Collective bargaining is the process of negotiation between representative of firms & workers for the purpose of establishing mutually agreeable condition of employment. The wage and fringe benefit of unionized workers are determined by collective bargaining.
In every free modern industrial society, trade unions are an accepted part of the industrial scene. Labour unions are complex organizations, with various desires and goals. Some of these goals are purely economic, for example, favorable wage settlements and levels of employment. In addition, some of the things unions desire are non-monetary, although still ‘economic’ in the sense of having identifiable and quantifiable cost to the employer. Among this second group would fall various fringe benefits – for example, contribution to pension funds, hospitilization programmes, paid holyday and so on. A third category union goals might be called indirect economic goal, in that their long-run effect is indirectly intended to be economic improvement of the union member. This category includes control over labour supply through apprenticeship regulation, union shop provision, restrictive working rules, and so on. Finally we may speak of some non-economic goals of unions, the goals of a social or political nature.
Major bargaining Issues:
(i) Purely Economical Issues : Wage rate for different job categories, overtime rates, rules for tea break, fringe benefit,
(ii) Work Rules related Issues : Assignment & task, job security, work load (staffing requirement)
(iii) Procedural Features related Issues: Rules of seniority, grievance handling for dispute and discharge, Laid off .
Normally, a few months before a union-management contract is to run out, the parties will come together to discuss a new contract. At this time, each side presents its views on what the new contracts terms should be. Seldom is agreement immediately reached, for the union will suggest terms most favorable to its members, and the employer will counter with an offer favorable to its interests. During the intervening weeks before the contract deadline, frequent sessions usually occur as the two parties attempt to find as acceptable compromise. Contracts are not always settled by logic, however, and the treat of economic sanctions may be implicitly or explicitly used in the attempt to induce one’s opponent to come to terms.
The Chief Weapons Used by the Employers to Fight Unions
I) Discriminatory discharge of union members,
II) The black list,
III) The ‘yellow dog’contract
IV) The labour spy
V) The Strike breaker of armed guard,
VI) Conspiracy of town marchants, police and judge against worker organizers
VII) Company union, in which the company would control the decision of the worker association
VIII) Court Injunction
The Economic Sanctions Of Collective Bargaining
The primary economic sanction available to the two parties is the discontinuance of work. If the union takes the initiative of ceasing work, a strike occurs; if the employer takes the initiative, it is a lock out. In either case, the effect is the same, the union members suffer income losses and the employer suffers from the loss of production and revenue. This economic sanction is available in the bargaining relationship; occasionally it is used, more often it remains an implicit threat encouraging the parties to find a compromise solution.
In the early days of a stoppage, most union members can fall back on their accumulated saving. As a strike lengthens and saving dwindle, the union treasury may be used to support those in most difficult straits through small weekly payments, soup kitchens, the extension of credit, and so on. Often unions dues are used during the contact period to build up a fund set aside for such emergency purpose – sometimes referred to as a strike fund. If a strike concerns only one or a few locals of a national union national headquarters will often help out from its treasury. Occasionally, a strike will concern all of a national union’s members, however, and support may be forthcoming from other national unions. A strike of four to six weeks will normally deplete the liquid saving of union members and serious drain a union’s treasury.
The financial impact on the employer varies considerably, depending upon the nature of the business. In some lines, the will normally have a large inventory of its product, so that sales and revenues do not immediately cease; in other industries where inventories are small or nonexistent (in the case of items made only on order), and the employer immediately feels the financial pinch. If only one firm in an industry is distracted, the employer may feel the loss more keenly than if the whole industry has cease production, for customers may turn to other suppliers rather than wait for the strike to be settled. If a strike continuous very long, the firm’s revenues are likely to fall to zero, while many heavy fixed changes continue, the employer’s ability to continue to resist will depend largely on the company’s liquid capital position.
The economic sanction of a cessation of work, therefore, is an important one and it is little real comfort to either party to know that one’s opponent is also shouldering considerable losses.
Bargaining Power in Collective Bargaining:
When analyzing any contest between two parties, the power of either party cannot be measured in absolute terms. The power of a military body depends on its size, its weapons, its determination and moral, and also on strategic position in relation to its opponent and in respect to the objectives of both parties. A small force may be ‘powerful’ in holding a mountain pass against a large enemy, but it may be ‘powerless’ to drive the opponent from the plain. A meaningful concept of bargaining power is a measure of relative power to accomplish specific limited objectives.
In analyzing any bargaining situation, bargaining power might best be defined as one’s ability to induce and opponent to agree on one’s own terms. Thus the important question is the opponent’s will to resist a particular situation or position.
In the case of unions and employers, to the extent that either party takes as its objective. Some goals those are almost unrealizable, so is its bargaining power weak. When either attempts to induce the other to agree to an offer not far from the other’s objective, the inducer’s bargaining power is much stronger (that is, the offer is much more likely to be accepted).
Perhaps the simplest way to analyze the willingness to give in and the determination to resist in the bargaining situation is to picture each party as a rational calculator of the cost of either action. For example, if the employer wishes to pay tk 8.00 an hour, and he finally agrees on a new contract calling for tk. 8.25 an hour, the cost of agreeing with the union is the extra tk. 0.25 per worker-hour. For any particular wage objective the union is striving for, the greater the gap between its and the employer’s objective, the larger the cost of agreeing on the union’s terms.
Analyzing the bargaining process, it can be seen that each party attempts to raise the other’s ‘bargaining attitude’ to unity to induce him to agree to the terms offered. One party can influence the other party’s bargaining attitude by changing either the cost of disagreeing or the cost of agreeing as seen by the opponent. For example, a union will attempt to raise the cost of disagreeing as seen by the management by trying to convince the union to resolve strike and of its willingness and ability to carry on the strike until the objective is achieved. It attempts to do this by mass meeting supporting the union’s leader, may a bluff and blaster showing the worker determination, by the availability of a substantial union treasury to support the strike, and so on. The company will counter by indicating that it will hold out as long as necessary to win its point as a matter of principle, by statements to the press regretting the income loss and worker are submitting an unjust cause, and so forth. Neither side would bother with all this fuss if it were not for the possibility of weakening the resolve of the opponent to resist.
Comprising is often mistakenly seen a sign of weakness, it is also a positive weapon in the arsenal of bargainers. The most certain way of weakening an opponent’s wills to resist (i.e., of raising the opponent’s bargaining attitude to one) is to reduce the cost of agreeing for the opponent by making a compromise offer.
Economic constraints on Collective Bargaining
It may be tempting to the casual observation of the labourer scene to conclude that wages in the age of trade unionism are no longer determined by market forces but by ‘conscious human decision’. However, this is being misled by the obvious and missing the real causation of actions. Wages in pre-union days were never determined impersonally in the market, for the employer always has to make a ‘conscious’ wage policy. The major difference trade unionism makes is that wages are set by bilateral agreement rather than by unilateral decision. In both instances, however, economic constraints are effective in limiting the range of choice. The employer today still has to make the same conscious calculations, obey the same economic rules of maximizing profit and avoiding loss, in connection to the same limitations imposed by real labour supply conditions, and so on, just as were necessary before the presence of a union. It is true that in addition, agreement with the union must be achieved, but this does not obviate the force of the market.
The presence of a trade union, of course, does create some added problems for management and exert some additional pressures. Management (authority) to act unilaterally in all aspects of the employment relationship is curtailed. This is a desirable move insofar as employers might otherwise be tempted to abuse managerial authority in autocratic use of power. It is as undesirable development insofar as this has restricted efficiency and economic growth.
If market forces are still the dominant influence on union-employer wage settlements, how do we observe their operation in a model of collective bargaining? Reflection will indicate that market pressures are the major determinant of each party’s calculation of the cost of agreeing in creation of bargaining attitudes. The cost of agreeing on the party’s terms is the difference between the opponent’s latest offer and one’s own reasoned objective.
Union and employer bargaining agents are seldom-wooly dreamers; they are practical, hardheaded businessmen who expend every effort to achieve an advantageous bargain. Both the union and employer representatives are fully aware of current wage rates in other firms, industries and regions. Aware of local availability of labour, and as cognizant as possible of the prices, wages, and employment. In other words, bargaining does not take place isolated from outside world, but with awareness of all the impinging supply conditions in the market. When the union determines its wage objective, it is in a sence determining its will to fight, for the cost of a strike and the terms offered by employer’s are outside of the union’s immediate control. Although a union’s states wage aims are not necessarily identical to its real objectives, they are a reflection of them and can be seen to vary with changing market conditions.
The employer is not only aware of economic constraints on the supply side of the market but is also fully conscious of the state of market demand for the company’s product and of current and prospective profit levels.
Facebook Comments