In this chapter, the authors consider the role of the state in industrial relations, primarily from the standpoint of the approach and involvement of government. Although the state also includes parliament and the judiciary, as well as the police and military, it is government which is now the most significant element in determining the legal environment within which industrial relations operates. Until the 1970s, therefore, when more stringent and detailed government intervention was introduced, the industrial relations system in Britain continued to be conducted predominantly on the basis of voluntary collective bargaining without legal compulsion on either side and implemented through unenforceable agreements. In continental European countries state regulation has played a greater part in determining wages, working conditions and fringe benefits than in either Britain or the USA and therefore the political process has assumed a critical role.