EMPLOYMENT RELATIONS AND WORKFORCE DYNAMICS IN SMES: A SYSTEMATIC ANALYSIS OF STABILITY, PRODUCTIVITY, AND POLICY IMPLICATIONS

Abstract

Employment relations play a pivotal role in shaping workforce productivity and business
sustainability in SMEs. This study examines the influence of employer-employee relationships,
workplace policies, trade unionism, and labour stability on SME performance. Utilizing a qualitative
research approach, the study synthesizes secondary data through a systematic literature review,
integrating insights from reputable scholarly sources. Findings indicate that strong employment
relations enhance job satisfaction, reduce turnover, and improve operational efficiency. Workplace
policies, particularly occupational safety and health measures, emerge as critical enablers of
workforce engagement and stability. Trade unions contribute to labour stability but sometimes
introduce financial constraints that SMEs must navigate strategically. High employee turnover
disrupts workflow continuity and increases operational costs, whereas labour stability strengthens
long-term productivity. The Employment Relations Impact Model (ERIM) provides a conceptual
framework for understanding these interdependencies, highlighting the need for structured
workforce management strategies. Practical implications suggest that SMEs should adopt fair
employment practices, improve workplace safety policies, and balance trade union engagements to
optimize productivity. This study contributes to academic discourse and policy development by
offering insights into effective employment relations frameworks, reinforcing the significance of
labour stability in SME success.