The labor and industrial relations INTRODUCTION In the economical aspect, labor and industrial relations has long been the subject of debates; hence it pertains generally to the affiliation between the source of work force consisting of the employee, and the purchaser of labor which is the firm or the employer. The relationship of the two as it grows from time to time promotes the rising of unions in which the latter performs a dual function both as the defender of the employee rights and to the easy bargaining or acquiring of labor for the employer.
But the role of unions to both parties is surrounded with controversy.
As to some economist, this just promotes inequality in terms of wage distribution to the employee or it does an additional burden to the return of investment of the firm. According to Hutt (1954) trade unionisms are considered ineffective because it has to sacrifice the other section of the work force to the cost of the other working force.
And the study conducted by Odgers and Betts (1997), the labor unions have that specific impact to the investment of the firm, which in most cases are uncertain. With prior consideration to the non linear effect of unionization, the union rent seeking party is said to experience less return of investment.
Thus, it is unpredictable even if there are theories designed to merely scrutinize the effects of collective labor unions to the firm’s investments. A 20% decrease in net investment was theoretically been extracted to unionization studies.Under the scope of trade unionism is collective bargaining. The book authored by de Silva (1996) define collective bargaining as the process made by shared agreements in the negotiations done by the employee to the employer for the sake of job opportunity and security.
The parallel effect of unionism to employment was slowly gratified when the first employment contract was established in France by Prime Minister Dominique de Villepin. The contract focused on the issues on labor relations or union function and analysis of performance, labor laws and union effects. These were assessed up to the point of productivity. Not only was the sake of the employee rights were given notice of but specifically on its productivity.
To delineate productivity, based on oldfraser.lexi.net (2007) definition, it is an output of any particular given phase of inputs; and that a firm that is productive than the other are able to produce output using the same kind of input or it has the ability to produce outputs at a lesser level of inputs. With that, it is believed that the productivity being attributed by the unions signify a shift to the marginal product schedule but not towards the labor demand curve which would imply a high capital-labor ratio responsive to higher wage.
To any given reasons in a workplace, collective bargaining is used to increase the means of production or the productivity of a firm that it sometimes counteracts the increase in wage or salary, thus argument is raised and turn into policies to smoothen the organization of unions. The increase in productivity was argued as it is affected by exercises in collective voice accompanied by suitable “institutional feedback” from the management. With this, the “total revenues” are said to be lowered because of the labor unions and the movement that it tends to establish, like the launching in work places a somewhat well-ordered organization epitomizing the rights of the employees in terms of public merchandise and or long working contracts. It is not very clear up to what extent are labor unions or the internal relations in a firm affect the productivity, with that side by side positive and negative feedback.
But however, knowing the overview of the facet of every side would give both parties the knowledge on what tools to use to achieve better productivity.CHAPTER 1 Labor And Collective Bargaining IssuesCited advantages of labor unions. In the real cases there are no specific citations that a firm gets a big beneficial advantage to the labor unions as it is clearly stated in most writings that the firm who engaged or rely on the labor unions are most likely to suffer failure. Sometimes unionization is connected to slow growth in employment.
If there are no clear beneficial statements that a firm could derive from the labor unions, why is it that firms still fit into labor unions? The situation wherein unions often put the firms into pitfalls is enough to cut off its relation to the unions itself. But it does not only end up to this point, hence unions definitely posses something that is advantageous to the firm. In the book authored by de Silva (1996) are the study of Brown and Medoff. The two are able to claim that unions therefore increase the productivity level of the firm.
This is shown by the “aggregate two-digit manufacturing industry data” that are cross-classified by state groups. Like for example, the union density is obtained by the coefficients from .22 to .24, with values implied (the values are derived by dividing the union coefficient by 1-a) for c-1 of from .
30 to .31. Thus, the study was able to make a hold to the conclusion that unions can raise the “total factor” of productivity greater than 20 percent. But the study of Brown and Midoff was also subjected to reproach hence; it showed inconsistency with the data’s.
Further new researches tend to disprove the Brown-Medoffstudy due to the parameters that the two used during the range of study. On the other hand a more detailed productivity study in labor unions is illustrated by Cobb-Douglas. The study uses estimates or “translog production functions” to measure outputs as it is related to inputs. The “production function formula” that was first developed by Brown and Medoff was adapted by Cobb-Douglas to illustrate further that unions ended benefits the firm.
The function is presented by the following given: Q = outputK = capitalLu & Ln = union and nonunion laborA=constant of proportionalitya & 1-a = output elasticity with respect to capital and laborc = differences of productivity in union and nonunion work force The explanation bears that if c >1, the labor union is considered more productive gaining co-linearity to “collective-voice model”. Letter P is used to stand for “proportion unionized (Lu /L)”. It would also mean that there is the existence or non-existence of union in a firm or company that may either represent “zero or one categorical variable”. That is how equation one is explained.
On the second equation, there is an assumption. The constant must return to the scale. By the use of lnL as a variable to determine the company size, the postulates are however lessened from tension. The “logarithmic productivity differential” of the establishment involved in a union uses the coefficient on P measures.
If the assumption returns the differential efficiency of labor inputs the calculation is carried upon by dividing the coefficient on P by (1-a). Presented in table 1 are comparative values when a firm is unionized, semi unionized or not unionized. It is also the numerical explanation on how much a union would affect the firm investments inTable 1. The full sample and by level unionization in the given industry (standard deviation in parenthesis) by Odgers, C.
, and Betts, J. (1997). Full SampleLow Unionization< 0.25 Medium0.
25<Unionization< 0.5High0.5<UnionizationObservationsNet Investment rate Unionization Unionization squared Fractions of days lost to strikesFractions of days lost to strikes squaredImport share of Domestic marketAccelerator Accelerator (-1) Accelerator (-2) Accelerator (-3) Accelerator (-4) User of cost capital User of costcapital (-1)User of costcapital (-2)User of costcapital (-3)User of costcapital (-4) 3780.027(0.
92)26.94(6.96) different level. The R&D and other innovation related motion were considered part of the evidences of reduced investment as identified by the Union rent-seeking way with features like firm specificity.
Then reduction in investment has been the sudden act of the firm to unions when there are returns coming from “innovative activity”. With the use of collective-bargaining, improvements in the “labor saving process” are affected uncertainly. There are also reduced investments when product innovation is practiced. The R&D expenditures serve as an indicator statistically in consideration to the physical investments.
That is why firms are able to experience long term reduction of schemes in the physical capital investment to respond mainly with unions’ rent-seeking conduct as it reduces investments in R&D.Negativity of labor unions. But on the study by Wessels (1985), under de Silva’s (1996) book, the theory is opposed as it has a high estimate of productivity knowing that there is a difficulty in reconciling the productivity and proof of wage on the employment side. Blocking off the increase of productivity because of unions and the labor cost related to it would mean that there is a sizeable lowering of union employment considering that all output were held constant while the firms approaches to the “labor-saving capital”.
Because of that, Clark (1984) emphasized that unions emerge to have a slight effect on “capital-labor ratios. Another comment coming from Hirsch and Prasad (1995) said that if the source from wage gain came from return to the capital taken from union tax, the unions has definitely have an undefined effect to the “capital-labor ratio”. Cited in oldfraser.lexi.
net (2007) the study of Hirsch (1996) that has a similarity to the theories of Brown and Medoff that discussed on the steady rate of decline in a union coefficient that turns became negative in the year 1980. Somewhat the result is doubtful due to its outsized variations reflecting various effects to unions and the trends in productivity. Therefore, there are illustrations on the difficulty to obtain the estimated productivity effect taken from collective industry data’s as unionization is interrelated on different types of industry criteria’s of production that seems to expose the time effect. Another approach on the study is when the marginally significant coefficients were obtained on the union with variability from -.
02 to -.03. The “two-digit industry regressions” by Clark was tested to find out its affirmative effects customarily used for the textiles, furniture, and petroleum industry. While that of Hirsch (1996) was on strong negativequasi-rents when there is an increase in wage to unions.
Taxes are put on as it must be included to the capital without being combined to any business aspects in labor and capital. Based in Hirsch’s approximation, there are effects on investment between a unionized versus a non-unionized firm. With other factor held constant, a unionized firm was found out to have a lowered 6% capital investment compared to its opposite, the unionized firm. The permitted “profit effect” is said to raise at an estimated 13 percent increase almost half to the general effect, and is also considered an “indirect effect”.
The effects of unions towards investment are studied by considering the discreet and physical capital. And the study further examined the “direct” and “indirect” effects to investment by the unions. Thus the direct effect was said to be derived from taxes of the unions that enables the firm to lessen its investment to liken the “marginal post-tax rate of return with the marginal financing cost”. While the indirect effect is obtained from high cost of financing leading to lowered profits, the other reason why there are “internal funding of investment” in the union firms.
With Hirsch’s replicated implementation in “intangible capital” like the annual investments of R&D, it was observed that 15% lowered R&D was found in unionized firm. The “indirect effects” was permitted and was brought about by “lowered profitability”. The significant decline empowered the “vote for certification” supporting to increase the corporate income tax by 30%. However the negative effects seen in the conducted experiments was only applicable and has a vast disadvantages in the American unions only hence the British or unions in other countries do not have such detrimental proofs.
Thus the American unions preferred to have an unambiguous bargain in employment and seek for longer term indenture. Whoever may benefit with the rules or laws that is being used for labor and industrial relations to this days, either the labor union or the employee and or the employer, as long as the parties aim for the better execution and protection of every reserved right of an individual, it does not imply any negative impact and is considered to be an important aspect to the economy. CHAPTER 2 Unionization And Net Investment RatesIn theories and experiments mentioned in the first chapter, different sides of those who conducted the study defended there assumption no matter what is its concept or content or even to the point of exaggerated or erroneous data’s as how the other claimants tried to prove. With almost all the negative and positive sides of unionization were being measured, in this chapter however, the core focus is that of the net investment rate, how unionization takes its very role to the firm.
Though unionization appeared like something that wraps controversy, it goes along the way trying to make agreeable environment for the good of the employee and the employees with investments and profits as part also of the concern.Union coverage and firm productivity. The book of de Silva (1996) also mentioned the union effect, how it could drop when there are measures in the firm especially like using the “control variables”. How this happens is furthermore investigated by using the “econometric probing”.
Hirsch interpretations of outcomes and the unclear evidences that the study offers, did not show an “economy-wide effect” of unions upon productivity in a positive outlook, and or what are the proofs that there is a negative outcome. Then Hirsch concluded for substantial inconsistency inside a union and its correlation to the productivity of an industry. During this times the union effects to the industry is relatively small and most likely the effects are more on the negative side. But of course there is no better than taking the focus on what are the best contributions of union to the industry.
The advantages are counted on like (1) unions tend to be more “industry-specific” and because of that econometric problems inside the manufacturing sector are evaded; (2) and measurement of outputs are based on “physical units” and not value added, thus information is easily accessed and “functional forms” are by far predictable. In analysis like the cement and sawmill industry, physical output measures are used to classify the factors used mainly in controlling the firm effects. By studying the plants that engaged in union then to non-union condition, introduction of supervising labor input measure and the partition in union effects with value-added are then became the output constituent to the price. With that of Allen (1986), the affirmative side of union effects is observed in large office building construction but not good in school construction and similar observation was noticed privately and publicly owned hospitals and nursing homes.
Hence there are great differences, opinions or studies conducted and written by union related literature, there are still reliable sources that tell about the reality of productivity as unionization ruled in the internal function of the company. The effects it have is divided into two portion the first one is productivity of a firm is at the largest when there is high “union wage premium”. The critics observed that what are reflected in the density coefficient are the wage and not the productivity effect. Thus as recommended, the management is suppose to increase the wage so that there is an increase in productivity while slowly increasing the measures for productivity.
The second advantage of unions to means of productivity is the existence of working pressure, however it is only restricted to private profit sector. That is in the contrary the positive effects of union is less or totally absent in public related works as in schools, hospitals and law offices.Profitability. It is another form of query as to what happens to the profitability of the firm as the union take over.
The profit of the firm is in reality compensated by the union unless that there are “productivity enhancements”. Unions tend to compete or absorb portions of the firms profit unless in different condition like for example increase in product price to counteract the possible losses in the profit is ideal and applicable to regulated industries that are ensure of “competitive rate of return”. The possible decline in wages, return on capital, and low valuation of the firm’s assets is an indicator of low profitability. If the long run of productivity has to be given due consideration, the “cost differentials” are no less ignored especially if the firm involved maximizes profit to the highest level.
Therefore the firm sets a perimeter to slow down the enormous “profit differentials” in the union and non-union firms. There are possible occurrences that “profit differential” will undergo mitigation when the product or resources moved in and out of the union. Then the investment will suddenly experience a lowering in operations due to the effect of union but the “post-tax like post-union rates of return” in another way will equal to the nonunion “rates of return”. There will be restrictions to economic zones or sectors when the union begun to access coverage so that the “pre-union rates of returns” will not go above normal.
Mainly, such tactics are used to block off the quasi rents that most of the time becomes the union gain and the long-run modifications will be left to happen slow. Thus the “profit differential” is highly seen when there are slow adjustments. Hence union was a subject of controversy especially when it comes to profit; economists designed a way on how to determine the profitability of the firm with the included effect of union. Formulations like how to get the industry price-cost margin (PCM) is bounded by laws in economics.
It is obtained by getting the difference of Total Revenue minus the Variable Cost (TR – VC). The Total Revenue is obtained by the difference of Value Added minus Payroll minus Advertising (VA – P – A). While for shipments and or line-of-business studies the accounting profit-rate measures are used mainly when there is a need to determine the rate of return on sales by dividing Earnings by the Sales (E ÷ S). Then the Rate of Return on Capital is calculated by means of dividing Earnings by the value of the capital stock (E ÷ VCS).
The lower profitability associated to unionized firms does not hold true in most cases because different lines of firms benefits in the union in one way or the other depending on how the union functions to the firm.Unions as how it was explained in theories or studies, has a less significant effect on the profitability of the firm. How a union functions is the best indicator to predict its effect to the profitability of the firm. However, the main purpose of a union is not to cut portion of profits to the firm but to look after the benefits of the labor source.
;;;;;;;;CHAPTER 3;Traditional On The Demand Curve Versus Union Rent Seeking ModelRent seeking. Most firms are engaged to labor unions with short term contracts as what Odgers, C., and Betts, J. (1997) claimed.
In the United States, the contract usually reaches three years. Unions have better incentives to capture the quasi rents rather than to capture than the firm has to the workers quasi rents accruing from firms specific skills. The traditional on the demand curve treats the union set wage rate as exogenous with the firm adjusting along its demand curve. An increase in wage causes substitution effect away from the labor towards the capital.
But total effect on capital is ambiguous because there will be a negative scale effect due to increase in wages. Unions are responsible for the quasi-rents. On the other hand, the firms are subjected to lowered investments in “tangible and intangible” capital. But this is temporarily experienced by the firm while returns on investment are still on the process to be part of the union tax and nonunion non-tax precinct.
New model (on-the-demand-curve). It has monopoly over the labor market, thus they have the aptitude to demand for higher wages while they raise their productivity standards. Meaning, the more they have skilled or competitive labor force, the more they are paid at a higher rate. In case that the labor demand had fluctuated, unions decrease employment to bear the high cost of wages.
Traditional model (off the labor–demand curve). There are inadequacies for the traditional way on how a union demands for its payment as labor source. (1) The management at the same time the union prefers “off the labor–demand curve”, low wage and high employment level. Then, if the defrayal did not occur in the “labor-demand curve”, the “factor mix” is highly affected by the union that it becomes unpredictable according to Farber (1986).
Another limitation for the traditional model is the increase of wages in a union that is highly independent to the increase capital of labor cost. The “union wage premiums” are observed to be as tax to the firms’ gross income that is composed mainly of the capital returns, while the union tax is the result of agreement to by “union power” and that of the firm.;;;;;;;;;;;;;;;;;CHAPTER 4;The Collective Bargaining Negotiation versus collective bargaining. One of the important tools in economics is collective bargaining with its deferent aspects like negotiation known to be applicable to employment.
The union however put its interests to the collective portion of the labor force as negotiations often benefit many employees. Collective bargaining however does not only benefit the employees but many employers also. Thus, bargaining happens due to these procedures for the benefit of both parties. Negotiations are done to situations when there is “non-employment condition”.
One thing that it differs from collective bargaining is that it has a lesser “collective interest”, except for when the states made an intrusion during the negotiation process. To further illustrate the difference of negotiation to labor relations, negotiations are often associated with the involvement of public interest like wages that has a great effect on prices. But on the other hand the government would always intervene and would prefer to use collective bargaining if ever the two parties are going beyond the parties itself. It is becoming convenient to use especially in cases that negotiations disrupts a work due to some failures.
Unlike negotiations, collective bargaining undergoes certain specifications that would involve the law system and the freedom of association. In the employment level, it is the employer who buys the services while the employee sells the service, thus the employee possess the potential permit by means of its involvement in the trade union. Collective bargaining may also take the form of haggling, but it considers respective factors to make the service beneficial to all.Though, collective bargaining and negotiation are almost the same, the practice are applied by the parties involved based on their differences of preference.
It is actually the choice of the employer or the employee to which they will attach themselves that they could derive the highest possible profit or wages that they expected to attain.Characteristics of collective bargaining. The ILO Right to Organize and Collective Bargaining Convention No. 98 (1949) described collective bargaining as a “intentional compromise between employers or employers’ organizations and workers’ organizations, with prior considerations to agreed collective terms or laws that would govern the act of the two parties”.
It could also be defined as a form of negotiations but with circumstances interconnected to the working conditions of the employee and its relation to employer, group of employers or employers’ organization and or representative workers’ organizations with preceding rules or specifications to follow. Collective bargaining may not always lead to a collective agreement. Some of the several features of collective bargaining are (1) trade unions’ uses collective bargaining for the improvements of conditions in the employment of its members, (2) restoration of the unequal bargaining process between the employer and employee, (3) the labor unions modifies, replaces, the contract of employment leading to an agreement, hence it does not build a correlation between the employer-employee (4) and it uses a bipartite process, although in developing countries, where the government acts as the conciliator when there are disagreements. Achieving accomplishment in collective bargaining Autonomy of association and pluralistic approach.
Bargaining power could happen in a pluralistic view as this is gaining high acceptance to established social groups like the religious groups, unions, and business associations, political parties in which the government could have a direct communication with the said party through negotiation or concessions. It is an interaction between the groups and the government while democracy is greatly practiced. Thus labor relations in a pluralist standpoint, is seen as an essential instrument to establish and sustain constancy. Without proper connection between the said group’s and or parties, the approach could not function competently.
Pluralism as cited by H.A. Clegg is a theme that is the consequence of association among people with common interests or goals towards employment. But their being closely associated created tensions not only with each other but also to the government; and the act made a positive connection in the society that resulted to high stability of function or productivity, thus it enables to form into associations with “powerful shifts” in between groups.
Identification of the trade union. Freedom of association does not function for the purpose of bargaining. In organizations that has an existing array of trade unions, pre-determination of “objective criteria operative” inside the structure of industrial relations is being used to make a decision as to when and how a union is being accepted for the intention of collective bargaining. The then established rules are used to distinguish the union that is the most reliable.
Before that there are certain regulations or forms of criteria’s used to decide what system to choose from because some systems issues are resolved by requiring the union for a certain set of percentage in a given enterprise. A referendum set on the working place is usually needed that are obtained from labor departments. The maintenance of stability is maintained by no change in agent once certified as a bargaining agent in a prescribed time period of contract. Adherence to contract.
Security in the observance of agreements by the members in a union is not often followed especially in the developing country where in there are lots of existing labor unions. This happens most often when the administration authority of the unions is hesitant to give punishment to the violating member of the union despite the labor law system that is being imposed. Without prior execution of the agreements and other regulatory systems in the union, the party involved sometimes losses their trust to that certain union or to the collective bargaining process. Provisions from labor administration.
In order for a collective bargaining to take place effectively there is a need of proper prop-up from the labor administration authorities. Among the rules that the authority implements are (1) provision of the needed services of the labor union like useful pacification when there are failures in the process and provision of legal framework to be able for the labor union to operate well, (2) does not give certain biases to parties with violations to what is being agreed upon to the collective bargaining, (3) security and observance of collective bargaining agreements, and (4) provisions of proper system on how to resolve disagreement that rise out unexpectedly if the parties did not so provide their own resolution. Trust between the parties. Collective bargaining is a critical means of working relation and its success relies on the trust between the parties involved.
The trust could be build up by compromising on dialogues, and other productive nature of relationships inside the collective bargaining situation as the secret of established and or strong organizations is on how the workers and employers maintain a good working relationship with each other like building up what has been similar in their attitude and the trust to everybody’s capability to do the job effectively. Suitable inside communication. There must be continues link between the firm and union. The managers are expected to convey all the information’s to the members hence, not doing so would result to miss communication that could lead to confusions not only in the job itself but also to other working factors which may cause the employees to organize a strike.
In some cases that there are middle-level managers who are miss-informed, there is a possibility that it can cause an unintentional misleading to the workers, that are not impossible to cause friction of misunderstanding and other internal problems that could result to a bigger problematic situation to the firm. Thus the managers or supervisors are highly recommended to be trained or be involved in some objectives and solutions formulation, by doing that, there will be development in the execution of right actions to the labor force.;;;;;;;CHAPTER 5;Unions And Wages InequalityThere are trend inequalities in labor unions and this is showed upon by failures in the unionization. Inequality to wage distribution inside the union is not impossible to occur and this is associate to how the law that is being imposed to labor unions are practiced or exercise.
Hence in the first place, as what was being discussed to the previous chapters regarding the functions of unions to the labor force is to mainly see to it that wages are equally distributed. Of course unions did a big participation to the maintenance of wage equality. But is there a need for a union to be able to make sure that wage distribution is safe? Isn’t it more dangerous that being a member of labor unions and used to collective bargaining will turn an individual to function like a puppet that whatever order given by the union, an individual has to follow? But such cases will depend the law is in leading all sanctions, how it is being used and made effective by the governing bodies. The laws that covered the unions are the ones that determine the equality to wages of the workers.
However to countries that unions, the government and the laws do not coincide well meaning there is no assurance for wage equality, hence there are cases that inside jobs in the unions resulting to manipulation of what is the suppose wage of the individual.In terms on how to motivate a worker for any jobs, there is no way that a form of labor has to be mandated to the worker. The relationship between the union, workers and government is the most effective way to improve the productivity of the worker.On the opposite side nothing is safer than to join into unions hence its benefits are better than not having it.
But an individual has to very careful because there are hierarchies in unions and its performance is mobile to their aim. Union are like safety nets that can back-up an employee whenever there are unavoidable circumstances that threatens its rights as part of the labor force. Although workers have a right not to join to unions, however workers in a union are offered with high job security as how acts like The National Labor Relations Act supports and became the most responsible for the improvement of bargaining power of the union. But without unions, the welfare of the workers will never be given prior concern.
;;;;;;;;;;;;;;;;CHAPTER 6;;The Labor And Employment Law;Law for labor. Based on data’s from Wex (2007) labor laws were established to give a directional status for the two parties. But the variation on how it is implied from state to state somewhat created an ominous result to where or what state an employee would gain higher or the best benefit. It is defined in one of the federal acts that the labor law’s purpose is for equalization of the bargaining power of the employees and employer.
Refer to figure 1 the chart representation of labor relations law and the union density by Karabegovic et al. (2004). The practice aims to improve the relation of the two parties at any given working conditions. While it also gives the employees the right to exercise picketing or strikes whenever there are unsatisfactory implementations in the firm that violate the right of the employees.
There are governing agencies that undermines the labor law and these are the federal law, state law, judicial decisions and other;Figure 1. Index of labor relations law flexibility versus union density by Karabegovic et al. (2004).administrative agencies.
Those employees or employees that are not under NLRA are ruled by other federal or states. And they are limited or regulated in doing the bargaining relationships. This could mean that there are forms of hierarchy in the functioning of labor laws. It also looks like a must for an employee to get in the regulations of NLRA to be able to get good bargaining relations.
Nonetheless, there are basis why there are different implementation of labor laws, and this is possibly to suit the different situations an employee could involve or wishes to involve itself to any firm.Refer to figure 2, the flexibility index of labor relations law that was studied by Karabegovic et al. (2004). The one with the highest rating is the most flexible in Canada and the United States.
The highest rating does not mean the most ideal labor union rather it assesses the flexibility.;Legend y-axis: Flexibility ratingx-axis: Abbreviation of states in the United StatesFigure 2. The flexibility index of labor relation law by Karabegovic et al. (2004).
The establishments of labor law are a gateway to the benefits of the employee like what to do when abuse or other malpractice by the firm was cast down to the employee. With due respect the law serve as the guides for the two parties to maintain consistency in the execution and productivity of the employee and the firm. That is in times that one of the two parties did an act violating the agreement, it is easy to asses which committed the mistake and must be adjudged guilty. One case in the neighborhood, an employee in an international food company was among the fired workers.
The said company has fired almost all the workers that are contractual or not regular in status without good proof for what was really the cause of firing. But hence the workers are contractual only; they are not given a clear right to call for a strike. Then the workers tried establishing their union and ask some of the employees who are already regular to join the picketing. Unfortunately, those who joined the strike were also fired while the government didn’t intervene until all the employees begun to walk out at the working period.
For almost three months of continues strike and boycotts for the companies products and services, the workers end up hopeless and did no longer push their protests instead they look for new companies that will provide them work. In that case, the importance of union is clearly needed but without support from the government and without strict compliance to the law, the fate of the workers will be at risk. The firms of course have their own ways or tactics to oppose unions, and in countries where the government do not merely join or look upon the welfare of the employees, some firms or employers would continue to do exploitation in any means to maximize their profit. Benefits are the clear goal of a union, that collective bargaining is considered one of the most efficient in terms of safety.
But issues like the rent-seeking behavior of the union seems odd for the firms, hence it looks like the very purpose of a union was replaced with monetary endeavors. One more issue that productivity does not reaches an exceptional height when unions are present in a firm and that collective bargaining failed the expectation to increase the productivity performance, rather it contributes to the lowering of the firm’s profitability. Unions are however considered as suitable only to establish a monopolistic approach in profits and to the quasi rents which is core make up for the return of investment to flow normally so that the return of investment is sustained. Unionized companies reduce investment in vulnerable forms of physical and innovative capital.
In cases that only partial financing on investment are given, reduction in the investment itself fall to a level of the “internal pool” and it is reflected back when there is slowing to the growth of sales, employment and productivity. The unions are also considered to bear poor feat when it comes to its relationship to the different industries, that the competitiveness of the company is sacrificed. Thus, resistance to unions among firms or companies is high. The fact that there is no greater difference in the performance level if the company is involved in a union or not and law modifications tend to enhance unions to strengthen its bargaining power is feared to result to economic uncompetitive ness.
Regardless of the proofs showing that collective bargaining did have evidences of increase in productivity, there are also indicators that affect the performance and productivity of the unionized company or firm. But it is not very easy to conclude what are the negative and positive effects of union to the firm or to the workers hence it has a “wide economy performance”. As to a very competent economy there are restrictions to the costs that unions can independently impose there power over wages and other rights where high return of investment is attainable. On the other hand, if unions begun to increase its “rent-seeking power”, there is no less chance that the union itself would collapse for the reason that unions have a monopolistic approach when it comes to bargaining of labor source.
This is because of the irregularity of assets whether it is from union to non-union zones and because of the diverging “social rates of return” in the different investment levels that sometimes results to inefficiency.The economy has policy that acts to the limitation of the union’s power to bargain labor. The fate of effective union and its known benefits to the labor force depends on the economy that holds the union. There are instances that the power of the union is often or totally ignored.
This occurs usually in places like the developing countries. That unions most of the time do not have the say-so over the violations to the workers. That is the reason why the effects of unions to profitability varies from place to place or as case to case basis due to indifference on how the union is given importance. It is however a reason also of some firm that the unions are being ignored of hence, in some occasion the former does not give much benefit to the company and the law is flexible enough to just let the violations or other agreements be put at risk.
The importance of establishing a firm law for the union is to assist the coordination of the two parties at a phase of being competitive. This lessens the monopoly of the union towards labor source and the protection of the rights of the employee. The law for conducts of unions covers the state of discrimination, disability, workplace safety, and rules about retirement fund and remuneration based on the summary report of Princeton Survey Research Associates (1994).The private sectors are supposed to be covered with collective bargaining law, and thus unionization envelops the safety of the labor source but as long as the economical and political aspect is not well coordinated to regulate the actions of every party, nothing could happen to the union.
The employees will be left to suffer from any faulty actions of the union or the firm. Regulations towards the conduct and extensive close approach to see what is really going on is a must for the law makers and bureaus engaged on the regulation act. When unionism declines the first to administer over labor market development are the political sectors. However, unions permit the workers and firms to have an agreement on labor contracts.
But the union could suffer from declines when regulations on overtime pay, disabilities, workplace safety, pensions, drug use and family leave are strictly being followed especially if it was made into laws. The same situation was studied by Levine (1997). There are proposals after the study and its systems were proposed on how to lower the direct guidelines for the maintenance of “minimum standard labor set”. During the times that the unions started to weaken, proposal that the government should be the one to do the lead in workers welfare begun to arise and this created a lowered support by the employees to the unions.
Because of that, unions were criticized that without the aid of the government it is considered weak and belongs to the “competitive disadvantage” when compared to the firms that are non-union members. At present labor unions are struggling to do well both in its relationship to the government, the employers and employees. But before it reached to such height of struggle to gain the power for the dual care of both parties, it was first been an issue or central focus in the course of history of economics and political sciences. And as new forms of technologies arrived, then the market competitions are becoming tougher and tougher, unions also increase their great effort so to become the most reliable sector for both the security of employer and employees.
But the critical side is, when there are less regulations and unions are faced with denied right of entry to rents and quasi rents that was basically accessible to the firm or the workers. New means of union organization is still facing the same constraints as its coverage to the economy is steadily waning. What triggers these constraints to unions is weak management relationship or conflicts with the management, few successes by the unions in the attempts to improve the workplace and other principles that serve as a threat to the firms’ profit. One problem with union is that it tends to be idealistic when it comes to rules to the participation of the workers, and the ways on how the firm should treat the employees, thus it seems very limited for every individual involved to work on liberally.
As the union projects to favor the motivation of the workers who are not very interested to work and begun disregarding the skilled workers to be given an additional reward for the high quality contributed work. Therefore, how can everybody say that an individual must join or be a member of a union if it has some pitfalls favoring the mediocrity of everybody when it comes to productivity? The idealism of unions’ maybe the reason why it continues to struggle up to this time despite the many good term goals that it wants to achieve and is highly achievable. But as long as its relation towards the “political and economic environment” is not in a comfortable manner, nothing could happen to the goals of the union and it will just continue to struggle and do the protest if it will not able to determine the most flexible flow that will benefit both parties. The laws that the unions pushed hard to be used are making a success like the employment law which is very responsible for the policy that aids in the progress of worker’s partaking to collective voice.
While the labor laws must be constantly upgraded to arrive at terms that will give specified employment agreements. Thus, if the union would broaden its scope of consideration by interconnection with the market forces, it will partly recognize more helpful terms for future innovation.;;;;;;;;;;;;;;;;;;CHAPTER 7;Procedures On The Employment Contract Agreements. As written by de Silva (1996), two courses are usually adopted and being used as the form of agreement (1) there must be a letter to the union stating the employee’s conformation on the work with draft of agreements and (2) alternate draft to be given tot the union for better results of the course of authentic agreement and also to provide a space for negotiations.
Then during the signing of the agreement it must be independent, in a general version. The contents which are composed of the agreed date, duration of service, and the processes to undergo in case there are argument with the wages. With this clear notice there is a better understanding between the employer and the employee. In cases that there is “union multiplicity”, criteria for recognition is highly recommended.
However to countries with high incidence of “union multiplicity” recognition causes competition, disagreement that further end up to major argument, and the worst when sensible problems soon begin. One best example is when a worker suddenly departs to a bargaining union and shifts to another union in exchange to better job opportunity or when a union was replaced by another union caused either by incompetence or other internal reasons. That is why to the employers, the legality of every agreement must be clear to avoid ambiguity just in case it will occur. Another good thing is there are laws that can be used to undermine all the issues from bargaining, to negotiating, up to the end of contract.
For the extensions of contracts, both parties must agree to it before proceeding to the next step.;CHAPTER 8The Negotiations Principles in negotiation. Principles govern the process of negotiations. It was written in a book called “Principles of Negotiation”.
Its contents explain and illustrate the most important procedures or step to follow so that everything is clear for the employer as well as the employee the functions that are bounded to be conducted by the two. Initiating negotiations. There are no clear rules as to who will do the initiation of bargaining or negotiations. But if it’s the management or the union who first do the move, the two of them is required to accomplish an outline stating their reasons for the agreement.
The agreement must cover all the aspects of expectations. As proposed in the outline of management based on the study by de Silva (1996), the content must state that (1) the focus of negotiation will include the business environment, and on how it will affect the performance and the welfare of the employee as it signs the contract; (2) The grants and other benefits that the employer are supposed to give or not to the employee must be judged accordingly hence this will be abided whenever the employee started working on the firm; and (3) There should not also be impressions to make that will pose a threat to the employer that it will not be able to make negotiations to the union regarding the labor force based on what case did the union had presented. In which the objectives, expectations in the collective bargaining of labor agreement, and other contents of the agreement that seems unsatisfactory to the employer that needs revisions be included in the negotiation. Internal Communication.
The internal communication is critical in both the negotiation process so to gain new employees, up to the point that the labor force were already working in the firm, hence there must be maintenance in the internal affairs. Like the company and its managers is well informed about the situation that the workers are facing and also the unions who are responsible for the workers safety. Misunderstanding and other internal arguments will be eliminated if not minimized when such practice are done. Styles of negotiating.
Negotiation is an art that is applied by any of the parties to convince or persuade the opposite party for an agreement. De Silva (1996) pointed out it depends on how the management would create their different styles to get their goal. But the management should make it sure that it can adapt or flexible enough to deal with the employees or the union that carries it. Thus a negotiator must posses’ good interpersonal characteristics and knows how to juggle the approaches that are asked by the other side.
What is the most important part of this point is on how a negotiator present the objectives to the most convincing level, whether its in a form of a dialogue, or other witty appearance and be able to convince the party at the end of the negotiation. Different styles are expected for the negotiator to exercise whenever the negotiations are going on. That differences and common aspects in the applicants must be spotted to know further the party. It is a must for a negotiator to have also good listening skills so that there will be no complicated communication and misunderstanding.
The other party must be listening and the negotiator must be able to call there attention so that the conversation will be fast. This would need a loud and well modulated voice, good diction and speaks clearly. There are measures that could be used to know that the other party is listening like by asking questions. Gestures are also helpful to convey message so the other party will listen very well.
Hence the outline of an agreement has many portions, it is very necessary that in every number or part of the agreement, the applicant are able to understand. This will avoid misconceptions or misunderstanding. Whenever there are counter proposals, or revisions on the agreed conditions it must be marked so there will be no errors. Brainstorming of ideas is helpful to see the possible problems that could arise.
If possible ask the union for comments and suggestion, as this also give new ideas and promote interaction. The negotiator must be open to any negotiation at any part of the things to be negotiated and ask for the party to explain there side as to why did they claim that instance. Simple but direct questions are one of the most effective for the other party to explain further their sides as this could also influence or even shift their perspective.;;;;;;;;CHAPTER 9;;Employment, Unemployment And Workers Compensation Rights Employment.
The former President John F. Kennedy released an executive order in 1961, pointing towards affirmative action the government contractors are required to guarantee employments to applicants and that they are treated well disregarding to what race the employee belongs that the contractor or employer is reliable for the employee’s employment, without racial discrimination or national boundary. If there are evidences of misconducts as discrimination against the employee, an affirmative action is expected to be conducted against the said discrimination. The Executive Order 10925 was released in 1965, for the documentations of affirmative actions for certain practices, policies, programs, and employment statistics between the contractor and subcontractor.
Then it was followed by Executive Order 11246 released by the US Department of labor. Then again by the Civil Rights Act in 1964 against existing discrimination acts.Unemployment. The inevitable cases like termination or end of contract that ends up the employee jobless, unemployment compensation are intended for the employee until they are able to look for a new job.
There are insurance that grant the workers with this type of benefits to lessen cases or avoid financial breakdown and to the sustenance of consumer expenditure when there are economic amendments. Federal programs in the United States are the ones who support the unemployment insurance using the “dual program” which was establish as the Social Security Act in 1935 and were put into service via the Federal Unemployment Tax Act. Different states provide different types of implementation of the unemployment compensation as this is permitted by the Secretary of Labor according to the standards that was formulated into laws by federal movements. How this law was being put into practice can be traced by the taxes paid by the employers depending on the wages paid to the employees.
Then the employers paid taxes are directly being deposited to the Unemployment Trust Fund. The act however provides a great help for the employee itself hence it provides financial grants during the time of crisis. Reparation for the workers. There are laws that deal with the compensation for the workers.
Primarily this laws were designed to provide insurance for the employees in cases like injuries, accident related death, illnesses and other physical disabilities that were acquired in the work place. That provision of monetary benefits without a need for legal action is automatically given usually to its beneficiaries like the children and or family relatives. Some of the acts that supports the compensation of workers are the (1) Federal Employment Compensation Act which is responsible for the benefits of non military workers and federal employees. The benefits covered are either disability or death while the employee is doing the job in the workplace.
(2) The Federal Employment Liability Act (FELA). (3) The Merchant Marine Act and many others that provide reasonable benefits for the workers.;;;;;;;;;;;;;CHAPTER 10;;The Skilled Workers;Levine and Tyson affirmed that market collapse are caused mainly arising problems like less participation, condensed wages so as to have a well organized group. The participation of an individual to join t he workforce is self mandatory and the union or the market has no power to compensate the skilled workers just to make those uncompetitive individuals work.
When the market begins to bias against the participatory workplace, this would result to “economic lock-up” that goes beyond the point of balance or equilibrium.The skilled workers in general is the most ideal to hire as part of the work force because it is evident that this people are able to provide output of exceptional quality and more or less efficient in the use of time thus they are part of the highly productive inputs. But behind the skill of a worker are considerations that are currently being exploited at the same time protected by the union to the extent that skilled employee do not only gets the benefits but as well as high moral with the current job it is enjoying. Articles in some journals clamed issues on the skilled workers its shortage and the wages that are paid off to them by the company.
An article of Ruiz (2006) said that almost one fourth in the U.S. workforce is paid with high salaries and this are the highly skilled professionals’. Whenever there is shortage for highly skilled professionals there is a tendency that wages rose to high levels.
Definitely the highly skilled have their very right to demand for quality payment hence they are contributing their power and skill that is limited or unique only to such individuals as like them. Anyway, the company may earn more than what they expected because of what the skilled professionals have imparted. Hence the law of supply and demand would always make it right and is very applicable to the high salaries that the skilled workers receive. Therefore, the lesser are the skilled professionals who practice certain unique job, the bigger the sum of salary has to be paid to that individual due to its possession of monopoly of skill.
Alan Greenspan, the former Federal Reserve Chairman came with the idea that immigrant workers should be hired to avoid highly paid skilled American workers or professionals. This idea of course was pushed through to stop the high wage gap. One important source of skilled workers surplus came mainly from developing countries like the Philippines, hence the manpower in that country is extremely many that no matter how low are the wages this skilled workers would received in the US when it is converted into Philippine peso, and it became a good sum. To cite a specific examples are the demand for teachers’ way back in the year 1999, the nurses, caregivers and many more.
With that point of view of Greenspan, it is claimed that the common workers became jealous with the high paid individuals, thus the former is no longer motivated to partake or be part of the labor force.However, it is more of an individualistic problem because as an individual, the most excellent would usually get a reward for its share effort. With no definite reason, an individual has right to achieve the highest possible value of its effort as quality or skill is being attached to it. The government or the law making body for wages of course can lessen the extreme payment for this people but it will not make sense if the wages will be lowered just to motivate those who are less skilled or uncompetitive hence hierarchy in every existing act is irremovable.
;CHAPTER 11;Disputes Over LaborWhen there are arguments between the management and the employees that became unstoppable or there are violations of the management against the labor force that were continually done, strikes or lockouts are one of the possible moves that protesting workers do to call the attention of the management. When this happens the company oftentimes hires workers that will continue the work to at least gain the break even point for the production of the day while the management tries to calm down the employers. It is not part of the sign contract actually that the company is allowed to hire “replacement workers” but in some states it is practiced while the others do not allow it.There are two categories of labor strikers, “the economic strikers” and the “unfair labor strikers”.
The one that receive permanent dismissal is the economic strikers while the one that is just temporarily replaced is the unfair labor strikers. Still the economic strikers do have the chance to get rehired upon the approval of its application during the release of hiring list.The mobility of workers rights in the United States, Canada, Europe, Australia and other leading first world countries are well exercised. However, compare it to the developing countries, an assumption of 0 percent chance of the strikers to be rehired in the same company and 50 percent or higher to get a job with other companies.
Some do not mind making any protest against the violation of the company that they are working on for the fear of losing their jobs.;;;CHAPTER 12;;The Edges In Improving The Labor And Industrial Relations Labor unions. There is always a need to protect the rights of every employee as they own there power to work and to live as humans. Labor unions functions like a blockade to avoid abuse and to promote the high performance level of every employee like consideration of the work loads, the mood of payments, benefits and the working environment.
It is the most humanistic approach to both consider the part of the good of the employee as well as the relationship of the employers to it. Hence, democracy is highly practiced in many countries, that labor relations are given aforementioned importance. And of course as human beings, there are unavoidable circumstances that exploitation arises suddenly in one side. Even if unions cannot perfectly protect the employee in a full manner, at least there are measures that serve as the safety spot to every employee.
As stated on the federal law, labor unions can bargain their working power collectively with the employer for the salaries, benefits and working conditions, a right to from a union or use the Weingarten rights. So also with the employer, as they are given restrictions on the other hand, like they cannot immediately fire punish or apply coercion, threaten or to some acts of bribery when the employees tends to form a union. Labor unions on the other hand, do not hamper the rights of the employers or put biases on the employee, but it puts the two parties at a regulated level for the improvement of the outputs. With the labor unions, human rights are well practiced and are less violated, with due concerns to dignity, rights, respect, discipline and dismissal, seniority rights and others.
Involvement in the union safeguards the employee using contracts, grievance process, and during cases of oppression and other forms of violation the unions could cover up the employee with legal assistance and consistency on the contract of the time period of the job is properly practiced. While without union, rights seldom or do not exist, health and safety is often times traded off and there are secret or private negotiations. This puts the employee in great danger, because of uncertainty and other threatening conditions based on Lowery, J. (2001) commentaries.
Resolving the issues on investments in labor relations. To what extent did labor unions or collective bargaining should be practiced if based on the previous discussion in Chapter 2 that the investment power of the firm is greatly affected at most 20 percent? Or isn’t the employee are given too much power by pampering its rights? Laws and rules in labor, employment and other employee related tactics, with the purpose of improvement in performance of the both parties. But how sure it is that the employee on the other hand are doing there side well too, what about the flaws like if an employee call for a strike to get its personal intention over the benefits whenever, the employers are adjudged.The current laws, economic principles are a big help in resolving labor and industrial issues.
But constant revisions of law and other labor related issues would help to the betterment the humanity.;;;;;;;;;;Referencess;de Silva,S.1996.Collective Bargaining Negotiations.
Retrieved on May 04, 2007 at http://www.ilo.org/public/english/dialogue/actemp/papers/1998/srscbarg.htm.
Diggers 2007.Greenspan: Import More Skilled Workers To Drive Wages Down Retrieved on May 05, 2007 at http://www.diggersrealm.com/mt/archives/002121.
htmlHutt, W.H. 1954. Theory of Collective Bargaining.
Retrieved on May 03, 2007 at http://www.crinfo.org/booksummary/10351/Karabegovic, A., Godin, K.
, Clemens, J., and Veldhuis N. 2004. Measuring the Flexibility of Labor Relation Laws In Canada and the United States.
Retrieved on May 03, 2007 at http://www.fraserinstitute.ca/admin/books/files/MeasuringFlexLabRelLaw.pdfOdgers, C.
, and Betts, J. 1997. Do Unions Reduce Investment? Evidence from Canada. Retrieved on May 03, 2007 at http://www.
net/publications/pps/3/evidence.html).;Ruiz, G. 2006.
Worldwide Skilled Worker Shortage Driving Wage Inflation. Retrieved on May 05, 2007 athttp://workforce.com/section/00/article/24/55/65.htmlWex,2007.CollectiveBargaining.http://www.law.cornell.edu/wex/index.php?title=Collective_bargaining;printable=yes
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