Industrial relations examines various employment situations, not just ones with a unionized workforce. However, according to Bruce E. Kaufman, "To a large degree, most scholars regard trade unionism, collective bargaining and labour–management relations, and the national labour policy and labour law within which they are embedded, as the core subjects of the field."
Initiated in the United States at end of the 19th century, it took off as a field in conjunction with the New Deal. However, it is generally regarded as a separate field of study only in English-speaking countries, having no direct equivalent in continental Europe. In recent times, industrial relations has been in decline as a field, in correlation with the decline in importance of trade unions and also with the increasing preference of business schools for the human resource management paradigm.
Protest against industrial relations legislation in Melbourne in 2005.
Industrial relations has three faces: science building, problem solving, and ethical. In the science building phase, industrial relations is part of the social sciences, and it seeks to understand the employment relationship and its institutions through high-quality, rigorous research. In this vein, industrial relations scholarship intersects with scholarship in labour economics, industrial sociology, labour and social history, human resource management, political science, law, and other areas.
Industrial relations scholarship assumes that labour markets are not perfectly competitive and thus, in contrast to mainstream economic theory, employers typically have greater bargaining power than employees. Industrial relations scholarship also assumes that there are at least some inherent conflicts of interest between employers and employees (for example, higher wages versus higher profits) and thus, in contrast to scholarship in human resource management and organizational behaviour, conflict is seen as a natural part of the employment relationship. Industrial relations scholars therefore frequently study the diverse institutional arrangements that characterize and shape the employment relationship—from norms and power structures on the shop floor, to employee voice mechanisms in the workplace, to collective bargaining arrangements at company, regional, or national level, to various levels of public policy and labour law regimes, to varieties of capitalism (such as corporatism, social democracy, and neoliberalism).
When labour markets are seen as imperfect, and when the employment relationship includes conflicts of interest, then one cannot rely on markets or managers to always serve workers' interests, and in extreme cases to prevent worker exploitation. Industrial relations scholars and practitioners, therefore, support institutional interventions to improve the workings of the employment relationship and to protect workers' rights. The nature of these institutional interventions, however, differ between two camps within industrial relations. The pluralist camp sees the employment relationship as a mixture of shared interests and conflicts of interests that are largely limited to the employment relationship. In the workplace, pluralists, therefore, champion grievance procedures, employee voice mechanisms such as works councils and trade unions, collective bargaining, and labour–management partnerships. In the policy arena, pluralists advocate for minimum wage laws, occupational health and safety standards, international labour standards, and other employment and labour laws and public policies. These institutional interventions are all seen as methods for balancing the employment relationship to generate not only economic efficiency but also employee equity and voice. In contrast, the Marxist-inspired critical camp sees employer–employee conflicts of interest as sharply antagonistic and deeply embedded in the socio-political-economic system. From this perspective, the pursuit of a balanced employment relationship gives too much weight to employers' interests, and instead deep-seated structural reforms are needed to change the sharply antagonistic employment relationship that is inherent within capitalism. Militant trade unions are thus frequently supported.