focuses on the history, development, and implications to the industrial relation system which will further give an effect to industrial harmony. Also, legislation touches on other aspects that contribute to industrial harmony. The three basic legislations that would be detailed are the Employment Act 1955 (Act 265), Industrial Relations Act 1967(Act 177) dan Trade Union Act 1959 (Act) as discussed below:
Employment Act 1955 (Act 265)
The Employment Act 1955 (Act 265) is the fundamental legislation of al labour statutes enforceable in Malaysia. Section 1(2) of the EA 1955 however limits its application to Peninsular Malaysia and by virtue of coming into being Federal Territory of Labuan (Extension and Modification of Employment Act) Order 2000 (P.U. (A) 400/2000) it is also enforceable in the Federal Territory of Labuan since 1st November 2000, Sabah Labour Ordinance 1949 (Sabah Cap. 67) for Sabah and Sarawak known as Sarawak Labour Ordinance (ACT A1237). Largely, the provisions in the labour laws are meant to protect the rights of employees in the private sectors who duly enter into contracts of service.
Industrial Relations Act 1967(Act 177)
An Act to promote and maintain industrial harmony and to provide for the regulation of the relations between employers and workmen and their trade unions and the prevention and settlement of any differences or disputes arising from their relationship and generally to deal with trade disputes and matters arising therefrom. Unlike the Employment Act 1955 which applies only to West Malaysia, the Industrial Relations Act applies throughout the country, both East and West Malaysia. It also applies to all categories of workmen irrespective of their occupants and wages as long as they have entered into a contract of service with their employers. The Industrial Relations Act on the other hand is more of persuasive nature in that industrial problems are solved as far as possible through negotiation and conciliation (Section 18).
Trade Union Act 1959
In Malaysia, employee and employer are free to establish trade union based on Article 10(1) (c) Federal Constitution, No.98 ILO Convention and Sec 8 and 9 of Trade Union Act 1959. Malaysia ratified ILO convention No.98 concerning the “Application of The Principles of The Right to Organize and Collective Bargaining Convention 1949”. The right to form trade union and to engage in their legitimate activities are embodied in the Industrial Relation Act rather than in the Trade Union Act. Sec 4(1) of IRA declares: No person shall interfere with, restraint or coerce a workman or an employer in the exercise of his right to form of and join a trade union and to participate in its lawful activities – see also Sec 5 IRA. This right of unionism is enjoyed by both the employer and the employee. As such, the Trade Union Act (TUA) creates an offence to act against an employee who is or proposes to become an officer or member of a trade union or of an association that has applied to be registered as a trade union. The action can be that of dismissal, injury or threatened injury in employment and alteration /threatened alteration of position. Penalty can be up to imprisonment for a term up to one year and fine not exceeding RM2000 or both.
National Wages Consultative Council Act 2011 and Minimum Wages Order 2012
The said policy is laid down in the Minimum Wages Order 2012. The Order which was gazetted on July 16, 2012 has to be read together with the National Wages Consultative Council Act 2011 (Act 732). The Act has come into effect on 23 September 2011 with the principal intention to set up a National Wages Consultative Council. The main responsibility of the Council is to conduct studies on all matters concerning minimum wages and to make recommendations to the Government to make minimum wages order according to sectors, types of employment and regional areas, and to provide for related matters.
Minimum Retirement Age Act 2012 (Act 753)
The main justifications of raising the retirement age from 55 (common retirement age set out by parties in private sector employment contracts) to 60 are due to people longer life span and the rising of living costs.

3. Collective Bargaining

Collective bargaining is the process by which representatives of labor and management attempt to negotiate a mutually acceptable labor agreement. Industrial Relation Act 1967 ((Act 177) requires that both sides in this process bargain in good faith, meaning that they must take the process seriously and make a sincere effort to reach an agreement that is acceptable to both sides. In Malaysia contect collective bargaining refers to Industrial Relation Act 1967 ((Act 177) Sec 13.The act define collective bargaining as means negotiating with a view to the conclusion of a collective agreement. Section 2 Industrial Relation Act 1967 ((Act 177).
The term ‘collective bargaining’ was coined by Sydney Webb and Beatrice Webb, who believed that collective bargaining was the collective equivalent to individual bargaining, whose primary aim was achieving economic advantage. Collective bargaining is concerned with the relationship between trade unions (representatives of workers) and the management (representatives of employers). Bargaining is collective because chosen representatives of both labour unions and management act as bargaining agents. Collective bargaining is the continuous relationship between an employer and a designated labour organization representing a specific unit of employees for the purpose of negotiating written terms of employment. Collective bargaining may, therefore, be defined as an agreement under which the organization of workers and employers collectively undertake to resolve their existing or future differences with or without the assistance of a third party.

4. Tripartite System

Tripartite is one of the approaches used in Malaysia in the creation and sustainability of industrial relations where the involvement of employee representatives, employer, and the government (known as actors), as introduced in Dunlop’s model. The actors have their own roles in the formulation and amendment of the policies that involves labour matters in Malaysia, which will be discussed in the later chapter.
As a measure to accommodate the needs of the three actors – government (represented by MOHR), employee representatives (represented by MTUC), and the employer (represented by MEF) – the Code of Conduct of Industrial Harmony 1975 was signed by all three actors. The aim of the Code is “to lay down principles and guidelines to employers and workers on the practice of industrial relations for achieving greater industrial harmony” (COCIH, 1975). The Tripartite System is a practical approach in establishing the relationship among actors particularly in managing conflict, establishing policy, rules, procedures or any matter that involve the actors in the industrial relations system. The vulnerable and exploitative labour practices have provoked a strong debate how to improve labour standards at the factories and ensure justice for global workers. Many industrial relations experts have argued that unjust or unfair labour conditions can be improved or eliminated through tripartite industrial relations system (e.g.; Shen and Benson, 2008).

5. Conciliation

Conciliation is a voluntary process to help an employer and employee resolve an unfair dismissal and dispute claim by employer or employee or trade union for trade dispute. It is a formal process and is done on a voluntary basis in settling disputes. Conciliation is carried out by the Industrial Relations Department (IRD) either if an employee who has been dismissed and has made a representation for reinstatement under Section 20 of the Industrial Relations Act 1967, victimisation or union busting (connotation used by trade union) case under Section 8 of the Industrial Relations Act 1967 or a trade dispute has been referred to the department under Section 18 of the Industrial Relations Act 1967.
The purpose of conciliation is to obtain an amicable settlement of a dispute through the resolution of issues with the help of the conciliator (also known as the Industrial Relations Officer). The conciliator has no powers to make any decision but conciliator is required to use his conciliatory skills in persuading the parties to the dispute to re-evaluate their stands and thereby agree to an amicable settlement. If he fails to settle the dispute, he is required by law to refer the dispute to the Minister of Human Resources. In a conciliation, each party can negotiate in an informal manner and explore the possibility of reaching an agreed settlement. In a conciliation any outcome is possible provided both parties agree to it.

6. Arbitration

Arbitration is a process in which the parties to a dispute present arguments and evidence to a dispute resolution practitioner (the arbitrator) who makes a determination. In 1967, the Industrial Relations Act 1967 was enacted whereby compulsory arbitration was introduced for trade disputes in all industries. Any trade dispute which is not resolved through conciliation may be referred to the Industrial Court by the Honourable Minister of Human Resources. This court is established under the Act and is empowered to arbitrate trade disputes and claims for reinstatement (Aminuddin, 2009). Arbitration is part of alternative dispute processes which are commonly used in Malaysia include mediation, conciliation and adjudication in the field of employment relations (Abraham, 2006). However, alternative dispute and its processes are not defined in Malaysian employment legislation. For example, although the industrial Relation Act 1967 provides for conciliation and arbitration in resolving employment disputes (including disputes on termination of employment), it provides no definition for these processes (Eden, 2012).
In Malaysia, the use of arbitration in resolving disputes is not new. The first piece of arbitration legislation was the Arbitration Ordinance XIII of 1809 enacted based on the British legal system to resolve disputes in trade and commerce (Abraham, 2008). The Ordinance was replaced with the Arbitration Act 1952 which follows the UK Arbitration Act 1952 used in resolving commercial disputes (Bukhari, 2003). This Act was repealed with the enactment of the Arbitration Act 2005 modelled after the English Arbitration Act 1996 and the New Zealand Arbitration Act 1969 (Abraham & Baskaran, 2008). Most recently, the Act was amended with the introduction of Arbitration (Amendment) Act 2011 which came in force on 1st July 2011. Its application remains applicable to disputes over trade and business, not employment disputes (Kuala Lumpur Regional Centre for Arbitration 2011). Whilst disputes relating to trade, commerce and investment are handled under the above Act, the arbitration of all types of employment disputes is covered under the Industrial Relation Act 1967, to be performed by the Chairmen of the Industrial Court (Ali Mohamed & Sardar Baig, 2009). Because the Industrial Relation Act 1967 and the Arbitration Act 2005 have no definition for ‘arbitration’, Eden (2012)

7. Soft Skills

Soft skills is usually a term which is mostly connected to an individual’s “EQ” (Emotional Intelligence Quotient) and such qualities can usually be seen in their personality traits, social graces, communication, language, personal habits, interpersonal skills, managing people and leadership. Such personality traits can be described in terms of optimism, integrity and sense of humour. They are also defined by practiced abilities such of those leadership, empathy, communication and sociability aspects. Soft skills are catalyst element which augments an individual’s interactions, career prospects and job performance. Its personal attributes reflects individuals’ ability in seeing whether they actively engage and interact with people or not.
Besides, soft skills are also secondarily known as people skills and usually blend with hard skills in polishing a person’s relationships, job performance and career prospects. Hard skills may act as a ‘magnet’ in getting job interviews, but soft skills appear to prove who the person really are; in terms of emotional aspects and how well they deal with their future jobs. To note, hard skills include a person’s technical skills set and their ‘functioning’ ability or expertise in their jobs meanwhile soft skills are interpersonal aspects growing inside a person. However, soft skills are prudently and closely tied to individuals’ personalities rather than practiced in forms of continuous training and therefore, is considered to be harder to develop compared to hard skills.
In a broad sense, productivity is referred to a relationship between output produced by a system and the quantities of input factors used by the system in order to obtain the output or results. Forms of output can be in various appearances like a product or service, while input factors regard those of human and physical resources utilised in a process. Therefore, in order to increase productivity, the system must either produce more or better goods from the same resources, or the same goods from fewer resources. When it comes to productivity improvement, it refers to an increase in the ratio of produced goods or services in relation to resources used. Ghoabadian and Husband (1990) both opined that productivity can be examined through various ways depending on aspects of studies like technology, engineering and economics and three broad industry categories.
Discussing the sub-topic of productivity further, it is highly to emphasise that productivity shall be measured based on the effectiveness of production; how much output is obtained from a given set of inputs. ‘As such, it is typically expressed as an output-input ratio’. Meanwhile, single-factor productivity measures reflected units of output produced per unit of a particular input. One such example is labour productivity; which is the commonly used productivity in measuring such type and it is usually measured based upon capital or measurement of materials productivity used. The levels of single-factor productivity are directly affected by the intensity of the usage of excluded inputs. Two producers may have diverse labour productivity levels even if they share similar production technology if one happens to use capital extensively, well probably due to different prices factor.

8. Generation Y

Generation Y is widely known as the generation born between 1980 and 2000. This generation is confident, independent, and goal-oriented. Popular generalisations have emerged about the cohort of people who born year from 1980 to 2000, including depictions of them as idealistic (Leydon & Teixeira, 2007), optimistic (Cole et al., 2002), and self-confident (Balda & Mora 2011) with overly high expectations (Martin & Schmidt 2010). Although, technology advances began in the Gen X era, Generation Y was born into technology and often knows more about the digital world than their teachers and parents. The enhanced technological knowledge has launched this generation into an era that is accessible everywhere to anyone. Gen Y has high self-esteem; they are the trophy generation that allows every child to get a medal or praise, leaving no one behind. Generation Y believes they can do more with less; consequently, they feel they deserve the freedom to work fewer hours while still taking jobs that are challenging (Lloyd 2007). Lloyd (2007) explains that members of Generation Y associate themselves less with the particular organization that employs them and more with the type of work which they perform.

9. Conceptual Framework

Based on the literature review conciliation and arbitration potentially give significant impact to preserve industrial relation trough mitigation of dispute further escalate to industrial action with intervention of third party without neglecting role of soft skill to ensure effectiveness of conciliation and arbitration process and also intangible benefit to reduce backlog cases at industrial court.
To note, after torough analysis of scholars views such as Selvarajah & Roger Tan (2017), Ford and Gillan. (2016), Rose, Kumar and Gani, (2008), Teh, Cheah, and Su (2012), Patrick (2013), Trebilcock (1994), Robles (2012), Eden 2012 with regard the study the researcher poropose a new theoretical framework as below for Malaysia industrial relation system, it’s still base on Dunlop’s theory and being improvise to suit with Malaysia environment and culture and this theoretical framework will be further analyses and deliberate in next chapter to conclude the study.
Conceptual Framework

10. Hypotheses

H1 : There is a relationship between L and IR
H2 : There is a relationship between CB and IR
H3 : There is a relationship between TS and IR
H4 : There is a relationship between C and IR
H5 : There is a relationship between A and IR
H6 : There is a relationship between SS and IR
H7 : Predicts that SS influences the relationship between L and IR
H8 : Predicts that SS influences the relationship between CB and IR
H9 : Predicts that SS influences the relationship between TS and IR
H10 : Predicts that SS influences the relationship between C and IR
H11 : Predicts that SS influences the relationship between A and IR

11. Conclusions

The objective of this research is to make industrial relation as the dependent variable (relationship between employee and employer, this research’s instrumentation is based on Dunlop’s (1958), theoretical framework and findings from scholars such as Graig and Solomon (1996), Sharma (1996), Parasuraman (2005) and Aminuddin (2007).
The Citizen-Consumer as Industrial Relations Actor: New Ways of Working and the End-user in Social Care: Ian Kessler and Stephen Bach. (British Journal of Industrial Relations March 2011). Securing a harmonious working environment through effective industrial relations at workplace: The Nigerian perspective Hassan, Olanrewaju Makinde. (Business Management Dynamics Aug 2013). How Important Are Stakeholder Relationships? Christopher S. Alexander, King’s College, Paul Miesing, State University of New York At Albany, Amy L. Parsons, King’s College. (ResearchGate January 2005). Due to the new variables and by referring to the previous research design made by other researchers, this study utilized mixed method in its data collection and instrumentation. The researcher used mixed method because the qualitative and quantitative data can be merged into one large database or the results used side by side to reinforce each other (e.g., qualitative quotes support statistical results; Creswell & Plano Clark, (2007).

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